TRADE AND ENERGY: Investment in the Gas and Electricity Sectors

Lars Albath

Our consumption of electricity and gas is growing. Equally steady is the growth of transborder trade and the need for investment in both sectors. In view of these phenomena, the question as to the legal framework for such transactions arises. Which problems appear, where are gaps in the legal set-up, which developments are to be envisaged?

Regulators acting in the field of energy are faced with three objectives: security of supply, efficient use of market forces, and environmental concerns. International trade law aims to establish and maintain unfettered international trade. International investment law intends to enable and to protect foreign investment. In this situation, a balancing of these diverse goals is required.

This work examines the legal framework for such balancing exercises by describing and analysing the international rules applicable to trade in electricity and gas. Asking these questions is not only of value because of the extremely high economic significance of electricity and gas and the consequentially high potential for conflicts. The application of the current law on international trade and investment to electricity and gas also offers the possibility of discussing some of the most fascinating questions of both bodies of law. Finally, the current political discussion on both issues is very dynamic and needs to be considered as well.

Departing from a description of the technical and economic characteristics of network dependent energies, the book offers a critical analysis of the international rules applicable to trade and investment in electricity and gas. While focussing on the agreements administered by the World Trade Organisation (WTO), other agreements such as the Energy Charter Treaty and the North American Free Trade Agreement are also taken into account. Examples modelled on real cases illustrate the application of the international rules.

The Structure of the Work

Chapters 1 and 2 give a short overview of the technical and economic background of trade and investment in electricity and gas will be given. It will clarify the subject of the study in factual terms. This information is helpful for an understanding of the phenomena under consideration and necessary to appropriately assess the legal questions.

Chapter 3 deals with some basic features emerging in both the fields of law studied. The protagonists in electricity and gas trade and investment are introduced and typical lines of conflict are described. Basic terminology of international economic law is explained and working definitions are developed. A practical scheme for the assessment of legal problems in both fields is introduced. Finally, some basic features of the current legal and political discussion are outlined.

Chapters 4 and 5 analyse international trade law and international investment law respectively and their application to electricity and gas. Special attention will always be paid to the possibility of waging values.

Chapter 6 will summarise the two foregoing chapters and try to provide an overview.

The study was finalised in July 2003 and updated in early 2004.

ISBN 10: 1 905017 02 2

ISBN 13: 978 1 905017 02 7

• Hardback  • 299pp • 2004 • £125.00