The German lignite phase-out contract and investment arbitration

The briefing examines a draft contract for Germany's lignite phase-out, specifically focusing on a waiver clause designed to stop operators from using international investment arbitration. While the clause allows the government to stop compensation payments if violated, it cannot bind foreign shareholders, who may still initiate claims under the Energy Charter Treaty (ECT) or bilateral investment treaties.

• The draft contract includes a waiver clause that allows the German government to cease compensation payments and reclaim funds already paid if lignite operators initiate investment arbitration in violation of their obligations.
• A significant loophole exists because the contract and its waiver clause do not bind the shareholders of lignite companies, meaning foreign shareholders could still initiate arbitration proceedings.
• Foreign stakeholders may be able to bring claims under the Energy Charter Treaty (ECT), as its definition of investment explicitly includes "shares, stock or other forms of equity participation in a company or business enterprise".

APA

Van Den Berghe, A., & Westphal, I. (2020). The German lignite phase-out contract and investment arbitration. ClientEarth. https://www.clientearth.org/media/vu5amwng/the-german-lignite-phase-out-contract-and-investment-arbitration-isds-ce-en.pdf

Chicago

Van Den Berghe, Amandine, and Ida Westphal. The German lignite phase-out contract and investment arbitration. ClientEarth, 2020. https://www.clientearth.org/media/vu5amwng/the-german-lignite-phase-out-contract-and-investment-arbitration-isds-ce-en.pdf.

Wikipedia

{{cite report |last1=Van Den Berghe |first1=Amandine |last2=Westphal |first2=Ida |title=The German lignite phase-out contract and investment arbitration |publisher=ClientEarth |date=September 2020 |url=https://www.clientearth.org/media/vu5amwng/the-german-lignite-phase-out-contract-and-investment-arbitration-isds-ce-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vandenberghe2020german, author = {Van Den Berghe, Amandine and Westphal, Ida}, title = {{The German lignite phase-out contract and investment arbitration}}, institution = {ClientEarth}, year = {2020}, month = sep, url = {https://www.clientearth.org/media/vu5amwng/the-german-lignite-phase-out-contract-and-investment-arbitration-isds-ce-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }