State-investor disputes connected to foreign investments in the nuclear energy sector: A review of the two cases arising under the energy charter treaty

Abstract

The idea of foreign investments in nuclear energy sector is relatively new. Foreign investors were for a long time denied an opportunity to invest in the sector which was considered to be too sensitive for reasons of safety and security. Together with the change of an attitude towards foreign private investment in this area a possibility of disputes between foreign investors and the host State also emerged. The Energy Charter Treaty represents the only currently existing comprehensive legal instrument of multilateral character which specifically provides for protection of foreign investments in the energy sector against non-commercial risks and establishes a mechanism for resolution of investment disputes. The article contains a review of the cases of HEP v. Slovenia and AMTO v. Ukraine, the only two arbitrations that have arisen so far under the ECT from disputes concerning foreign investments in the nuclear sector. Their analysis shows that the involvement of State in this sector is indispensable but it should be exercised with respect for rights of investors protected by international law. Regulatory measures introduced by the State to protect certain important interest, such as public health, safety, security or the environment, may be perceived by the investor as having equivalent effect to expropriation. Regulatory uncertainty is considered to be one of the main deterrents to investment in new nuclear plants.

Keywords

• foreign investments
• nuclear energy
• Energy Charter Treaty
• HEP v. Slovenia
• AMTO v. Ukraine