THE AUTHORS:<\/strong> On Tuesday, 24 March 2026, Pinsent Masons<\/a> hosted a conference entitled \u201cRebuilding the Atom: Construction Disputes and Sovereign Risk in Nuclear Projects\u201d. The panel was moderated by Ms Caroline Desoille<\/strong> (Partner, Pinsent Masons<\/strong>) and brought together Ms M\u00e9lin\u00e9e Reule<\/strong> (Senior Legal Counsel, \u00c9lectricit\u00e9 de France<\/strong>), Ms Brittany E. Gifford<\/strong>(Partner, A&O Shearman<\/a>), Ms Elina Mereminskaya<\/a> (Partner, Wagemann<\/a>), Mr Yashwardhan Rana<\/strong> (Senior Associate, Osborne Partners<\/a>) and Mr Richard Hill<\/a> (Senior Advisor, Pinsent Masons<\/strong>).<\/p>\n\n\n\n The panel opened by noting the global revival of nuclear energy, driven by energy security concerns, decarbonisation objectives and the need for reliable baseload power. Nuclear projects are again attracting significant public and private investment, but they remain among the most complex infrastructure projects in the world. They involve long development timelines, high capital expenditure, demanding regulatory oversight, specialised supply chains and heightened political sensitivity. These features make nuclear projects particularly exposed to construction disputes and sovereign risk.<\/p>\n\n\n\n The discussion first addressed the specificities of nuclear construction disputes. Nuclear projects differ from ordinary infrastructure projects in several respects. They require extensive regulatory approvals, involve numerous public authorities, and depend on highly specialised contractors and suppliers. The technical complexity of the works, the need for strict safety compliance and the limited number of qualified market participants often lead to delays, cost overruns and disputes over responsibility for project disruption. The panel also noted that nuclear projects generate large volumes of highly sensitive documents, particularly in relation to safety, cybersecurity and national security, creating confidentiality challenges comparable to those encountered in the defence sector.<\/p>\n\n\n\n The speakers then compared commercial construction arbitration with investment arbitration in the nuclear sector. Commercial disputes are primarily grounded in contractual obligations, while investor-State claims are generally based on treaty protections. Although construction disputes usually concern delays and cost overruns, in the investor-State context such issues often arise from regulatory changes rather than purely contractual performance. Three broad categories of disputes were identified in the nuclear sector: disputes directly linked to plant construction, disputes indirectly connected to the industry, notably involving suppliers, and disputes resulting from policy shifts following nuclear incidents, such as phase-out measures adopted after Fukushima.<\/p>\n\n\n\n The discussion further highlighted the particular exposure of nuclear projects to investor-State dispute settlement. Such projects require significant upfront investments, involve long operational lifespans and are inherently immovable, thereby increasing investors\u2019 reliance on regulatory stability. At the same time, the sector remains highly sensitive from a political and societal perspective, as it lies at the intersection of public safety, environmental protection and national security. This results in a high degree of regulatory intervention by States. In this context, arbitration may be triggered by regulatory changes, licence withdrawals, forced shutdowns, environmental opposition, abrupt policy shifts or breaches by State entities. Reference was made to cases such as Vattenfall v. Germany, where policy changes adopted in the aftermath of Fukushima gave rise to investment claims.<\/p>\n\n\n\n Turning to risk allocation, the discussion underlined the specific structure of the nuclear industry, characterised by a limited number of market participants and highly complex contractual arrangements. Two principal categories of risk were identified. The first concerns civil nuclear liability, which is governed by international conventions such as the Paris and Vienna Conventions. These regimes generally impose strict liability on the operator while excluding liability for contractors. Divergences from these frameworks at the national level have, in some instances, led to project delays, particularly where liability regimes remain uncertain. This was the case in India before the December 2025 SHANTI Act, which aims to align India\u2019s regime with international standards by placing liability on the operator rather than suppliers. The second category is contractual liability, managed through mechanisms such as pain\/gain share, performance-based milestones, and alliancing contracts.<\/p>\n\n\n\n In this context, it was emphasised that risk allocation must remain pragmatic and adaptable, given the diversity of actors involved in nuclear projects and the differing nature of the risks they face. Particular attention was drawn to the importance of allocating risks to the parties best placed to manage them, as well as to the benefits of collaborative approaches over rigid risk transfer mechanisms. Recurring challenges were also identified, notably in relation to geotechnical risks and constraints affecting the limited pool of qualified nuclear suppliers.<\/p>\n\n\n\n The interaction between regulatory frameworks and dispute resolution was also addressed. The State was described as playing a dual role, both as regulator and, in certain instances, as a commercial actor, thereby constituting a constant presence in nuclear projects. Regulatory requirements, including testing, reporting and approval processes, may generate delays and give rise to disputes, particularly where the allocation of responsibility for such delays is unclear. In addition, the existence of parallel regulatory proceedings and third-party actions, including those initiated by non-governmental organisations, may further complicate dispute resolution processes.<\/p>\n\n\n\n The discussion also examined the boundary between legitimate regulatory action and compensable interference. While States retain a recognised right to regulate in the nuclear sector, this prerogative is not without limits. Arbitral tribunals typically assess whether regulatory measures have frustrated investors\u2019 legitimate expectations, provided that such expectations are based on specific assurances rather than general assumptions. They also consider whether commitments made by the State have been breached, as well as broader criteria such as proportionality and reasonableness. It was further noted that a mere loss of profit is generally insufficient to establish expropriation, which instead requires a substantial deprivation of the investment.<\/p>\n\n\n\n In this context, practical steps were identified for investors seeking to mitigate risk, including the careful preservation of evidence of regulatory assurances, thorough documentation of stakeholder engagement, and comprehensive due diligence supported by external legal and technical expertise. Attention was also drawn to the significant degree of discretion retained by national regulatory authorities in implementing international safety principles, resulting in divergent approaches and timelines across jurisdictions. This regulatory fragmentation may have a direct impact on project execution, even in jurisdictions with well-developed nuclear regulatory frameworks.<\/p>\n\n\n\n The discussion also underlined the importance for investors of carefully assessing the scope of treaty protections, particularly in light of carve-outs that may limit their application, such as essential security clauses or express exclusions relating to nuclear activities.<\/p>\n\n\n\n The panel concluded with forward-looking reflections on the need to further examine the protection of intellectual property rights in the context of nuclear projects, an issue likely to gain increasing prominence as technological complexity continues to grow.<\/p>\n\n\n\n This article was originally published in PBA Bulletin on 17 April 2026, as part of a special edition curated by Paris Baby Arbitration (PBA)<\/a>, in collaboration with Jus Mundi <\/a>and Jus Connect<\/a>.<\/p>\n\n\n\n
Nadim Majdalani<\/strong>, Master 1 Economic Law Student, Sciences Po Paris<\/strong>
Anthonia Fanokoa<\/strong>, LL.M. Candidate at University of Sherbrooke <\/strong><\/p>\n\n\n\n
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As part of Paris Arbitration Week 2026, Paris Baby Arbitration (PBA)<\/a><\/strong>, in collaboration with Daily Jus<\/a><\/strong> and Jus Mundi<\/a><\/strong>, brings together contributions in a special edition of PBA Bulletin<\/a>,<\/strong> sharing reflections and perspectives from across this year\u2019s events.<\/em><\/h4>\n<\/blockquote>\n\n\n\n
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