Investment Arbitration in the Nuclear Energy Sector: Environmental Protection versus Investor Protection

Abstract

Foreign capital involvement in the nuclear energy industry has grown in recent years, even after Germany and Switzerland decided to proceed with a general nuclear energy phase-out after the Fukushima Daiichi nuclear disaster in 2011. A unique characteristic of this field is that it continues to be dominated by state-owned enterprises, which now act as foreign investors, as opposed to mere national energy utilities. Therefore, the group of foreign investors that appears to be emerging in the field of nuclear energy is limited in number and lacks homogeneity, since it comprises both private as well as public enterprises acting as foreign investors. This development creates the need to examine how, if at all, this group of investors could benefit from the existing grid of investment treaties to the detriment of the host state’s regulatory powers. In particular, the question arises whether investment treaties preserve or weaken the power of host states to regulate their nuclear energy sector in order to safeguard their environmental interests, especially when specific exception clauses that allow for such regulation are not found in the relevant investment treaties. This chapter addresses this question, with the conclusion being that investment treaties have the potential power to weaken the regulatory powers of a state in the nuclear energy field. With regard to state-owned enterprises acting as foreign investors in the nuclear energy field, this chapter does not address the issues that may arise for these particular investors, but merely recognizes that this is another factor that needs to be taken into consideration, especially when considering the standing of these investors under the ICSID Convention.