Abstract
The Energy Charter Treaty is unique as a multilateral treaty, indeed it is the only international legally binding agreement specific to the energy sector. The Energy Charter Treaty is unique as a multilateral treaty, indeed it is the only international legally binding agreement specific to the energy sector.
The views expressed in this chapter are strictly personal and should not be attributed to the Secretariat or the Contracting Parties of the Energy Charter Treaty.
First published in Yulia Selivanova (ed.) “Regulation of Energy in International Trade Law: WTO, NAFTA and Energy Charter”, Kluwer Law International, 2011.
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Notes
- 1.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000.
- 2.
The Final Act of the European Charter Conference describes best the beginning of the process: ‘During the meeting of the European Council in Dublin in June 1990, the Prime Minister of the Netherlands suggested that economic recovery in Eastern Europe and the then Union of Soviet Socialist Republics could be catalysed and accelerated by cooperation in the energy sector. This suggestion was welcomed by the Council, which invited the Commission of the European Communities to study how best to implement such cooperation. In February 1991 the Commission proposed the concept of a European Energy Charter. Following discussions of the Commission’s proposal in the Council of the European Communities, the European Communities invited other countries of Western and Eastern Europe, the Union of Soviet Socialist Republics and the non-European members of the Organisation for Economic Co-operation and Development to attend a conference in Brussels in July 1991 to launch negotiations on the European Energy Charter. A number of other countries and international organizations were invited to attend the European Energy Charter Conference as observers.’ See The Energy Charter Secretariat, The Energy Charter Treaty and Related Documents. A Legal Framework for International Energy Cooperation, p. 25, available at: www.encharter.org/fileadmin/user_upload/document/EN.pdf (last visited on 15th August, 2010).
- 3.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 2.
- 4.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 8.
- 5.
Negotiations on the ECT started in 1992 and could be successfully concluded after a period of three years. The ECT was signed in Lisbon on 17th December, 1994, and entered into force on 16th April, 1998.
- 6.
The role of the European Energy Charter declaration is significant as it should be taken into account in interpreting the ECT, since the ECT’s preamble makes clear that the Treaty is intended to provide the basis for implementing the principles contained in the Charter; Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 3.
- 7.
Sussman, The Energy Charter Treaty’s Investor Protection Provisions: Potential to Foster Solutions to Global Warming and Promote Sustainable Development, Oil, Gas & Energy Law Intelligence 6 (2008) 3, p. 2.
- 8.
Bamberger, The Energy Charter Treaty. A Description of Its Provisions, 1995.
- 9.
The Protocol on Energy Efficiency and Related Environmental Aspects entered into force simultaneously with the Treaty on 16th April, 1998.
- 10.
Selivanova, Managing the Patchwork of Agreements in Trade and Investment, in: Goldthau/Witte (eds.), Global Energy Governance: The New Rules of the Game, 2010, pp. 49–72.
- 11.
United States actively participated in the ECT negotiations but decided not to join the Treaty for the following reported reasons: investment protection under the ECT is not as strong as in the bilateral agreements concluded by the United States; there is a potential conflict between the ECT’s unconditional provision of the MFN and the Jackson-Vanik Amendment to the 1970 U.S. Trade Act; it would be difficult to ensure that the ECT is implemented on a sub-federal level. Furthermore, it was reported that the US did not become a party to the treaty because it was not clear how to bind the States at the pre-investment stage which relates to resources access conditions, Sussman, The Energy Charter Treaty’s Investor Protection Provisions: Potential to Foster Solutions to Global Warming and Promote Sustainable Development, Oil, Gas & Energy Law Intelligence 6 (2008) 3, p. 7.
- 12.
Lists of ECT’s members and observers are available at: www.encharter.org/index.php?id=61 (last visited on 15th August, 2010).
- 13.
However, before the ECT was negotiated, the UN General Assembly Resolution 626 (VII) of 21st December, 1952 recommended all Member States “to refrain from acts direct and indirect, designed to impede the exercise of the sovereignty of any state over its natural resources”, – see General Assembly Resolution 626 (VII), www.un.org/documents/ga/res/7/ares7.htm (last visited on 15th August, 2010). Later General Assembly resolution 1803 (XVII) of 14th December, 1962 on “Permanent sovereignty over natural resources” recognized that “The right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the State concerned.”
- 14.
Annex EQ I.
- 15.
Art. 4 provides: “Nothing in this Treaty shall derogate, as between particular Contracting Parties which are parties to the GATT, from the provisions of the GATT and Related Instruments as they are applied between those Contracting Parties.”
- 16.
As of August 2011, this was relevant for seven member countries of the Energy Charter Treaty that are not yet members of the WTO.
- 17.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 13.
- 18.
The covered energy products are listed in Annex EM I.
- 19.
The Trade Amendment entered into force on 21st January, 2010.
- 20.
Not all WTO rules are applicable under the ECT (See Annexes G and W). It was decided for instance not to incorporate provisions of the WTO General Agreement on Trade in Services (GATS). However, trade in services is indirectly addressed by the ECT, in particular through the ECT provisions on investment.
- 21.
Annex EQ I.
- 22.
The possibility to move to a future legally binding commitment for agreed items which are presently subject to the best endeavours commitment is foreseen by paras. (6) and (7) of amended Art. 29.
- 23.
However, any increase of import duties is subject to a notification obligation and consultation procedure (Art. 29(5)).
- 24.
Items subject to a legally binding tariff commitment will be listed in Annexes EM II and EQ II, both of which are empty until the Conference decides otherwise. In case of a respective decision of the Conference, Contracting Parties may not increase any customs duty or charge of any kind imposed on or in connection with importation or exportation of respective Energy Materials and Products or Energy-Related Equipment above the rates applied on the date of the decision by the Charter Conference to list the particular item in the relevant Annex.
- 25.
In this case, the Energy Charter Conference shall take the decision by a three-fourths majority of the Contracting Parties and determine the date of the disapplication or modification of such amendment. Such a request to the Conference can be made within six months of the circulation of a notification from the Secretariat that the amendment has taken effect under the WTO Agreement. Annex W (B)(10)(b).
- 26.
Annex W (B)(4)(iv).
- 27.
Annex D.
- 28.
Art. 29(7).
- 29.
Disputes between two WTO members that are also ECT members are to be resolved in the WTO dispute settlement forum.
- 30.
Art. 28.
- 31.
See Art. 5 and 10(11).
- 32.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 56.
- 33.
Annex W(B)(1).
- 34.
See Declaration adopted by the Energy Charter Conference, 17th December, 2001. The Conference has declared that strengthening energy supply security throughout the Energy Charter’s constituency is a priority for the cooperation in the Charter process. In this context the conference linked supply security to transit and the adoption of the draft Transit Protocol. See Azaria Energy Transit under the Energy Charter Treaty and the General Agreement on Tariffs and Trade, Journal of Energy and Natural Resources Law 27 (2009) 4, pp. 559–596.
- 35.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 29.
- 36.
Ibid.
- 37.
Bamberger, The Energy Charter Treaty. A Description of Its Provisions, 1995, p. 13.
- 38.
Art. 7(4) of the ECT.
- 39.
Art. 7(6) of the ECT.
- 40.
Art. 7(7) of the ECT. See L. Ehring & Y. Selivanova “Energy Transit” in Y. Selivanova (ed.) “Regulation of Energy in International Trade Law: WTO, NAFTA and Energy Charter”, Kluwer Law International (2011).
- 41.
The ECT’s principal investment provisions are contained in Part III of the Treaty.
- 42.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 19.
- 43.
Hober, Investment Arbitration and the Energy Charter Treaty, Journal of International Dispute Settlement, 1 (2010) 1, pp. 153–190 (155).
- 44.
Ibid.
- 45.
See Art. 18 of the ECT and s. II.A above.
- 46.
Mernier, The Rules of Energy Trade, Speech of at the World Energy Council, 12th November, 2007.
- 47.
Art. 1(5)(6) of the ECT. The definition sets forth that the term “Investment” refers to any investment “associated with an Economic Activity in the Energy Sector”, which is related to the definition of ‘Energy Materials and Products’.
- 48.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 20.
- 49.
According to Art. 1(6).
- 50.
Art. 1(5).
- 51.
Annex EM lists those ‘Energy Materials and Products’ that are covered by the Treaty. These include nuclear energy (e.g., uranium, other radioactive chemical elements, heavy water), coal, natural gas, petroleum, petroleum products, and electrical energy.
- 52.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 5.
- 53.
According to Art. 10(1).
- 54.
Hober notes in this respect: “This standard of ‘fair and equitable treatment’ is derived from international law, and has, through its frequent application by tribunals in BIT and NAFTA arbitrations, become an important principle of investment protection. Although certain principles have developed in arbitral practice (good faith, protection of legitimate expectations, due process, proportionality, etc.), the exact scope and meaning of fair and equitable treatment is not easily described in general terms … tribunals applying the principle of fair and equitable treatment have found it to include principles such as the protection of legitimate investor expectations with respect to the maintenance of a stable and predictable business and legal environment by the host government, the principle of transparency, the good-faith and abuse of rights principles, due process, proportionality and the prohibition on arbitrariness. References to the prohibition on arbitrariness and requirements of transparency are frequently made within the general framework of due process, which must be observed by courts and authorities of the host state”, Hober, Investment Arbitration and the Energy Charter Treaty, Journal of International Dispute Settlement, 1 (2010) 1, p. 4.
- 55.
Art. 10(1).
- 56.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 6.
- 57.
The stage of “making investments” and the issue of access conditions.
- 58.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 22.
- 59.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 3. Art. 10(4) provides for negotiations on the extension of the non-discrimination principle to the pre-establishment phase. These negotiations began in 1995. Although negotiators had come close to a final agreement, a number of political issues could not be resolved. The basic structure of the draft “Supplementary Treaty” consisted of two components:
(1) An obligation of CPs to grant foreign investors national treatment and most favoured nation treatment concerning their establishment in the host country. According to Understanding Nr. 10 to the ECT, this includes the issues of privatization and de-monopolization.
(2) The right of each CP to launch individual exceptions to this commitment (“top-down approach”). The “Supplementary Treaty” would also have considerable significance in the context of privatization. Foreign investors who would like to participate in tender procedures and the subsequent sale of state assets would be protected against discrimination.
- 60.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 4.
- 61.
“Blue Book” contains all exceptions to the principle of non-discrimination that member countries/signatories have reported concerning the making of a foreign investment in the energy sector. The exceptions are regularly reviewed in the ECT Investment Group, either through individual country examinations or horizontal reviews (e.g., concerning existing authorization procedures, screening mechanisms, restrictions on land ownership, etc). See Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 24.
- 62.
In Art. 1(7), “Investors” are defined simply as natural persons having the citizenship or nationality of or permanently residing in a Contracting Party “in accordance with its applicable law”, and as companies or other entities organized “in accordance with the [applicable] law”. The ECT recognizes a right to deny the advantages of the investment provisions in two cases: (1) so-called “mailbox companies” (i.e., a company that has no substantial business activities in the country where it is organized); (2) if the denying CP does not maintain diplomatic relations with the third country, or adopts or maintains measures that prohibit or restrict transactions with investors of that state.
- 63.
Art. 10(7).
- 64.
Ibid.
- 65.
The ECT contains provisions on responsibility of state enterprises to conduct their activities consistently with obligations under investment provisions of the Treaty (Art. 22(1)).
- 66.
Hober notes in this respect: “The significance of the protection against expropriation is not primarily the protection against outright takings of investments by the host state, but rather the protections against “measures having equivalent effect to nationalisation or expropriation”, i.e. various forms of indirect or creeping expropriation such as exorbitant regulations or confiscatory taxation that undermines the operation or enjoyment of the investment”, Hober, Investment Arbitration and the Energy Charter Treaty, Journal of International Dispute Settlement, 1 (2010) 1, p. 161.
- 67.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 9.
- 68.
Hober states in this respect: “In the first case, compensation is a precondition for the lawfulness of the expropriation, and, in the latter case, compensation is equivalent to damages for the loss suffered by the investor as a result of the unlawful expropriation”, Hober, Investment Arbitration and the Energy Charter Treaty, Journal of International Dispute Settlement, 1 (2010) 1, p. 161.
- 69.
Art. 12 of ECT.
- 70.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 24.
- 71.
Ibid.
- 72.
Ibid.
- 73.
Art. 14(1) containing a non-exclusive list of transfers mentions initial and additional capital, returns, payments under a contract, unspent earnings and other remuneration of personnel, proceeds from sale or liquidation, dispute settlement proceeds, and compensation of expropriation.
- 74.
Art. 11, see Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 28.
- 75.
Art. 10(1). Under Art. 26 and 27, Contracting Parties may opt out of application of the ECT dispute settlement to breaches of this obligation (see Art. 26(3)(c) and 27(2)). Australia, Hungary and Norway have opted out of the application of this provision.
- 76.
Art. 27.
- 77.
Art. 26.
- 78.
Art. 29, Annex D.
- 79.
Art. 7.
- 80.
Art. 6.
- 81.
Art. 19.
- 82.
Art. 26(2).
- 83.
Art. 26(4).
- 84.
This option is available if both the home state of the investor and the host state are parties to the ICSID Convention. Alternatively, the foreign investor may invoke the ICSID Additional Facility Rules for the Administration of Proceedings by the Centre. These arbitration rules are applicable where only either the home state of the investor or the host state – but not both – is a party to the ICSID Convention.
- 85.
Art. 26(3)(b). The Treaty permits Contracting Parties listed in Annex ID to decline giving their unconditional consent to the submission of a dispute to international arbitration where the investor has previously submitted the dispute to another dispute resolution forum.
- 86.
Art. 26(6).
- 87.
Art. 26(8). Pursuant to Art. 26(5)(b), an investor-state arbitration shall, at the request of any party to the dispute, be held in a state that is a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This Convention requires state parties to recognize and enforce within their courts arbitral awards rendered in foreign states. This provision permits the investor to ensure that such states are obliged to enforce the award. Moreover, the ICSID Convention already requires that its parties recognize and enforce ICSID arbitral awards. Therefore, if this option is chosen, the ICSID awards will generally be enforceable in a large number of states even if the New York Convention is, for some reason, inapplicable.
- 88.
See discussion in s. II.B.2 above and Art. 27(9).
- 89.
Art. 19.
- 90.
Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA), Art. 3, available at: www.encharter.org/fileadmin/user_upload/document/EN.pdf (last visited on 15th August, 2010).
- 91.
Art. 19(2).
- 92.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 36.
- 93.
Art. 6(1).
- 94.
Art. 6(2).
- 95.
Art. 6(5).
- 96.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 37.
- 97.
Art. 9(1).
- 98.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 39.
- 99.
Art. 22(1).
- 100.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 41.
- 101.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 41. Similar obligation exists with respect to enterprise, agency or other organization to which an ECT Member State grants exclusive or special privileges.
- 102.
Art. 22(3).
- 103.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 41.
- 104.
Art. 22(4).
- 105.
At the tenth anniversary session of the Energy Charter Conference in December 2001, Valery A. Yazev, member of the Russian Duma, expressed Russia’s disappointment in the ECT for its failure to live up to these expectations: “Regrettably, the dynamic of the ‘post-treaty’ period is not bright. The Protocol on Hydrocarbons was not developed. The Protocol on Emergency-Situations was not developed. The Supplementary Treaty was not concluded. Negotiations on the development of a Protocol on Electricity always postponed. Negotiations on the Protocol on Transit that are most important for Russia appear close to a dead end.” Speech of the Russian State Duma Delegate Mr. Valery A. Yazev at the occasion of the ten-year anniversary session of the Energy Charter Conference on the 17th December, 2001, para. 5, unpublished, cited from van Agt, Tabula Russia. Escape from the Energy Charter Treaty, Briefing Paper, Clingendael International Energy Program, September 2009, p. 11.
- 106.
Arguably, interests of regional energy producing states have changed now from those of the early nineties when the ECT was negotiated and countries like Russia were in a weak negotiating position. These interests are now claimed to be best served by state control and strong “national champions” to compete with international oil and gas companies. See van Agt, Tabula Russia. Escape from the Energy Charter Treaty, Briefing Paper, Clingendael International Energy Program, September 2009, p. 11.
- 107.
Art. 18, see discussion in s. II.1 above.
- 108.
Other examples of misperceptions, cited by Konoplyanik, are that “the ECT opens access to the Gazprom transportation system at the discounted domestic transportation tariffs”, the claim that the ECT “obliges Russia to open access to its energy resources”, or it requests unbundling of Gazprom”, or “requests cancellation of long-term gas export contracts”, etc. Konoplyanik, Common Russia-EU Energy Space: The New EU-Russia Partnership Agreement, Acquis Communautaire and the Energy Charter, Journal of Energy & Natural Resources Law 27 (2009), p. 278.
- 109.
The ECT Understanding IV.1(b)(i). For example, a long-standing opponent of ECT ratification, the former member and then the Chairman of the Energy Committee, and currently the Deputy Chairman of the Russian State Duma, Valery Yazev, contended for a long time that the ECT provides for mandatory third party access (MTPA) to the energy infrastructure. See Konoplyanik, Common Russia-EU Energy Space: The New EU-Russia Partnership Agreement, Acquis Communautaire and the Energy Charter, Journal of Energy & Natural Resources Law 27 (2009), p. 278.
- 110.
See Art. 19 and Protocol on Energy Efficiency and Environmental Aspects.
- 111.
Remarkably, the Treaty does not even include renewable energies in the list of energy products and materials covered by the Treaty. It may be argued that this omission is mitigated by the fact that electrical energy is covered by the Treaty and since the large share of renewable energy is geared towards producing electricity, the Treaty’s provisions do indeed cover renewable energy to some extent. This example is however illustrative of the fact that the agenda of energy negotiations may have looked very different two decades ago than it does now. Indeed any serious attempt to negotiate an energy-specific Treaty in the twenty-first century would need to address renewable energies explicitly.
- 112.
Konoplyanik, Energy Charter Plus – Russia to Take the Lead Role in Modernizing ECT?, Oil, Gas & Energy Law Intelligence 7 (2009) 4, p. 2. These criticisms were mainly voiced by Russia who in fact proposed in course of the ECT negotiations in the beginning of 1990s to develop a protocol on emergencies in the energy field of cross-border character aimed at securing non-interrupted transit.
- 113.
Although the coverage of the WTO with respect to energy is less than comprehensive, it has been reported that WTO members bring a wide range of energy-related issues to the negotiations table – many of them not covered by existing WTO disciplines.
- 114.
From Russia’s perspective, the interruption was not due to Russia’s failure to put the gas into the transportation system, but unsanctioned take-off of gas by Ukraine. Having subsidized deliveries to Ukraine for years, Russia wanted to obtain market price for its natural gas, which Ukraine simply could not afford to pay. See Doeh/Nappert/Popov, Russia and the Energy Charter Treaty: Common Interests or Irreconcilable Differences?, International Energy and Taxation Law Review 2006.
- 115.
See http://www.chile.mid.ru/2009/bull_015.html. Statement of Russian President Dmitry Medvedev of 20th January, 2009 said: “We should consider what international agreements – multilateral international agreements – are able to provide for the interests of sellers, transit countries, and consumers. Why do I mention this? Everyone knows about the so-called “Energy Charter”, which was developed to a large extent with a view to protecting the interests of consumers – which is not a bad thing. One should not forget, though, that sellers are equally parties in any contractual relations and their interests should also be protected to the same extent as the interests of transit states. To make this protection effective, one needs new international mechanisms. I believe, we could think about either amending the existing version of the Energy Charter (if other member-countries agree to that) or developing a new multilateral instrument, which would fully correspond to these objectives, and which would address both procedural, technological and legal issues related to guarantees of payment for the gas supplied, performance by transit states of their functions and prevention of such problems, which, unfortunately were created by Ukraine late last year. I consider that both the Government of the Russian Federation and JSC “Gazprom” (as our main supplier of gas) ought to think about what mechanism to this effect could be appropriately developed and proposed to all members of the international community. I view this as our special task in the energy area by virtue of Russia being the largest energy producer in the world.”
- 116.
“Did this Energy Charter help in the course of the recent gas conflict? Procedures which are provided by this charter did not work, incentives did not work either, the Energy Charter Treaty was not used. This means that we need another basis for downplaying such conflicts”, http://www.rian.ru:economy/20090605/173397916.html (last visited on 15th August, 2010).
- 117.
In his speech in Helsinki on 20th April, 2009, Russia’s President stated: “The existing bilateral arrangements and multilateral legally binding norms governing international energy relations have failed to prevent and resolve conflict situations. This makes it necessary to efficiently improve the legal framework of world trade in energy resources.”
- 118.
The text of the joint declaration signed during Joint EU-Ukraine International Investment Conference on the Modernisation of Ukraine’s Gas Transit System is available at: http://www.eeas.europa.eu/energy/events/eu_ukraine_2009/joint_declaration_en.pdf (last visited on 15th August, 2010).
- 119.
Bovt, Energy Dialogue: A Restart?, 28th April, 2009, available at: http://www.eu-russiacentre.org/our-publications/column/energy-dialogue-restart.html (last visited on 15th August, 2010).
- 120.
Konceptual’nyj podchod k novoj pravovoj baze mezhdunarodnovo sotrudnichestva v sfere energetiki (celi I principy), President of Russia, Official Web Portal, 21st April, 2009, available at: http://www.kremlin.ru/eng/text/docs/2009/04/215305.shtml (last visited on 15th August 2010).
- 121.
The Concept states that “existing bilateral arrangements and multilateral legally binding norms … have failed to prevent and resolve conflict situations.” This refers implicitly to conflicts with Ukraine and inability not only of the ECT but also Bilateral Investment and Trade agreements (BITs) and even the WTO to prevent the crisis. See the commentary by van Agt, Tabula Russia. Escape from the Energy Charter Treaty, Briefing Paper, Clingendael International Energy Program, September 2009, p. 13.
- 122.
Bovt, Energy Dialogue: A Restart?, 28th April, 2009, available at: http://www.eu-russiacentre.org/our-publications/column/energy-dialogue-restart.html.
- 123.
van Agt, Tabula Russia. Escape from the Energy Charter Treaty, Briefing Paper, Clingendael International Energy Program, September 2009, p. 14.
- 124.
Ibid., p. 26.
- 125.
On 20th August, 2009 the Russian Federation officially informed the Depository that it did not intend to become a Contracting Party to the Energy Charter Treaty and the Protocol on Energy Efficiency and Related Environmental Aspects. In accordance with Art. 45(3(a)) of the Energy Charter Treaty, such notification results in Russia’s termination of its provisional application of the ECT and the PEEREA upon expiration of sixty calendar days from the date on which the notification is received by the Depository. Therefore, the last day of Russia’s provisional application of the Energy Charter Treaty and the PEEREA was 18th October, 2009.
- 126.
van Agt, Tabula Russia. Escape from the Energy Charter Treaty, Briefing Paper, Clingendael International Energy Program, September 2009, p. 12.
- 127.
Ibid., p. 2.
- 128.
Forty-six of them have actually ratified the ECT.
- 129.
It has been commented, “the window of political opportunity is much narrower than it was in the early 1990s … The euphoria and expectation of changes on both sides were so high that they opened a broad window of political opportunity for negotiations aimed at creating common rules of the game and a level playing field, particularly in energy, in a broader Europe. Today, this window is likely to have narrowed dramatically”, Konoplyanik, Common Russia-EU Energy Space: The New EU-Russia Partnership Agreement, Acquis Communautaire and the Energy Charter, Journal of Energy & Natural Resources Law 27 (2009), p. 274.
- 130.
Van Agt commented: “Replacing [the ECT] with a new legal framework to accommodate Russia appears frivolous and difficult in substance”, van Agt, Tabula Russia. Escape from the Energy Charter Treaty, Briefing Paper, Clingendael International Energy Program, September 2009, p. 2. So far, there has been no top-level reaction from either the US or European leaders. For Europe, the ECT is too important to abandon it in favour of some vague proposals. Ibid. See also comments by Konoplyanik, Energy Charter Plus – Russia to Take the Lead Role in Modernizing ECT?, Oil, Gas & Energy Law Intelligence 7 (2009) 4, p. 1: “The truth is that initiatives on creating a new system in place of the ECT proposed by Russia did not enthuse potential partners. To the contrary, Brussels and some individual EU members declared that abolishment of the Energy Charter is out of the question.” Konoplyanik pointed out negative consequences of potential withdrawal of Russia from the ECT. He argued that there was no reasonable benefit from such a withdrawal from the provisional application. Such withdrawal would not make any difference for the ongoing arbitration at the UNCITRAL on Yukos case brought by the latter’s minority shareholders against the Russian government (as reportedly the case had been the key motivation behind the decision to stop the provisional application of the Treaty). Not only the cessation of provisional application would have no effect on the Yukos case, under the terms of such application Russia would remain bound by the investment protection regime of the ECT for another twenty years.
- 131.
“If Russia and the EU have failed so far to reach any large scale agreement in the energy sphere, why would it be viable to anticipate that it could be reached with a larger number of participants, including those who openly confront each other (the US and Venezuela)? It is very doubtful that Russia could quickly find strong supporters for its proposal. Nor is it clear who could eventually become supporters of such a sweeping reform of the whole international energy framework. Also, it could be asked why it is impossible in the eyes of the Russian leadership to amend and improve the existing documents instead of announcing them all as dead”, Bovt, Energy Dialogue: A Restart?, 28th April, 2009, available at: http://www.eu-russiacentre.org/our-publications/column/energy-dialogue-restart.html.
- 132.
Ibid., p. 2. Most of the issues listed in Medvedev’s New Legal Framework have been the subject of intensive EU-Russian energy dialogue in recent years in negotiations over the new Partnership Agreement as well as the ECT itself. They have not been resolved so far and, more importantly, are seen differently by Moscow and the EU. For instance, Russia has continuously complained that Europe discriminates against its companies investing in the EU, while it itself has put forward some severe restrictions on foreign investments into its “strategic spheres”.
- 133.
The ECT countries recognized in Rome statement of the Energy Charter Conference of 9 Dec. 2009 that “the Energy Charter Process must reflect new developments and challenges in international energy markets and respond to broader changes across its constituency. This could entail consultations, possibly leading to negotiations on the preparation of practical proposals on how the Energy Charter Process could be modernized, whilst remaining universal, comprehensive and equal in character, and to strengthen common implementation mechanisms as appropriate to be effective and efficient.” The Road Map for the Modernisation of the Energy Charter Process was adopted 24 November 2010 by the Energy Charter Conference.
- 134.
President Medvedev admitted, as one of the options, “we could think about … amending the existing version of the Energy Charter (if other member-countries agree to that).” The President of the European Commission Jose Manuel Barroso announced at a summit with President Dmitry Medvedev in Khabarovsk in May 2009 the EU’s consent to improve the Energy Charter process and its instruments. “We are open to discussion of the proposals put forward by Russia but building on the existing agreements … without destroying, without putting under pressure the system that already exists”, Barroso said; see “EU Will Not Abandon Energy Charter Rejected by Russia: Barroso”, EU Business, 22nd May, 2009, available at: http://www.eubusiness.com/news-eu/1242973023.48/ (last visited on 15th August, 2010).
- 135.
Konoplyanik, Common Russia-EU Energy Space: The New EU-Russia Partnership Agreement, Acquis Communautaire and the Energy Charter, Journal of Energy & Natural Resources Law 27 (2009), p. 287.
- 136.
US Senator Lugar stated: “The absence of a collective energy security strategy will lead to greater fragmentation among European nations and across the Atlantic. This fragmentation will not be exclusive to energy policy; it may also detrimentally impact on our ability to act upon shared security and economic issues.” See “Lugar Calls for Trans-Atlantic Energy Security Strategy”, Senator Lugar’s speech to the U.S.-Ukraine Energy Dialogue Series, 15th April, 2008. On Lugar’s Energy Initiative see http://lugar.senate.gov/energy/press/speech/ukraine.cfm (last visited on 15th August, 2010).
- 137.
Sussman notes: “With the increasing globalization of the world’s economy, the interdependence of the energy sector, and the long term and highly capital intensive nature of energy projects, multilateral rules for international cooperation are needed. The ECT was negotiated to meet that need”, Sussman, The Energy Charter Treaty’s Investor Protection Provisions: Potential to Foster Solutions to Global Warming and Promote Sustainable Development, Oil, Gas & Energy Law Intelligence 6 (2008) 3, p. 3.
- 138.
Mernier, The Rules of Energy Trade, Speech of at the World Energy Council, 12th November, 2007.
- 139.
Decisions on depletion policy – on whether and how fast national resources are to be developed – are matters for resource-owning governments. International regulation is not likely to succeed if it tries to infringe in a binding way on these national prerogatives. This was the experience during the preceding rounds of trade negotiations. Mernier, The Rules of Energy Trade, Speech of at the World Energy Council, 12th November, 2007. See UN Resolution No. 1803 of 18th December, 1962 on permanent sovereignty over natural resources.
- 140.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 3.
- 141.
Mernier, The Rules of Energy Trade, Speech of at the World Energy Council, 12th November, 2007.
- 142.
van Agt, Tabula Russia. Escape from the Energy Charter Treaty, Briefing Paper, Clingendael International Energy Program, September 2009, p. 8. In 2006 leaders of G8 adopted the Energy Security Declaration which “support[ed] the principles of the Energy Charter and the efforts of participating countries to improve international energy cooperation” and committed to the following principles: “open, transparent, efficient and competitive markets for energy production, supply, use, transmission and transit services as a key to global energy security; transparent, equitable, stable and effective legal regulatory frameworks, including the obligation to uphold contracts, to generate sufficient, sustainable international investments upstream and downstream.” G8, Global Energy Security (Russia 2006), see “Global Energy Security”, Official Website of the G8 Presidency of the Russian Federation in 2006, 16th July, 2006, retrieved at: http://en.g8russia.ru/docs, (last visited on 15th August, 2010). See also G8 Summit 2007 Heiligendamm, Growth and Responsibility in the World Economy.
- 143.
Konoplyanik, Common Russia-EU Energy Space: The New EU-Russia Partnership Agreement, Acquis Communautaire and the Energy Charter, Journal of Energy & Natural Resources Law 27 (2009), p. 262.
- 144.
The tribunal stated in Plama case that the ECT is the “first multilateral treaty to provide as a general rule the settlement of investor-state disputes by international arbitration” and provides “a covered investor an almost unprecedented remedy for its claims against a host state.” Plama Consortium vs. Republics of Bulgaria, 44 I.L.M. 721 (ICSID 2005), 739, 742. Sussman, The Energy Charter Treaty’s Investor Protection Provisions: Potential to Foster Solutions to Global Warming and Promote Sustainable Development, Oil, Gas & Energy Law Intelligence 6 (2008) 3, p. 3.
- 145.
Except to a limited extent through GATS.
- 146.
Selivanova, Managing the Patchwork of Agreements in Trade and Investment, in: Goldthau/Witte (eds.), Global Energy Governance: The New Rules of the Game, 2010, p. 7.
- 147.
Sussman argues that while increased investments in GHG mitigation projects will be necessary, the ECT could make such investments more attractive: “Accession to the ECT would contribute significantly to the attractiveness of investment in the developing countries and should serve to reduce the cost of such investment.” Sussman, The Energy Charter Treaty’s Investor Protection Provisions: Potential to Foster Solutions to Global Warming and Promote Sustainable Development, Oil, Gas & Energy Law Intelligence 6 (2008) 3, p. 9. This is because clean energy projects are based largely on local support schemes and governmental incentives and require that those be maintained in the same form as when the investment is made. The ECT creates rights for investors in cases where host countries decide to change incentives or subsidies in violation of the investment protection rules of the ECT (See Nykomb Synergies Tech. Holding AB vs. The Republic of Latvia, Arb. Inst. Of the SCC, Case No. 118/2001 (2003), pp. 31–32). Sussman contends that the ECT investment provisions are broad enough to cover many if not all of the currently known GHG mitigation measures including nuclear energy, coal gasification and carbon sequestration.
- 148.
Bamberger/Linehan/Waelde, The Energy Charter Treaty in 2000: In a New Phase, in: Roggenkamp (ed.), Energy Law in Europe, 2000, p. 1.
- 149.
Energy Charter Secretariat, The Energy Charter Treaty. A Reader’s Guide, 2002, p. 53. Art. 26(3)(c) grants CPs the right not to give their unconditional consent to international arbitration in respect of disputes of alleged breaches of the obligations under an individual investment contract. Three ECT members – Australia, Hungary, Norway – have opted for this.
- 150.
Be it in relation to trade, finance or energy.
- 151.
Van Agt comments: “Energy policy frameworks, and their legal architecture, have to evolve beyond their current limits to successfully tackle an imposing range of energy security, climate and social economic challenges. The WTO inspired multilateral energy governance system, in which the Energy Charter serves as a figure head for the energy sector, is re-evaluated actively by its stakeholders”, van Agt, Tabula Russia. Escape from the Energy Charter Treaty, Briefing Paper, Clingendael International Energy Program, September 2009, p. 8.
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Selivanova, Y. (2012). The Energy Charter and the International Energy Governance. In: Herrmann, C., Terhechte, J. (eds) European Yearbook of International Economic Law 2012. European Yearbook of International Economic Law, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-23309-8_10
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