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Iceland-UK Interconnector: A Brief Analysis of Possible Political Risk Mitigation and Dispute Settlement

Andri Dan Traustason and Hilmar Þór Hilmarsson
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Andri Dan Traustason: University of Akureyri, Iceland
Hilmar Þór Hilmarsson: University of Akureyri, Iceland

Journal of Applied Management and Investments, 2016, vol. 5, issue 1, 66-74

Abstract: The proposed interconnector between Iceland and the United Kingdom carries numerous and different types of risks for Iceland. This article focuses on political risk. Ownership of the interconnector and related infrastructure needs to be settled in a way that minimizes political risk for the Icelandic nation without sacrificing national sovereignty over its clean energy sources. A public-private partnership could use various methods to mitigate risk. International institutions, such as the Energy Charter Organization and the International Centre for Settlement of Investment Disputes (part of the World Bank Group) could provide a basis for international arbitration in the event of dispute. Other solutions, such as bilateral legal agreements and contracts for difference, are also assessed with regard to the interconnector in addition to some financing options.

Keywords: political risk; risk mitigation; cross-border investments; cross-border financing; international business (search for similar items in EconPapers)
JEL-codes: F13 F23 F33 F51 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:ods:journl:v:5:y:2016:i:1:p:66-74