Press Release on Two New Energy Charter Lawsuits

Two energy companies have sued Germany for the coal phase-out and the excess profit tax - PowerShift calls for more use of the Federal Government
Berlin, 1 November 2023: The environmental organization PowerShift is very concerned about two arbitration lawsuits filed against Germany under the Energy Charter Treaty in the past two weeks.
On the one hand, the Swiss energy company Azienda Elettrica Ticinese (AET) is suing the Federal Republic of Germany for the German coal phase-out. AET holds a 15 percent stake in the Trianel coal-fired power plant in Lünen, North Rhine-Westphalia, which is to be decommissioned in 2032. Trianel had not received any compensation for breastfeeding in the context of the bidding competition. AET is represented by the law firm Luther, which also represents RWE in the lawsuit against the Dutch coal phase-out. PowerShift has received a statement from AET.
On the other hand, the international industrial raw materials group Klesch-Group, based in London and Geneva, is suing Germany, Denmark and the EU for the excess profit tax. This comes from a Question by Member of the Bundestag Ralph Lenkert (left) to the federal government. The Klesch Group operates Germany's largest refinery in Heide, Schleswig-Holstein and a refinery in Denmark.
“Whether it is a coal phase-out or an over-profit tax, investors are seeking to undermine democratic decisions and impose the costs of the energy transition and the energy crisis on the general public through litigation before arbitral tribunals. This must finally be over. In a democratic community, non-transparent arbitral tribunals have no place", says Fabian Flues, trading expert at PowerShift.
PowerShift calls on the German government, together with other states, to find ways to rule out arbitration lawsuits in sensitive areas such as the energy transition. “If democratic decision-making processes and public courts are circumvented, states must defend themselves. In the coalition agreement, the traffic light promised to significantly restrict arbitration lawsuits. After Germany's important withdrawal from the Energy Charter Treaty, it must now back up", explains Flues. In addition, the European Council must also immediately abandon its blockade against a joint withdrawal of all EU Member States from the Energy Charter Treaty, as the Commission and Parliament have already called for.
background
The Energy Charter Treaty (ECT) is an international trade and investment protection agreement that entered into force in 1998. Investors can sue states in private investor-state dispute settlement (ISDS) proceedings for decisions that have an impact on their expected profits, including for climate change mitigation. After years of protests against the ECT and three years of unsuccessful negotiations on its reform, On 11 November 2022, the Federal Government announced that: Germany will withdraw from the agreement at the end of 2023. However, an exit from the Energy Charter Treaty is subject to a twenty-year continuation clause for existing investments. In the case of a joint withdrawal of many member countries, these could be defused. Germany is also a party to more than 100 investment protection agreements, the vast majority of which enable actions to be brought by private arbitration tribunals.
Press contact
Fabian Flues (PowerShift trade expert)
fabian.flues@power-shift.de, 0159 06113733