ATOME Files Arbitration Notice Against Paraguay Over PPA Dispute

Less than a month before ATOME PLC secured development-bank backing for a 300 MW solar plant in Paraguay, the UK-listed green fertiliser company was already fighting a deteriorating dispute with the Paraguayan state over the power contracts that underpin its flagship Villeta project.

On 17 September 2026, ATOME formally notified the Republic of Paraguay of an investment dispute and set out its intent to pursue arbitration if talks fail within three months. The notice was filed under the UK-Paraguay bilateral investment treaty, and it targets Paraguay’s revocation of Presidential Decrees that had guaranteed price and term certainty under the project’s power purchase agreement.

White & Case LLP is advising ATOME. Paraguay’s Attorney General has acknowledged receipt but stresses that no formal arbitration has yet been filed.

Here is what the notice actually determines: what the three-month cooling-off period buys both sides, why the 300 MW solar ambition is now hostage to the Villeta dispute, and why investors are reading this as a signal for clean-energy risk across the region.

How a power-contract reversal triggered a treaty claim against Paraguay

This is not a vague falling-out. It is a traceable chain of state actions, and the pivot point is a single structural fact: Paraguay withdrew the decrees that made the project bankable.

ATOME’s Villeta green fertiliser project depends on power supplied by ANDE, Paraguay’s state electricity utility, under a power purchase agreement (PPA). A PPA is a long-term contract that fixes the price and term at which a generator sells electricity, and it is the document project financiers scrutinise before committing capital. To anchor that contract, the Paraguayan state had issued Presidential Decrees providing high-level backing for the project’s commercial structure.

A power purchase agreement fixes the price and delivery term at which electricity changes hands between a generator and an offtaker, and it is the single document project financiers scrutinise most closely when assessing whether a capital commitment is bankable.

Then the decrees were revoked. That single reversal removed the certainty on term and price that the entire project economics rested on.

ATOME’s notice identifies two specific grievances:

• The revocation of Presidential Decrees previously issued in support of the Villeta project
• The removal of certainty on term and price under the PPA that underpinned the project’s bankability

ATOME frames these actions not as an ordinary commercial disagreement, but as breaches of the protections owed to a foreign investor under the Agreement between the Government of the United Kingdom and the Government of Paraguay for the Promotion and Protection of Investments.

The UK-Paraguay bilateral investment treaty, published in full by UNCTAD’s Investment Policy Hub, sets out the promotion and protection standards that underpin ATOME’s claim, including the fair and equitable treatment and expropriation provisions that apply when state actions alter an investor’s contractual position.

ATOME’s stated position is that Paraguay’s revocation of the Presidential Decrees, and the resulting changes to PPA terms, constitute violations of the treaty protections owed to its investment in the Villeta project.

That distinction matters. A commercial contract dispute lives in domestic courts. A treaty-level investment dispute goes to an international arbitral forum, and it carries the possibility of compensation from a sovereign state. ATOME chose the second route, which tells you it judged domestic remedies inadequate against the government itself.

If the parties do not resolve the matter within three months of the notice, ATOME intends to file at the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C. The cooling-off window runs from 17 September 2026 to approximately mid-December 2026.

What happened to the 300 MW solar ambition and the Villeta project pipeline

To understand the collision, you first need the project’s real position before the dispute arrived.

As of August and September 2026, ATOME’s Paraguay portfolio was not a distressed single asset. It spanned three developments: the flagship Villeta green fertiliser facility, a 300 MWp solar PV plant at feasibility stage near Villeta, and the hydropower-based Yguazú Phase II project, for which ATOME had entered a pre-PPA with ANDE for 300 MW of power, reported in July 2023.

The timeline is what makes this striking. On 20 August 2026, less than four weeks before the arbitration notice, ATOME announced it had secured backing from a multilateral development bank’s dollar-denominated fund for a feasibility study on the 300 MWp solar plant, with battery energy storage integration under consideration.

So the company was expanding and defending its Paraguay position at the same time.

The solar project is not insulated from the Villeta dispute. ATOME has said its development depends directly on securing an appropriate PPA for the electricity generated.

ATOME has stated that the feasibility study and development of the 300 MWp solar plant are contingent on its Paraguayan subsidiary securing an appropriate power purchase agreement, and that it will provide further updates once the subsidiary’s position is resolved.

No source in 2026 reports the solar plant as operational, under construction, or cancelled. It sits at feasibility, and its fate is now tied to whether the Villeta power dispute is resolved.

For anyone tracking ATOME’s capacity targets, that conditionality is the point. The 300 MW solar ambition is not a separate line item you can value independently. It is downstream of the very dispute now heading toward possible arbitration.

Three ways investors are reading the ATOME notice, and what each interpretation implies

The notice supports more than one reading, and the frame you choose changes what the next twelve weeks look like.

Consider three interpretations side by side:

1. A signal of policy and contract failure. BNamericas, in coverage dated 17 September 2026, framed the dispute as one that may raise risk perception for foreign investors in Paraguay’s clean-energy and industrial sectors. On this reading, the revocation of the decrees shows that regulatory commitments can be reversed even in sectors the state promotes as strategic. The implication: heightened sovereign risk, potentially extrapolated to comparable projects across the region.

The revocation of decrees in Paraguay fits within a wider set of LATAM risk drivers that have elevated sovereign-action risk across the region’s energy and infrastructure sectors through 2026, complicating project financing assumptions for developers who relied on stable regulatory frameworks.

1. A legal and commercial negotiating instrument. A Notice of Dispute and Intent to Submit a Claim to Arbitration is a standard first step under most bilateral investment treaties. It serves as both a legal prerequisite and a pressure mechanism. On this reading, ATOME, advised by White & Case, is securing leverage to force a restructured PPA rather than abandoning the project. The implication: the three-month window is a negotiation runway, not a countdown to litigation.
2. A recoverable dispute with a treaty backstop. The ICSID route gives ATOME a credible enforcement path if talks fail. On this reading, the notice may reassure some investors that the company has tools to seek compensation or enforce its rights, and its continued pursuit of the solar feasibility study suggests it still intends to invest in Paraguay under acceptable terms. The implication: strategic patience, with the dispute treated as manageable rather than terminal.

Paraguay’s Attorney General leans toward the second frame. In a statement reported on 18 September 2026, the office confirmed no lawsuit or formal arbitration had been filed and noted both parties had three months to explore an amicable solution.

The broader arbitration record complicates any single verdict. Many investment-treaty disputes are settled or restructured during or after the cooling-off period rather than proceeding to a full tribunal award, and ICSID proceedings themselves are typically lengthy and costly, which reinforces the preference for negotiated settlement.

Which frame you adopt matters because it dictates your posture. Read it as policy failure and you reprice country risk. Read it as a negotiating tactic and you wait. Read it as a backstopped, recoverable dispute and you hold. The evidence, as of now, does not force one conclusion, so the read you take should be tested against your own thesis on ATOME and on Paraguay as a jurisdiction.

What the ATOME dispute reveals about PPA and sovereign risk in emerging-market clean energy

Lift the story above the specifics and a repeatable risk pattern comes into focus, one worth carrying into any comparable project you evaluate.

The ATOME case illustrates several structural risk factors that recur across emerging-market clean-energy developments:

• Regulatory and political risk: state decrees and government commitments can be revoked, undermining long-term project assumptions
• PPA and contract sanctity risk: even signed or pre-agreed offtake terms with a state utility may be subject to reversal or renegotiation
• Single-buyer power market risk: dependence on one counterparty, in this case ANDE, with limited alternative offtakers, concentrates negotiating exposure
• Timeline and FID delay risk: arbitration or prolonged talks can push back final investment decisions and construction
• Reputational and country-risk spillover: a high-profile treaty dispute can lift the risk premium for every foreign investor in the sector, not just the named project

The core vulnerability is the gap between early-stage political support and durable contractual protection. Decrees signal enthusiasm. They do not always survive a change in policy priorities.

BNamericas has characterised the litigation between ATOME and Paraguay as a development that may raise risk perception for foreign investors, particularly for large clean-energy and industrial projects that rely on state-backed PPAs and decrees.

This is why bilateral investment treaty arbitration exists. When domestic courts offer limited recourse against the sovereign itself, a BIT gives foreign investors an international forum to seek compensation or enforce rights. The catch is that the ICSID route is long, expensive, and uncertain, which is precisely why so many disputes settle before an award.

Coverage treats the ATOME case as a relatively novel, high-profile example in the green hydrogen and fertiliser sector specifically. That makes it a live test of how treaty protections function in practice for early-stage clean-energy projects.

The ATOME notice arrives against a broader trend: the investor-state dispute record set in 2025 reflects a global surge in treaty claims filed by foreign investors against sovereign states, with clean-energy and infrastructure sectors among the most frequently contested.

For you, the read-through is practical. If you are assessing any green ammonia or hydrogen project that depends on state-utility PPAs and government decrees in an emerging market, this is a working example of what happens when that support is withdrawn. Use it to stress-test your assumptions about contract sanctity before capital is committed, not after.

Three months to resolve it, or take it to Washington

The cooling-off window is not a formality. It is the period in which the Villeta project’s future, and with it the 300 MW solar ambition, will be decided.

ATOME cannot file formal ICSID proceedings until the window closes, around mid-December 2026, and no formal arbitration had been filed as of 20 September 2026. Both sides have publicly signalled interest in an amicable outcome, with Paraguay’s Attorney General describing the three months as a period to seek resolution.

Two paths lead out of the next twelve weeks:

1. A negotiated resolution. This would likely involve a restructured PPA and possibly revised Presidential Decree support, restoring a development pathway for Villeta and clearing the conditionality that currently freezes the solar feasibility study.
2. A formal ICSID filing. This would move the matter to Washington and would likely stall financing conversations and final investment decisions for an extended period, given how long treaty proceedings typically run.

Every strand of ATOME’s Paraguay pipeline, the solar feasibility study, the Yguazú Phase II pre-PPA, and the broader green fertiliser strategy, remains contingent on which path emerges. For investors monitoring the AIM-listed company, mid-December 2026 is the next material checkpoint.

For readers wanting to understand what happens after a treaty claim proceeds to a tribunal ruling, our full explainer on arbitration award enforcement examines how investors pursue collection from sovereign states when a final award is resisted.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.

These statements are speculative and subject to change based on market developments and company performance. Past performance does not guarantee future results.