Managing conflicts that are associated with natural resources is now more important than ever before. With the rise in global consumption levels due to population and economic process, many countries face a risk of shortages of important renewable resources, one among which is renewable energy.
This article aims to present ways, (as proposed by the UN and EU, also as by other international bodies), on the ways to prevent and resolve conflicts arising from renewable energy while capitalizing on infrastructure investment.
Conflict Prevention Strategies for Renewable Energy
While there’s endless competition with regards to natural resources which frequently lead to conflicts, there are ways to turn these combined interests into a shared opportunity for cooperation, confidence-building and sustainable development.
Understanding the way to transform conflicts over natural resources into interdependent outcomes that deepen trust and co-dependence between parties may be a key aim of effective conflict prevention and conflict management methods.
Such efforts should specialise in building agreement and mutual trust around the co-management of natural resources and therefore the environment, determining equitable sharing of advantages and resolving disputes in non-violent ways.
In most cases, conflicts over renewable energy or natural resources, are intertwined with afore existing political, socioeconomic or security tensions and stresses, and this needs a response on several levels and across various sectors.
In other words, there’s often no “quick fix” to the matter. Appropriate interventions depend upon the combination of key influencers, livelihood responses, existing government regulations and therefore the level of conflict intensity. In a lot of cases, solutions would require intended interventions at the local, national and international levels.
For renewable energy, conflict prevention and conflict resolution strategies often encompass a mix of three main sorts of linked objectives and associated interventions, which are:
- A total reduction in the competition over scarce resources between livelihood groups:
• Supporting easily sustained livelihoods and reducing exposure to resource scarcity: The sustainable livelihoods framework is one method to determine options and help determine suitable solutions that reduce vulnerability and help prevent conflict. A deep understanding of livelihood strategies in a specific area, especially areas where livelihoods compete for equivalent limited natural resources, is vital to designing conflict prevention or management strategies. especially, the risks to minority groups and indigenous people must be assessed.
• Increasing the supply of renewable energy through protection, restoration, infrastructure and efficient use: These measures specialise in addressing the number, quality and availability of renewable natural resources to scale back scarcity and competition. Supply-side interventions specialise in increasing the general supply of, or access to, renewable resources, also as stopping sources of environmental degradation and pollution. Demand-side strategies specialise in improving the efficiency of resource use and reducing the per capita rate of consumption. Substitution measures plan to replace scarce renewable resources with alternatives.
- An improvement in resource governance, accountability and dispute resolution capacity:
• Establishing the governance framework for natural resources, strengthening implementation capacity and recognizing resource rights: Improving resource governance includes a variety of measures such as: addressing inequitable access; reducing corruption and improving transparency; preventing environmental degradation; establishing and enforcing rights and rules over natural resources use; fostering parliamentary oversight; enhancing public participation within the design and acceptance of such rules; ensuring that there is a transparent identification of any potential environmental and social effects from development projects; and, establishing mechanisms for the resolution of diverging disputes.
• Building the capacity of stakeholders and civil society to participate in decision-making, to watch compliance with the governance frameworks, and to access justice mechanisms: Even when governance frameworks for natural resources exist, stakeholders and civil society groups cannot often participate in decision-making, to watch compliance with the governance frameworks, to market accountability and transparency, and to access justice mechanisms and dispute resolution processes. As these are essential components of excellent governance and may contribute to conflict prevention, targeted capacity-building is usually required.
- Improve transboundary management institutions and cooperation:
• Establish or strengthen transboundary information, resource-sharing agreements, joint institutions, and dispute resolution processes: The effective management of transboundary resources often relies on a mixture of tools and approaches. These can include flexible resource-sharing agreements, joint management institutions, harmonized laws and constant access to dispute resolution processes that have been used over time. These measures often got to be strengthened as a part of conflict prevention efforts.
- Implement cross-cutting measures across all programmes:
• Designing conflict-sensitive resource management, adaptation and development programmes: one among the critical aspects of preventing conflicts over natural resources s is to make sure a conflict-sensitive approach is integrated within all-natural resource management, development and global climate change adaptation policies and programmes. Stakeholders and donors got to anticipate the potential sources of conflict that would be generated by their interventions and adopt a conflict-sensitive approach in the least phases.
• Conducting early warning, risk assessments and scenario analysis to spot potential conflict hotspots: the utilization of early warning, risk assessments and scenario analysis to spot potential conflict hotspots involving renewable resources is a crucial input to any targeted conflict prevention programme. These tools should be used on a scientific basis to spot existing and potential conflict hotspots.
ConclusionEffective management of energy-related conflicts s now more important than ever before, with an endless increase in global consumption. Hence the necessity for effective methods (as outlined above), that yield timely solutions with a tilt towards infrastructure investment.
Dispute Resolution In The International Energy Sector: An Overview.
The international energy sector invests in large, complex, capital-intensive projects that have spanned a long time. A lot of things including circumstances, governments, economics and parties invariably change within the period of the project, from inception to completion, which often leads to disputes.
Since disputes are a significant risk in any international energy project, parties, therefore, need to continually manage that risk from the beginning of the contract through to the point when a dispute arises to when it is eventually resolved.
This article provides the knowledge and the tools to do so.
Planning for disputes
It pays to plan for these things. There are several points in any transaction where parties can play a significant role in how their disputes will be effectively managed and resolved. These are:
(1) When the parties involved first make a deal and draft a dispute resolution clause into the agreement; and
(2) When the parties involved have an actual dispute and select their arbitrators, dispute counsel and the mediators or other dispute resolution facilitators.
Been proactive in matters like these have the advantage of potentially increasing benefits and minimizing losses.
Types of disputes in energy arbitration
There are essentially three types of disputes found in energy arbitration.
- State versus state disputes
These are boundary disputes concerning oil and gas fields that cut across international borders, many of which are located in maritime waters. Most times, these disputes are mainly between governments because only they can claim the sovereign title and resolve boundaries with their neighbouring states. However, oil and gas companies do get indirectly involved in these disputes when they are granted permissions that straddle disputed boundary lines. Sometimes, companies are asked by developing nations to help fund the dispute costs and to provide data and legal expertise to aid in resolving the boundary dispute.
Companies, therefore, need to get acquainted with these disputes and be able to manage them properly when they find themselves in the middle of one.
- Company versus state disputes
These are often called state investment or investor-state disputes. They occur when governments significantly change the terms of the contract or expropriate an investment.
- Company versus company disputes
These are often called international commercial disputes. There are two subcategories when it comes to disputes between energy companies.
The first is between joint venture participants in contracts while the second is between operators and service contractors
These disputes make up the majority of disputes in energy arbitration.
Types of dispute resolution methods
There are several dispute resolution methods that parties can employ when it comes to energy arbitrations. They can use one or several of them together depending on the circumstances of the dispute.
The various types of dispute resolution methods include the following:
Negotiation between the parties at the time of a dispute usually comes as a matter of course. There may or may not be a provision for negotiation in the contract/agreement but it can be formalized as part of a multi-tiered dispute resolution process. It is possibly the least expensive of any dispute resolution method and potentially the most commercially viable solution. But it needs the total co-operation of the parties and a great deal of objectivity and detachment in the parties’ behaviour to avoid negative emotions and bias views that get in the way of a settlement. But, It should not be the only dispute resolution method.
Mediation involves the parties being well prepared and committed to the overall process of dispute resolution. When that happens, mediation can be a very effective and successful tool in dispute resolution. This is because the focus is on the real interests of the parties, not their contractual or legal entitlements.
This is one of the most used tools in technical assessments or economic valuations in energy arbitrations. The decision of an expert is only as a contract between the parties and is not enforceable as an arbitration award in court systems all over the world. It would require the written agreement of the parties involved.
Dispute Review Board
This usually consists of a three-member board that is selected for the duration of a large construction project. They have proven to be very effective in the construction industry, but have not quite spread to the energy sector in any significant manner. If they were used, they would be very effective in energy investment projects.
This is one of the most common dispute resolution tools for lawyers. But, it is not the preferred tool when it comes to resolving international disputes for several reasons. These include problems in enforcing court judgments in foreign jurisdictions, the cost and length of trials, and aversion to local courts by foreign investors.
Arbitration is the most widely accepted and used dispute resolution method when it comes to energy arbitration. It is a legally binding process that provides the most flexibility to parties seeking to resolve their disputes.
Legal framework for International Arbitration
Several elements combined provide an effective and enforceable legal framework for international arbitration. They are the:
A. Arbitration Agreement or Clause
B. Arbitration Conventions and Investment Treaties
C. Arbitration Procedural Rules
D. National Laws
E. National Courts.
1) The Arbitration agreement
This is the foundation of international arbitration. It is based on the principle of party autonomy, which states that parties have the right to decide how and where they wish to resolve their disputes and they are to provide for that in their contracts in a binding, enforceable manner.
2) Arbitration conventions and investment treaties
Some several international conventions and treaties are recognized and do enforce arbitral awards and the protection of investments. They are:
- New York convention
- Regional conventions
- Energy Charter Treaty
- Bilateral investment treaties (BITs)
- Multilateral trade agreements
3) Arbitration procedural rules
All arbitrations are subject to these rules. However, the rules tend to be broad and ambiguous.
Therefore, the parties need to agree upon a specific set of procedural rules by which to conduct their arbitration.
4) National laws
The national laws of a country enforce the rights and obligations of the arbitral conventions and treaties. They provide the execution mechanisms for arbitration agreements and awards, along with making up for gaps in parties’ arbitration agreements or dispute resolution clauses. In addition, national laws govern the nullification awards rendered in a country and the waiver of sovereign immunity.
5) National Courts
The national courts provide the authority to enforce arbitration agreements and awards.
They also provide orders that aid arbitration, such as interim relief and ways to preserve evidence, documentary disclosure and the attendance of witnesses. These courts also ensure procedural due process and the fundamental fairness of arbitral proceedings.
Drafting dispute resolution clauses
Parties cannot anticipate exactly, what a future dispute will be about, including what side of the dispute they will be on when it comes up. Therefore, a simplistic approach and clarity when drafting dispute resolution clauses are very essential.
The following are some of the components to be included in or considered concerning dispute resolution clauses in international agreements:
. Broad Form Clause
. Arbitral Rules
. Arbitrator Appointment
. Seat of Arbitration
. Choice of Law
. Consent to Judgment and
. Multi-Step Clause
This article sought to provide a succinct review of the important things to note when it comes to dealing with the disputes encountered in energy arbitration. It covered the various types of dispute that comes up, the types of dispute resolution mechanisms available as well as the legal framework for international arbitration.