European Energy Disputes Update

As we reported, German-owned energy company Uniper put the Netherlands on notice of an investment dispute last year, following the announcement of the country’s plan to phase out coal-burning power plants by 2030. Alongside RWE, another German energy company, Uniper made good on that threat earlier this year; both companies initiated ICSID claims lodged under the ECT this spring.

Subsequently, the Netherlands has reportedly asked German courts to review the legal basis of these claims, on the grounds that the ECT dispute settlement mechanism contravenes EU law, following the CJEU’s Achmea decision.

Editor’s note: A longer discussion of Belgium’s questioning of the ECT’s legality under EU law can be found here. Moreover, in this issue, we argue that withdrawal from the ECT is an option worth considering.

Germany Reaches Settlement With Vattenfall in Long-Running Dispute Over Nuclear Phase-Out

Putting an end to a decade-long dispute, the government of Germany has agreed to compensate four major energy companies for its decision—following the 2011 disaster in Japan’s Fukushima nuclear plant—to phase out nuclear power by 2022. Announced on March 5, 2021, the agreement sets out a payment totalling EUR 2.8 billion to Swedish-owned Vattenfall as well as several domestic companies and it settles all legal disputes with them.

Vattenfall had, in 2021, initiated an international arbitration under the ECT before ICSID, claiming EUR 4.7 billion due to losses suffered from the nuclear energy phase-out.

In 2016, Germany’s Constitutional Court ruled that the phase-out was lawful but that the companies affected should nevertheless be compensated. Vattenfall won a federal court case in November 2020, arguing the German Government failed to implement the 2016 decision. The ICSID proceedings hearing Vattenfall’s claim against Germany were suspended on March 11, 2021.

Vattenfall, which operated two nuclear power plants in Brunsbüttel and Krümmel in northern Germany, will be compensated EUR 1.43 billion, subject to taxation.