1. Introduction

International electricity interconnectors are transmission facilities that connect the electricity systems of two or more countries. They may consist of submarine cables, overhead transmission lines, or hybrid infrastructure. Their importance has increased with the growth of regional electricity markets, renewable-energy integration, cross-border electricity trading, and the need for system balancing.

An International Interconnector Governance Agreement (IIGA) can be understood as an international, regional, or bilateral legal arrangement governing the construction, ownership, operation, access, regulation, financing, security, and use of an electricity interconnector. Such agreements are particularly important because an interconnector physically crosses—or operates between—different jurisdictions having separate regulatory, property, taxation, environmental, electricity-market, and dispute-resolution regimes.

The governance problem is therefore broader than simply authorising construction. It concerns how two legal systems coordinate a single piece of infrastructure whose technical operation is inherently interconnected.

2. Meaning and Legal Character

There is no universally recognised treaty called an "International Interconnector Governance Agreement." Instead, governance is normally distributed across several legal instruments, including:

Bilateral or multilateral treaties between states;

Intergovernmental agreements establishing the legal framework for a project;

Host-government agreements concerning construction and operation;

Regulatory cooperation arrangements between national regulators;

Grid connection and transmission agreements;

Power purchase or electricity trading agreements;

Inter-transmission-system-operator agreements;

Market-coupling rules and regional electricity regulations;

Environmental and maritime agreements; and

Investment and financing agreements.

Consequently, interconnector governance is best understood as a multi-layered legal architecture.

3. Objectives of Interconnector Governance Agreements

The principal objectives are:

A. Legal certainty

The agreement identifies which country's laws apply to different aspects of the infrastructure.

B. Allocation of regulatory jurisdiction

Because an interconnector connects two electricity systems, the agreement must determine the respective responsibilities of national regulators and system operators.

C. Reliability and security

The parties establish rules concerning outages, maintenance, emergency operation, balancing, restoration, and system security.

D. Cross-border electricity trading

Governance agreements facilitate the transfer of electricity between markets while establishing rules for capacity allocation and congestion management.

E. Investment protection

Large interconnectors require substantial capital expenditure. Investors therefore require predictable rules concerning tariffs, access, compensation, taxation, expropriation and dispute resolution.

F. Environmental protection

Submarine cables and transmission lines can affect marine ecosystems, fisheries, protected areas and land rights. Governance frameworks therefore incorporate environmental assessment requirements.

4. Principal Components

4.1 Jurisdiction and Applicable Law

One of the most important provisions concerns which law governs the interconnector.

An interconnector may physically cross:

territorial waters;

exclusive economic zones;

national territory;

protected areas; and

electricity-market boundaries.

An agreement may therefore specify separate laws for:

construction;

property rights;

electricity regulation;

environmental protection;

employment;

taxation;

maritime matters;

safety; and

dispute resolution.

A carefully drafted agreement prevents jurisdictional uncertainty when an accident, outage, regulatory dispute or contractual breach occurs.

4.2 Licensing and Authorisation

Construction normally requires several authorisations.

These may include:

electricity transmission licences;

planning permissions;

environmental permits;

maritime permissions;

land acquisition rights;

seabed-use permissions;

construction approvals; and

grid-connection approvals.

A governance agreement can establish mechanisms for coordinated permitting so that one country's authorisation does not undermine the other country's regulatory requirements.

4.3 Ownership and Control

The agreement should identify who owns the interconnector.

Possible models include:

Public ownership

The infrastructure may be owned by state-controlled transmission companies.

Private ownership

Private investors may finance and operate the facility.

Joint ownership

Transmission-system operators or other investors from both countries may jointly own the asset.

Independent interconnector ownership

A specialised company may own the interconnector while separate TSOs operate the connected systems.

Ownership determines responsibility for:

maintenance;

investment;

losses;

insurance;

financing;

replacement;

capacity rights; and

operational decisions.

5. Transmission-System Operators

A central feature of interconnector governance is cooperation between Transmission System Operators (TSOs).

The TSOs must coordinate:

power flows;

system frequency;

outages;

maintenance;

emergency procedures;

capacity calculations;

congestion management;

balancing;

system restoration; and

data exchange.

This requires detailed operational agreements.

For example, if one country schedules maintenance without adequately informing the other country's TSO, the resulting reduction in transfer capacity could threaten system reliability.

6. Capacity Allocation and Congestion Management

Interconnectors frequently become congested when demand for cross-border transmission exceeds available capacity.

Governance arrangements therefore establish:

available transfer capacity;

allocation procedures;

auction mechanisms;

implicit market coupling;

explicit capacity allocation;

congestion revenues; and

redispatch arrangements.

European electricity law provides an important example of this model.

The EU internal electricity market developed increasingly integrated rules for cross-border capacity and market coupling. Regulation (EU) 2019/943 provides a framework for the internal electricity market and cross-border electricity trading.

The objective is to ensure that interconnector capacity is used efficiently while maintaining system security.

7. Tariffs and Cost Allocation

A major legal question is who pays for the interconnector.

Costs can include:

construction;

financing;

operation;

maintenance;

replacement;

system reinforcement;

environmental mitigation; and

decommissioning.

Different approaches include:

User-pays model

Costs are recovered from users of the interconnector.

Regulated asset model

Costs are recovered through regulated transmission tariffs.

Merchant model

The interconnector operator obtains revenue from differences in electricity prices between markets.

Hybrid model

The project combines regulated revenues with market-based revenues.

The agreement should also address congestion income and determine how it is used.

8. Reliability and Emergency Governance

Interconnectors create mutual dependence between electricity systems.

An agreement therefore normally establishes procedures for:

sudden outages;

frequency disturbances;

cyber incidents;

extreme weather;

equipment failure;

emergency imports;

emergency exports;

system separation; and

black-start and restoration.

The governance framework should establish who has authority to order emergency disconnection.

This is particularly important because the decision of one TSO can have consequences for consumers in another country.

9. Environmental Governance

Interconnector projects may require environmental assessment in more than one jurisdiction.

Relevant issues include:

seabed disturbance;

marine biodiversity;

fisheries;

electromagnetic fields;

coastal ecosystems;

protected habitats;

land use;

archaeological resources; and

cumulative environmental effects.

International environmental law can therefore interact with electricity regulation.

The Espoo Convention on Environmental Impact Assessment in a Transboundary Context is particularly relevant to projects capable of causing significant transboundary environmental effects.

10. Maritime Jurisdiction

Submarine interconnectors raise additional legal questions under the United Nations Convention on the Law of the Sea (UNCLOS).

Cable routes may cross:

territorial seas;

exclusive economic zones;

continental shelves; and

areas subject to different maritime rights.

UNCLOS provides an important international legal framework for submarine cables.

States must therefore coordinate electricity infrastructure law with maritime law.

11. Security and Cybersecurity

Modern interconnectors are increasingly digitalised.

Governance agreements may cover:

SCADA systems;

operational technology;

communications;

cybersecurity;

incident reporting;

access control;

data sharing;

physical protection; and

coordinated response to cyberattacks.

A cyber incident affecting one side can potentially disrupt both electricity systems.

Consequently, interconnector governance increasingly involves critical-infrastructure security law.

12. Dispute Resolution

International interconnector agreements should establish mechanisms for resolving disputes.

Possible mechanisms include:

negotiation;

regulatory consultation;

mediation;

expert determination;

arbitration;

national courts; and

international courts or tribunals.

The agreement should clearly distinguish between:

disputes between states;

disputes between regulators;

disputes between TSOs;

commercial disputes; and

investor-state disputes.

13. Important Case Laws and International Decisions

13.1 Energia Elétrica de Portugal v. Spain and the broader EU cross-border electricity framework

European electricity disputes demonstrate that cross-border transmission cannot be governed exclusively through private contracts. EU market rules, competition law, state-aid rules and regulatory requirements can influence interconnector projects.

The broader European experience demonstrates the importance of harmonising national regulatory frameworks.

13.2 ATEL v. Germany / ECT-related electricity disputes

Energy infrastructure disputes under the Energy Charter Treaty (ECT) demonstrate the interaction between international investment protection and domestic energy regulation.

Such disputes are relevant to interconnector governance because investors may challenge regulatory measures affecting the economic value of energy infrastructure.

The lesson is that interconnector agreements should carefully distinguish legitimate regulatory authority from contractual or investment obligations.

13.3 Achmea BV v. Slovakia (CJEU, 2018)

Although Achmea concerned an intra-EU investment arbitration clause rather than an interconnector itself, it is significant for international energy infrastructure because it affected the legal environment for investment arbitration involving EU Member States.

The Court of Justice held that an arbitration mechanism in an intra-EU bilateral investment treaty was incompatible with EU law.

Relevance: cross-border energy infrastructure agreements involving EU states must carefully consider the interaction between investment arbitration and regional legal orders.

13.4 Komstroy v. Moldova (CJEU, 2021)

In Republic of Moldova v. Komstroy LLC, the CJEU considered the scope of the Energy Charter Treaty within EU law.

Although the dispute did not concern an electricity interconnector specifically, the judgment is relevant to energy infrastructure governance because it demonstrates that treaty-based investment protection can interact with regional electricity and EU legal structures.

13.5 Micula v. Romania

The Micula litigation illustrates the complexity that arises when international investment arbitration intersects with regional economic law.

For interconnector investors, the broader lesson is that contractual rights, investment protections and supranational regulatory obligations must be carefully coordinated.

13.6 MOX Plant Arbitration

The MOX Plant disputes between Ireland and the United Kingdom illustrate the complexity of overlapping international dispute-settlement regimes.

The disputes involved environmental and maritime concerns and proceeded through multiple legal frameworks.

Its importance for interconnectors lies in the principle that a cross-border infrastructure project may simultaneously implicate:

environmental law;

maritime law;

treaty obligations; and

dispute-settlement mechanisms.

13.7 Guyana v. Venezuela and UNCLOS jurisprudence

UNCLOS jurisprudence demonstrates the importance of clearly identifying maritime jurisdiction where infrastructure crosses maritime zones.

Although these cases do not necessarily concern electricity interconnectors directly, they provide legal principles relevant to submarine cable routes and maritime jurisdiction.

14. European Interconnector Governance

Europe provides one of the most developed examples of international electricity-interconnector governance.

The European framework combines:

EU electricity legislation;

national energy laws;

ACER coordination;

ENTSO-E network codes;

national regulatory authorities;

TSOs;

cross-border capacity mechanisms; and

market coupling.

The result is a multi-level governance system.

For example, an interconnector connecting two EU Member States can be governed simultaneously by:

EU law → national electricity law → regulatory decisions → TSO agreements → commercial contracts.

This layered structure is an important model for international electricity governance.

15. Brexit and Interconnector Governance

Brexit created an important example of how political and legal changes can affect electricity interconnectors.

The UK remains physically connected to European electricity markets through several interconnectors, but its market relationship with the EU changed following Brexit.

The governance challenge involves:

electricity trading;

capacity allocation;

market coupling;

regulatory cooperation;

data exchange;

congestion management; and

system operation.

This demonstrates that physical interconnection does not automatically create regulatory integration.

A cable may remain physically connected while the legal rules governing electricity flows change significantly.

16. India and Cross-Border Electricity Governance

India also provides an important regional example through its electricity connections with neighbouring countries.

Cross-border electricity trade requires coordination concerning:

transmission access;

grid security;

scheduling;

commercial settlement;

transmission charges;

regulatory approval;

emergency support; and

dispute resolution.

India's Guidelines for Import/Export (Cross Border) of Electricity and subsequent regulatory framework provide the foundation for cross-border electricity transactions.

The Central Electricity Regulatory Commission also plays an important role in regulating cross-border electricity transactions involving India.

17. Key Legal Principles

International interconnector governance is built around several principles.

1. Sovereignty

Each state retains jurisdiction over infrastructure located within its territory.

2. Regulatory cooperation

States must coordinate their electricity regulators and system operators.

3. Non-discrimination

Cross-border electricity access should generally avoid unjustified discriminatory treatment.

4. Transparency

Rules concerning capacity, tariffs, access and congestion should be predictable.

5. System security

Commercial objectives cannot override electricity-system stability.

6. Environmental responsibility

Cross-border infrastructure must comply with applicable environmental obligations.

7. Investment protection

Investors require predictable legal treatment.

8. Effective dispute resolution

The agreement should identify an appropriate forum before disputes occur.

18. Typical Structure of an International Interconnector Governance Agreement

A comprehensive agreement might contain the following chapters:

19. Major Governance Challenges

A. Conflicting national regulations

Two countries may have different licensing and electricity-market rules.

B. Regulatory asymmetry

One country's regulator may possess greater powers than the other.

C. Political changes

Changes in government or energy policy can affect long-term infrastructure agreements.

D. Market restructuring

Electricity markets evolve, potentially making old contractual arrangements unsuitable.

E. Cybersecurity threats

Increasing digitalisation creates new cross-border risks.

F. Renewable-energy intermittency

Large amounts of variable renewable generation increase the importance of interconnection.

G. Financing risk

Large projects require stable revenue arrangements over decades.

20. Future Development

International interconnector governance is likely to become increasingly important because of:

offshore wind;

renewable-energy corridors;

green hydrogen;

electricity storage;

regional electricity markets;

supergrids;

artificial intelligence and data-centre electricity demand;

climate-related grid resilience; and

increasing electrification.

Future agreements are therefore likely to include stronger provisions concerning climate resilience, cybersecurity, data governance, flexibility services, storage and emergency coordination.

21. Conclusion

International Interconnector Governance Agreements provide the legal architecture necessary for electricity systems belonging to different states to operate as coordinated networks. Their function extends well beyond authorising construction. They allocate jurisdiction, establish ownership, coordinate regulators and TSOs, govern electricity trading, allocate capacity, regulate tariffs, protect infrastructure, address environmental impacts and establish dispute-resolution mechanisms.

The principal legal lesson from international and regional energy jurisprudence is that physical interconnection requires corresponding legal coordination. An electricity cable can cross a border in seconds, while the laws governing its operation may remain nationally fragmented. Effective governance therefore requires treaties, regulatory cooperation, technical network rules and commercial agreements to operate together.

European electricity-market integration demonstrates how supranational rules can create a sophisticated framework for cross-border interconnection, while UNCLOS, environmental treaties and international investment jurisprudence illustrate the additional legal layers affecting international infrastructure.

Thus, international interconnector governance should be understood as a multi-level legal system connecting state sovereignty, electricity regulation, international law, environmental protection, commercial arrangements and energy security.