GERMANY Trends and Developments Contributed by: Patricia Nacimiento, Catrice Gayer, Lara Panosch and Theo Pauthonier, Herbert Smith Freehills Kramer LLP
Netherlands under the ECT in 2021, after the Dutch government decided to ban coal-fired power genera- tion by 2030. RWE and Uniper each owned modern coal power plants in the Netherlands and argued that the state failed to provide the most constant protec- tion and security, fair and equitable treatment, national treatment and most-favoured-nation treatment, effec- tive means for the assertion of claims and enforce- ment of legal rights and that the measures amount to an unlawful expropriation. In response, the Dutch government raised the intra-EU objection and sought injunctions in German courts. German courts sided with the Dutch government: The Higher Regional Court in Cologne ordered RWE and Uniper to withdraw their ICSID claims, and the German Supreme Court (BGH) upheld their decisions in July 2023 (see details above). Consequently, Uniper (which was nationalised by Ger- many amid an energy crisis) dropped its case in 2023 and RWE discontinued its claim by late 2023. From an investor’s perspective, this offers lessons relevant for non-German companies investing in Ger- many or vice versa. The setbacks RWE and Uniper faced might encourage treaty shopping (choosing an investment vehicle from a jurisdiction with a favour- able treaty) to escape the intra-EU objection. Wintershall v Russia Wintershall Dea, a major German oil and gas firm, lodged two parallel arbitrations in late 2024 against Russia: one under the Germany–Russia BIT and one
under the ECT, claiming an unlawful expropriation of its interests in Russian gas field projects on the basis of presidential decrees in 2023 (as part of Russia’s response to sanctions). These cases will test recovery prospects given the political and legal climate. This dispute has proven particularly challenging as Rus- sia started national proceedings under the Lugovoy law against Wintershall’s counsel and the arbitrators in the arbitration under the ECT, imposing a penalty of EUR7.5 billion on them if the court’s injunction to stop the arbitration is not followed. Conclusion and Outlook: Investment Protection and Energy Transition Germany’s role in ISDS in the energy sector reflects a broader balancing act: achieving transformative energy goals while adhering to investor protection. Its evolving energy policy, shaped by climate goals, EU law and domestic politics, creates both opportunities and regulatory risks for investors. Germany’s effort to modernise its energy sector provides attractive opportunities for foreign investors. At the same time, carefully tracking Germany’s and the EU initiatives is essential to mitigate risks. With legal foresight and constructive engagement, Germany remains an attractive jurisdiction for energy investment, with stable, rule‑of‑law‑based institu- tions, even amid rapid and sometimes unpredictable regulatory changes.
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