Energy Arbitration and Emerging Claims: A Post-COVID-19 New Normal?

Document Cited in Related
DOI10.3366/gels.2020.0029
Published date01 August 2020
Date01 August 2020
Pages205-210
Author

For the energy sector and its stakeholders, COVID-19 and the measures taken in response to it, could not have come at a more critical time. Considering the role of energy as a driver of economic activities, and the ongoing quest for a just transition to low-carbon economies, the impact of COVID-19 will be huge on the energy industry.

Over the years, investors in the energy industry have shown significant preference for arbitration as the mechanism of choice for resolving disputes1. In recent years, major arbitral institutions have witnessed a steady increase in disputes involving climate change and green technology-related issues.2 Expectedly, these have been intrinsically linked to the transition away from traditional energy sources to increased investments in renewable energy sources, modernisation of power grids, and the improvement of energy storage.3 Undoubtedly, COVID-19 will give rise to multi-faceted ways through which some of these disputes would arise, and a shift on how they will be settled.

With the global-scale lockdowns severely inhibiting mobility in and out of most countries, global demand for transportation fuel plummeted. The projection is that if the lockdown measures continue, there could be a 6% decline in global energy demand.4 One unintended but inevitable consequence of the fall in global demand for energy and oil is the over-utilisation of available terminal and tanker storage facilities for hydrocarbon products.

With limited demand for commodities and lack of storage capacity, the prices of products have taken a nose-dive to the point that the West Texas Intermediate traded at a negative. In contrast, Brent Crude traded below $30 per barrel. Price changes in the energy industry are usually critical determinants of change. As the industry adapts to the shift in global economics, low oil prices will influence investment decisions.

Conversely, the decreases in the emission of CO2 and NO2 during the lockdowns,5 give greater impetus to climate change obligations and the energy transition. The momentum these decreases bring level presents an excellent opportunity for governments to ramp up investments into low-carbon sources of energy by initiating recovery policies that are based on clean energy.

COVID-19 's impact has been regarded with some concern in some countries. The disruption of project development programs has not seen as many force majeure calls compared to the level of disruptions. . There is no guarantee though that this will remain the same as the world moves further into a COVID-19-inflicted new normal. Governments and energy investors seeing revenues shrink could seek to ascribe the resultant liabilities occasioned by the pandemic.

...

Get this document and AI-powered insights with a free trial of vLex and Vincent AI

Get Started for Free

Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant

  • Access comprehensive legal content with no limitations across vLex's unparalleled global legal database

  • Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength

  • Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities

  • Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

vLex

Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant

  • Access comprehensive legal content with no limitations across vLex's unparalleled global legal database

  • Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength

  • Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities

  • Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

vLex

Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant

  • Access comprehensive legal content with no limitations across vLex's unparalleled global legal database

  • Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength

  • Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities

  • Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

vLex

Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant

  • Access comprehensive legal content with no limitations across vLex's unparalleled global legal database

  • Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength

  • Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities

  • Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

vLex

Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant

  • Access comprehensive legal content with no limitations across vLex's unparalleled global legal database

  • Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength

  • Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities

  • Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

vLex

Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant

  • Access comprehensive legal content with no limitations across vLex's unparalleled global legal database

  • Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength

  • Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities

  • Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

vLex

Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant

  • Access comprehensive legal content with no limitations across vLex's unparalleled global legal database

  • Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength

  • Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities

  • Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

vLex