Legitimate expectations in the arbitral practice of green energy cases under the Energy Charter Treaty

Abstract

Abstract This paper discusses the issue of legitimate expectations in the arbitral practice of green energy cases under the Energy Charter Treaty. Before the economic crisis of 2008, several European countries provided special incentives and subsidies to investors in the field of renewable energy. However, following the crisis, some of them (e.g. Spain and Italy) abridged these benefits, which resulted in a number of arbitration proceedings under the Energy Charter Treaty. Some of these are still pending. Most of these disputes are centered on legitimate expectations, a major component of the fair and equitable treatment standard. The introductory part of the article gives a general overview of the issue of legitimate expectations in international investment law, and identifies the three types of situations which can generate legitimate expectations: specific commitments, unilateral representation or promises, and regulatory frameworks. The main part of the work analyses the most relevant green-energy cases of the Energy-Charter-Treaty-related arbitrations, with special emphasis on the issue of legitimate expectations. In the final part of the paper, conclusions are drawn based on the case law here presented, as well as other researched cases.