Lansdowne sues Ireland for $100m over Barryroe lease denial

Dublin Faces Contentious Legal Challenge

The Irish government is facing a formidable legal challenge as Lansdowne Oil & Gas PLC initiates a compensation claim expected to be at least $100 million (£78.5m). The dispute centres on the state’s refusal to grant a lease for the Barryroe oil and gas field, located off the coast of Cork. This action is being pursued under the contentious Energy Charter Treaty (ECT), an international agreement from which Ireland has already announced its intention to withdraw.

In a statement released on Monday, the London-listed energy firm confirmed it had secured a litigation funding agreement with the US law firm Diamond McCarthy LLP. This arrangement will cover all legal costs on a non-recourse basis, meaning the law firm only gets paid if the claim is successful. Should the arbitration result in an award of approximately $100 million, Lansdowne anticipates receiving between 60 and 70 per cent of the proceeds.

A Long-Running Dispute

The roots of this conflict trace back to April 2021, when the operators of the Barryroe field applied for a ‘lease undertaking’. This was intended as a follow-on authorisation to their existing exploration licence, SEL1/11, in which Lansdowne, through its subsidiary, held a 20 per cent stake. The licensees argued that the terms of their original exploration licence gave them the right to progress to this next stage of development.

However, after a two-year deliberation, the application was officially refused by the Department of the Environment, Climate and Communications in May 2023. This decision prompted Lansdowne to notify the Irish state in June 2023 that a formal dispute existed under the Energy Charter Treaty, setting the stage for the current arbitration proceedings. The company will be represented by a combination of Diamond McCarthy and Mantle Law, an international arbitration firm specialising in energy disputes.

Stephen Boldy, the Chief Executive of Lansdowne, expressed his resolve, stating, “On behalf of Lansdowne and all our shareholders, I would like to thank the legal teams that have worked on our case to reach this substantial funding agreement, which will allow us to proceed to seek just compensation for the loss of our Barryroe asset.”

The Shadow of the Energy Charter Treaty

This case casts a harsh spotlight on the Energy Charter Treaty, an agreement widely criticised by environmental and climate justice organisations. The treaty was established in the 1990s to protect energy investments, but critics argue it is now being used by fossil fuel companies to sue governments for billions over climate policies that might affect their profits. This mechanism, known as an investor-state dispute settlement (ISDS), allows corporations to bypass domestic courts and seek compensation in international arbitration tribunals.

Recognising these concerns, the Irish government, along with the EU and the UK, announced its decision to exit the treaty last year. Yet, the process is not immediate. Climate Minister Darragh O’Brien recently confirmed in the Dáil that Ireland has not yet completed its formal withdrawal. “The government is committed to exiting the ECT as soon as is practicable,” he stated, adding that the relevant memorandum would be brought to government shortly.

Crucially, even after formal withdrawal, Ireland will not be free from its obligations. The ECT contains a controversial ‘sunset clause’, which protects existing investments for 20 years after a country leaves. This means that companies like Lansdowne can continue to bring claims against the state for two decades, potentially undermining future climate action and leaving the Irish taxpayer liable for significant payouts long after the country has officially departed the treaty. The case brought by Lansdowne serves as a stark and immediate example of the treaty’s enduring power and financial risk to signatory nations attempting to pursue a green transition.