A first-of-its-kind claim in which upcoming COP climate summit host Azerbaijan is suing its neighbour Armenia for allegedly stealing its green energy resources is underway in the Netherlands.

A tribunal at the Peace Palace in The Hague last week began hearing the international legal action Azerbaijan has brought alleging Armenia illegally exploited its renewable energy resources.

The case is kicking off in a year in which the eyes of the world will fall on Azerbaijan after it was named as the host of the COP29 climate change summit, which will take place in December.

Azerbaijan has already courted controversy by naming a 28-strong organising committee that doesn’t feature a single woman and appointing an oil industry veteran Mukhtar Babayev, now its minister of ecology and natural resources, as president-designate of the summit.

The renewables resources at the centre of its legal case are based in the landlocked mountainous Nagorno-Karabakh region, which has been the source of two wars between Azerbaijan and Armenia. Both countries have claimed the enclave as their own since the fall of the Russian Empire in 1917.

Azerbaijan controlled the territory for much of the 20th century and built various energy resources there, including the 50MW Tartar hydro-electric plant in the 1970s.

After the fall of the Soviet Union in 1991, Armenians seized most of the territory in the First Nagorno-Karabakh War. It fell under the leadership of the internationally unrecognised Republic of Artsakh, which was dominated by ethnic Armenians.

After simmering tensions for decades following that conflict, Azerbaijan seized the territory back in a lightning offensive in 2020 that resulted in a 44-day war with Armenia.

Azerbaijan last year launched a claim against Armenia under the Energy Charter Treaty – the first ever inter-state case under the multilateral framework for energy cooperation – seeking compensation for the alleged illegal exploitation of its resources in the region while it had been under its neighbour’s control.

In a press release last week, Azerbaijan said: “Throughout the illegal occupation, Armenia wrongfully excluded Azerbaijan from accessing its energy resources, expropriated those resources for its own use and benefit, and deprived Azerbaijan of the opportunity to develop them.”

Azerbaijan also said it was “prevented from harnessing the abundant hydropower, wind and solar energy resources” in the region.

The exploitation of hydropower is a key part of the claim. Azerbaijan argues Armenia illegally used the Tartar plant and built at least 37 “additional unauthorised hydropower facilities” during its control of the territory, which contains a quarter of Azerbaijan’s internal water resources.

The claim also concerns fossil fuel assets – Azerbaijan is rich in oil and natural gas resources – including the alleged extraction of coal from the region and damage to a natural gas pipeline.

Armenia has dismissed Azerbaijan’s case as “groundless”.

The proceeding is being administered by the Permanent Court of Arbitration. Three arbitrators have been appointed to hear the case at the Peace Palace.

Azerbaijan launched another international legal action last year in which it accused Armenia of destroying the region’s biodiversity.