Summary

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The case has been submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") under Article 37(1) of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention") and Article 26(3) of the Energy Charter Treaty ("ECT").

The parties to this arbitration are Strabag SE ("Strabag" or the "First Claimant"), Erste Nordsee-Offshore Holding GmbH ("NOH 1" or the "Second Claimant") and Zweite Nordsee-Offshore Holding GmbH ("NOH 2" or the "Third Claimant"), companies organized under the laws of the Republic of Austria ("Austria") (the "Claimants"), and the Federal Republic of Germany ("Germany" or the "Respondent," and together with the Claimants, the "Parties").

The dispute arises out of regulatory measures taken by the Respondent regarding the Claimants' development of installations for the production of offshore wind energy. The Claimants contend that the Respondent's measures undermined the Claimants' development of a new technology for installation of offshore wind farms ("OWFs") and their right to develop offshore wind energy projects in certain areas of the North Sea, resulting in a loss of their investments, in breach of the ECT.

The Respondent argues that the Claimants' claims fall outside the Tribunal's jurisdiction on a number of grounds, including because the Respondent never agreed to arbitrate intra- EU investor-State disputes under the ECT. The Respondent also denies any breach of the ECT and contends that it merely exercised its right to regulate in the public interest, which cannot give rise to any valid claims under the ECT.

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IX. AWARD

689. For the reasons set out above, the Tribunal determines as follows:

a. The Respondent's objections to the Tribunal's jurisdiction and to the admissibility of the claims are rejected;

b. The Tribunal has jurisdiction in this matter and the Claimants' claims are admissible;

c. The Respondent has breached its obligation under Article 10(1) of the ECT by failing to accord fair and equitable treatment to NOH 1's and NOH 2's investments in their respective Offshore Wind Projects;

d. The Respondent has breached its obligation under Article 13(1) of the ECT by taking measures having effect equivalent to expropriation of NOH 2's investments in its Offshore Wind Projects;

e. The Respondent is ordered to compensate NOH 1 for the loss and damage caused to NOH 1's investments in its Offshore Wind Projects as a result of the Respondent's breach of Article 10(1) of the ECT, in the amount of EUR 61,400,000.00;

f. The Respondent is ordered to compensate NOH 2 for the loss and damage caused to NOH 2's investments in its Offshore Wind Projects as a result of the Respondent's breaches of Article 10(1) and 13(1) of the ECT, in the amount of EUR 179,546,773.55;

g. The Respondent is ordered to pay pre-award interest on the amounts awarded to NOH 1 and NOH 2 in sub-paragraphs (e) and (f) above as of 18 December 2013 at a rate of 3 percent per annum until the date of this Award, compounded yearly;

h. The Respondent is ordered to pay post-award interest on the amounts awarded to NOH 1 and NOH 2 in sub-paragraphs (e) and (f) above at a rate of 3 percent per annum, payable as of 60 days from the date of this Award until the date of payment of such amounts in full, compounded yearly;

i. The Parties shall bear and equally share the fees and expenses of the Tribunal and the costs of the ICSID facilities;

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PARTIAL DISSENTING OPINION
Prof. Dr. Maria Chiara Malaguti, Arbitrator

8th December 2024

1. I am writing this Partial Dissenting Opinion under A1iicle 48(4) of the ICSID Convention.

2. It has been a privilege and a genuine pleasure to be part of the Arbitral Tribunal in this case. The deliberations have been enriching and rewarding, as well as intellectually honest. While we reached consensus on most of the findings, I found myself in disagreement with the assessment of the circumstances under the FET Standard in the end. Since it seems to me that this divergence derives essentially from a different reading of the scope of a State's undertakings under Article 10(1) ECT (first and second sentence) against its right to regulate, it is worth trying to express how I assess the facts of the dispute under my understanding. As this is a controversial issue that led various tribunals to diverge in their findings under Article 10(1) ECT, and without jeopardizing the integrity of the Award issued by the Tribunal Majority by any means, I feel it is my duty to express my dissent where in my view it is relevant to the interpretation of the ECT and international investment law in general.

Summary of conclusions

3. I concur with my colleagues in the assessment of the Respondent's behaviors as for the claims linked to the GFT (Award, §§380-393).

4. I also concur with my colleagues in the assessment of the Respondent's behaviors related to the Offshore Wind Projects under the Full Protection and Security Standard (Award, §§484-490) and the Non-Impairment Standard (Award, §§508-517).2

5. I instead diverge in the assessment of the challenged measures under Article 10(1) ECT and, more precisely, the application of the FET Standard. Whether analyzed in its own right under the FET Standard or as part of investors' legitimate expectations, my interpretation differs as to the scope of the "stability undertaking" in relation to the State's right to regulate. The difference surfaces primarily in the actual assessment of both the challenged measures against the State's undertaking to encourage and create stable conditions for the investors, and what the Claimants should have reasonably expected at the time of making the investment.

6. As I shall describe, I would conclude that the Respondent violated the FET Standard under Article 10(1) ECT when, in 2017, it adopted the Renewable Energy Sources Act (Award, §136) without any form of compensation for those investors that had legitimately relied on the previous mechanisms for authorization and had taken active steps as well as undertaken exchanges with the regulator (and other relevant stakeholders) to follow such previous procedure, and accomplish the various different steps they were allowed to in order to (hopefully) achieve the final goal, but could not participate in the new compulsory tendering process. This constituted a radical change in the regulation that, although in furtherance of public interest, did not proportionately protect the positions of investors that had been legitimately acquired under the previous mechanism. In my understanding, all acts and behaviors before the 2017 Renewable Energy Sources Act were instead legitimate manifestations of the State's right to regulate, which did not constitute per sea radical change, were proportionate, and would not come as totally unexpected to investors.

7. In the light of my assessment of the Respondent's acts and behaviors when judging under FET, my analysis under the expropriation standard would also differ from that of the Tribunal Majority. I agree that the Respondent should be held liable under Article 13 ECT for creeping expropriation, but I consider that this was produced through a series of acts and behaviors which were legitimate per se, and that ultimately culminated with the 2017 Renewable Energy Sources Act, which crystallized the expropriation and thus led to the complete deprivation of the Claimants' investment. In the absence of such Act, expropriation would not have occurred.

8. In the light of my assessment, it is apparent that the point in time for the initiation of the violations under both Article 10(1) and Article 13 ECT would differ from that established by the Tribunal Majority and be set at the time of adoption of the 2017 Offshore Wind Energy Act. This would affect also the valuation date, to be postponed to early 2017.

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Footnotes omitted, OCR errors may be present.