International Energy Investment Law: The Pursuit of Stability

853 Pages·2022·8.803 MB·English

by  Peter Cameron

International Energy Investment Law

International Energy
Investment Law
The Pursuit of Stability
Second Edition
PETER D CAMERON
1
3
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For my father, Stewart Cameron (1924– 2021):
The most reliable friend, the fiercest supporter and the wisest counsellor. With love, forever.

Foreword
Disputes in the energy sector have contributed significantly to shape the current status of
international investment law. They represent just under half of the cases commenced at
ICSID, whether based on consent in international investment treaties, contracts, or for-
eign investment laws. Indeed, by June 30, 2021, 25% of ICSID cases had emanated from the
oil, gas, and mining sectors, and another 13% came from electric power and other energy
sources. To similar effect, 142 arbitrations to date have been based on the investment protec-
tions in the Energy Charter Treaty.
The fact that disputes involving the energy sector have often resorted to international invest-
ment arbitration is perhaps not surprising when one considers their profile. Most of these
cases involve complex commercial relationships between investors and governments; are ex-
pected to last for years, if not decades; require significant financial resources to build and
operate; rely on advanced technological know-how; and usually require the development of
a substantial fixed infrastructure in the host State.
While some of these cases have interpreted industry-specific provisions in energy contracts
such as stabilization clauses, many have been based on the obligations found in investment
treaties. In particular, such investment treaty cases have considered allegations of breach of
fair and equitable treatment, failure to meet legitimate expectations, direct and indirect ex-
propriation, discrimination on the basis of nationality, and umbrella clauses.
The number of investment cases arising from the energy sector also represents something
very aptly highlighted in the title of this text and this revised second edition: the pursuit of
stability. Governments and investors recognize that it is vital to create a stable business envir-
onment in the energy sector, and that investment in this sector may be foregone, postponed,
or cancelled if the business and regulatory environment in a jurisdiction is unpredictable.
The availability of peaceful and effective dispute settlement through arbitration serves a vital
role in creating and maintaining stable investment climates. As the drafters of the ICSID
Convention noted in 1966, the availability of dispute settlement between States and foreign
investors “can be a major step toward promoting an atmosphere of mutual confidence and
thus stimulating a larger flow of private international capital into those countries which wish
to attract it.”
The stability of investment climates will be even more important in the coming years as gov-
ernments grapple with unprecedented public policy challenges. These include ensuring ac-
cess to modern and affordable energy, tackling the impacts of climate change, and quickening
the transition to clean energy. Government regulation and private sector investment will be
required to meet green investment needs in the energy sector. When these come into con-
flict, an effective and transparent rules-based dispute resolution mechanism is of paramount
importance.
Against this backdrop, International Energy Investment Law: the Pursuit of Stability pro-
vides a thorough account of the increasingly complex regimes that govern international
viii Foreword
investment in the energy sector. It also offers an in-depth analysis of how these laws and
regulations have been tested in investment arbitration. In doing so, it provides an invaluable
roadmap for policymakers, counsel, and arbitrators as they navigate the field of international
investment law and dispute settlement in this critically important sector.
Meg Kinnear
ICSID Secretary-General,
Washington DC
August 2021
Acknowledgements
A number of people were kind enough to read chapters or sections and provide comments on
them. Many of them were past or present colleagues from the Centre for Energy, Petroleum
and Mineral Law and Policy at the University of Dundee: Daniel Behn, Stephen Dow, Abba
Kolo, Rafael Macatangay, Xiaoyi Mu, and Ugur Ozgur. For the new Chapter on damages
and enforcement, I am grateful to Ryan Bausch and Ugur Ozgur for their assistance. My
PhD students, Rahmi Kopar and Ozge Varis, now graduated, were good sparring partners
on a number of issues addressed in this book. I am also grateful for the insights provided
by Robert Armour, John Bowman, Graham Coop, Paul Griffin, David Humphreys, Honore
Le Leuch, Peter Leon, Mark Kantor, Antonio Parra, Laurence Shore, Elisabeth Sullivan, and
Peter Styles.
I have always believed that synergies between the academic world and legal practice can
generate fresh insights into familiar problems. Happily, I am not alone in that view. At the
Institute for Energy Law in Houston, Texas, David Winn has organized a succession of an-
nual events on International Energy Arbitration which CEPMLP has co- sponsored and
which have been an excellent means of bringing together some of the best legal minds en-
gaged in this field. Participation in these events was helpful in the work for this edition, not
least through my interviews with professionals and in-h ouse counsel. Similarly, I bene-
fited from participating in several arbitration events organization by the Association of
International Petroleum Negotiators, the International Bar Association, and the Global
Arbitration Review.
While writing this book, I benefited from a professional link with the Scottish Arbitration
Centre through the International Centre for Energy Arbitration, which I established with
Brandon Malone and Andrew Mackenzie. I am grateful for their many invitations to SAC
seminars and workshops and the support of its President, Sir David Edward. The events were
both educational and congenial.
In my activities as expert witness and more recently as arbitrator, I have benefited from the
many professional relationships I have had with lawyers and associates in international law
firms, in- house counsel, and barristers. These have greatly enriched my understanding of the
practicalities in this field in ways I could never have grasped from a purely academic envir-
onment. I am sure that they will see evidence of this in chapters of this book, particularly in
the case studies.
Indirectly, my students at CEPMLP have been a great influence, and particularly the many
students from Africa that I have had the privilege of teaching and supervising. Their enthu-
siasm for the study of energy, investment, and arbitration, made this Scotsman determined
to include a case study on Africa that might—j ust possibly— meet their expectations.
Of course, I am grateful to the assistance and continued support from the various editorial
staff at Oxford University Press, most recently Brianne Bellio and Fay Gibbons.
None of the above bears any responsibility for errors or shortcomings in the text.