In a mark of growing moves toward transparency in investor-State arbitration, the hearing on jurisdiction, merits and quantum in the case of Vattenfall AB and others v. Federal Republic of Germany (ICSID Case No. ARB/12/12) was recently held in public (except for the parts involving confidential or sensitive information). The hearing took place at the World Bank in Washington D.C. between 10 and 21 October 2016.
The claimants filed their request for arbitration under the Energy Charter Treaty following Germany’s decision to phase out its nuclear power plants by 2022.
At the hearing, the claimants argued that Germany had breached its obligations towards the claimants under the ECT, including by: (i) revoking all of the claimants’ new production volumes for its nuclear power plants; (ii) permanently revoking the claimants’ licence to operate the plants; and (iii) rendering the claimants’ rights to old production volumes worthless by destroying the market. According to the claimants, these actions constituted direct and indirect expropriation of their investments and other breaches of the ECT.
Germany argued that the measures at issue were a reaction to the tragic events at Fukushima, were enacted in good faith and fell squarely within its right to regulate in order to protect the health of its people, as mandated by the German Constitution. According to Germany, its measures were conducted in such a way that they balanced the interests of all concerned parties and any financial loss suffered by the claimants was the result of their own business failure.
For the ICSID press release, click here; for videos of the hearing, click here.