ICCA and VanIAC joint conference - energy infrastructure disputes and arbitration: today and tomorrow

by Özge Yazar, Miller Titerle + Co

On 2 June 2023, the Vancouver International Arbitration Centre (VanIAC) and the International Council for Commercial Arbitration (ICCA) hosted a joint conference in Vancouver, Canada on ’energy infrastructure disputes and arbitration: today and tomorrow’. The conference kicked off with a traditional welcome by Wilson Williams (Sxwíxwtn) of the Squamish Nation, followed by opening remarks from Craig Chiasson, Borden Ladner Gervais, who presented a history of VanIAC and introduced Lucy Reed, member of Arbitration Chambers and President of ICCA. After Ms Reed’s presentation on ICCA and the official launch of the ICCA Awards Series, the first panel was underway.

New energy projects, new legal frontiers: how clean energy and climate change are transforming construction disputes

In the morning session moderated by Laura Cundari, Blakes, Dr. Patricia Galloway, Galloway Arbitration, Inc., Dr. Ezra Jampole, Exponent, Doug Jones AO, Atkin Chambers, and Miguel López Forastier, Covington & Burlington, discussed trends in disputes arising out of energy construction projects.

The speakers explained that clean energy projects present unique challenges due to their high value, community visibility, multinational involvement, regulatory environment, and extended timelines.

The audience heard about the unique ways disputes can arise in energy projects. Dr Jampole explained issues he has experienced with solar energy, including cracking and water intrusion at the panel level, as well as unintended consequences of light reflection at the plant level. Mr Jones explained the parallel arbitration and court proceedings in MT Højgaard A/S v E.On Climate & Renewables UK Robin Rigg East Limited, where the parties had a dispute about, inter alia, whether a contractor for offshore wind turbines was liable for damages resulting from its reliance on international standards, which turned out to be wrong. Dr Galloway gave examples and predicted an increasing number of disputes resulting from weather-related events, new contractual standards, and new regulations.

Mr López Forastier explained that investor-state disputes related to clean energy projects generally stemmed from a change in the state’s renewable energy strategy, or its preferential treatment towards local or state-owned projects. Spain and Mexico were discussed among the states that face a large amount of energy related claims by investors. 

Predicting the future of energy arbitration

Raëd Fathallah, Bredin Prat, moderated the second panel, which explored what types of disputes, arbitrators, and procedures awaited energy arbitration.

As for the types of disputes, Jessica Crow, Arbitra, predicted more carbon pricing disputes, while Maria Chedid, Arnold & Porter, anticipated disputes arising from joint venture formations as well as risk and revenue sharing arrangements.

Will users start seeking increasingly tech-savvy arbitrators? Michelle MacPhee, BP International Disputes Team, and Constantine Partasides KC, Three Crowns, agreed that despite new technologies and regulations, key issues in arbitration such as contract interpretation or revenue sharing remain the same, so the set of criteria for choosing an arbitrator will not change significantly, and adjudicative experience and judgment will remain of paramount importance. 

While traditional energy disputes will not end anytime soon, the panel expected an increase in bespoke arrangements promoting sustainable business, like the Dutch government’s International Responsible Business Conduct (IRBC) Agreements.

The panel agreed that energy disputes are likely to embrace procedural innovations in arbitration. Mr Partasides anticipated an increase in time-sensitive disputes that would utilise early disposition and summary judgment, such as section 21 of the VanIAC International Commercial Arbitration Rules. Ms Chedid predicted increased use of witness conferencing in the face of expert intensive disputes.

Fueling the future and saving the planet: a debate

The audience was then treated to an entertaining debate between Mark A. Luz, Global Affairs Canada, and Jim Morrison, Peter & Kim, on whether ’we should fuel our future through the extraction of critical minerals’. Alison Fitzgerald, Norton Rose Fulbright, Canada, moderated, and posed critical questions to the debaters.

When the audience heard the arguments in favour of the motion, they were optimistic that critical mineral mining can sustainably fuel the green energy transformation. It was compelling to hear that switching to green energy will offset the amount of carbon dioxide emissions from critical mineral mining, and that there are enough critical mineral reserves in the world to facilitate the green energy transformation.

Optimism waned, however, when the audience learned that the current reserves of critical minerals might not be sufficient to achieve a net-zero world. The speaker against the motion emphasised embracing the difficulty and awkwardness of the clean energy transition, comparing it to our teenage years. He argued that governments cannot be relied on to make consistent regulations on critical minerals, and warned of international block formation and trade conflicts.

Who speaks for you, me and the trees?

The final panel, moderated by Vasuda Sinha, Freshfields, discussed the role of third parties in arbitration, emphasising the need for careful consideration of their inclusion while preserving the essential characteristics of arbitration.

Abby Cohen Smutny, White & Case, highlighted the cost of disregarding third party interests in modern business, and suggested that the design phase is the ideal moment to incorporate their voices. Dr Elizabeth Whitsitt, University of Calgary, pointed out that in certain jurisdictions, regulated industries already require third party intervention, or commercial parties voluntarily enter into benefit sharing agreements with stakeholders. However, both speakers were against imposing third-party intervention on commercial parties to preserve the fundamental aspects of arbitration, such as finality, confidentiality, efficiency, and consent.

The involvement of state parties introduced a different perspective on the issue of consent. Dr Whitsitt suggested that third-party intervention becomes more conceivable when a state’s (in)actions are directly challenged in investor-state arbitrations. Gabriela Alvarez-Avila, DLA Piper, pointed out that environmental, social and corporate governance may in some jurisdictions be considered public policy, hence raising questions about arbitrability and becoming relevant in set-aside or enforceability proceedings.

The panel also explored who should represent third parties. They referenced Milieudefensie et al. v. Royal Dutch Shell plc, where the District Court of Hague confirmed the standing of NGOs, including Milieudefensie, representing the Dutch public interest, but denied standing to another NGO, ActionAid, as it did not sufficiently promote the interests of Dutch residents. The panel also considered nature’s personhood, recognised in states such as Ecuador and New Zealand, but concluded that its application in arbitration would pose risks to the legitimacy of the process.

The VanIAC-ICCA Conference came to an end with closing remarks by Tina Cicchetti, Vancouver Arbitration Chambers/ Arbitration Place, and Joe McArthur KC, Blakes, who thanked the distinguished delegates from around the world for their valuable contributions, and encouraged participants to consider using the VanIAC International Commercial Arbitration Rules.

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