Legal Claim Advice
Legal Claim Advice
Companies and individuals can take legal actions to seek justice and compensation against any party, including the government or other companies that they feel and believe have infringed their freedoms and rights. The law provides that contracting parties can make legal claims to enforce a right, damages, property, and money. The government of Highlands issued a concession in 2015 allowing Juniper Company Limited, a United Kingdom Incorporated company, to operate a coal-power plant for 30 years. But due to the recent multilateral climate action agreements, the Highlands government adopted a law in 2020 that bans coal-fired power generation effective after 2030. It means that Juniper will have to close down its coal-power plant operations by 2030. As provided by the law, Juniper can claim based on the BIT agreement signed and enforced in 2018 between the United Kingdom and the government of Highlands. This claim advice answers whether the BIT signed between UK and Highlands applies to Juniper’s circumstance and whether the new law violates the BIT provisions. Specifically, the provisions on expropriation and fair and equitable treatment (FET).
UK-Highlands BIT applies in the circumstances at issue.
The BIT model between the United Kingdom and Highlands applies to the circumstances under the consequences of the new law adopted by the Highlands. The fundamental purpose of the model BIT is to provide a favorable condition to facilitate more significant investment by Juniper Company Limited in Highlands guided by an international agreement to encourage and ensure reciprocal protection for the investment for mutual benefits in both states. The model defines investment to include all the business concessions conferred under contracts or by law to explore, cultivate or exploit natural resources. It means the concession agreement issued by the government of Highlands in 2015 granted the operations rights to Juniper limited, valid for the specified period. The provisions under the model BIT that directly apply to the circumstance include protection and promotion of investment, compensation for losses, expatriation, and dispute settlement between the host state and investor.
The provision under Article 2 talks about investment promotion and protection, giving Juniper and Highlands the responsibility to create and encourage favorable conditions for capital investment. Thereby, the agreement directly applies to the circumstance at hand because the two contracting parties have a shared obligation to promote and protect the investment for their mutual benefit. Consequently, the article provides that Highlands shall accord Juniper Limited equitable and fair treatment at all times, granting it total security and protection in its territory. According to compensation for losses, a contracting party suffers losses only due to war, revolts, state national emergency, and riots. Adopting a new law does not relate to any of the instances. Thereby Juniper cannot claim compensation for losses resulting from implementing the new laws banning its operations. The provision on expropriation also applies to the circumstances. The provision prevents expropriation or nationalization of investments of either contracting party. The provision only allows nationalization or expropriation when it is motivated by a public purpose based on the internal needs of a particular contracting party. Besides, adopting the new law can potentially lead to disputes between the investor and the host state applicable under article eight of the BIT agreement. The provision provides the guidelines for settling disputes that arise between the Juniper and Highlands. A conflict can arise concerning failure to honor the obligations provided under the agreement. In essence, several provisions under the BIT agreement between Highlands and UK apply in the circumstance at issue. But perhaps the conditions that have attracted more concern in this particular circumstance are Article 5 on expropriation and Article 2 on investment promotion and protection.
Expropriation and fair and equitable treatment (FET)
The new law breaches neither the fair and equitable treatment nor the expropriation provision because it does not apply discriminatory measures. A public purpose drives it. It is essential to understand that the new law is a multilateral agreement meaning that several countries have collaborated to achieve global climate action. Thus, as one of the signatories, Highlands should be on an equal playing field with the other signatories by implementing activities that will help achieve the set multilateral goals on climate change. The protection of investment provides that the investment of companies or nationals of the contracting parties shall receive fair and equitable treatment and enjoy total security and protection across the territories of the contracting parties. It further provides that neither party shall unreasonably impair or use discriminatory measures to manage, maintain, use, dispose of, or enjoy the investments in its territory. That clarifies that both Juniper and Highland should promote fairness and equity regarding the investment to protect it and increase profits for both parties. However, the provision does not make the circumstances under which either party can adopt laws or implement policies that could compromise the nature of their agreement. But it does provide that each contracting party, in this case, Highlands and Juniper, shall observe any obligation signed regarding investments for companies or nationals for either of the contracting party. From a general perspective, Highlands has failed to honor the terms of their agreement by adopting the new law, which will mean that Juniper will have to stop its operations by 2030 instead of continuing for more years according to the 30-year concession agreement issued 2015. Thus, Juniper, as one of the two contracting parties feeling that Highlands has not observed the obligations regarding their investment agreement, can consider bringing a claim as provided under investment protection. The major challenge, however, is the vagueness of the definitions under the provision. The provisions do not clearly define the terms of the contractual obligations or the nature of the unreasonable and discriminatory impairment described in the provision (Sharpe, 2021). It does not also clarify the unfair and inequitable treatment that either party could encounter within the provision. But as it remains, the new laws significantly impact the agreement between the two contracting parties. Besides, the new law does not violate the expropriation provision because the exemption allows either contracting party to make changes based on public purpose according to their internal needs on a non-discriminatory basis. Furthermore, the new law applies to all coal-power plant-based operations regardless of nationality or agreement. Yet, it is difficult to determine whether it reasonably or unreasonably impairs the contract terms because it aims to achieve a common good for the environment.
Sharpe, J. (2021). Negotiating from a Model BIT. IAI Series No.