1. Introduction

A multi-party interconnector is a cross-border electricity transmission asset in which ownership, financing, operation, or economic rights are divided among two or more parties. These parties may include national transmission system operators (TSOs), private investors, state-owned utilities, infrastructure funds, renewable-energy developers, or entities established jointly by different jurisdictions.

The legal governance of such assets is considerably more complicated than ordinary domestic transmission infrastructure because an interconnector simultaneously involves:

two or more national electricity systems;

different regulatory jurisdictions;

ownership and corporate-control questions;

transmission-system operation;

third-party access;

congestion management;

allocation of interconnector revenues;

investment and cost recovery;

security of supply;

competition law;

cross-border dispute resolution; and

potentially different rules concerning public and private ownership.

The central legal problem is therefore not simply who owns the cable or transmission line, but how ownership can coexist with independent system operation, non-discriminatory access, regulatory supervision, and equitable allocation of costs and benefits.

European Union electricity law provides particularly developed principles in this field. Indian law is also relevant where cross-border electricity trade involves India and neighbouring countries.

2. Meaning and Structure of Multi-Party Ownership

Multi-party ownership can take several forms.

A. Joint ownership by TSOs

Two neighbouring TSOs may establish a jointly owned company to develop and operate an interconnector.

For example:

TSO A + TSO B → Joint Venture → Interconnector

The joint venture may own the physical asset while the participating TSOs retain responsibilities for system operation in their respective territories.

B. TSO–private investor ownership

A private infrastructure investor may finance an interconnector while TSOs provide system-operation services.

This model raises questions concerning:

regulatory return;

investment risk;

access rights;

ownership control;

exemption from regulated third-party access;

revenue allocation; and

change-of-control restrictions.

C. Consortium ownership

Several parties may form a consortium:

TSO + utility + infrastructure fund + renewable developer

Each participant may hold a specified percentage of the interconnector company.

D. Separate ownership and operation

The physical interconnector may be owned by one company but operated by one or more TSOs.

This distinction between ownership and system operation is legally significant.

The Court of Justice of the European Union has specifically considered situations where an undertaking merely operates a cross-border interconnector. In Baltic Cable, the Court held that an undertaking merely operating a cross-border interconnector can fall within the concept of a transmission system operator for relevant EU regulatory purposes. (EUR-Lex)

3. Core Principles of Legal Governance

3.1 Legal personality and ownership structure

The first requirement is a clearly defined legal entity.

A multi-party interconnector should ordinarily have:

separate legal personality;

clearly defined shareholder interests;

defined capital contributions;

rules governing voting rights;

board representation;

restrictions on transfer of shares;

rules governing additional capital requirements;

liability provisions;

insolvency arrangements; and

procedures for shareholder disputes.

The ownership agreement should distinguish between:

legal ownership of the physical asset;

economic ownership;

operational control;

capacity rights;

congestion revenues; and

regulatory responsibilities.

Failure to distinguish these functions can create significant regulatory uncertainty.

4. Unbundling and Independence

One of the most important principles governing interconnector ownership is unbundling.

The objective is to prevent a vertically integrated electricity undertaking from using ownership or control of transmission infrastructure to discriminate against competitors.

EU law has historically required transmission networks to operate under rules designed to ensure independent and non-discriminatory access.

The Court of Justice has repeatedly treated open third-party access as a fundamental element of the internal electricity market. In E.ON Czech Holding / related electricity-market jurisprudence, and particularly in the citiworks line of cases, the Court emphasized the importance of third-party access to electricity networks. (EUR-Lex)

For a multi-party interconnector, this means that ownership rights cannot automatically become exclusive rights to use the transmission capacity.

5. Third-Party Access

A multi-party ownership agreement cannot ordinarily be designed merely to reserve the interconnector for its shareholders.

The basic regulatory principle is:

Ownership of transmission infrastructure does not necessarily confer an unrestricted right to exclude third parties.

EU electricity regulation has strongly emphasized non-discriminatory third-party access. ACER explains that TSOs must provide non-discriminatory access and equivalent service and contractual conditions to market participants. (ACER)

Therefore, the ownership agreement should establish:

capacity-allocation procedures;

transparent access rules;

congestion-management mechanisms;

nomination procedures;

curtailment rules;

emergency access rules;

maintenance arrangements; and

rules for allocating scarce capacity.

6. Regulatory Exemptions for New Interconnectors

A particularly important issue is whether a privately financed interconnector can obtain an exemption from ordinary regulated access and revenue rules.

Under the former EU Regulation 714/2009 framework, Article 17 established conditions for exemptions for new interconnectors.

Among the conditions were requirements concerning:

enhancement of competition;

investment risk;

ownership by a legally separate entity;

users bearing the cost;

absence of financing through ordinary network charges; and

absence of adverse effects on competition and market functioning. (ACER)

The ownership structure is therefore directly connected to the regulatory treatment of the interconnector.

7. Baltic Cable AB v Energimarknadsinspektionen — C-454/18

This is one of the most important cases for the legal governance of interconnector ownership and operation.

In Baltic Cable AB v Energimarknadsinspektionen, Case C-454/18, the Court of Justice considered an undertaking that merely operated a cross-border interconnector between national electricity systems.

The Court concluded that the relevant regulatory provisions concerning congestion revenues could apply to an undertaking merely operating a cross-border interconnector. (EUR-Lex)

Importance for multi-party ownership

The judgment demonstrates that regulatory obligations can attach to the functional role performed by an undertaking, rather than simply to whether it owns a conventional national transmission network.

The Court also recognized that an interconnector-only operator must be placed in financially acceptable conditions.

Where congestion revenues are subject to regulatory restrictions, the regulator may need to allow sufficient revenue for operation, maintenance and an appropriate return. (EUR-Lex)

Legal principle

The case therefore supports an important proposition:

Ownership and operational functions must be analysed separately, but the entity exercising operational responsibility may itself fall within transmission regulation.

This is particularly significant for consortium-owned interconnectors.

8. Revenue Governance

Multi-party ownership creates difficult questions concerning the distribution of revenues.

Possible revenue streams include:

transmission charges;

congestion revenues;

capacity-auction revenues;

regulated network revenues;

ancillary-service revenues;

balancing revenues; and

other commercial income.

The ownership agreement must establish whether these revenues belong to:

the asset-owning company;

individual shareholders;

the TSOs;

consumers through regulated mechanisms; or

another designated entity.

EU law places restrictions on the use of congestion revenues.

The Baltic Cable judgment demonstrates that regulators cannot necessarily require an interconnector operator to devote all congestion revenues to prescribed network purposes if doing so prevents the operator from covering legitimate operating costs and earning an appropriate return. (EUR-Lex)

Thus, revenue governance must reconcile:

consumer protection + infrastructure investment + operational sustainability + competition.

9. Cost Allocation Between Participating States

A multi-party interconnector frequently produces benefits in several jurisdictions.

For example:

Country A obtains additional electricity-import capacity;

Country B obtains export opportunities;

both systems obtain improved security;

renewable electricity can move between markets.

The problem is determining how the costs should be divided.

ACER's cross-border cost-allocation framework recognizes that costs and benefits may not be territorially aligned. Cost-sharing arrangements can therefore be used to facilitate projects where benefits and costs fall disproportionately on different jurisdictions. (ACER)

Where national regulators cannot agree in certain EU cross-border infrastructure cases, ACER can act as a last-resort decision-maker in the relevant cost-allocation process. (ACER)

10. The Aquind Litigation

The Aquind interconnector litigation is highly relevant to privately developed interconnectors.

Aquind proposed an electricity interconnector between the United Kingdom and France and sought an exemption under the EU interconnector regime.

In Aquind Ltd v ACER, the General Court examined issues surrounding the exemption regime and regulatory assessment of investment risk. The litigation ultimately reached the Court of Justice in Case C-46/21 P, ACER v Aquind Ltd.

The Court of Justice held in 2023 that review of ACER decisions concerning complex technical and economic assessments cannot be reduced to merely checking for manifest errors of assessment. (EUR-Lex)

The later General Court litigation also involved Aquind's argument concerning French-law requirements for joint ownership with RTE. The case records that Aquind argued that French law required a jointly owned company with RTE for operation of the proposed interconnector. (EUR-Lex)

Significance

The Aquind litigation demonstrates that:

ownership structure can directly affect regulatory eligibility;

national law can interact with supranational energy regulation;

investment-risk assessments are central to exemption decisions;

regulatory decisions concerning interconnectors are subject to judicial review; and

private interconnector developers cannot assume that regulatory exemptions will automatically follow from investment risk.

11. Governance of the Board and Voting Rights

A multi-party interconnector requires sophisticated corporate governance.

A shareholders' agreement should normally regulate:

Ordinary decisions

Such as:

annual budgets;

routine maintenance;

insurance;

procurement;

staffing.

Reserved matters

Certain decisions may require unanimous or enhanced-majority approval, such as:

major capital expenditure;

borrowing;

refinancing;

disposal of the asset;

admission of a new shareholder;

amendment of access arrangements;

changes in ownership;

material changes to operating agreements;

litigation settlements.

However, corporate voting rights must not undermine independent regulatory functions.

For example, shareholders should not be permitted to use corporate control to interfere unlawfully with:

grid dispatch;

congestion management;

third-party access;

system security; or

regulatory compliance.

12. Operational Independence

A critical distinction should be maintained between commercial ownership and system operation.

A shareholder may have a financial interest in the interconnector without being entitled to determine:

which electricity transactions occur;

which market participant receives capacity;

dispatch priorities;

emergency curtailment;

system-security decisions.

These matters should remain subject to applicable grid codes and the legally designated system operator.

The Baltic Cable judgment is particularly instructive because the Court treated the operation of a cross-border interconnector as participating in cross-border electricity trade and therefore falling within the regulatory framework applicable to transmission activities. (EUR-Lex)

13. Dispute Resolution

Multi-party interconnectors create disputes at several levels.

Corporate disputes

Between shareholders regarding:

capital contributions;

voting;

dividends;

management.

Regulatory disputes

Between the asset company and:

national regulators;

ACER;

TSOs;

market authorities.

Commercial disputes

Between the interconnector company and:

contractors;

capacity users;

suppliers;

financiers.

State-to-state disputes

These may arise where different national governments disagree about:

permitting;

environmental requirements;

security;

tariffs;

taxation;

cross-border infrastructure.

The governing documents should therefore specify:

applicable law;

competent courts;

arbitration mechanisms;

emergency relief;

enforcement mechanisms;

language;

jurisdiction.

14. India and Cross-Border Interconnectors

India's legal framework provides a useful comparison.

The CERC Cross Border Trade of Electricity Regulations, 2019 regulate cross-border electricity trade involving India and neighbouring countries.

The regulations contemplate bilateral agreements, bidding arrangements and mutual agreements between participating entities, while tripartite arrangements must operate within the relevant governmental framework. (Indian Kanoon)

They also allocate institutional functions among Indian grid institutions.

For example, the National Load Despatch Centre acts as the system operator for cross-border trade, while the Central Transmission Utility has specified responsibilities concerning long-term and medium-term access. (Indian Kanoon)

This demonstrates an important governance principle:

Cross-border commercial ownership does not eliminate the authority of the designated national system operator.

An interconnector involving India and another country would therefore need to reconcile:

the Electricity Act framework;

CERC regulations;

governmental bilateral arrangements;

grid-security requirements;

transmission-access rules; and

the laws of the neighbouring country.

15. Competition Law

Multi-party ownership can create competition concerns where owners also participate in electricity generation or supply.

Potential problems include:

discriminatory access;

capacity hoarding;

preferential allocation to affiliated companies;

strategic withholding of capacity;

exchange-market manipulation;

information sharing between competitors.

Therefore, governance documents should establish strict information barriers and transparent capacity-allocation procedures.

The EU approach is particularly concerned with ensuring that infrastructure ownership does not undermine the internal electricity market. The Court has emphasized the importance of open access in achieving a functioning electricity market. (EUR-Lex)

16. Change of Ownership

Ownership changes create another major regulatory issue.

Suppose:

Company A – 40%
Company B – 30%
Company C – 30%

Company A later sells its interest to a foreign infrastructure fund.

This may trigger:

regulatory approval;

national-security review;

foreign-investment restrictions;

competition review;

change-of-control provisions;

financing-consent requirements;

re-evaluation of licences or exemptions.

The interconnector's legal documentation should therefore contain carefully drafted change-of-control provisions.

17. National Security and Strategic Infrastructure

Interconnectors are increasingly treated as strategic infrastructure because they can affect:

electricity security;

national resilience;

critical infrastructure;

energy independence;

geopolitical relationships.

Consequently, states may impose restrictions on foreign ownership or require security clearance.

This creates a legal tension between:

investment freedom

and

national energy security.

A sophisticated legal framework must establish transparent criteria for intervention rather than leaving ownership decisions entirely discretionary.

18. Environmental and Planning Regulation

Multi-party ownership does not eliminate ordinary environmental law.

An interconnector may require:

environmental impact assessment;

marine permissions;

land acquisition;

construction permits;

seabed permissions;

ecological assessments;

archaeological assessments;

fisheries consultation.

For submarine interconnectors, these requirements can extend across several jurisdictions.

Consequently, ownership agreements should allocate responsibility for:

obtaining permits;

environmental compliance;

environmental liabilities;

restoration;

decommissioning.

19. Decommissioning

A frequently neglected issue is the end of the interconnector's operational life.

The ownership agreement should determine:

who pays for decommissioning;

whether the asset must be removed;

whether cables can be abandoned in place;

who owns residual materials;

environmental restoration obligations;

liability after dissolution of the ownership company.

Without clear provisions, decommissioning can become a major cross-border liability dispute.

20. Key Case Laws

21. Model Legal Architecture

An effective multi-party interconnector regime can therefore be represented as follows:

Shareholders' Agreement
↓
Special-Purpose Interconnector Company
↓
Ownership & Financing Rules
↓
Regulatory Licence / Exemption
↓
Independent System Operation
↓
Third-Party Access
↓
Capacity Allocation & Congestion Management
↓
Revenue & Cost Allocation
↓
Cross-Border Regulatory Coordination
↓
Dispute Resolution & Judicial Review

This structure prevents ownership from becoming confused with operational control.

22. Major Legal Challenges

The principal legal challenges are:

1. Fragmented jurisdiction

Different national laws may apply to the same physical infrastructure.

2. Conflicting regulatory objectives

One regulator may prioritize consumer protection while another emphasizes investment incentives.

3. Ownership versus operational independence

Shareholders may seek commercial control while system operators require independence.

4. Revenue disputes

Parties may disagree over congestion revenues and returns.

5. Cost allocation

The countries receiving the largest benefits may not be the countries bearing the largest costs.

6. Competition concerns

Owners may have incentives to discriminate against competing market participants.

7. Political and national-security considerations

Foreign investment can become politically sensitive where the asset is strategically important.

8. Regulatory change

A project designed under one regulatory regime may operate for decades under another.

23. Conclusion

Legal governance of multi-party interconnector ownership requires a separation of ownership, operation, market access and regulatory authority. The central legal principle is that financial ownership of a cross-border transmission asset cannot automatically confer unrestricted control over its capacity or operation.

The Baltic Cable judgment is particularly important because it confirms that an undertaking involved solely in operating an interconnector may still be subject to transmission-related regulatory obligations, while regulators must ensure that the undertaking can operate in financially acceptable conditions. (EUR-Lex)

The Aquind litigation further demonstrates that ownership structure, investment risk and exemption requirements can become decisive regulatory issues and that regulatory decisions concerning complex interconnector projects remain subject to judicial scrutiny. (EUR-Lex)

For India, the CERC cross-border framework illustrates the complementary role of commercial arrangements, governmental agreements and national system-operation institutions in governing cross-border electricity transactions. (Indian Kanoon)

Ultimately, a robust multi-party interconnector regime should provide clear ownership rights, independent operation, non-discriminatory access, transparent capacity allocation, regulated revenue arrangements, equitable cost sharing, cross-border regulatory coordination, national-security safeguards and effective dispute resolution.