New Article on Nuclear Power Plant Financing and International Investment LawPosted: June 24, 2013
I’ve recently had accepted for publication a new paper in the Journal of World Energy Law & Business, which is a peer-reviewed journal published by Oxford University Press. The article is entitled Nuclear Power Plant Financing Post-Fukushima, and International Investment Law. The complete paper can be downloaded from SSRN here.
This paper project took me about a year to complete, and represented a significant new direction in my research, that required a steep learning curve in order to get up to speed.
The paper grew out of my experience in consulting and advising states and private companies on international investment law in the context of nuclear power plant finance. It struck me along the way that there were some current trends in financing of nuclear power plants that were likely to make the triggering of host-state obligations under international investment law sources more likely in the future. And that this was a phenomenon that both host states and foreign investors should be aware of, as it could be quite significant in a number of calculi (risk, liability, pricing, etc.) concerning a potential nuclear power plant investment project.
Here’s the abstract. I would appreciate forwarding of the link to any listserves readers think appropriate.
The essential thesis of this article is that, as corporate and project finance trends continue in nuclear power plant financing, resulting in diversified and much broader and more complex structures of foreign investment, international investment law will become increasingly relevant to and influential upon these transactions. This in turn will spawn a new wave of disputes based in international investment law claims, before international arbitral tribunals including the ICSID. After discussing the 2011 Fukushima nuclear disaster, and the first international investment law case directly related to an investment in a nuclear power plant, the article begins in Part I by describing recent trends in the financing of nuclear power plants. These trends include a shift from almost exclusively sovereign-assumed financing cost and risk, to other financing models which increasingly access global capital markets, and spread risk among a larger and more diverse set of investors. It then proceeds in Part II to review and consider the international legal sources addressing nuclear energy development and related international trade and investment transactions, focusing on the sources of international investment law. It considers both the primary ways in which the current trends in nuclear power plant financing are making international investment law increasingly relevant to nuclear power plant related investments, as well as the secondary effect this increasing relevance will likely have upon future structuring of financing arrangements for new nuclear power plants. In Part III it provides detailed consideration of the application of international investment law to foreign investments in nuclear power plants, including areas in which host states of such investments are most likely to experience increased exposure to liability due to current financing trends. It concludes with a further consideration of the secondary effects caused by this increased host state exposure to liability, including effects on future structuring of financing arrangements for new nuclear power plants, and effects on (re)negotiations of international investment law instruments between actual or potential host states, and states that are actual or potential home states of nuclear vendors and investors.