Dutch government sued at World Bank tribunal for fossil fuel phase out plan

13 July 2021

In February, online news site Clean Energy Wire reported that German energy company RWE has sued the Dutch government “for compensation payments in relation to the country’s coal phase-out plans” at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID, see Inside the Institutions, ICSID). The article notes that, “in contrast to Germany’s planned coal exit, the Dutch phase-out law for the fossil power source does not stipulate an ‘adequate compensation’ for plant operators.” According to a March report by the Netherlands-based Centre for Research on Multinational Corporations (SOMO), RWE “seeks €1.4 billion in compensation for damages resulting from a new law, adopted in December 2019, that prohibits the use of coal for the production of energy as of 2030.”

In a separate report, which focused on Anglo-Dutch oil and gas company Royal Dutch Shell’s use of investor-to-state dispute settlement (ISDS) mechanisms to thwart state efforts to work toward a green and just energy transition, SOMO stressed that “almost a fifth of the more than 1,000 registered ISDS cases relate to fossil fuel investments”, including oil and gas extraction and transportation, gas supply and combustion, oil refining, and coal extraction. These reports add further evidence of the power of the regulatory chill produced by the threat of action in international arbitration tribunals such as ICSID, which threatens climate action and undermines state responses to the Covid-19 pandemic (see Observer Summer 2020; Winter 2020).