FORT is collaborating in the research of the Energy Charter Secretariat for Energy Investment Risk Assessment (EIRA)
In early 2018 the Energy Charter Secretariat (hereafter, the Secretariat) began working on an international research of risks concerning risks of investments in the energy sector. The objective of the research is to establish deficiencies in the national energy policies, as well as to provide recommendations for introduction of reforms and for improvement of the investment environment.
Upon invitation of a representative of the Secretariat, FORT experts in energy law engaged in development of the research. Within the scope of the research, FORT provided information about the legal framework in Latvia, especially governing the energy sector and the practice in application thereof. Based on the information provided the Secretariat drafted a report including a Latvian chapter therein either, where a risk assessment is made focusing on the following three principal areas: (i) unpredictable policy/regulatory change; (ii) discrimination between domestic and foreign investors; (iii) breach of the state obligations. Furthermore, this report comprises an assessment according to certain several parameters.
50% of the assessment is comprised of the information prepared by experts of the public sector, whereas 50% of the assessment is formed of the information provided by experts of the private sector. In Latvia, representatives of the Ministry of Economics were involved in the status of the experts of the public sector, whereas representatives of four law firms – FORT, Ellex Klavins, Primus and Vilgerts – were engaged in the status of the experts of the private sector.
In comparison with other countries, Latvia received a high score, whereas the overall risk level was assessed as comparatively lоw. The highest risks were established in the area pertaining to default on the obligations by the Government. The report also contains several recommendations for improvement of the legal framework in Latvia.
The findings of the research are intended to be used to facilitate cross-border investments in energy projects and alleviate disputes between the investors and Signatories and Contracting Parties of the Energy Charter.
It should be noted that the Energy Charter denotes a body of documents aimed at facilitation of international collaboration in the energy sector. Among these documents there is the Energy Charter Treaty, which is a multilateral international treaty ratified by the Republic of Latvia as well. The Treaty is aimed at protection of the cross-border investments in the energy industry; it prescribes an equal treatment of foreign and local investors, as well as includes a regulation for review of disputes between the investors and the Government.
The Secretariat provides a support to the Energy Charter Conference (authority), and to this end it performs several designated assignments, including monitoring of application of the Charter, developing draft contracts for cross-border energy projects, supporting contracting parties in improvement of the investment environment. Within the scope of performance of these functions the particular research was implemented.
Findings of the research are publicly available here: energycharter.org