Oil firm Rockhopper wins £210m payout after being banned from drilling

theguardian.com:

A corporate tribunal has ordered the Italian government to pay more than £210m to the UK oil company Rockhopper as compensation for an offshore oil drilling ban.

Rockhopper’s case was launched after the Italian government banned oil exploration and production within a 12 mile-limit off the Italian coast in 2015, scotching the firm’s planned Ombrina Mare oilfield.

Following a closed-door tribunal operating under the energy charter treaty (ECT), which has been criticised for its lack of transparency and operating outside national court systems, a panel of judges unanimously agreed on Wednesday that Italy had breached its obligations to Rockhopper, entitling it to a compensation payout of about six times more than the estimated £33m the firm had invested in the project.

The ECT was drawn up to protect the profits of European energy firms as the Soviet Union crumbled in the early 1990s. Under the terms of the ECT, companies can sue governments if they make policy decisions that could cut profits. This poses a clear challenge as governments seek to reduce their fossil fuel emissions.

Payouts under the treaty could reach as much as $1.3tn by 2050, according to Yamina Saheb, an ECT official turned whistleblower, who is also the lead author of a UN Intergovernmental Panel on Climate Change (IPCC) working group paper on climate mitigation.

Saheb said Wednesday’s panel decision was “exactly in line with my earlier projection, and confirms its accuracy”.

“If policymakers want to make the EU climate neutral they must withdraw from the energy charter treaty and stop protecting fossil fuel investments,” she said. “The choice is between climate neutrality and the treaty. We cannot have both.”

A rancorous debate about the treaty came to a head