Host Government Agreements and the Law in the Energy Sector

This book delves into the political risks of energy investment projects, focusing on stabilisation clauses and their significance in host government agreements.

This book explores the political risks associated with unilateral actions taken by host governments throughout the duration of energy investment projects. It primarily focuses on stabilisation clauses as a means of managing these political risks, investigating the factors that influence host states to agree to stability within their long-term governmental agreements. By examining these dynamics, the book provides insights into the complexities of energy investments in developing countries.

The energy sector serves as a crucial driver of economic growth for many developing nations. These countries are often eager to engage with international investors through petroleum contracts, anticipating that such partnerships will yield significant benefits. While some developing states create a favorable investment climate through domestic laws that offer guarantees and stability, others rely on investment contracts or treaties facilitated by international organizations to attract foreign investment.

In Host Government Agreements and the Law in the Energy Sector, the author identifies key political risks, particularly indirect expropriation, stemming from unilateral government actions. Utilizing comparative empirical evidence from Turkey and Azerbaijan, the book proposes a framework that considers both internal and external influences on host states' decisions to include stabilisation clauses in their agreements. Through a thorough analysis of these factors, the book aims to inform practitioners, students, and scholars in the fields of international investment law and energy law about the importance of contractual stability in energy projects.