1. Introduction

International electricity grids increasingly depend on cross-border interconnectors, coordinated transmission-system operation, regional electricity markets, common balancing arrangements, and shared technical standards. An international grid may therefore involve several sovereign states, national regulators, transmission system operators (TSOs), market operators, and supranational institutions.

The central legal problem is fragmentation: the rules governing one part of an interconnected electricity system may differ from, or conflict with, those governing another part. Fragmentation can arise from differences in licensing, grid access, tariffs, environmental approvals, ownership rules, market design, balancing obligations, emergency powers, data regulation, liability, and dispute resolution.

The European Union provides one of the most developed legal examples because its internal electricity market attempts to coordinate national electricity systems through common legislation and institutions such as ACER. Cases involving interconnectors demonstrate how apparently national regulatory decisions can have cross-border consequences. (EUR-Lex)

2. Meaning of Legal Fragmentation in International Grids

Legal fragmentation means the coexistence of multiple legal and regulatory regimes governing infrastructure that operates as one interconnected physical system.

For example, an interconnector between State A and State B may simultaneously be governed by:

State A's electricity legislation;

State B's electricity legislation;

national regulatory decisions;

bilateral interconnection agreements;

regional market rules;

technical grid codes;

environmental legislation;

competition law;

investment rules; and

international treaties.

The physical electricity system does not respect national borders in the same way that legal jurisdiction does. Electricity flows according to physical laws, whereas legal obligations remain largely dependent on jurisdiction.

This creates a fundamental governance problem:

One physical grid can function as an integrated system while remaining legally divided among different sovereign authorities.

3. Major Legal Fragmentation Risks

A. Conflicting Grid-Access Rules

One jurisdiction may require non-discriminatory third-party access while another may apply different rules to cross-border capacity.

Different rules concerning:

connection rights,

transmission capacity,

congestion management,

priority access,

curtailment,

network charges, and

access exemptions

can create disputes between market participants and regulators.

The EU's electricity legislation specifically attempts to prevent discriminatory solutions to congestion. In Baltic Cable AB v Energimarknadsinspektionen, Case C-454/18, the Court of Justice examined the legal treatment of an undertaking operating a cross-border interconnector and emphasized the importance of non-discriminatory treatment in cross-border electricity markets. (EUR-Lex)

B. Conflicting Regulatory Authorities

International grids can involve two or more national regulators with potentially different approaches.

A particularly important example is Aquind Ltd v ACER.

Aquind concerned a proposed electricity interconnector between the United Kingdom and France. The French and UK regulatory authorities were unable to reach agreement concerning an exemption for the proposed interconnector, leading the matter to ACER. (EUR-Lex)

The case demonstrates an important fragmentation risk:

an infrastructure project crosses national borders;

each country retains regulatory authority;

the authorities may interpret the applicable rules differently;

disagreement can delay the project;

a supranational institution may ultimately need to resolve the disagreement.

In European Union Agency for the Cooperation of Energy Regulators v Aquind Ltd, Case C-46/21 P (2023), the CJEU confirmed the importance of meaningful review of ACER decisions concerning complex technical and economic questions. (EUR-Lex)

C. Conflicting Tariff and Revenue Rules

Interconnectors generate congestion revenues and involve substantial investment and operating costs. Fragmentation may arise where neighbouring jurisdictions have different rules governing:

transmission tariffs;

congestion income;

allowed returns;

investment recovery;

network charges; and

allocation of interconnector revenues.

Baltic Cable is particularly relevant. The CJEU held that Article 16(6) of Regulation 714/2009 applied even to an undertaking that merely operated a cross-border interconnector. It also addressed the circumstances in which congestion revenues could be used to support operation, maintenance and an appropriate return. (EUR-Lex)

The case illustrates why uniform treatment of cross-border infrastructure can be legally important.

4. Fragmentation of Emergency Powers

International grids require coordinated action during:

major equipment failures;

frequency disturbances;

cyber incidents;

extreme weather;

generation shortages;

cascading outages; and

system-wide emergencies.

A serious legal problem arises when neighbouring countries have different rules concerning who may order disconnection, curtailment, load shedding or emergency imports/exports.

For example, one country may permit its TSO to restrict exports during an emergency, while another country's legislation may impose contractual obligations to maintain cross-border supply.

This can produce conflicts between:

national energy security
and
regional system security.

Without clear priority rules, an emergency decision in one jurisdiction may legally conflict with obligations owed to another jurisdiction.

5. Divergent Market-Design Rules

Cross-border grids increasingly operate through integrated wholesale electricity markets. Fragmentation can occur where jurisdictions have different:

bidding-zone structures;

market-coupling rules;

balancing mechanisms;

capacity-allocation methodologies;

price caps;

scarcity pricing rules;

ancillary-service markets; and

renewable dispatch rules.

The European Court of Auditors has identified the complexity of the EU's cross-border electricity-market legal architecture and governance as factors that contributed to delays in market integration. It also reported that market coupling had not been fully completed by the end of 2021 despite earlier deadlines. (Publications Office of the EU)

Thus, legal fragmentation is not merely a theoretical problem: differences in regulatory architecture can directly affect the practical integration of electricity markets.

6. Conflicting Rules on Interconnector Investment

Cross-border infrastructure normally requires substantial long-term investment.

Legal fragmentation creates uncertainty regarding:

which regulator approves investment;

which jurisdiction bears costs;

whether investment receives regulated returns;

whether the project qualifies for exemptions;

whether capacity is reserved;

who bears construction risk; and

what happens if the project becomes economically unviable.

The Aquind litigation demonstrates the complexity that can arise when national regulators and a supranational regulator are involved in the regulatory treatment of a proposed interconnector. The proposed project connected the British and French transmission systems and required coordination between UK and French authorities. (EUR-Lex)

The 2025 General Court judgment in Aquind Ltd v ACER, Case T-342/23, further illustrates that disagreements concerning cross-border infrastructure can extend into questions of institutional liability and judicial review. (EUR-Lex)

7. Environmental-Law Fragmentation

An international grid may require infrastructure such as:

submarine cables;

overhead transmission lines;

converter stations;

substations; and

land-based transmission corridors.

Different countries may apply different requirements concerning:

environmental impact assessment;

biodiversity protection;

marine protection;

public consultation;

land acquisition;

indigenous/community rights; and

planning permission.

Consequently, a project could receive approval in one jurisdiction while facing significant legal obstacles in another.

This can create a regulatory bottleneck in which the most restrictive jurisdiction effectively determines the practical feasibility of the entire interconnector.

8. Fragmentation of Technical Standards

Electricity grids must coordinate technical matters including:

frequency control;

voltage control;

protection systems;

system restoration;

reserve requirements;

cybersecurity;

data exchange; and

operational communication.

If neighbouring systems apply incompatible technical standards, legal rules may prevent TSOs from taking actions necessary for coordinated operation.

Technical fragmentation therefore becomes a legal risk when grid codes are mandatory legal instruments rather than merely voluntary engineering standards.

9. Liability Fragmentation

Cross-border electricity failures raise difficult questions about responsibility.

Suppose a major blackout results from an event involving three jurisdictions. Potentially responsible actors might include:

a TSO;

a distribution operator;

a generator;

an interconnector operator;

a market operator; or

a regulator.

Different national laws may impose different standards of negligence, contractual liability, statutory liability and compensation.

This creates uncertainty concerning:

applicable law;

jurisdiction;

causation;

limitation of liability;

compensation;

sovereign immunity; and

enforcement of judgments.

A cross-border grid therefore requires more than technical coordination—it requires a sufficiently coherent legal allocation of responsibility.

10. Dispute-Resolution Fragmentation

A major risk is the existence of multiple dispute-resolution mechanisms.

A dispute may potentially proceed before:

a national administrative court;

a national energy regulator;

an international arbitral tribunal;

a regional court;

a supranational regulator; or

an international court.

This creates the possibility of parallel proceedings or inconsistent interpretations.

The Aquind litigation demonstrates the importance of institutional review mechanisms where national regulators and a regional energy regulator interact. The CJEU addressed the scope of review available concerning ACER's decisions. (EUR-Lex)

11. Fragmentation and Energy Security

Legal fragmentation can undermine energy security even where physical infrastructure is technically reliable.

For example, during an electricity shortage:

State A may prioritize domestic consumers;

State B may require continued exports;

State C may impose emergency restrictions;

the interconnector operator may be subject to contractual commitments.

The resulting conflict can make coordinated emergency management more difficult.

The central legal question becomes:

Which obligation prevails when national energy-security legislation conflicts with cross-border system obligations?

International grid agreements therefore need explicit emergency-priority rules.

12. Fragmentation and Renewable-Energy Integration

Cross-border grids are increasingly important for integrating:

offshore wind;

solar generation;

hydropower;

battery storage;

hydrogen-related electricity demand; and

regional balancing resources.

However, renewable-energy support schemes differ substantially between jurisdictions.

Differences in:

subsidies;

contracts for difference;

renewable certificates;

guarantees of origin;

grid-priority rules;

curtailment compensation; and

balancing responsibility

can distort cross-border electricity flows.

Consequently, legal fragmentation may undermine the economic benefits of physical interconnection.

13. Important Case Laws

1. Baltic Cable AB v Energimarknadsinspektionen, C-454/18 (2020)

This is one of the most directly relevant authorities concerning cross-border electricity interconnectors.

The CJEU held that Article 16(6) of Regulation 714/2009 applied to an undertaking merely operating a cross-border interconnector. It also addressed the treatment of congestion revenues and the need to avoid discriminatory treatment. (EUR-Lex)

Legal significance:
The judgment demonstrates how common legal rules can prevent divergent national treatment of cross-border electricity infrastructure.

2. ACER v Aquind Ltd, C-46/21 P (2023)

The case concerned a proposed UK-France electricity interconnector and disagreement between national regulatory authorities regarding an exemption request.

The CJEU upheld the General Court's approach concerning the intensity of review that the ACER Board of Appeal must undertake when reviewing ACER decisions involving complex technical and economic assessments. (EUR-Lex)

Legal significance:
The case illustrates the need for effective supranational dispute-resolution and review mechanisms when national regulators cannot reach agreement.

3. Aquind Ltd v ACER, T-342/23 (2025)

The General Court considered a claim for non-contractual liability concerning the proposed UK-France interconnector and alleged unlawful acts or omissions by ACER. (EUR-Lex)

Legal significance:
The case demonstrates that fragmented regulatory decision-making can generate not only administrative disputes but also potential institutional-liability litigation.

4. Polskie sieci elektroenergetyczne v ACER, T-483/21 (2024)

This case concerned the EU internal electricity market, capacity calculation and the methodology for addressing congestion with cross-border relevance. The General Court examined the interaction between ACER's regulatory role and the powers of transmission system operators. (Bailii)

Legal significance:
It illustrates the legal tension between national TSO responsibilities and regional coordination mechanisms.

14. Legal Mechanisms for Reducing Fragmentation

Legal fragmentation can be reduced through several mechanisms.

A. Harmonised Grid Codes

States can adopt common mandatory rules concerning:

frequency;

voltage;

balancing;

congestion;

emergency procedures; and

restoration.

B. Regional Regulatory Authorities

Regional regulators can resolve disputes where national regulators cannot agree.

The EU's ACER framework represents an important example of this institutional model.

C. Common Market Rules

Common rules should govern:

capacity allocation;

congestion management;

balancing;

cross-border trading;

market coupling; and

settlement.

D. Bilateral Interconnector Agreements

States should clearly establish:

ownership;

operation;

maintenance;

financing;

emergency powers;

liability;

revenue allocation;

data sharing; and

dispute resolution.

E. Mutual Recognition

Countries may recognize regulatory approvals issued by another jurisdiction where standards are sufficiently equivalent.

F. Common Dispute-Resolution Mechanisms

International-grid agreements should specify:

applicable law;

competent regulator;

judicial or arbitral forum;

emergency procedures;

enforcement mechanisms; and

treatment of conflicting national decisions.

15. Conclusion

Legal fragmentation is a structural risk for international electricity grids because electricity operates as a physically interconnected system while legal authority remains divided among sovereign jurisdictions.

The principal risks concern grid access, tariffs, market design, emergency powers, environmental approvals, technical standards, investment, liability and dispute resolution.

The jurisprudence concerning Baltic Cable demonstrates the importance of common rules for cross-border interconnectors, while Aquind demonstrates the institutional difficulties that can arise when national regulators cannot agree on the treatment of cross-border infrastructure. (EUR-Lex)

The broader legal principle is that international grid integration requires legal interoperability as well as physical interoperability. Harmonised rules, coordinated regulators, clear allocation of emergency powers, common technical standards and effective cross-border dispute-resolution mechanisms can reduce the risk that national legal differences undermine the operation of an interconnected electricity system.