Arbitration Investment law is one of the influential blocks of the system and is highly desired as a mechanism of dispute resolution. Globally, investment law provides disputing parties with a reliable option for a fair hearing with zero bias on paper and almost all practical situations.
Generally, investment law is the field of law that makes it possible for two contracting parties in any field to go into a contract with at least one bilateral treaty clause. The clause gives each party the option of taking the contract to the arbitration tribunal on the perception or evidence of bridges by any of the parties. When this happens, the arbitral tribunal then decides based on the treaty clause if the aggrieved rights have been breached as instituted in the contract or if it has not..
Investment law is generally beneficial for investors who desire to invest in a host state. The law makes it possible for investors to include an investment treaty in the contract that gives them the right to take the host state to the tribunal on the advent that investment disputes occur such that the investor feels aggrieved. Apart from investment-state dispute resolution, Investment laws also comprise vast treaties that offer clauses for corporations to corporations’ disputes, investor to corporate disputes, and many more.
Investment Law: Energy Dispute and Investment Arbitration
While investment law and investment arbitration can be applied to almost every transactional and formal sector, they have received more recognition in the energy sector more than any other. Historically, the energy sector has always led in investment arbitration and related disputes than any other, and over the decades, the gap it has over others only seems to have widened. For 2020 computed ICC Dispute Resolution statistics, up to 167 new energy-related cases were recorded, and when checked on the basis of foreign investor and host state investment disputes, the sector still dominated most of the submitted cases.
The ICCDRS was not the only record that showed the dominance of the Energy sector in international investment arbitration. Following the International Centre for Settlement of Investment Disputes (ICSID) Annual report for 2020, the energy sector was the leading sector for international investment disputes, with the sector accounting for up to 50% of investment arbitration disputes. The closest sector to it was that of construction, which accounted for 17%.
These stats show that Energy Dispute and Investment Arbitration work hand in hand, and Investment law is a very important part of the sector. Even though foreign investors and host states disputes are the dominating investment disputes, energy disputes come in different forms and could include investment disputes between states, between state and private party, and between two private parties.
Each of the energy disputes is covered under investment laws such that they can be sorted via a tribunal. However, it is essential to note that Energy investment disputes are much more challenging to resolve than any sector. This is because the sector comprises different components, and a case is, on average, very long and complex and demands substantial capital for arbitration prices.
Also, energy disputes are usually handled by expert arbitrators that have at the very least more than average understanding of the sector so a fair ruling can be reached and enforced
Investment Law: Energy Investment Disputes Involving Arbitration
Investor-State Disputes
Investor-state is the major energy investment dispute handled by arbitration with the impact of the investment law. From times of early civilization, states have always been the ones in charge of their energy sectors, with all companies involved in the sector, being fully state-owned. However, due to the inability for states to fully maximize the sector, they began to cede a level of control to private parties, with most private members being investors, which could be from the states or from a foreign one.
However, as semi privatization of states’ energy continues to grow and states welcome more investment input for private entities, investment disputes have also continued to grow in an unparalleled fashion. The reason for these disputes is not far-fetched as states usually try to make use of their resources while investors look to make significant ROI. Hence the majority of Energy Investment disputes are from capital importing states that welcome foreign investment.
Contract-Based Disputes
when private companies/investors enter into a contract with the state or a company controlled by it, then a written agreement is reached. If the contract includes an arbitration clause that gives the parties the right to a tribunal in a breach, then such clause, if ever activated, leads to a contract-based dispute.
Domestic Investment Law-Based Disputes
This kind of dispute or claim is exactly like a contract-based dispute. However, it involves the legislature of the host states being much more friendly to investors such that they feel invited. This means that the host state’s domestic law generally gives unilateral consent that it agrees to arbitration if ever put up by a foreign investor.
Conclusion
The Energy sector is one of the major sectors of investment arbitration and covers most investment state disputes. As outlined in this article, the processes of energy sector investment disputes are usually very complex, and a Foreign investor must have a good case and a great Arbitration team to make a successful claim.
There are several arbitration firms with energy Investment disputes expert arbitrators, and an investor must ensure that such firms are the target when creating a dispute resolution team for possible future disputes or an already perceived dispute.
Rattsakuten is one of the major arbitration firms with expert Energy Arbitrators in its ranks to help clients get the best out of a dispute and make a successful claim. The firm can be reached for inquiries on Energy disputes and how investment law can be harnessed to full advantage for a successful claim.
About Rattsakuten
Rattsakuten is a leading law firm focused on Commercial Arbitration and Dispute Resolution. Based in Sweden, Rattsakuten handles dispute resolution and Arbitration matters before the SCC (Swedish Chamber of Commerce), ICC, HKIAC, and several other Arbitration tribunals.