Review DIS Autumn Conference 2022: “Disputes in an Age of Uncertainty – Managing the Energy Transition”

The first panel was comprised of Elena Busson (BonelliErede), Nikolas Hübschen (RWE Renewables GmbH), Bregje Korthals Altes (Ysquare Dispute Resolution) and Sebastian Schneider (Hengeler Mueller). Moderated by Florian Cahn (Framatome GmbH), the panel discussed contractual best practices to cover for uncertainty in energy-related transactions. With regard to M&A transactions it was noted that cheap financing and a boom in investments in renewable and ESG sectors during the last years has lead to a seller’s market and the risks being largely passed on to the buyers, which, however, is likely to change in light of recent developments and rising financing costs. In long term energy projects involving multiple players, covering for uncertainties can be more complex. Regulatory uncertainty is regularly a key aspect in the negotiation of such projects. While known risks can be specifically addressed in the project contract, long-term projects are often also confronted with changes that were unforeseeable and therefore could not be specifically addressed. This is where hardship and force majeure clauses come into play, which are currently being invoked more and more frequently in disputes.

“Managing Uncertainty – Procedural Best Practices” was the topic for the second panel which was comprised of Antje Baumann (BAUMANN Resolving Disputes), Christian Borris (Borris Hennecke Kneisel), James Boykin (Hughes Hubbard & Reed) and Anja Ipp (Climate Change Counsel). The panel moderated by Maxi Scherer (WilmerHale) discussed what types of disputes are to be expected from the energy transition, what procedural issues they may typically entail and which procedural tools are available to deal with them. As many of the disputes are expected to involve technical and scientific issues, much of the discussion was devoted to the best use of experts. The discussion revolved around familiar issues such as the advantages and disadvantages of party- and court-appointed experts and the use of tools like expert conferencing and “hot tubbing”. Another key area of discussion was whether there is a greater need for transparency due to public interest involved. This was predominantly answered in the negative, at least for commercial arbitration where the arbitrator is tasked by the parties to resolve the dispute between them, not to make policy.

After lunch, a coffee house debate moderated by Nils Schmidt-Ahrendts (Hanefeld) kicked off the afternoon session of the conference. Mino Han (Peter & Kim), Johannes Koepp (Baker Botts), Courtney Lotfi (Jones Day) and Simon Manner (MANNER SPANGENBERG) had a lively discussion on the provocative question “Did Discovery/Document Production ever Lead to the Truth?”. Ms Lotfi and Mr Manner took the negative position, arguing that document production, while very time and cost intensive, never produces the smoking gun. Mr Koepp and Mr Han took the opposite position, arguing that in an age where virtually every aspect of life is documented in some way, document production is more important than ever and instead of dispensing of it entirely, the focus should be on its efficient use. (The positions taken in the debate did not necessarily reflect the personal views of the speakers.)

The following panel moderated by Alexander Demuth (Alvarez & Marsal) and speakers were Johanna Reichenbach (Frontier Economics), Stuart Dekker (Secretariat) and Dan Harris (The Brattle Group) presented and discussed “Old school vs Modern Approaches“ to assess and value the uncertainty inherent in long-term energy investments and projects. First, Mr Dekker explained how uncertainty can be reflected in the traditional discounted cash flow method (DCF) and a more “modern” approach to DCF. Mr Harris then introduced the audience to the Monte Carlso Simulation method to capture risk and make predictions about future price development. Lastly, Ms Reichenbach presented the fundamental energy market modeling.

The final panel, comprised of Manfred Dittmer (Parkwind), Carlo Ottaviano (TenneT) and Roya Sangi (Redeker Sellner Dahs) and moderated by Markus Köhler (Oppenländer), was devoted to the topic of „Resolving Uncertainty: Arbitration to Accelerate the Energy Transition?“ and focused on the discussion of whether disputes relating to offshore grid connection costs can be submitted to arbitration instead of litigation. The costs for the grid connection can be socialized as costs for the transmission grid, but only if they are accepted by the Federal Network Agency as “reasonable” costs. Contractual disputes relating to these costs are likely to involve highly complex technical issues, which makes arbitration preferrable over litigation in state courts. Against this background, it was discussed which prerequisites would have to be fulfilled to best ensure acceptance of the arbitral tribunal’s decision by the Federal Network Agency.

Both the DIS40 and the DIS Autumn Conference offered a great insight into highly relevant topics that are sure to be on our minds for the time to come.

Tanja Stooß

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