The linkage between legislation and adjudication: The impact of arbitration tribunal decisions on energy policy and regulatory framework

Abstract

With the proliferation of Investor-State Dispute Settlement cases pertaining to renewable energy, it has been observed that arbitration tribunals are gradually assuming the role of de facto contributors to energy and climate policymaking, exerting influence on the regulatory framework. In light of this context, the objective of this study is to analyze the impact of international arbitration cases concerning renewable energy investments on the development of renewable energy policy, while simultaneously proposing avenues for enhancing legislation pertaining to investment protection standards. Spain will be used as a case study to elucidate the key trends within the evolving legal landscape surrounding renewable energy and shed light on how tribunals interpret the standards of investment protection. Furthermore, the study explores the hypothesis of a regulatory chill effect resulting from ISDS decisions, developing, and employing a theoretical framework to conceptualize this notion. Due to the challenges associated with establishing conclusive evidence of the regulatory chill phenomenon, establishing a concrete linkage between the phenomenon and its impacts on policymaking remains difficult. Nonetheless, in the case of Spain, it can be argued that the country has experienced a "response chill" in connection to the protracted legal disputes surrounding its renewable energy sector. Lastly, this thesis discusses the implications of arbitration cases related to renewable energy on the investment protection regime and emphasizes the necessity of striking a better balance between the state's right to regulate and the protection of investments.