Roschier Arbitration Forum 2024: How arbitration shapes the path to a greener future

Insights|May 10, 2024

The Roschier Arbitration Forum, one of the largest and most popular arbitration events in the Nordics, attracted nearly 200 attendees to Stockholm this year. The theme was the shift towards economically sustainable growth and economies becoming less reliant on fossil fuels, known as the green transition.

Speakers focused on the obstacles that are expected with large-scale green transition projects, how clients and suppliers can achieve fruitful discussion with green transition stakeholders – and how to capitalize on opportunities provided by the shift to green.

The consensus of the day was that there are many unknown factors in the green transition and some challenges in communication among stakeholders. Disputes and arbitration were seen as effective methods for finding best practices together. It was also noted that balancing regulation and the needs of clients and suppliers is a tightrope walk.

Overview of the day’s agenda

Roschier Partner Johan Sidklev welcomed guests with an overview of last year’s unforeseen energy crisis, which led to rising raw material costs and, consequently, higher energy prices. He explained that this had impacted the possibility and willingness to progress green transition projects.

This was followed by a discussion with three Roschier’s experts who gave insight into the challenges of the green transition, followed by a panel discussion about the effects of unstable regulation with clients and partners. The experts in this panel were Anders Grefberg, Wendy Miles, Anna-Maria Palmroos, Anja Ipp, Jorma Myllymäki and Hans Kreisel.

In the afternoon, Roschier partner Björn Winström discussed procurement with Timo Okkonen and the discussion was followed by the second panel of the day, which concentrated on managing disputes related to large green transition projects.

Finally, partner Annika Pynnä Lindskog highlighted findings from this year’s Roschier Disputes Index and spoke about how client preferences regarding disputes and arbitration have changed since the covid pandemic.

Regulatory challenges with the green transition

Roschier’s experts Shirin Saif, Emelie Zellmer, and Miikka Konttinen, in their discussion of the challenges of the green transition, examined the role of predictability and stability in the financial and regulatory spheres, focusing on whether unstable regulation is harming green transition.

Shirin noted that major disruptions typically evolve slowly. Highlighting the speed of digital transformation, she suggested that there was potential for an accelerated breakthrough in the green transition. The EU’s Green Deal, aiming for climate neutrality by 2050, will require significant changes and extensive technology deployment across all industries, she said. Mikael added that with the uncertainties in the world, it would be better to just get things done.

The Roschier speakers concluded that while the urgency of the green transition is not in doubt, financial support and regulatory frameworks do not yet fully support the necessary actions. Shirin cited events in Spain, where several dispute cases have been brought against the Spanish state after it implemented certain subsidies to boost the renewable energy sector. Once the subsidies were implemented and investments secured, the Spanish government cut back or eroded the subsidies.

Views from the panel

The day’s first panel made the point that it’s not just regulatory challenges that must be contended with. Wendy Miles explained that there are issues in parts of the Nordics when it comes to sustainability in construction. In her presentation she pointed to the problems caused by bottlenecks in grid and transportation, as well as housing and labor. It’s difficult to achieve green transition projects in large remote areas, like the northern parts of Sweden, she said. Issues are also investment and business opportunities, the panelists agreed.

According to Anders Grefberg, suppliers can overcome some regulatory risks ahead of investments by rigorous due diligence and good financial legal advice. But he also pointed out that political risks are the hardest to overcome. Hans Kreisel said that from the energy network perspective regulation is a good thing, but he agreed suppliers must be active in societal and political discussions.

The impact of global politics in procurement

In remarks by Johan Sidklev, he questioned whether the current geopolitical situation is delaying projects related to the green transition. He described two camps: One that predicts that energy supply and security issues, triggered by the invasion of Ukraine and increased instability in the Middle East, are likely to set back the timeframe for the global energy transition. The other believes that the current situation will accelerate the green transition, as nations feel an increased need to create greater independence from energy sources like those from Russia or the Middle East.

Disputes related to nuclear energy, where cases are already pending, were also discussed. The International Atomic Energy Association recently forecast significant growth in nuclear capacity to 2040, indicating an upsurge in newcomers to nuclear energy and an increased number of disputes. The reason for this is that nuclear projects can take up to a decade to complete, and the costs are significant while the regulatory environment is complicated.

Björn Winström talked to Timo Okkonen from Kind Atom about procurement disputes. On the question of preventing disputes in procurement, Timo said that the outcomes always depend on the team managing the projects. He said that it doesn’t matter if the contract specifies that the supplier is responsible for delivering by EPC (Engineering, Procurement, and Construction), because if the owner or customer side are not savvy enough issues will arise.

Timo’s suggestion on how to ensure that the strategy is in place to avoid issues in procurement, is to not rely on one nuclear plant or just one method. He emphasized that it’s important to integrate the human aspect: you can’t just buy the technology without considering the human element, he said. He also pointed out that it’s good to make some mistakes, but rather make them before billions are spent.  

Pressed for an example of effective procurement, Timo said that Swedish industry in the 1970s had processes that were simplified, pedagogical, and humane, which required people to focus intensely on their tasks.

How to adjust to future requirements?  

From these discussions, it is evident that many questions about the green transition remain unanswered, with still insufficient knowledge about the future. All parties on the panels agreed that disputes play a role in creating regulations that work both from legal and business perspectives, and sometimes it’s better to move fast and get it wrong than to wait and plan for years.

The “fail fast” mentality, however, requires open dialogue between all stakeholders and the courage to take calculated risks. By implementing quick iterative cycles for policy development and encouraging robust stakeholder collaboration, we can create a dynamic legal landscape that is better equipped to support the complexities and rapid changes required for a successful green transition.

Ultimately, this mindset not only accelerates the discovery of viable solutions but also cultivates a culture of resilience and adaptability that is crucial for overcoming the environmental challenges that we are facing. If you want to learn more about arbitration and dispute resolution trends in the Nordics, please check out the newly published seventh edition of the Roschier Disputes Index.

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