REQUEST FOR ARBITRATION

in accordance with Article 36 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention"), the Swedish company Vattenfall AB ("Vattenfall") and its subsidiary, the German company Vattenfall Europe AG ("Vattenfall Europe") as well as the German company Vattenfall Europe Generation AG & Co. KG ("Vattenfall Generation") (collectively the "Claimants") hereby respectfully submit this Request for Arbitration (the "Request") to the International Centre for Settlement of Investment Disputes ("ICSID"), and respectfully request that the Secretary-General register this arbitration against the Federal Republic of Germany ("Germany' or "Respondent")`

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2. Summary of the Dispute

2.1 Background

8. The first Claimant, Vattenfall, is the parent company of the the Vattenfall group of companies (hereinafter the "Vattenfall Group"). Vattenfall is a Swedish electricity company. In 1996, Vattenfall began to expand internationally. Today the Vattenfall Group is operating in six different core markets: Sweden, Finland, Germany, Denmark, Poland and the United Kingdom.

9. The Vattenfall Group's business in Germany is conducted through the second Claimant, Vattenfall Europe. Vattenfall Europe was established as the result of a merger between several German companies active in the electricity sector in which the Vattenfall Group had acquired the majority of the shares. Such companies include: HEW in Hamburg (Hamburgische Eletricitätswerke), BEWAG in Berlin (BEWAG Aktiengesellschaft Berlin), VEAG (VEAG Vereinigte Energiewerke AG) and LAUBAG (Lausitzer Braunkohle AG), a coal producer. Vattenfall Europe has several German subsidiaries, including, Vattenfall Europe Generation AG & Co, KG ("Vattenfall Generation"). Vattenfall Generation operates the major part of the Vattenfall Group's power plants in Germany, and sells the electricity and heat to other companies within and outside the Vattenfall Group.

10. HEW, in the German federal state of Hamburg (Free and Hansestadt Hamburg), was previously the local state-owned electricity company, HEW supplied the city of Hamburg both with electricity and district heating generated by its own power plants, One of these plants was situated in the local suburb of Moorburg and used to operate on gas and oil. However, due to high gas prices, the plant was decommissioned in 2001 and eventually dismantled in 2004.

11. The dispute between the Vattenfall Group and Germany arises out of the conduct of the Hamburg government authorities relating to the administrative procedure for the issuing of permits for a new power plant being constructed by Vattenfall Generation at the site of the former plant which is at Hamburg- Moorburg. This new coal-fired power plant (the "Moorburg power plant"), will have two block-unit; with a combined production capacity of max. 1730 MW electricity or max, 650 MW district heating.

12. The planning of the Moorburg power plant started in 2004. The Vattenfall Group originally planned to build a one-block plant at an investment coat of approximately EUR 700 million. However, the city of Hamburg explicitly encouraged and proposed the construction of a dual-block plant. The idea was that the increased amount of district heating from a dual-block plant would ensure long-term supply of district heating to the city of Hamburg. The Vattenfall Group accepted Hamburg's proposal to expand the plant to a dual block plant. This also proved favourable in Vattenfall's economic analysis. Consequently, Vattenfall changed its investment decision accordingly. Thus, on 31 August 2006, the board of directors of Vattenfall approved the planned construction of the Moorburg power plant with an - initial - budget of EUR 1833 million. At the date of filing of this Request, due to the actions of Hamburg, the costs have increased to more than EUR 2 billion.

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