International Arbitration of Renewable Energy Disputes

Written for both a legal and non-legal audience, in light of the increased prevelance of these disputes, this Special Report considers the scope for disputes in the renewables sector, how they can be avoided, and how arbitration can best be deployed to prevent delay and help push energy transition forward.

Despite a temporary decline in energy usage and emissions resulting from the confinement policies adopted by many states in response to the Covid-19 pandemic, the world is not on track to meet the Paris Agreement climate change goals. In order to bridge the 'emissions gap' by 2030, the energy industry is critical to achieving the necessary cuts to emissions, however, it must also balance increasing energy demand with the need to achieve sustainability of energy supply for future generations. This requires the industry to transition from dependence on fossil-fuel sources and look to new technologies that underpin a low-carbon economy. Renewables are central to this transition.The increase in renewable energy capacity globally and the complex and relatively untested nature of renewables projects and the contracts underlying them give rise to a wide range of potential disputes. International arbitration has long been the preferred dispute resolution forum for the energy sector and is well placed to be the leading process for resolving the many and varied disputes that can arise in the lifetime of a renewables project.In light of the increased prevalence of renewable disputes, this Special Report considers:•the defining characteristics of renewables projects;•the scope for disputes to arise in the implementation of these projects at an inter-state, investor-state and commercial level;•the suitability of arbitration to resolve these disputes, and how its processes can be adapted to resolve them in an efficient and effective way; and•what the future of arbitration of renewable energy disputes might look like.Written for both a legal and non-legal audience, this Special Report is relevant to those interested in learning about the scope for disputes in the renewables sector, how they can be avoided, and how arbitration can best be deployed to prevent delay and help push energy transition forward.

Introduction 7I. An introduction to renewables projects 111. What is renewable energy? 112. The key players in renewables projects 132.1 The project company or consortium 132.2 The contractor(s) 142.3 Operation and maintenance provider 142.4 The offtaker of energy produced 152.5 Other participants 16II. Renewables projects: international law protection 171. International investment protection 181.1 Bilateral and multilateral investment treaties 181.2 Substantive protections 191.3 Reference to arbitration 202. The renewables cases against Spain, Italy and the Czech Republic 22III. Common areas of dispute and contractual protections 251. Unique characteristics of renewables projects and the scope for disputes 251.1 Multiple players and contracts 251.2 New and emerging technology 261.3 No standardised contracts and the lack of precedent 271.4 Relevance of local law and the importance of stabilisation clauses 282. Common disputes in the main phases of a renewables project 302.1 Disputes in the development phase 302.2 Disputes in the construction phase 312.3 Disputes in the operation phase 33IV. International arbitration 351. What is international arbitration? 352. A final and binding decision 363. A decision that can be enforced outside of the parties’ home jurisdictions 384. Arbitration is perceived as a more neutral forum for disputes involving parties from multiple jurisdictions 385. Appointing arbitrators with relevant expertise 396. Flexibility of process 407. Privacy and confidentiality 408. The choice of forum is clear 419. Types of relief available in arbitration proceedings 41V. Getting the basics right: drafting an effective arbitration agreement 431. The scope of the clause 432. Multi-tiered arbitration clauses 443. The seat (or legal place) of the arbitration 454. The procedural rules that will apply 464.1 Ad hoc arbitration 464.2 Institutional arbitration 465. The tribunal 486. The choice of governing law 487. The law of the arbitration agreement 488. Provision for joinder and consolidation 499. Provision for confidentiality 5110. The need for a quick resolution 5210.1 Emergency arbitration 5210.2 Expedited proceedings 5210.3 Summary disposal of unmeritorious claims 53VI. Top tips in resolving renewables disputes through arbitration 551. Use of experts 551.1 Identification of remedies and quantification of losses 561.2 The importance of early engagement 581.3 Tribunal-appointed experts 592. Joinder and consolidation 593. Document production 604. Case management techniques 625. ADR techniques 635.1 Mediation 635.2 Facilitation, conciliation and expert determination of key issues 656. Site visits 65VII. Looking over the horizon: the future of renewables arbitrations 671. Energy transition: more claims 672. Modernised investment treaties 683. The impact of COVID-19 714. Changes to arbitration 73Notes 74About the authors 85About Globe Law and Business 87