Why should you rely on Team Consult's expertise in dispute resolution and arbitration proceedings?

Extensive experience as an expert witness in arbitration tribunals

Team Consult has supported energy companies in countless national and international arbitration proceedings over the past 20 years.

We have worked on behalf of claimants and defendants under different arbitration rules (ad hoc proceedings, D.I.S. proceedings, ICC proceedings) and in various settings as an expert witness (and in an individual case also as party-appointed arbitrator).

Comprehensive knowledge of markets and commercial practices

We advise our clients on contentious energy industry issues arising from supply and service relationships in the context of current market developments. We prepare expert reports based on our market analyses, provide support in legal proceedings and are available to testify as experts before arbitration tribunals. Team Consult supports the parties in resolving contractual disputes before and during the entire proceedings.

Execution competence and excellent value for money

Our knowledge of national and international markets and our long-term experience as experts in arbitration proceedings are a solid basis for convincing the arbitral tribunal with hard facts and conclusive arguments. Our customers attest to our excellent value for money and our high degree of adherence to deadlines and quality of results.

What our clients say:

“We would strongly recommend Team Consult as experts in arbitration proceedings.”

“Mr. Kübler is an excellent expert witness with authority and experience to appear before a Tribunal and TC has a great team to support him in preparing expert witness reports and statements.”

What determines success in arbitration proceedings?

From the many disputes and arbitration proceedings in which Team Consult has been involved, we have learned that a proven approach is crucial. Experience is the key to success. Below, we present some important insights and describe best practices for arbitration cases.

Early assessment of the facts by commercial experts and legal counsel ahead of formal proceedings

Early assessment by external experts can prevent a party from filing a claim that would have no prospect of success. Both legal and economic experts should review the arguments presented. Have the markets really changed in the direction needed to make a case? What could be valid counterarguments?

Early preparation is also important on the part of the (potential) defendant. Building a strong defence in advance of possible arbitration proceedings can help to avert proceedings and achieve an advantageous settlement. A defence is most successful if it is not needed in court and no costs are incurred for proceedings.

Process experience is key

Support in dispute resolution is not just about providing expertise. It is also about being prepared for the unexpected. It is about deciding which arguments are important and presenting them convincingly before an arbitration tribunal.

Legal disputes require a team you can trust and rely on. Unlike in ‘normal’ consulting projects, there is no second chance. Choosing the right expert at the outset is crucial, as replacing them during ongoing arbitration proceedings carries enormous risks.

Strong case management team

The teams of internal and external specialists involved in contract negotiations and arbitration proceedings are often relatively small. The careful selection of specialists – both internal and external – is of high value, given the large amounts in dispute in many cases.

Ensure the availability of strong and competent internal resources and hire a strong external team for your dispute. Avoid hiring opportunistic experts who immediately adopt your point of view without critically challenging it. Instead, let the experts express their honest assessment. Although this requires more discussion and coordination in the early stages of the process, it is the only way to ensure that a strong and convincing case is presented to the tribunal.

Know your contract (and its history)

There are many approaches to ‘opening up’ a contract for adjustments. These can be contractual clauses (e.g. price revision clause, hardship clause) or legal provisions (e.g. in competition law or frustration of contract in contract law).

There are many ways to interpret such legal or contractual provisions: Which standard should be applied? How should it be applied? Is there an explicitly defined and agreed procedure?

We have often seen parties overstretch possible interpretations, thereby giving the impression that they want to ‘rewrite the contract.’ In our experience, these approaches have not proven successful – rather, success has been achieved by focusing on the contract language, supplemented by appropriate analyses and assessments.

Less can be more

One of the most important strategic questions from the perspective of both the claimant and the defendant is to what extent their own position should be ‘stretched’. Should the claimant make the highest possible claim? Should the defendant deny any claim for adjustment?

In our experience, arbitrators appreciate parties taking realistic positions and thereby help the tribunal to reach a reasonable judgement. Taking an extreme position is counterproductive (and can also lead to endless proceedings with additional pleadings and hearings).

Make it easy for the arbitrators to come to an appropriate decision. Don’t deny the obvious and thereby increase your overall credibility.

Don’t cut corners

Especially in times of volatile energy and raw material prices and a pressure to cut costs, companies are inclined to enter arbitration proceedings with a tight budget. While this is understandable, it carries great risks if cuts are made in the wrong areas.

In our experience, face-to-face meetings between clients, legal counsel and expert witnesses accelerate the team-building process and lead to a better mutual understanding of the respective views of the dispute, even if this takes time.

Similarly, the data required for analysis can be costly. Sometimes a party is reluctant to invest in data when it is unclear what insights it will yield. Although there are no guarantees, the cost of data from external sources is usually negligible compared to the financial process risk.

Plan milestones and meet internal deadlines

Short-term changes to the schedule are always possible. Sometimes, short-term changes to the scope of an expert opinion or a written pleading are also unavoidable.

And yet, precisely because of the possibility of such short-term changes, it is even more important to define clear milestones for the preparation of a written submission and the associated expert opinions in advance.

The deadlines for written submissions and expert opinions are binding in any case. However, internal deadlines during the preparation of draft expert opinions, feedback on them, etc. should also be treated with the same diligence.

If at all, last-minute interventions are only possible in a well-organised environment.

Do not close communication (negotiation) lines to counterparty

Legal disputes are often conducted with a certain degree of harshness. In your communication, make a clear distinction between the formal proceedings and the long-term relationship with your business partner, which should continue to function beyond the end of the proceedings.

Avoid closing communication channels for commercial negotiations.

Why is arbitration relevant to the energy industry?

Long-term nature of the business

Due to capital-intensive investments, the energy industry is characterised by long-term planning horizons and long-term contractual relationships. When concluding contracts, business partners must therefore anticipate certain future developments and take these into account when finding a contractual balance.

Unexpected developments

During the term of a long-term contract, it is not uncommon for underlying assumptions to be overtaken by new, unforeseen events and developments which may shift the balance of opportunities and risks in favour or to the detriment of one party.

Such unforeseen developments can lead to legal disputes over complex technical and commercial issues. If the contract in dispute is a continuing obligation, the time factor also plays an important role, as a disruption of the contractual balance can quickly become existential to one of the contracting parties.

Benefits of arbitration

Expertise of the court

A profound decision in an energy contract dispute requires the court to have the relevant background experience. The likelihood of the dispute being heard before a knowledgeable court is higher when the parties have a say in appointing the judges, which is generally the case under arbitration rules.

This is an important reason for the contracting parties to agree to resolving any contractual disputes through arbitration. Arbitration proceedings enable the parties to select judges with experience in energy law and industry knowledge as arbitrators.

Avoiding lengthy proceedings

By referring contract disputes to arbitration, the contracting parties avoid lengthy legal proceedings before a court of law which often involve appeals and relitigating at a higher court instance. This is because the arbitration clause in a contract generally entails the recognition of arbitral awards. Arbitral awards are generally final and cannot be appealed. Arbitration proceedings are therefore often perceived as a faster alternative to court of law proceedings, and they are also more flexible regarding the language and venue of the proceedings and the substantive law governing the contract.

Ensuring confidentiality

Disputes in the business-to-business sector often involve matters known only to very few people involved, even among the contracting parties themselves. Disclosure of this content, such as the agreed contract price and any adjustment modalities, would have an immediate adverse effect on the contracting party or parties, e.g. in negotiations or in competition with other companies. Arbitration clauses allow for ensuring the confidentiality of sensitive information throughout the proceedings.

Typical issues in energy industry related arbitration proceedings

Energy supply contracts

The core elements of a long-term energy supply contract (e.g. PPA for the supply of renewable electricity, natural gas or LNG supply contract, heat supply contract) include the agreed quantities, the supply profile, the price and the contract term. The agreed terms are based on the parties' assumptions about the future supply and demand situation and the marketability of the respective product.

Due to the imponderability of commodity markets, the assumptions made at the time of contract conclusion are usually overtaken by unforeseen developments that may necessitate adjustments, depending on the terms and provisions of the contract.

Long-term use of infrastructure

Due to the comprehensive unbundling of energy infrastructure from trading, long-term capacity contracts are the basis for fulfilling energy trading transactions. Such capacity contracts can be found in energy transport, in the liquefaction and regasification of LNG, in tolling agreements for power generation and in energy storage (batteries, underground gas storage, etc.).

The core elements of the contract (agreed capacities, fees, term) are very similar to those of energy supply contracts. Unexpected developments in the market environment can also affect these contractual relationships, often triggered by changes in regulation.

Obligations arising from joint venture structures

Collaborations on a joint venture basis are common in the energy industry. A joint venture allows the parties involved to contribute their respective core competencies to the venture and share potential risks.

Typical examples of joint ventures in the energy sector include joint power plants operated by various utilities or by utilities and industrial customers, biogas plants (plant operators, biogas marketers, substrate suppliers) and similar ventures.

Significant market disruptions can have very different effects on individual JV partners and may lead to legal disputes over the interpretation of the JV agreement.

Premature termination of contract

Long-term contracts between business partners sometimes contain special termination rights that are subject to certain conditions (e.g. a change of ownership of one of the contracting parties).

Especially in the case of continuing obligations, this can lead to disputes over possible “windfall profits” or “windfall losses”, e.g. because a supplier has already secured quantities at fixed prices for future deliveries and its counterpart is no longer willing to take these due to premature termination. In such cases, the focus is on determining compensation payments or, in case the termination is legally void, possible damages.

Post-merger disputes

In connection with corporate transactions (e.g. acquisition of a wind farm including associated supply contracts), so-called post-M&A disputes often arise between buyers and sellers.

Due to the inherent complexity of M&A transactions and the required confidentiality, arbitration clauses are usually agreed upon.

Disputes in connection with international investment treaties

Due to the strong international integration of the energy industry, disputes often arise between states and foreign investors (e.g. when a foreign investor has based its investment decision to build renewable energy generation plants on a subsidy scheme existing in the target market, and this scheme is subsequently changed by the responsible authority).

If an investment protection agreement exists between the investor's country of origin and the target market country, the investor can exercise corresponding protection rights. The Federal Republic of Germany has concluded bilateral investment protection agreements with many countries, meaning that investments by German entrepreneurs in these countries can be protected by such agreements (and vice versa). Such disputes are often settled through arbitration or international dispute resolution proceedings, partly because in international disputes it is easier to enforce foreign arbitral awards than judgments of a foreign court of law.