Table Of ContentSTABILITY AND LEGITIMATE EXPECTATIONS IN
INTERNATIONAL ENERGY INVESTMENTS
Th is book assesses stability guarantees through the lens of the legitimate expecta-
tions principle to off er a new perspective on the stability concept in international
energy investments. Th e analysis of the interaction between the concepts of stabil-
ity and legitimate expectations reveals that there are now more opportunities for
energy investors to argue their cases before arbitral tribunals.
Th e book off ers detailed analyses of the latest energy investment arbitral awards
from Spain, Italy and the Czech Republic, and refl ects on the state of the art of
the legitimate expectations debate and its relationship with the stability concept.
Th e author argues that, in order to achieve stability, the legitimate expectations
principle should be employed as the main investment protection tool when a
dispute arises on account of unilateral host state alterations.
Th is timely work will be useful to both scholars and practitioners who are
interested in international energy law, investment treaty arbitration, and interna-
tional investment law.
Global Energy Law and Policy: Volume 6
Global Energy Law and Policy
Series Editors
Peter D Cameron
Pieter Bekker
Volker Roeben
Leonie Reins
Crina Baltag
Energy policy and energy law are undergoing rapid global transformation,
characterised by the push in favour of decarbonisation. Th e 2015 Sustainable
Development Goals and the 2015 Paris Agreement on international climate action
have forged a consensus for a pathway to a universal just transition towards a
low-carbon economy for all states and all societies.
Th is series publishes conceptual works that help academics, legal practition-
ers and decision-makers to make sense of these transformational changes. Th e
perspective of the series is global. It welcomes contributions on international law,
regional law (for example, from the EU, US and ASEAN regions), and the domestic
law of all states with emphasis on comparative works that identify horizontal trends,
and including transnational law. Th e series ’ scope is comprehensive, embracing
both public and commercial law on energy in all forms and sources and through-
out the energy life-cycle from extraction, production, operation, consumption and
waste management/decommissioning. Th e series is a forum for innovative inter-
disciplinary work that uses the insights of cognate disciplines to achieve a better
understanding of energy law and policy in the 21st century.
Recent titles in this series:
Decarbonisation and the Energy Industry
edited by Tade Oyewumni, Penelope Crossley,
Fr é d é ric Gilles Sourgens and Kim Talus
Th e Global Energy Transition: Law, Policy and Economics
for Energy in the 21st Century
edited by Peter D Cameron, Xiaoyi Mu and Volker Roeben
Th e Law and Governance of Mining and Minerals: A Global Perspective
by Ana Elizabeth Bastida
National Climate Change Acts: Th e Emergence,
Form and Nature of National Framework Climate Legislation
edited by Th omas L Muinzer
Governing the Extractive Sector: Regulating the Foreign
Conduct of International Mining Firms
by Jeff rey Bone
Stability and Legitimate Expectations in International Energy Investments
by Rahmi Kopar
Stability and Legitimate
Expectations in International
Energy Investments
Rahmi Kopar
HART PUBLISHING
Bloomsbury Publishing Plc
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PREFACE
Th e stability concept has been considered a shelter by international energy inves-
tors against unilateral host state actions. Investors constantly look for ways to
ensure a stable legal environment in host states in order to be able to secure profi t
from their investments. Stability provisions, as found under investment contracts
or domestic laws, are the main tools that international energy investors employ in
this regard.
Even though stabilisation clauses have been around for decades, the dispute
regarding their effi ciency is still ongoing. Th is book adds another perspective to
the utilisation of the stability concept in investment treaty protection by assess-
ing it through the prism of the legitimate expectations principle. Th e legitimate
expectations principle, as the most important component of the fair and equita-
ble treatment (FET) standard, plays a signifi cant role in providing protection to
investments. Despite this, the contours of the principle have not been defi ned well
under investment treaty jurisprudence.
Th is book explores the relationship between the stability and legitimate
expectations concepts in the fi eld of international investment law. First, it analyses
these concepts separately to identify their contours, then it brings them together
to illustrate the interplay between the two concepts. Th e book fi nds that there is
a close link between them, upon which investors might rely when arguing their
cases before arbitral tribunals.
Th e analysis in this book identifi es three main sources of legitimate
expectations: contractual commitments, administrative representations of host
states and the general legal framework prevailing in host states. It is argued that
each of these sources, when analysed in conjunction with stability commitments,
provides a stronger and more effi cient protection framework to investors under
investment treaties. Th e book shows that while stabilisation provisions create
legitimate expectations to be protected, there is also a requirement arising from
investment treaty law for host states to provide a stable investment environment,
even in the absence of an explicit stability assurance.
Th is interplay between the stability and legitimate expectations concepts
provides international energy investors with a strong means to ensure protection
before investment arbitration tribunals. Th is book advances the debate surround-
ing the FET standard and the legitimate expectations principle, and provides a
comprehensive analysis of the issue of stability in international energy investments.
Th e main aspiration of the book is to achieve the greatest use and eff ectiveness
of the stability concept for international energy investments. In order to achieve
the stability that is sought aft er, the book argues that the legitimate expectations
vi Preface
principle should be employed as the main investment protection tool when a
dispute arises on account of unilateral host state alterations.
Th is book is both timely and needed, as statistics indicate an increasing number
of investment arbitrations in the energy sector. In particular, the latest regulatory
changes in some European states, including Spain, Italy and the Czech Republic,
have caused a spike in investment treaty arbitrations under the Energy Charter
Treaty and highlighted the need for a holistic inquiry into these issues.
ACKNOWLEDGEMENTS
Th is book is an updated version of my PhD thesis, written at the Centre for Energy,
Petroleum and Mineral Law and Policy (CEPMLP), University of Dundee. I wish
to express my sincere gratitude to my supervisors, Professor Peter D Cameron and
Mr Stephen Dow. Th eir intellectual guidance, continuous support and construc-
tive comments throughout the whole time were of great help in developing and
completing this study.
Th is work would not have been possible without the funding of the Ministry
of National Education of the Republic of Turkey and therefore I am grateful to
them for providing the scholarship that made it possible for me to pursue the PhD
that resulted in this book.
I would like to off er my special thanks to Professor M Fatih Usan, the Dean of
Ankara Yildirim Beyazit University Law Faculty, Associate Professor Musa Ayg ü l,
the head of Private International Law Department, and all of my colleagues at
the department for their support. Professor Yusuf Caliskan and Professor Volker
Roeben ’ s insightful comments were really helpful in improving the study and I owe
them a great debt of gratitude. I am grateful that Hart Publishing agreed to publish
my work, and I would like to extend my thanks to Roberta Bassi and Rosemarie
Mearns from Hart Publishing for their help during the preparation of this book.
Th is book would not have come about without the guidance and mentoring
of my father, Fahri Kopar. My mother, Nesrin Kopar, deserves special thanks for
always being supportive. Th ey taught me, and made me never forget, that being a
good person and being on the straight path are more important than anything else.
Last but not least, I must thank my wife, Tuba, for constantly being by my
side throughout this entire journey. She has always been supportive and hence
she deserves my highest appreciation. Our lovely children, Ay ş e H ü ma and Ö mer
Salih, will now get their well-deserved longer hours at the playground.
CONTENTS
Preface ����������������������������������������������������������������������������������������������������������������������������v
Acknowledgements �����������������������������������������������������������������������������������������������������vii
List of Abbreviations ���������������������������������������������������������������������������������������������������xi
Table of Cases ������������������������������������������������������������������������������������������������������������xiii
Table of Legislation ����������������������������������������������������������������������������������������������������xxi
1. Introductory Remarks: The Quest for Stability ................................................1
I. General Introduction and Background.......................................................1
II. Objectives and Scope of the Book ...............................................................5
III. Justification and Significance of the Book ................................................10
IV. Methodology and Structure of the Book ..................................................14
2. International Energy Investments, the Risks and the Protection
Methods ..................................................................................................................18
I. Introduction .................................................................................................18
II. Definition of Investment .............................................................................19
III. International Energy Investments: What is Special about them? ..........31
IV. Risks in Energy Investments ......................................................................35
V. Political Risks ...............................................................................................37
VI. Sources of Investment Protection against Political Risks .......................44
VII. Conclusion ...................................................................................................49
3. Stability in International Energy Investments ...............................................51
I. Introduction .................................................................................................51
II. The Stability Concept in General ...............................................................52
III. Stability Provisions Defined .......................................................................53
IV. Sources of Stability Guarantees ..................................................................77
V. The Changing Role of Stability Provisions ...............................................90
VI. Conclusion ....................................................................................................91
4. Backgrounds of Two Contentious Concepts: Fair and Equitable
Treatment Standard and Legitimate Expectations ........................................93
I. Introduction .................................................................................................93
II. The Fair and Equitable Treatment Standard.............................................94
III. Investors’ Legitimate Expectations ..........................................................100
IV. Conclusion ..................................................................................................120
