15 June 2018

Stanescu on the Effects of the Concession Directive on Investor Protection Mechanisms

Postdoctoral Researcher Cătălin Stănescu published an article in International Energy Law Review, dealing with the impact of the Concessions Directive on investor protection mechanisms in the energy sector.

The article titled ”Dead End for Stabilization Clauses? The Effects of the Concessions Directive on Investor Protection Mechanisms in the Energy Sector” is part of the CEVIA’s framework research project “Long-term Private and Public Contracts— Flexibility and Stability”, funded by The Danish Research Council.
It was presented in 2017 at the 5th Annual Energy Transitions International Conference 2017, organised by the University of Eastern Finland Law School, and was published in June 2018 in Issue no 3 of International Energy Law Review by Sweet & Maxwell.

The paper seeks to determine the effects of the Directive on concessions concerning oil and gas or energy production, mainly the clauses providing for fiscal and political investor protection mechanisms. By analysing the black letter provisions of the Directive, the existent ECJ case law and relevant arbitral awards, it concludes that the new EU regime of concessions appears incompatible with stabilisation clauses and other mechanisms of investor protection that, on the one hand, limit the state’s regulatory powers and, on the other hand, guarantee investors’ profit arising from a concession.
However, such change of regime is likely to stir a new wave of arbitration cases with unforeseeable results regarding the application of EU law and to drive away foreign investment altogether.