Title: The Continuing Backlash against Investor-State Arbitration may Call for the Increasing Use of Contract Terms to Protect Energy Investments
Author(s): Gunjan Sharma (View Profile)
Journal: Indian Review of International Arbitration
Just like concessions for natural resources, international energy contracts and large energy projects are particularly susceptible to the “political risk” of uncompensated expropriation or other internationally unlawful government interference. This is because an international energy contract or large energy project normally involves high up-front capital expenditures that might only be recovered from long-term profits many years after the expenditures are incurred. As a result, some governments, regulators and regulated utilities may believe they have strong leverage to demand revisions to contract terms and other long-term expectations, on the basis that an investor can be induced to accept these changes once significant sums have been spent on constructing infrastructure but before the profits are extracted.
Cite this as: Gunjan Sharma, The Continuing Backlash against Investor-State Arbitration may Call for the Increasing Use of Contract Terms to Protect Energy Investments, 2 IRIArb (2022).
Keywords: International Energy Contracts, High Up-Front Capital Expenditures, Strong Leverage, Political Risk
*The views expressed are of author(s) only.