Eurus Energy Holdings Co. With the Vattenfall II
matter soon to conclude, which concerned legislation
phasing out nuclear power plants, Germany is now
faced with further investment treaty claims arising
from amendments to its energy market legislation.
Italy, the Czech Republic, Poland, Croatia, Bulgaria
and Hungary are also facing similar claims involving
the renewable energy sector.
Some of these claims have now attracted the
attention of the EU. In a decision issued in December
2017, EU Commissioner for Competition, Margrethe
Vestager, observed that any compensation that an
arbitral tribunal might grant to an investor on the
basis of Spain's modifications to its incentives regime
in the renewables sector would constitute state aid.
The EU Commission's position, therefore, is that any
payment by Spain of arbitral awards would require
its approval. We are likely to see further
developments in this area in the coming year.
Human rights and the environment
Parties have increasingly argued for the application
of human rights to investment treaty arbitration
(although this is controversial and remains
unsettled). For example, in Urbaser v Argentina, it was
argued that a supranational corporation should be
bound by human rights standards, a view also held
by Philippe Sands QC in a dissenting opinion in Bear
Creek Mining v Peru. In certain BITs, states are seeking
to recognise human rights obligations over the
promotion of foreign investment: for example, in the
Morocco-Nigeria BIT (not yet in force).
As governments increasingly seek to fight climate
change, this is giving rise to a new area of disputes,
with instruments such as the Geneva Convention on
Long-Range Transboundary Air Pollution, the Paris
Agreement and the United Nations Framework
Convention on Climate Change including dispute
resolution clauses that permit or provide for
arbitration. Climate change-related issues are also
likely to arise in investment treaty arbitration.
Huge sums of money will be required to fund the
transition to the green economy and much of it
will have to be provided by private enterprise.
Investment treaties have an important role to play
in encouraging this investment and investment
treaty arbitration will be essential in assisting to
resolve resulting disputes.
We see this 'rebalancing' continuing in 2018.
Recent examples include a claim at the International
Centre for Settlement of Investment Disputes (ICSID)
by a Jordanian hotelier against Hungary (Al Ramahi v
Hungary); a UAE ports operator against Belgium
(DP World v Belgium); an Egyptian telecoms group
against Canada (Global Telecom Holding S.A.E. v Canada);
and an Iranian investor against South Korea (Dayyani
v South Korea) (in which we represent South Korea).
Investors continue to bring claims against
traditional capital-exporting states (eg in Europe),
as well as states traditionally viewed as 'off limits'
due to the perceived repercussions of bringing such
claims. One of the clearest recent examples of the
latter is two recent claims against Saudi Arabia
(Makae Europe SARL v Saudi Arabia; Samsung
Engineering v Saudi Arabia).
' We are seeing an increasing
number of climate changerelated
disputes. Given that
these disputes are of a complex,
international nature and key
treaties provide arbitration
options, we expect to see the
importance of climate changerelated
arbitration grow in the
years to come.'
Moritz Keller, Counsel, Arbitration
Bilateral investment treaties: rebalancing
between 'the West' and 'the rest'