The International Centre for Settlement of Investment Disputes (ICSID) began hearings on Monday in the 4.7 billion ($5.21 billion) lawsuit by Swedish utility giant Vattenfall against the German government for its 2011 decision to accelerate the phase-out of nuclear energy.
Vattenfall is demanding compensation from the German government for lost earnings and investments made when nuclear power still appeared to have a future in Germany.
The German government sees the legal action as inadmissible and unfounded, the Süddeutsche Zeitung reports.
In the wake of the March 2011 Fukushima disaster in Japan, Chancellor Angela Merkels administration ordered the immediate shutdown of eight of Germanys 17 nuclear power plants, with the remaining stations to go offline by 2022. A ninth plant was switched off last year.
The government's decision to phase out nuclear power led to strong growth in the country's renewable energy sector but also led to a dramatic increase in the use of coal power.
Vattenfall also joined German utilities E.ON and RWE earlier this year in a separate lawsuit with the Federal Constitutional Court in Karlsruhe that could cost tax payers up to 19 billion in what financial newspaper Handelsblatt Global Edition described as likely to be a precedent-setting case over paying for the costs of Germanys shift to renewable energy.
According to the Süddeutsche Zeitung, it remains unclear whether Vattenfall, as a state-owned Swedish company, has the right to sue the German government for compensation in Germany, which is why it also filed a lawsuit with the ICSID in the U.S.
The ICSID proceedings are expected to last two weeks, with a decision due in mid-2017 at the earliest.
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