Arbitration in the energy sector
Produced in partnership with Katharina Brueckner of Baker McKenzie LLP
Arbitration in the energy sector

The following Arbitration guidance note Produced in partnership with Katharina Brueckner of Baker McKenzie LLP provides comprehensive and up to date legal information covering:

  • Arbitration in the energy sector
  • The energy market
  • Arbitration as the preferred method to resolve disputes
  • Scope of energy arbitration
  • Nature of energy disputes—gas price reviews
  • Seat of the arbitral tribunal, institutions and rules
  • Selection of arbitrators in energy disputes
  • Key role of experts

The increasing liberalisation of markets, accompanied by a decrease of trade barriers and more developed technologies have arguably led to a gradually more international energy market, which is marked by expansion, joint ventures and cross-border investments of various kinds.

As a consequence, dispute resolution mechanisms have needed to adapt to new challenges. Energy investments are often made in countries providing less stability and security than the investor's host state. Thus, the growing internationality of the energy sector encompasses complex cross-border disputes as a result.

This Practice Note may be read usefully in conjunction with Practice Note: Oil and gas projects—contracts and disputes.

The energy market

Dominated by oil and gas, the energy arbitration sector comprises investments concerning fossil fuel sources such as biomass, wood, nuclear, coal, wood, oil and gas, as well as renewable energies like hydro, wind, geothermal, solar and tidal power. It is characterised by capital-intensive and complex deals of typically large volumes. Transactions and investments are usually long-term in nature and involve players from different countries and cultural backgrounds.

The last decade showed a trend to decouple oil and gas prices and the emergence of spot markets (in which financial instruments or commodities are traded for immediate delivery rather than at a later date (a futures market). The UK and northwest Europe largely base contracts on the spot market, whereas