Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v. Federal Republic of Germany
ICSID · Investment (ICSID and treaty) · Germany · 11 Mar 2011
Why it matters
This case is notable as one of the first investor-state arbitrations against Germany under the Energy Charter Treaty, concerning environmental regulation. It highlights the use of settlement to resolve disputes involving public interest and regulatory measures. The award on agreed terms demonstrates how parties can achieve a mutually acceptable outcome without a final determination on treaty breaches, preserving the state's regulatory space while providing compensation to the investor.
Summary
Vattenfall, a Swedish energy company, and its German subsidiaries initiated arbitration against Germany under the Energy Charter Treaty, claiming that Germany's environmental restrictions on the Moorburg coal-fired power plant in Hamburg violated the treaty's fair and equitable treatment and expropriation provisions. The dispute centered on water use permits and cooling system requirements. After the proceedings were suspended, the parties reached a settlement agreement on August 25, 2010. The agreement required Germany to issue modified permits and Hamburg to settle related administrative proceedings. In return, Vattenfall released all claims. The conditions were fulfilled by February 2011, and the parties jointly requested an award on agreed terms. The Tribunal issued the award on March 11, 2011, recording the settlement and ordering discontinuance. Each party bore its own costs, and ICSID costs were shared equally. The award includes no findings on liability or damages.
The detail
Parties: Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v. Federal Republic of Germany
Case number: ICSID Case No. ARB/09/6
Outcome: The dispute was settled by agreement of the parties. The Tribunal issued an award on agreed terms recording the settlement, with no admission of liability. The conditions of the settlement were fulfilled, and the proceedings were discontinued.
Applicable law: Energy Charter Treaty; ICSID Convention; German law (governing the settlement agreement)
Issues in play: The case involved a conflict between the investor's rights under the Energy Charter Treaty and Germany's regulatory measures regarding environmental permits for a coal-fired power plant. The settlement resolved the dispute without a ruling on the merits.
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