Questions and answers - Vattenfall – ICSID

The lawsuit

Why are you filing your claim at an international court of arbitration and not before German courts?

You argue that you could not bring your claim before the German Federal Constitutional Court and therefore chose the ICSID in the US. Why is it then that you did not await the German court's decision, but already filed your claim with the ICSID before going to the German court?

Do you also seek compensation for necessary security measures – in other words, do you want the German taxpayers to pay you for having been unsafe in the first place?

Why do you allege that you were treated differently or worse than your German competitors when they too had to close plants?

You claim that E.ON was compensated for the closure of the Barsebäck plant in Sweden. Why do you think you can compare the two cases, and did the German government respond to this comparison?

Did you inform the Swedish government on your plans to sue beforehand?

 

ICSID process

What is the ICSID?

How does an ICSID arbitration work?

Who decides the case? How are the arbitrators selected?

Who will participate in the hearings?

What law governs the case?

What language is used?

What filings are involved?

What is involved in the oral hearing?

When and how is a decision reached?

What happens after the tribunal issues its award?

What will be covered in the hearings?

When do you expect a decision?

Why will it take so long to come to an arbitration ruling?

Can't you make a settlement? Why don't you negotiate rather than sue?

Which law firms work for you on this case?

 

Vattenfall views on the Energiewende and renewable energy

Why do you obstruct, or put in question, the German democratic decision to phase out nuclear power?

 

 

The lawsuit

Why are you filing your claim at an international court of arbitration and not before German courts?

There is a trade agreement in the energy sector – the Energy Charter Treaty – which has been signed by Germany and Sweden together with over fifty other states and the EU. The Charter contains clauses aiming to ensure that countries respect fundamental legal principles. The dispute settlement mechanisms laid down in the Charter give companies the security to make major investments without having to take political risks. This in no way prevents democratic decisions. Germany can naturally decide to reorient its energy policy, but foreign investors should not have to pay the price for such a decision and lose money, if the government's decision is at random and unfair.

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You argue that you could not bring your claim before the German Federal Constitutional Court and therefore chose the ICSID in the US. Why is it then that you did not await the German court's decision, but already filed your claim with the ICSID before going to the German court?

The German nuclear operating companies of Vattenfall have filed a constitutional complaint against the 13th amendment of the Atomic Energy Act with the German Federal Constitutional Court. It is, however, very questionable whether these companies can refer to the Constitutional Rights in Germany at all, since they are fully owned by the Swedish state. So far, the German Federal Constitutional Court has regarded similar complaints very critically (please see – however only in German - BVerfGK 15, 484 / BVerfG NJW 2006, 2907 / BVerfG NVwZ 2010, 373). Against this background, it was not an option for Vattenfall to await the multi-year procedure at the German Federal Constitutional Court before appealing to ICSID.

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Do you also seek compensation for necessary security measures – in other words, do you want the German taxpayers to pay you for having been unsafe in the first place?

No. We will not seek compensation for security measures which would have been required anyway. These investments are being paid by us.

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Why do you allege that you were treated differently or worse than your German competitors when they too had to close plants?

Vattenfall is worse off in two respects: Its nuclear power plant (NPP) Krümmel has been treated differently to those of our competitors: In 2010, the legislator assigned Krümmel to the "younger" plants as it has been taken into operation in 1984. A few months later (in the 13th amendment of the Atomic Energy Act) in 2011, Krümmel was included among the group of "older" power plants, i.e, those plants that started operation by or before 1980. For example, the NPP Grafenrheinfeld, which has started power generation just approx. two years before Krümmel, kept its operating license. 

With regard to the production volumes that have been agreed on with the German government in 2002, Vattenfall's situation is also unique as Vattenfall is the only operator in Germany, that has no running power plants anymore where the production could be transferred to.

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You claim that E.ON was compensated for the closure of the Barsebäck plant in Sweden. Why do you think you can compare the two cases, and did the German government respond to this comparison?

In both cases a political decision triggered the closure of a nuclear power plant well ahead of the end of its lifetime. But when in 1997 the Swedish government decided to decommission the nuclear power plant Barsebäck, Sweden compensated the German owners who were affected because the decommissioning of Barsebäck came ahead of time. The German government has not sought to compensate Vattenfall in a similar way.

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Did you inform the Swedish government on your plans to sue beforehand?

As the Swedish government is represented in Vattenfall's Board, the Swedish government has been involved.

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ICSID process

What is the ICSID?

The ICSID (International Centre for the Settlement of Investment Disputes), an arm of the World Bank in Washington, DC, is a leading institution for settling international investment disputes. Established by international treaty in 1965 (the "ICSID Convention"), the ICSID offers an independent and neutral forum for investors and States to have investment disputes settled by experienced and impartial professionals. It is designated as a dispute-resolution forum by numerous international treaties and trade agreements.

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How does an ICSID arbitration work?

Similar to a court proceeding, an ICSID arbitration involves (i) a request for arbitration that describes the claim, (ii) preliminary sessions where objections can be heard and procedural issues addressed; (iii) written briefs and submissions of evidence and argument by the parties, (iv) an oral hearing at which the parties present witnesses and experts, and (v) a written decision, or award, by the tribunal. The ICSID generally describes the process here

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Who decides the case? How are the arbitrators selected?

The case is decided by a tribunal of arbitrators. There generally are three arbitrators – one chosen by each party and a president of the tribunal chosen by agreement of the parties. The majority of the arbitrators must be from counties other than the States involved in the dispute. The ICSID maintains a Panel of Arbitrators from which arbitrators typically are selected, though the parties may select any qualified professional as an arbitrator. Arbitrators must be experienced professionals of "high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment."

In this case, the arbitrators are President Professor Albert Jan van den Berg of the Netherlands (appointed by agreement of the parties), Professor Vaughan Lowe of Great Britain (appointed by Germany), and The Honorable Charles N. Brower of the United States (appointed by Vattenfall).

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Who will participate in the hearings?

The Tribunal, the lawyers of the parties, representatives of the parties, witnesses and experts.

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What law governs the case?

Unless the parties agree otherwise, the ICSID procedural rules and the Energy Charter Treaty (which due to ratification of the ICSID Convention and the Energy Charter Treaty are also part of German national law). German national law is relevant as a factual background for the case. The very subject-matter of the case is whether German law, specifically the 13th amendment to the Atomic Energy Act, breaches Germany's obligations under the Atomic Energy Act.

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What language is used?

The parties may agree to use one or two languages. Here, the case is being conducted in English, although certain witnesses and experts may testify in German, with English translation.

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What filings are involved?

The party making the claim first files a request for arbitration, which sets out the basis for bringing the claim in the ICSID, and any supporting documentation. The main written filings consist of a Memorial (brief) by the claimant, a Counter-Memorial by the other party, a Reply by the claimant, and a Rejoinder by the other party. Each brief sets out the relevant facts and legal arguments and is accompanied by submissions of evidence.

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What is involved in the oral hearing?

Much like a courtroom trial, the parties, represented by counsel, present opening statements, call witnesses and experts to testify, answer questions from the tribunal, and may make closing statements. The tribunal, in consultation with the parties, determines whether the hearing can be attended or observed by other persons, besides the parties, along with any arrangements necessary to protect confidential or proprietary information. In some cases the ICSID hearings had been even broadcasted on the internet, different from cases in national courts. The ICSID keeps audio recordings and written transcripts of the hearing.

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When and how is a decision reached?

The tribunal issues its written decision, or award, within 120-180 days after the parties have presented their cases and the proceeding was closed by the Tribunal. The award is by majority vote of the tribunal, and individual arbitrators may attach separate statements agreeing with or dissenting from all or part of the decision. The award must address every question submitted and give the reasons for the decision. At a minimum, the ICSID publishes excerpts of the tribunal's legal reasoning, and, with the parties consent, it may publish the entire award.

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What happens after the tribunal issues its award?

The tribunal's award is binding and has the same effect as a final judgment of a German national as stipulated under international and under relevant German law.. Under certain circumstances, the parties may ask ICSID to revise or annul the award or to interpret any portion of the award that may be ambiguous or disputed.

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What will be covered in the hearings?

The hearing will cover the facts and the arguments of the parties.

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When do you expect a decision?

We do not expect a decision before mid of 2017.

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Why will it take so long to come to an arbitration ruling?

There are special requirements for such a proceeding. Compared with a lawsuit in Germany the proceeding time at ICSID does not take longer.

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Can't you make a settlement? Why don't you negotiate rather than sue?

A settlement is possible at any time. We did not receive any signal from the German Government with regard to a possible settlement.

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Which law firms work for you on this case?

Luther Rechtsanwälte GmbH (DE) and Mannheimer Swartling AB (SE)

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Vattenfall views on the Energiewende and renewable energy

Why do you obstruct, or put in question, the German democratic decision to phase out nuclear power?

Vattenfall is not questioning the decision to phase out nuclear power in Germany. But we insist on receiving compensation for the financial loss suffered by the company. If we suffer a major loss, and are entitled to compensation, then it would be irresponsible of us not to try and obtain it. That has nothing to do with whatever general feeling one may have about nuclear power.

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Last updated: 2016-10-12 09:45