On 29 June 2017 RTPR Allen & Overy’s Dispute resolution team hosted a seminar examining the latest developments in international law protection for renewable energy investments under the Energy Charter Treaty (ECT), including enforcing investors’ rights through international arbitration.
The seminar was moderated by Bucharest-based litigation Partner Valentin Berea and featured members of Allen & Overy’s International Arbitration team, Lucia Raimanová and Lauren Lindsay, as well as Bucharest-based energy specialist, Bogdan Cordos. Allen & Overy is currently representing numerous international investors in investment treaty arbitrations brought against the Kingdom of Spain under the ECT. The cases, which all relate to changes made by Spain to the regulatory framework governing its renewable energy sector, include the successful claim brought by Eiser Infrastructure Limited, which was recently awarded EUR128 million in compensation by an ICSID tribunal.
At the seminar, Allen & Overy’s public international and Romanian law experts examined how the ECT can be used by international investors to seek compensation for Government actions – for example, dramatic and arbitrary changes in regulation – that harm their investments and where, like in Spain, local law does not adequately protect investors.
The event brought together representatives from a number of international companies active in the energy sector in Romania, as well as representatives of industry bodies and legal professionals, who engaged in a lively discussion.
Allen & Overy is at the cutting edge of dispute resolution under the ECT and our team regularly represents both multinational companies and sovereign States in disputes arising under this important treaty. In 2000, Allen & Overy brought the first ever arbitration under the ECT for our client AES Summit Generation Ltd. That claim against the Republic of Hungary arose in the power generation sector and was ultimately settled on favourable terms.
Allen & Overy’s further experience in ECT disputes includes acting for:
• Eiser Infrastructure Limited and its affiliate, Energia Solar Luxembourg, in their successful claim at ICSID against Spain. The claim related to Eiser’s investment in concentrated solar power installations in Spain. In an award rendered in 2017, the arbitral tribunal ruled that the manner in which Spain amended its renewable energy regulatory framework violated the ECT and awarded Eiser EUR128 million plus interest in compensation. This represents Spain’s first defeat in the numerous ECT claims relating to its renewable energy programme.
• Over 30 other international investors, including AES, RREEF (part of Deutsche Bank), Bridgepoint, RWE and Stadtwerke München, in nine separate ECT claims (all claims bar one are brought at ICSID) against the Kingdom of Spain. The claims relate to investments made in the Spanish renewable energy sector, in particular in photovoltaic and concentrated solar power plants, and retrospective changes made by Spain to the regulatory framework governing those investments. These cases include the first-ever collective, or aggregated, claim brought under the ECT – The PV Investors v Spain. In the claim brought by RREEF, we also secured an important jurisdictional award in which the tribunal ruled that EU law does not trump obligations under the ECT.
• JKX Oil & Gas plc in three investment treaty claims, including one under the ECT, against Ukraine in respect of JKX’s
investments in a local oil & gas production company. In January 2015, we succeeded in obtaining an order for provisional relief against Ukraine from an emergency arbitrator under the Stockholm Chamber of Commerce’s Rules in respect of a recent and radical hike in taxes applicable to gas production, and measures placing severe restrictions on the sale and transport of gas within Ukraine. We believe this to be only the second time such an order has been made in the context of an investment treaty arbitration. An UNCITRAL tribunal later issued interim measures forbidding Ukraine from imposing royalty hikes on the claimants’ gas production until the conclusion of the arbitral proceedings.
• AES Corporation and Tau Power B.V. in an arbitration against the Republic of Kazakhstan arising under the ECT, U.S.-Kazakhstan BIT and Kazakhstan’s Foreign Investment Law. We successfully established breaches of treaty by Kazakhstan.
• The Republic of Azerbaijan in two ICSID arbitration proceedings involving claims valued in excess of USD600 million, brought under the ECT by companies in a Dutch energy group, for the alleged expropriation of an oil and gas business. The cases gave rise to novel questions of jurisdiction under the ECT and the application of transnational public policy. We successfully settled one claim, with the claimants dropping their claims and our client making no payment or admission of liability. The other claim was dismissed in its entirety.
Note to the editors:
1. Allen & Overy is an international legal practice with approximately 5,400 staff, including some 554 partners, working in 44 major cities worldwide.
2. RTPR was incorporated in 2004 and has been working in association with Allen & Overy since 2008. RTPR Allen & Overy has a team of 43 lawyers, including 5 partners: Costin Tărăcilă, Victor Pădurari, Alexandru Retevoescu, Mihai Ristici, Valentin Berea and also Prof Dr Lucian Mihai, Of counsel.
3. In this press release, “Allen & Overy” means Allen & Overy LLP and/or its affiliated undertakings.
4. In this press release, “RTPR Allen & Overy” means Radu Tărăcilă Pădurari Retevoescu SCA in association with Allen & Overy LLP.
5. Allen & Overy has been operating in the CEE region since 1991, when its first office opened in Warsaw. Since then, it has expanded its operations to include Prague, Budapest, Bucharest, Bratislava and Moscow, all of which are renowned in the market for top quality legal advice combined with local commercial understanding, as well as for their integrity and their pro-active approach to matters. Additionally, Allen & Overy signed an exclusive association with the leading full-service Romanian law firm Radu Tărăcilă Pădurari Retevoescu SCA (RTPR), effective from July 2008, expanding the number of CEE offices in which we are able to provide local law advice to six.