Arbitrating Energy: The Impact of Arbitration on the Energy Transition

Authors

• Somtochukwu Attamah, Penn State University
• Lara B. Fowler, Penn State Dickinson Law

Abstract

Even prior to recent events in the Middle East, the global energy sector has been undergoing a significant transformation as states pursue regulatory reforms aimed at addressing climate change, environmental protection, and energy system restructuring. These developments have contributed to an increase in disputes arising from energy-related investments, particularly where regulatory measures affect existing investment expectations. This paper examines the role of arbitration in the context of global energy transitions by tracking publicly available arbitration cases through 2022 and analyzing selected energy disputes linked to regulatory change. It explores how arbitration operates not only as a mechanism for resolving disputes but also as a forum in which tensions between investor protection and state regulatory authority are negotiated. Through an examination of arbitration treaty-based case law and illustrative disputes, the paper highlights how regulatory adjustments in areas such as renewable energy incentives, environmental standards, and energy governance have generated legal challenges. The paper concludes that arbitration occupies a dual position in the governance of global energy transitions by providing legal predictability for investors while simultaneously constraining the regulatory flexibility of states responding to changing energy and environmental priorities. The role of arbitration is likely to dramatically increase given the uncertain energy situation in the Middle East.

First Paragraph

The global energy sector is undergoing one of the most consequential transformations in modern history. As states pursue regulatory reforms aimed at combating climate change, transitioning from fossil fuels to renewable energy, and restructuring their domestic energy systems, these shifts have generated a rising tide of cross-border investment disputes. Even prior to the 2026 war in the Middle East, these transitions have left the energy industry much more unpredictable. This unpredictability can be viewed in the sense that the industry is exposed to “geological and technical risk, social and political changes, and enhanced scrutiny from the public” and its vulnerability to unforeseen market fluctuations. Arbitration has evolved at the center of this transformation, not merely as a mechanism for resolving disputes, but as a forum for negotiating some of the most fundamental tensions in contemporary international law: the protection of private investment rights against the regulatory authority of sovereign states responding to urgent public imperatives. Understanding how arbitration operates in this context, and what it means for the future of climate governance and the energy transition, is the central concern of this paper.

Recommended Citation

Somtochukwu Attamah & Lara B. Fowler, Arbitrating Energy: The Impact of Arbitration on the Energy Transition, 17 Arb. L. Rev. 18 (2026).