Investment Protection in the Oil & Gas Sector

Investment protection is particularly relevant to the energy and natural resources industries.  As of July 2013 25% of the cases registered with ICSID have concerned the oil, gas and mining sectors and a further 12% of cases have concerned the electric power and other energy sectors.

Investments in these sectors are vulnerable to governmental interference due to the fact that they are typically capital-intensive, long-term and highly regulated and concern public and valuable resources and essential services.  These attributes increase the likelihood of disputes arising out of changing political and regulatory landscapes over the life of a project.

Due to their nature, many undertakings in the energy sector will typically qualify for protection under applicable investment treaties.  Issues may arise in relation to grey areas such as hedging arrangements and pure sales or services contracts and in these cases much will turn on both the precise nature of the undertaking as well as on the precise definition of a qualifying “investment” in the applicable investment treaty.

Investments in the energy sector are also the object of a special multilateral investment protection agreement contained as a chapter within the Energy Charter Treaty (ECT).

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