Hong Kong energy fund sues Japan in groundbreaking case

Hong Kong energy fund sues Japan in groundbreaking case

The Japanese government was pushed into “crisis mode” after a Hong Kong-based renewable energy fund broke a long-standing taboo and became the first to file an arbitration claim against the state under ‘a 24-year-old investment treaty.

The dispute centers on whether Japan’s sharp pullback on a renewable energy subsidy program has exposed investors to unreasonable risk and an operating environment that Teikoku Databank figures show has forced more of 250 solar companies that have gone bankrupt since 2018.

The groundbreaking case, which litigation lawyers in Tokyo said risked a series of similar complaints against the Japanese government, is being conducted under a veil of secrecy and injunctions that prevent both the plaintiff and the Japanese government to discuss the matter in public.

However, two people familiar with the situation told the Financial Times that the company making the claim was Shift Energy, an investor with offices in Hong Kong, Tokyo and three other Japanese cities. Shift declined to comment.

As well as being the first complaint filed under any of Japan’s 29 bilateral investment treaties, the case is unique, lawyers familiar with its details said, as the plaintiff has withstood considerable government efforts. Japanese to settle the case without formal arbitration.

Upon receipt of the complaint, the Japanese government assembled an elite group of lawyers from the country’s largest firms and senior legal experts …

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