Vattenfall AB and others v. Federal Republic of Germany

Case summary

At a glance

Parties: Vattenfall AB, Vattenfall GmbH, Vattenfall Europe Nuclear Energy GmbH, Kernkraftwerk Krümmel GmbH & Co. oHG and Kernkraftwerk Brunsbüttel GmbH & Co. oHG v. Federal Republic of Germany
Case no.: ICSID Case No. ARB/12/12
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules
Treaty: Energy Charter Treaty
Tribunal: Albert Jan van den Berg (President), Charles N. Brower, Vaughan Lowe
Court: Federal Constitutional Court of Germany, First Senate (related constitutional complaints, judgment of 6 December 2016)
Sector: Nuclear power generation
Outcome: Germany's intra-EU (Achmea) jurisdictional objection was rejected on 31 August 2018. Germany's two proposals to disqualify the whole Tribunal were rejected in 2019 and 2020. A Discontinuance Order dated 9 November 2021 is listed, but its text is not among the documents provided.

The dispute

The Swedish State-owned Vattenfall AB and its German subsidiaries owned and operated, wholly or in part, the Krümmel and Brunsbüttel nuclear power plants. After the Fukushima accident of 11 March 2011, Germany adopted the Thirteenth Amendment to the Atomic Energy Act of 31 July 2011. It revoked the extra electricity quantities granted to nuclear plants in December 2010 and set fixed shutdown dates; for Krümmel and Brunsbüttel the right to operate ended on 6 August 2011. In a Request for Arbitration of 14 May 2012, the claimants alleged that this phase-out breached Germany's obligations under the Energy Charter Treaty. Germany disputed jurisdiction. After the ECJ's Achmea judgment of 6 March 2018, Germany also argued that EU law bars intra-EU investor-State arbitration under the ECT. The European Commission supported that argument as a non-disputing party.

Key holdings

Germany's Achmea objection was timely. The ECJ judgment of 6 March 2018 was a new fact under ICSID Rule 41(1), and Germany raised the objection at the first opportunity. The Tribunal added that it would in any event have examined the issue on its own initiative under ICSID Rule 41(2). Decision on the Achmea Issue, ¶¶ 103–106
Article 26(6) ECT and Article 42(1) ICSID Convention govern only the law applicable to the merits. Jurisdiction is decided under Article 26 ECT and Article 25 ICSID Convention, interpreted under general international law as reflected in the VCLT. Decision on the Achmea Issue, ¶¶ 121, 166
The TEU and TFEU, as interpreted by the ECJ, are part of international law. But they cannot be 'taken into account' under Article 31(3)(c) VCLT to give Article 26 ECT a meaning contrary to its ordinary terms. The Achmea judgment is silent on whether ECT arbitration is compatible with EU law. Decision on the Achmea Issue, ¶¶ 150, 163–165
'Contracting Party' in Article 26 ECT covers EU and non-EU Member States without distinction. There is no carve-out for intra-EU disputes. The EU Statement under Article 26(3)(b)(ii), the object and purpose of the ECT, and the deliberate omission of a disconnection clause all confirm this reading. Decision on the Achmea Issue, ¶¶ 206–208
Articles 267 and 344 TFEU do not conflict with Article 26 ECT. Even if they did, Article 16 ECT would apply as lex specialis and preserve the investor's more favourable right to dispute resolution. The objection was rejected, and all other issues and costs were reserved. The European Commission is not liable for costs caused by its intervention. Decision on the Achmea Issue, ¶¶ 23, 212, 229, 232
In the related proceedings, the Federal Constitutional Court held that Vattenfall Europe Nuclear Energy GmbH could exceptionally bring a constitutional complaint under Article 14 of the Basic Law, although the Swedish State holds it indirectly in full. It reached this view because of the EU freedom of establishment. BVerfG judgment, Rn. 185, 196–201
The Federal Constitutional Court held that the Thirteenth Amendment was largely constitutional and was not an expropriation. It was incompatible with Article 14(1) of the Basic Law in two respects. First, Vattenfall and RWE could not use substantial parts of their 2002 residual electricity quantities within their own groups. Second, the Amendment gave no compensation for investments made in legitimate reliance on the 2010 additional quantities. The legislature had to enact new rules by 30 June 2018. BVerfG judgment, operative part; Rn. 310, 367, 369