Summary

Source: icsid.worldbank.org

TABLE OF CONTENTS

I. Introduction
A. The ECT is not a decision against climate action
B. Beyond the issue of climate change, the deficiencies in Claimant's case increased
C. Overview over structure, witnesses and experts
II. Facts established through document-production
A. AET did not conduct any due diligences on German law
B. AET's obligation under Swiss law to exit the Lünen Plant
1. 2011-2017, AET either made insufficient efforts or deemed its shares worthless
2. In 2018, the Lünen Plant received offers significantly below its expectations
C. [redacted]
D. The 2023 restructuring leading to the 2023 PPA
1. AET was advised of the banks' difficult stand to invoke the 2020 Act
2. [redacted]
3. The recourse under the 2023 PPA was assumed to remain inapposite
III. Preliminary objections
A. State control over the decision to invest
1. Legal standard: Article 25(1) ICSID Convention and Article 8 ILC Articles
a. Core parameters not in dispute between the Parties
b. Comments on legal authorities
2. Application
a. Already the undisputed facts suffice to meet the ILC Articles' test
b. In addition, the AET Law required the approval
B. Violation of obligation under Swiss law to divest
1. Legal standard: principles of good faith in international law
2. Application: but-for AET's violation of Swiss law, there would not be a dispute
IV. Liability
A. The ICJ's 2025 Climate Change Opinion
B. Expropriation
1. The 2020 Act constitutes a legitimate exercise of Germany's police powers
a. Article 24 ECT does not insulate the ECT from the police-powers doctrine
b. The 2020 Act is not discriminatory
(i) Nationality-related differentiations are not in issue
(ii) The Lünen Plant is treated like all other hard-coal power plants
(iii) The mining perspective renders lignite a different industry
c. Claimant has no further meaningful case against the police-powers doctrine
2. In any case, the 2020 Act does not meet the threshold of an indirect expropriation
C. Umbrella clause
1. AET made no meaningful new arguments for an application beyond contracts
2. Claimant has not addressed the issues of fact about the 2013 Permit's timing
3. Claimant's supplementary argument on the applicable German law is incorrect
D. Fair and equitable treatment
1. Legal standard
a. An FET award as requested by Claimant would be the first-of-its-kind
b. The ECT is not less climate-friendly than other norms of international law
2. Application
a. Climate action is required by a scientific consensus and international law
b. Undisputedly, Claimant received neither commitments nor due diligences
c. Claimant's new exhibits fail to proof reliance on political speeches
d. The events on the Uerdingen Plant also refute any reliance on political speeches
e. AET's supplementary case on the 2013 Permit misrepresents German law
f. AET's revealed inaction under the 2011 AET Law must be held against it
g. The new allegations on the Coal Commission's bias are contradictory
h. AET's repetitive attempts to second-guess the 2020 Act are flawed
i. AET's new allegations on the 2020 Act's constitutionality are incorrect
j. Contrary to AET, the ECtHR's judgment on the 2020 Act is persuasive
k. AET's speculations about RWE's reasons to bid make Respondent's case
l. The 2020 Act did not cause any liability of AET towards the banks
m. AET cannot rely on its highly-leveraged nonrecourse financing
n. AET profited from the 2020 Act and retains conversion options
E. Claimant's subsidiary claims
1. Full protection and security
2. Unreasonable treatment under Article 10(1) sentence 3 ECT
3. Discrimination under Article 10(1) sentence 3 ECT
F. Summary on liability
V. Quantum
A. Fundamental flaws requiring to strike damages from the outset
1. Claimant clarified that it brings a damages, not an Article 13(1) ECT claim
2. Incorrect valuation date under customary international law
3. Premature ex ante valuation date
4. Failure to respect Paris Agreement and market realities for hard-coal plants
5. Failure to present valuation appreciating the Coal Commission
6. Failure to explain inconsistency between claim and failure to divest 2011-2017
7. Failure to submit a reviewable power-market modelling
B. Further necessary reductions to Claimant's valuation
1. Failure to mitigate losses: rejection of plant conversion
2. [redacted]
3. Failure to account for benefits through portfolio effect
a. Legal standard
b. Application
4. Failure to account for Ticino hard-coal levy
5. Timing of annual maintenance
6. Increase of fixed OPEX after 2019
7. Variable OPEX
8. Unavailability
9. Load ramp time
10. Cold start costs
11. Degeneration
12. Discount factor of future cash-flows
13. Minority Discount
14. Uncertainty regarding legality of the 2013 Preliminary Permit in 2020
15. Illiquidity Discount
16. Trade tax
17. Tax-gross up
18. Pre-award interest
VI. Request for relief

I. INTRODUCTION

A. THE ECT IS NOT A DECISION AGAINST CLIMATE ACTION

1. Claimant began its case in this arbitration by trying to carve-out the issue of climate change.1 In the Counter-Memorial, Respondent insisted that climate change is at the heart of the present arbitration. The Act to Reduce and End Coal-Fired Power Generation of 8 August 2020 (the "2020 Act") combats climate change. The Counter-Memorial showed that the 2020 Act was adopted because of the existential need for climate action to save species, mitigate poverty and prevent geopolitical conflicts.2 Further, the 2020 Act was enacted to comply with the Paris Agreement of 12 December 2015,3 and Germany's obligations under, inter alia, international law, EU law, and German constitutional law on climate change.4 Hence, the 2020 Act falls under the police-powers doctrine and is compliant with Article 10 ECT.

2. After the Counter-Memorial, the ICJ rendered its Advisory Opinion of 23 July 2025 on Obligations of States in respect of Climate Change (the "Climate Change Opinion"). The ICJ's Climate Change Opinion underlines the existential need for climate action and concludes that sovereign States, including Respondent, have certain obligations under international law. The Opinion reinforces Respondent's case.5

3. Claimant's Reply on Merits and Counter-Memorial on Jurisdiction (the "Reply") disputes neither the existential need for climate action, the binding nature of the Paris Agreement, nor the unchallenged status of Germany's climate-action obligations under EU and German law.

Nor did Claimant dispute that the police-powers doctrine is a rule of customary international law or that climate action is also required under human rights. Therefore, these aspects are undisputed.

4. Claimant's case in the Reply on climate action is narrow, albeit incorrect.

5. First, Claimant's main allegation is that the ECT would constitute a conscious decision against further climate action. This is incorrect. Above all, Article 24(1) ECT does not exclude the police-powers doctrine. Essential-security clauses such as Article 24 ECT and the police-powers doctrine are two separate topics.6 On fair and equitable treatment ("FET") under Article 10 ECT, Claimant's case that the numerous references in the ECT to environmental matters would e contrario imply that further climate-action norms violate FET, is incorrect.

Instead, FET must be interpreted in line with these references. Claimant's case would result in the untenable result of the ECT not being embedded in international law, but the ECT standing against other norms of international law.7

6. Second, on the need for climate action as such, Claimant's main assertion appears to be that climate action should be achieved through means other than phasing out hard-coal power plants: "none of these documents establish a necessity to shut down New Plants".8 For the avoidance of doubt, hard-coal power plants, including those built in the 2000s such as the Lünen Plant, are amongst the world's most significant CO2 emitters. This is scientific consensus. Hence, phasing out hard-coal power plants is a reasonable step to fulfil the obligation to mitigate climate change.9

7. Third, Claimant alleges that the 2020 Act would have discriminated against the Lünen Plant. Claimant's arguments in the Reply mainly repeat the Memorial. They remain incorrect. The 2020 Act treats Claimant like any domestic or third-State investor. This already undermines Claimant's discrimination case. Even if the Tribunal holds otherwise, the 2020 Act's shutdown order is based strictly on age. The 2020 Act's auction formula applied to all hard-coal power plants identically. Plants of a comparable vintage participated in the auctions. Hence, Claimant's true case on the comparison with other hard-coal plants is that the Lünen Plant should have been treated better than these plants. However, the obligation not to discriminate is not an obligation to treat a foreign investor better than everyone else.10

8. Claimant's discrimination case regarding the lignite sector remains flawed because hard-coal and lignite are two different industries. German hard-coal power plants only burn hard- coal sourced on the world market (hard-coal mining in Germany had been phased out already after many billions of subsidies). By contrast, the lignite phase-out under the 2020 Act concerned the lignite mining sector. In Germany, lignite mining is intertwined with the power plants. The mining sector employed more than 60,000 employees and needs to take care of the rehabilitation of the lignite pits. Therefore, treating hard-coal power plants and the lignite sector differently was appropriate and well within Germany's margin of appreciation.11

9. Fourth, Claimant and its experts allege that alleged principles on fair market value ("FMV") would entitle Claimant to claim lost profits that depend on an alleged market expectation in the Paris Agreement being ignored by regulators. After the Reply, it is undisputed that input data in line with the Paris Agreement, e.g. on CO2 certificate prices, would reduce any damages claim to zero because the Lünen Plant's phase-out will be market-driven. Contrary to Claimant, damages, if any, must be calculated under international law, not contrary to international law. Especially, in the present case, the sole financial beneficiary of a hypothetical damages award, i.e. Switzerland, is itself bound by the international law on climate action.12

...

VI. REQUEST FOR RELIEF

681. Respondent requests that the Tribunal render an Award:

(i) declaring that the Tribunal has no jurisdiction of the claims raised by Claimant and, therefore, dismissing these claims with prejudice;

(ii) in the event that the Tribunal accepts jurisdiction (quod non) dismissing all of Claimant's claims with prejudice;

(iii) ordering Claimant to reimburse Respondent for the costs of this arbitration, including its legal fees, inhouse-cost and expenses, the fees and expenses of the Tribunal as well as the ICSID Secretariat, and interest on these costs.

...

Footnotes omitted