Australian company sues Sweden for $1.8 billion for phasing out uranium mining
January 7, 2020: Aura Energy Ltd, an Australian company also listed in the UK, has lodged a claim under the Energy Charter Treaty (ECT) for US 1.8 billion compensation from the Swedish government because in 2018 it decided to phase out uranium mining for environmental reasons.
The company is claiming compensation for ‘indirect expropriation’ and ‘unfair treatment’ which it claims violated its ‘legitimate expectations’ of future profits.
Australia has not ratified the ECT, and did not opt to provisionally apply the treaty’s investment protections, so it appears that the company is relying on its UK listing to claim jurisdiction because the UK has ratified the ECT.
This case shows the dangers of treaties like the ECT that give special legal rights to foreign investors to sue governments for billions of dollars over policy changes by democratically elected governments arising from environmental concerns. Mining companies have made similar claims against Canada for phasing out coal-powered energy. These claims are designed to frustrate and deter democratic policy change to address climate change and other environmental concerns.
The ECT is responsible for the largest number of corporate cases against governments, called Investor-state Dispute Settlement or ISDS cases. AFTINET joined with 278 civil society organisations in signing an open letter to EU and other government members of the ECT meeting in December to update the treaty. The letter asked governments to remove ISDS from the treaty. EU governments recently terminated bilateral agreements containing ISDS between themselves, because the European Court of Justice found they violated EU law on national sovereignty.