Mainstream Renewable Power Ltd and others v. Federal Republic of Germany

Case summary

At a glance

Parties: Mainstream Renewable Power Ltd, International Mainstream Renewable Power Limited and Mainstream Renewable Power Group Finance Ltd (Ireland), and Horizont I Development GmbH, Horizont II Renewable GmbH and Horizont III Power GmbH (Germany), v. the Federal Republic of Germany
Case no.: ICSID Case No. ARB/21/26
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules in force as of 10 April 2006
Treaty: Energy Charter Treaty (Article 26)
Tribunal: Wendy Miles QC/KC (President), Charles Poncet, Antolín Fernández Antuña
Court: German Federal Court of Justice (Bundesgerichtshof), I ZB 43/22; Federal Constitutional Court (Bundesverfassungsgericht), 2 BvR 1277/23
Sector: Offshore wind energy
Outcome: The arbitration was still pending in the published documents. The Tribunal refused Germany's Rule 41(5) objection, a stay and bifurcation. The German Federal Court of Justice declared the arbitration inadmissible under German and EU law (27 July 2023), and the Federal Constitutional Court declined to hear the claimants' constitutional complaint (31 July 2025).
Amount: Claimed: EUR 275 million plus EUR 56 million in interest (EUR 331 million plus interest per the Statement of Claim of 11 February 2022). No award in the published documents. The Federal Court of Justice put the costs of the German proceedings on the claimants and fixed the value of the appeal at EUR 30 million.

The dispute

Three Irish Mainstream companies and their three wholly owned German project companies began developing three offshore wind farms in Germany's exclusive economic zone in the North Sea in 2008. Germany reformed the licensing and grid-connection regime in 2012. Section 46(3) of the Offshore Wind Energy Act (WindSeeG) then ended all pending planning and approval procedures as of 1 January 2017, so the claimants' procedural position and existing permit lost legal effect. The Federal Constitutional Court held on 30 June 2020 that a compensation scheme was required. Germany then enacted Section 10a WindSeeG, under which the authority recognised EUR 398,000 of the EUR 2.4 million in costs claimed. The claimants brought ECT claims for damages (Articles 10 and 13, as described by the German courts). Germany objected that Article 26 ECT gives no valid consent to intra-EU arbitration, that the claimants made no investment because the projects never left the preparatory stage, and that the German claimants are not protected investors.

Key holdings

The Rule 41(5) application is denied. The intra-EU objection rests on disputed descriptions and effects of EU instruments and CJEU judgments, and on novel and contested points of law, including the then-recent Komstroy and PL Holdings judgments. The claim is therefore not manifestly without legal merit. The nationality objection also fails at this stage, because the German claimants were pleaded as controlled by the Irish claimants (Article 26(7) ECT). Rule 41(5) Decision ¶¶ 102, 119–126
By majority, the Tribunal refused bifurcation and joined the intra-EU, ratione materiae and ratione personae objections to the merits. It found that the objections were not frivolous, but that the investment objection was almost certainly intertwined with the merits evidence and the intra-EU objection possibly so. Antolín Fernández Antuña dissented: absent compelling reasons, jurisdictional objections should be decided first. PO 3 ¶¶ 53–73; Dissent
The European Commission was granted leave to file one non-disputing party submission of at most 30 pages on whether Article 26 ECT applies intra-EU, due by 30 March 2023. Its requests to access the case file and attend the hearing were denied; the Claimants had refused consent to its attendance. PO 5 ¶¶ 43, 54–63
On a prima facie basis, Germany's Section 1032(2) ZPO proceedings, insofar as they seek to determine the Tribunal's jurisdiction, appear potentially to breach the exclusivity rule in Article 26 of the ICSID Convention. Provisional measures were nonetheless refused for lack of urgency (the court proceedings had run for almost two years) and of necessity (given Germany's assurances). The Tribunal recommended that Germany refrain from further court steps aimed at stopping the arbitration or, at minimum, give advance notice of them. PO 8 ¶¶ 57–61, 70, 75, 80
The German Federal Court of Justice declared the ICSID arbitration inadmissible. German courts have international jurisdiction by analogy to Section 1025(2) ZPO. Because EU law has primacy, Article 41(1) of the ICSID Convention exceptionally does not bar the application. Following CJEU case law, Article 26(2)(c) ECT is incompatible with Articles 267 and 344 TFEU in intra-EU cases, so Germany made no valid offer to arbitrate. No reference to the CJEU was required. BGH, I ZB 43/22, Rn. 78–82, 95–113
The Federal Constitutional Court did not accept the constitutional complaint. The complainants had not substantiated that the CJEU acted ultra vires. The Federal Court of Justice's ruling raises doubts as to whether EU law requires such a remedy, but it is not objectively arbitrary. The complainants also showed no continuing legal interest: the Tribunal will decide its own jurisdiction, and enforcement in EU Member States is in any event excluded by EU law as interpreted by the CJEU. BVerfG, 2 BvR 1277/23, Rn. 89, 100–114
Witness statements from three new witnesses filed with Germany's Rejoinder were admitted. The claimants were allowed responsive documentary evidence and cross-examination; weight is left to the award. In an earlier order, privilege claims over communications with the claimants' German lawyer-witness were referred for possible review by a neutral third party, and the hearing could not be public because the claimants objected. PO 10 ¶¶ 20–26; PO 7 ¶¶ 88–101