GERMANY Trends and Developments Contributed by: Patricia Nacimiento, Catrice Gayer, Lara Panosch and Theo Pauthonier, Herbert Smith Freehills Kramer LLP
Over the past decade, Germany has faced seven high-profile treaty arbitrations arising from its nuclear shutdown, coal phase-out, renewable energy reforms (all part of Germany’s ambitious energy transition plans, the so-called Energiewende ) and EU energy measures. While the total number of cases against Germany remains small relative to its economic pow- er, these disputes carry important lessons for foreign investors. In addition, Germany has terminated all intra‑EU bilateral investment treaties (BITs) and with- drawn from the Energy Charter Treaty (ECT). These steps align with the EU’s position of partial incompat- ibility of investor-state-dispute-settlement (ISDS) with EU law and climate objectives. Meanwhile, German investors abroad are among the most active ISDS users globally, having brought 85+ claims. Clients investing in Germany’s energy sector should consider both the opportunities and the risks. Ger- many’s commitment to decarbonisation and energy transition creates investment opportunities in renewa- bles and infrastructure, but unpredictable policy shifts might affect them. This article focuses on the energy sector and outlines key cases in recent years and legal developments in investor-state arbitration involving the German state and German investors. Renewable Energy: Offshore Wind Disputes In recent years, a cluster of investor-state disputes has arisen in the renewable energy sector, particularly involving offshore wind projects. To achieve its ambi- tious energy transition, Germany has been revising its renewable energy laws – eg, altering the licensing of offshore wind farms and feed-in tariffs aimed at controlling costs and grid integration. Strabag v Germany So far, the most consequential claim brought under the ECT because of Germany’s shift in offshore wind policies is Strabag SE, Erste Nordsee-Offshore Hold - ing GmbH and Zweite Nordsee-Offshore Holding GmbH v Germany (ICSID Case No ARB/19/29). Stra- bag SE, an Austrian construction company, alongside German partners, had invested in offshore wind farm projects in the North Sea. They alleged that Germany’s changes in the renewable energy regime – including caps and auction systems introduced in the 2010s – scuttled their projects and caused severe financial
losses. Consequently, in 2019, Strabag initiated an ICSID arbitration under the ECT. Germany inter alia raised jurisdictional objections, arguing that the case was a so-called intra-EU dispute, since some claim- ants were EU-based. This challenge derives from the so-called Achmea decision of the Court of Justice of the European Union (CJEU) in Slovak Republic v Achmea B.V. (Case C-284/16), which held that investor-state arbitration clauses in intra-EU BITs are incompatible with EU law. In alignment with this jurisprudence and sub- sequent EU policy, Germany, alongside the majority of EU member states, signed the Agreement for the Termination of Bilateral Investment Treaties Between the Member States of the European Union on 5 May 2020. This plurilateral termination treaty implements the Achmea decision by collectively cancelling the arbitration clauses (and other substantive provisions) of intra-EU BITs. Achmea was followed in 2021 by Republic of Moldova v Komstroy LLC (Case C-741/19, Komstroy ), which extended the conclusions of Ach- mea to the intra-EU application of the ECT. The tribunal rejected the intra-EU objection and awarded Strabag approximately EUR240 million plus interest and costs in late 2024, marking it the first award in investor–state arbitration against Germany. It held that Germany’s legislative changes breached the investors’ protections, violating the fair and equitable treatment standard and amounting to an expropriation of the investors’ rights. Germany has since then adopted an offensive approach against this award. It has filed a request for rectification under Article 49 of the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Con- vention”), arguing the award contained factual or cleri- cal errors warranting correction. Simultaneously, Ger- many requested a stay of enforcement of the award until the decision on the rectification is rendered. The tribunal rejected the latter due to a lack of authority to order the stay. Meanwhile, Strabag has filed a petition in a US court to recognise and enforce the award. In August 2025, Germany initiated ICSID annulment proceedings
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