Sued for acting on climate breakdown?

A German company is threatening to sue the Netherlands for their plan to phase out coal.

An innovative Dutch law that will see the phase-out of coal power by 2030 is at the source of a conflict between Uniper, a German coal company, and the Dutch government. Uniper is threatening to sue the Netherlands for millions of Euros if they try to stop them burning coal.

In 2007, Uniper invested more than €1.6 billion building a coal power plant, in the Netherlands. In 2017, the Dutch government announced that in order to meet its commitments to reduce CO2 emissions it would commit to ending the burning of coal to generate electricity by 2030 at the latest.

The company claims that the Netherlands asked for the power plant and is now reversing its decision.

As a result, Uniper is threatening to sue the Netherlands under the Energy Charter Treaty if they don’t get financial reparation for what they say is a change of policy. The Energy Charter Treaty protects the interest of companies that have invested in energy infrastructure.

In an interview with Dutch newspaper De Telegraaf, Hans Schoenmakers director of Uniper Benelux said: “I will not say that at that time the government explicitly asked us to build a new coal-fired power station. But those conversations convinced us [that that was what they wanted].”

Uniper claims that stopping coal exploitation in 2030 would cost the company millions. They estimate that their plant could still run for about 40 years.

The Dutch law proposes that the plants be converted into biomass plants. However, Duurzaam Nieuws reports that the Eerste Kamercommissie – a special committee set up by the Ducth Senate – doubts that passing from one fuel to another be possible until 2030.

Usually, when a company invests in a foreign country, rules in the investment treaties apply to protect the investors. In case of a dispute, the ISDS mechanism (Investor-State Dispute Settlement) is used to resolve the issue.

ISDS is criticized by activists because cases are decided in private arbitration instead of in open and public courts. Environmental groups argue that the composition of these tribunals is problematic and they highlight the lack of accountability. The system only allows for investors to sue States, not the other way around, and there is no additional oversights from another party or a way to appeal a decision in ISDS. It creates a parallel business-friendly judicial system that only applies to corporations. Sometimes the decisions and the amount of money involved in ISDS remain confidential so people are often unaware of the disputes because of the lack of transparency in the process.

Francesca Carlsson, Legal Officer at the European Environmental Bureau, explained to META that the case fell under the European Court of Justice competence, as the investment of a German company in the Netherlands is an issue of free movement between EU Member States.

“All disputes on all matters should be resolved in independent courts, it is totally unacceptable that a German company threatens to sue the government of another Member State with an ISDS – for potentially billions of Euros of Dutch taxpayers’ money – outside the designated court system that all the rest of us are otherwise subject to. We have to stop giving special treatment to investors, we are all equal before the law.”

Francesca Carlsson

Nick Meyen, Policy Officer for Environmental and Economic Justice at the European Environmental Bureau, has been a leading voice in the Rights for People, Rules for Corporations – Stop ISDS! campaign. It aims to eliminate ISDS processes that “threaten democratic decision making, the rule of law, human rights, the environment, health, public services, gender equality, as well as consumer and labour rights.

“It is the ISDS mechanism that locks in so many bad policies that push both people and planet to a burnout. ISDS threats and cases boil down to this: foreign investors handcuffing policymakers who wish to put the interests of all people above the expected profits of a single company.”

Nick Meyen

The Dutch coal phase out law was approved by the country’s lower chamber on 4 July 2019. It must now be accepted by the upper chamber.

Feature image source: Sonia Goicoechea