Swedish Company Uses Corporate Sovereignty Clause To Demand 4.7 Billion Euros From German Public

Legal Issues

from the are-you-sure-that's-enough? dept

Thu, Oct 16th 2014 12:48am — Glyn Moody

A couple of months ago we mentioned the long-running legal battle involving the Swedish energy company, Vattenfall, which is suing Germany using corporate sovereignty provisions in the Energy Charter Treaty after the German state decided to phase out nuclear power stations. The rumored figure we mentioned then was the already-generous €3.7 billion; but it has just been revealed that Vattenfall is actually demanding even more -- €4.7 billion, to be precise. We know this is the real figure, because it was mentioned by Germany's Minister of the Economy, Sigmar Gabriel (original in German.)

This fact may help to explain persistent reports that Germany will not agree to the inclusion of an investor-state dispute settlement (ISDS) chapter in either TAFTA/TTIP or CETA (the Canada-EU trade agreement). Germany is already experiencing first-hand the dangers of such corporate sovereignty provisions, and clearly wants to avoid suffering any more on this front.

The latest information, reported by the German news magazine Der Spiegel, points out that two other energy companies, RWE and E.on, are unable to sue in the same way as Vattenfall, because they are German companies, and the ISDS option is only available to foreign investors. This underlines the fact that, far from creating a level playing-field, corporate sovereignty is biased against local companies. For this reason, RWE and E.on are also trying to sue in Germany's national courts in order to obtain compensation, as Vattenfall is doing with the ISDS tribunals; whether they can depends on a ruling from Germany's constitutional court, due early next year. Interestingly, Vattenfall is also suing the German government through these courts -- which shows how ISDS gives foreign investors extra ways of claiming compensation.

Finally, the Der Spiegel article points out that the original estimate of the potential costs to the German government (and thus to the German taxpayer, who has to pick up the bill) from the action in the national courts, which were put at between €15 billion to €20 billion, are probably too high. That's because the price offered for supplying electricity has now dropped, bringing down potential profits too. That demonstrates the danger of granting corporate sovereignty tribunals unchecked power to make awards in favor of companies based purely on the latter's probably exaggerated claims about uncertain "losses" far into the future.

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Filed Under: corporate sovereignty, germany, investments, isds, lawsuits, tafta, ttip
Companies: vattenfall

37 Comments

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Anonymous Coward, 16 Oct 2014 @ 1:47am

The people of the world need to unite and stand up to large companies and tell them they do not have the rights to guaranteed income.

Companies should never be "too big to fail" in which the public needs to bail them out, nor should they ever be able to sue sovereign countries for imaginary lost income due to laws and regulations.

If corporations want to be people, then they're not immune to getting screwed like people (usually like the people they're screwing themselves) and left to die like people when they've reached the end of their life.
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David, 16 Oct 2014 @ 2:04am

Re:
Wishful thinking. You have been assimilated by the Corp. Resistance is futile. All your leaders have Corp blood running through their assets. If it walks like a green-billed platitude, and talks like a green-billed platitude, why, it is a green-billed platitude! Don't confuse them with warm-blooded individuals.
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Anonymous Howard (profile), 16 Oct 2014 @ 2:10am

Right for expected future profits?
Paint me confused, but ISDS isn't supposed to counter expropriation of material assets of a company?

What the fuck does this has to do with patents, regulations and other imaginary "assets".

Not to mention "expected future profits"?
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Anonymous Coward, 16 Oct 2014 @ 2:49am

Re: Right for expected future profits?
That's what it they claim it does. In reality the wording is usually so overbroad that companies can sue a country and change laws for ANYTHING that might hurt their profits. Even at the expense of the citizens of the country.
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I hate people, 16 Oct 2014 @ 2:53am

making people suffer
Pretty much said in the subject line

people should suffer because...

I have been interested in what the internet(s) could have been and copyright and patents where not part of that.
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Christopher (profile), 16 Oct 2014 @ 3:18am

Does that company have an army?
Because Germany does. Go ahead and sue... now try to collect it. Honestly, these paper fictions all burn away if you meet someone that doesn't care to play this stupid game.

-C
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Anonymous Coward, 16 Oct 2014 @ 3:55am

and the ISDS is still wanted in the various deals, such as TTIP and TAFTA. is it any wonder? companies can force payments from countries and actually put them in the bankrupted club, as well as making a company mega rich! this is an awful inclusion in any deal and needs to be removed for good! just think of the consequences. a country that has been on the verge of bankruptcy could be thrown a 'lifeline' in the form of 'we want to be able to spy on every one of your citizens and companies. we want to be able to ...............' the demands could be endless and possibly worse than the bankruptcy.
i hope Germany fights this and gets other countries to back it too!
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Richard (profile), 16 Oct 2014 @ 4:19am

Re: Does that company have an army?
No but Sweden does have an army.

In the past the outcome of this would have been a war!
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Merijn, 16 Oct 2014 @ 4:44am

Read and think critically before you post
No where in this article does it say Vattenfall is sueing the government because they need to be bailed or, does it imply the German government is bailing them out.

Vattenfall is sueing for the destruction of value in their assets by the German governments decision to abandon nuclear power. Vattenfall still has to pay for the dismanteling of their plants, replacment of generational capacity and quite possibly unwinding of their hedges (e.g. they probably sold a large chunk of their expected output on the futures market).

Before you post, think critically.. all this hippy nonesense about companies being to big to fail.
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Anonymous Howard (profile), 16 Oct 2014 @ 5:02am

Re: Does that company have an army?
That's where Shadowrunners come into play!
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That One Guy (profile), 16 Oct 2014 @ 5:05am

Re: Read and think critically before you post
Vattenfall is sueing for the destruction of value in their assets by the German governments decision to abandon nuclear power.

And? What's the alternative, locking in a previous decision by a government because to do otherwise would 'destroy the value' of a company's assets in an area?

The government previously had decided one way on nuclear power, and Vattenfall acted accordingly. Now the government has changed their mind, and it's up to Vattenfall to deal with that, not try and sue to recoup 'lost' profits and 'worth'.

You don't always come out ahead in business, that's kinda how it works. To attempt to force the german people to pay back what the company spent is basically trying to turn it into a win-win situation for the company, where no matter what happens they don't lose money on a given venture.
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Henrie Schnee, 16 Oct 2014 @ 5:11am

Re: Does that company have an army?
An army of lobbyists?
It's not like they "sue" in order to fight the government. Both legislators and shareholders "agree" that money will flow, the court proceedings mentioned above are just a public facade. German mentality breeds a very kafkaesk kind of corruption.
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Anonymous Coward, 16 Oct 2014 @ 5:16am

Did they have a signed contract to supply said power? If so they can sue in regular court for breach on contract. If not then wtf? Stop gambling with the stock holders money.
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Anonymous Coward, 16 Oct 2014 @ 5:19am

Re: Read and think critically before you post
"Vattenfall still has to pay for the dismanteling of their plants, replacment of generational capacity and quite possibly unwinding of their hedges "

Awwww, isn't that sad. I know, let's all pitch in and help them out - not.

It's not like this or any other corporation is going out iof their way to help those in need, so to hell with them. They made their bed and now they have to sleep in it. I'm sorry, but that is capitalism at its finest, they should have read the contract and tough shit ......
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Anonymous Coward, 16 Oct 2014 @ 5:26am

Re: Read and think critically before you post
Are you investor in Vattenfall?
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Stewby, 16 Oct 2014 @ 7:00am

If only Grünenthal had the recourse of corporate sovereignty provisions their poor shareholders wouldn't have lost out on their future Thalidomide windfall.
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Anonymous Coward, 16 Oct 2014 @ 7:47am

Re: Re: Read and think critically before you post
The biggest problem with ISDS is that it is effectively extrajudicial. Yes, a company should reasonably be able to fight or receive compensation for the expropriation of their assets. But this should occur through the courts, not a Tribunal.
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Anonymous Coward, 16 Oct 2014 @ 7:47am

Re: Re: Read and think critically before you post
The biggest problem with ISDS is that it is effectively extrajudicial. Yes, a company should reasonably be able to fight or receive compensation for the expropriation of their assets. But this should occur through the courts, not a Tribunal.
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Hephaestus (profile), 16 Oct 2014 @ 7:51am

Re: Re: Does that company have an army?
Germany -vs- Sweden ... anyone want to make a bet on who would win that one?
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Hephaestus (profile), 16 Oct 2014 @ 7:55am

Re: Read and think critically before you post
With the way clean energy is going in Germany the companies would have failed anyway in 5 years.
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Anonymous Coward, 16 Oct 2014 @ 8:06am

Re: Re:
Quick, whats the difference between an Executive in a large Corporation and a Politician...

I don't know either!
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Anonymous Coward, 16 Oct 2014 @ 8:52am

Re: Re: Re: Does that company have an army?
Wait, I got this. Viking raiders pillage all up and down the Elbe until they approach Berlin, at which point Angela Merkel forks over 4.7 billion Euros of Danegeld.

As horrible as some of these trade agreements are, we should at least be grateful we don't live in the seventh century.
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Anonymous Coward, 16 Oct 2014 @ 9:22am

...Vattenfall still has to pay for the dismanteling of their plants...

There are businesses that have been around over 100 years. A nuclear power generating plant will not be one of them. A nuclear power generating plant will have a finite life span. Anybody building such a plant should know about that before spending their money.
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Anonymous Coward, 16 Oct 2014 @ 10:05am

Taxation without representation. Germans are being taxed/fined (Obamacare calls it a tax, not a fine) by foreign corporations, without any representation for the taxpayers.
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John Fenderson (profile), 16 Oct 2014 @ 10:08am

Re:
German citizens are being taxed/fined because of Obamacare? Huh?
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Anonymous Coward, 16 Oct 2014 @ 10:18am

Re: Re:
It all depends on your perspective. If we're talking about Obamacare then it's classified as a 'tax'. If we're talking about Corporate Sovereignty then it's classified as a 'fine'.

The end result is the same in both cases. The taxpayers end up paying the tax/fine.
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John Fenderson (profile), 16 Oct 2014 @ 11:05am

Re: Re: Re:
But how does that relate to German citizens? Nobody in Germany is being required to comply with Obamacare. Obamacare is a US thing.
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Anonymous Coward, 16 Oct 2014 @ 11:10am

Re: Re: Re:
One is mainly greedy the other is a professional liar.
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Anonymous Coward, 16 Oct 2014 @ 11:18am

Re: Re: Read and think critically before you post
I am not fond of large corporations but I bet there was a multi year contract with the government about how much and how long they would be generating power. If the government cancelled then the need to pay for breaking the contact. Otherwise how could you even trust the government with any contract if they can break them and not pay the consequences.
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John Fenderson (profile), 16 Oct 2014 @ 11:22am

Re: Re: Re: Read and think critically before you post
If this is the case, then there's no need to bring corporate sovereignty rules into it at all. It's a straight-up breach of contract dispute.
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art guerrilla (profile), 16 Oct 2014 @ 11:27am

Re: Right for expected future profits?
i'm with you on this one, bro: future profits ? ? ?
um, depending on your time line, future profits = ZERO
since when have 'profits' been GUARANTEED ? ? ?
ISN'T that *supposed* to be the WHOLE POINT of so-called 'free market capitalism' ? ? ?

SOME one, ANY one makes a cheaper widget, offers a better service, provides a comprehensive solution for your wants/needs, and you go with them, and we call that 'competition' and the audience claps...

ain't that the way it is *supposed* to work ? ? ?
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dungeonlight, 16 Oct 2014 @ 2:37pm

There will be more cases like that in the future...
if CETA will be adopted instead of rejected.

The second point is:
ISDS is not the only mechanism wiping democracy away.
There is also "regulatory council" and "stillstand clause".

And I'm sure that they are not only part of TTIP, but also CETA and TPP. Don't forget them.
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David, 16 Oct 2014 @ 3:03pm

Re: Re: Re:
They are on different sides of a revolving door.
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That One Guy (profile), 16 Oct 2014 @ 5:26pm

Re: There will be more cases like that in the future...
I believe I've heard of regulatory councils before, but this is the first time I've seen 'stillstand clause' mentioned, just what is that?
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Anonymous Coward, 16 Oct 2014 @ 6:07pm

Re: Re: Re: Re:
Haven't you heard?
Obama is responsible for everything bad that happens,
while everything good that happens is because of those who are working against him.
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Anonymous Coward, 16 Oct 2014 @ 6:16pm

Investor State Idiotic Strategy, or ISIS for short, is causing much consternation and anguish across the globe. These freaks think they can run roughshod upon the backs of their victims, Gangnam Style while laughing it up on ill gotten gains. Well, nothing lasts forever and when the shit hits the fan it tends to go everywhere, umbrellas don't help much.
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Cerberus (profile), 16 Oct 2014 @ 10:05pm

Re: Re: Re: Read and think critically before you post
I'd say it is up to the German courts to determine how to deal with Vattenfall's projected losses fairly and responsibly. No need for undemocratic foreign lawyers with huge conflicts of interest.
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