Rockhopper, a British oil company, has won over €190 million ($190m) in compensation from the Italian government for blocking a planned project off Italy’s Adriatic coast.
This came after tens of thousands of Italians protested the Ombrina Mare oil drilling project in 2015, a process which forced the Italian government to ban oil drilling within 12 miles of Italy’s shoreline.
Despite investing just $40-50m in the project, the company claimed foregone profits estimated at $200-300m.
Represented by no-win-no-fee lawyers, the company sued the Italian government under the controversial Energy Charter Treaty (ECT). The ECT is an energy investment treaty which was created after the end of the Cold War.
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Although Italy left the ECT in 2015, it remains bound by its rules until 2035 because of the treaty’s 20-year sunset clause. Campaigners have called for ECT members to leave the treaty together and avoid the worst effects of the sunset clause by promising not to enforce its provisions on each other.
It was designed to protect energy investments from arbitrary seizures in the former Soviet Union. Lately, fossil fuel investors have repurposed it to challenge climate policies that affect their profits.
While the company’s share price doubled on the news, CEO of the company, Samuel Moody said he was “delighted” and that the award would help Rockhopper drill for oil in the Falkland Islands.
Also reacting to the compensation, Paul De Clerck from Friends of the Earth Europe said It is scandalous that Italian citizens are now expected to pay Rockhopper €250 million for not destroying the Italian environment and the climate.
Trade campaigner at Global Justice Now, Cleodie Rickard said, “We need to get rid of this shadowy legal system that poses a threat to the climate – not in ten years’ time as governments are proposing at the moment, but right now… the UK and countries across Europe should exit the ECT in a coordinated withdrawal and put an end to the risk of being sued.”
Recall that the Intergovernmental Panel on Climate Change warned that investor-state dispute settlement mechanisms in trade agreements like the ECT “may lead to ‘regulatory chill’… [and] lead to countries refraining from or delaying the adoption of mitigation policies, such as phasing out fossil fuels”.
Story was adapted from Climate Home News.