-
The EU, the Energy Charter Treaty, and sustainability policies: the legal intricacies of trying to boil the ocean
A Europe and the World Special Series.
The Energy Charter Treaty (ECT), signed in 1994, aimed to incentivise and protect Foreign Direct Investments (FDIs) in the energy sector, in particular from Western European countries into fossil rich countries in the East. It is an unusual and anachronistic investment treaty that would not meet current standards of protecting the right to regulate. It restricts the parties’ space for climate mitigation policies.
The ECT is also the most widely used investment treaty in the world. In August 2022, UK oil and gas company Rockhopper obtained an award of EUR 190 million plus interest against Italy for banning new oil and gas projects along the coastlines. The tensions between the EU’s and the Member States’ obligations under the ECT and under international, European, and national climate laws are apparent and likely to grow.
In addition, most disputes under the ECT are intra-EU, i.e., investors from one EU Member State start a dispute against another EU Member State. These are the type of disputes that the European Court of Justice (ECJ) declared in September 2021 to be contrary to EU law (Komstroy). The EU and its Member States are obliged to take action to end this constitutional conflict.
The contracting parties to the ECT negotiated amendments in relation to, among other things, sustainability concerns and the EU constitutional conflict between 2020 and 2022. In June 2022, the parties reached an agreement in principle to reform the ECT. However, several Member States have rejected the reform as insufficient to allow the urgently required energy transition and expressed the intention to withdraw from the ECT.
In this special issue, we assess to what extent the ECT is an obstacle to sustainability, as well as the legal intricacies surrounding the EU’s and its Member States’ participation in the ECT, including whether and how the different parties can legally withdraw from the ECT.
Publication date: From June 2023 (ongoing).
Article list
Research article
Withdrawal from mixed agreements under EU law: the case of the Energy Charter Treaty
Laurens Ankersmit
2023-06-28 Volume 7 • Issue 1 • 2023
Also a part of: