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Making Germany's Energy Security of Supply Act future-proof – Legal scholar from Passau was invited to advise Bundestag

Dr Patrick Abel from the University of Passau testified as an expert witness to the Committee for Climate Protection and Energy in Germany's federal parliament, the Bundestag, on the planned amendment to the Energy Security of Supply Act. According to him, the bill is a move in the right direction, but the details would need further looking into.

Industrial plant. Symbol picture: Colourbox

Under the amended Energy Security of Supply Act, the government can place privately run power companies that are critical for Germany's infrastructure under fiduciary management. Subject to strict provisos, it can even expropriate them if supply security comes under threat. The governing traffic-light coalition had decided to introduce the relevant amendments last year. Subsequently, the law was applied against the German subsidiaries of the Russian power corporations Gazprom and Rosneft: In April and September 2022, the federal government placed the companies under the trusteeship of the Federal Network Agency.

A number of further amendments to the law are now being discussed, including a new paragraph to regulate the transfer of assets belonging to such companies that have been placed under state trusteeship. The primary focus is on claims for damages that may be asserted by the affected companies. On 27 March, legal scholar Dr Patrick Abel from the University of Passau, whose research fields includes energy law, testified as an expert witness at a hearing held by the Committee for Climate Protection and Energy of the Bundestag.

No trump card against damage claims

According to Dr Abel, the bill was a move "in the right direction". On the whole, he believes the approach taken to be legitimate and commendable. "I would recommend making some refinement regarding the right to being heard and compensation, especially for the sake of avoiding mistakes in the application of the law and minimising litigation exposure," he says. The main goal is to make the law clearer and "future-proof". In providing for the exclusion of damage claims, the current bill is being played as a "trump card": "The exemption suggests that companies controlled by foreign states (especially Russia) will be deprived of the right to claim compensation right from the start." Things are not that easy, however, as international law must also be taken into account, especially international investment protection law. Dr Abel advised the government not to categorically exclude compensation for companies that make up critical infrastructure ab initio but to examine each individual case so as to avoid exposure to legal liability. The key is to choose a course that is consistent with the rule of law.

Furthermore, he found it problematic, from the perspective of constitutional law, that the Energy Security Supply Act provides the possibility of refusing affected companies the right to be heard altogether if the effort required is deemed disproportionate. Given the substantial economic impact for the companies themselves, Dr Abel considers any such exclusion unreasonable and believes it should be struck down.

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Dr. Patrick Abel

Dr. Patrick Abel. Foto: Uli Schwarz/Universität Passau

Since October 2021, Dr Patrick Abel has been conducting research at the Law Faculty of the University of Passau, more specifically at the Chair of Constitutional and Administrative Law, Public International Law, European and International Economic Law headed by Professor Christoph Herrmann. Dr Abel's areas of interest include climate protection and energy law in the international context. His input is informed by the findings he made in his widely acclaimed doctoral thesis, where he demonstrated how investment protection law can be tied up with foreign investor obligations.

"I am delighted that our chair's expert knowledge is being heard at federal level," said chairholder Professor Christoph Herrmann, LL.M., who himself has extensive experience as an advisor and expert at both national and European level in issues relating to European and international business law.

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