This chapter provides an analysis of bilateral, regional, and multilateral energy investment treaties. The argument is that, although investment is a major issue for energy production, in relation to the global governance of energy investments, there is no overarching regime. In fact, without access to energy, our daily lives would collapse. No truly universal investment framework exists, let alone one concerned with global investment protection in energy. What one might imagine to exist is a putative composite framework constituted by various independent elements. The international community is neither monolithic nor homogenous; it is made up of numerous states that could broadly be lumped together in different groups in relation to their economic strength and levels of industrialization/development. In that respect, the interests of least or less developed countries on the question, say, of foreign investment interests protection had, in the past, not been identical to those of the developed world. This is less the case now, following the end of the Cold War, where it appears that, whatever misgivings existed on the part of the less industrialized world about capitalist-based paths to development seem to have subsided, given that states in the less industrialized world seek to outcompete one another in their quest to attract foreign direct investment and to further integrate into the global economy.
- Bilateral energy investment treaties
- Multilateral energy investment treaties
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See for instance Leal-Arcas R (2009) The multilateralization of international investment law. N C J Int Law Commer Regul 35(1):33–135.
The adoption of multilateral frameworks for investment protection within the context of the WTO and the OECD has been unsuccessful, given the difficulties of securing the buy-in from least and less developed countries. See Sornarajah M (2004) The international law on foreign investment. Cambridge University Press, Cambridge, Chap. 6. See also Schrijver N (1997) Sovereignty over natural resources: balancing rights and duties. Cambridge University Press, Cambridge, Chap. 6 (at pp. 187–190).
For a comprehensive analysis on the role of energy in the context of sustainability, see R. Leal-Arcas, SOLUTIONS FOR SUSTAINABILITY: HOW THE INTERNATIONAL TRADE, ENERGY, AND CLIMATE CHANGE REGIMES CAN HELP, Springer International Publishing, 2019;
International Energy Agency. https://www.iea.org/topics/energysecurity/subtopics/whatisenergy-security/. Last visited on 30 January 2019.
See International Energy Agency: World Energy Outlook (2017) Special report. p 24. It can be accessed at https://www.iea.org/publications/freepublications/publication/WEO2017SpecialReport_EnergyAccessOutlook.pdf. Last accessed 12 Mar 2019.
United Nations Foundation: Achieving Universal Energy Access. http://www.unfoundation.org/what-we-do/issues/energy-and-climate/clean-energy-development.html. Last visited on 20 November 2015
International Energy Agency: World Energy Outlook Special Report, 2014. p 13
Nalule VR (2018) Energy poverty and access challenges in sub-Saharan Africa: the role of regionalism. Springer
See Cameron P (2009) International energy investment law: the pursuit of stability. Oxford University Press, Oxford, p 4
See Nalule VR (2019) Regional cooperation in the establishment of regional energy infrastructure. In: Energy poverty and access challenges in sub-Saharan Africa. Palgrave Macmillan, Cham, pp 143–168
For further details on these agreements, see Morgandi T “Bilateral State Practice Concerning Energy Activities in International Law.” www.energybilaterals.org (November 2017)
Nalule VR (2018) Energy poverty and access challenges in sub-Saharan Africa: the role of regionalism. Springer
For a full discussion on this, see Vincentelli IA (2010) The uncertain future of ICSID in Latin America. Law Bus Rev Am 16:409
Nalule VR (2019) Regionalism in addressing energy access challenges. In: Energy poverty and access challenges in Sub-Saharan Africa. Palgrave Macmillan, Cham, pp 41–89
Ethier W (1998) The international commercial system (No. 210). Princeton University International Economics, Princeton, p 11
Ravenhill J (2016) Regional integration in Africa: theory and practice. In: Region-building in Africa. Palgrave Macmillan US, New York, pp 37–52; Padoan PC (2001) Political economy of new regionalism and world governance. In: Telò M (ed) European Union and new regionalism: Regional actors and global governance in a post-hegemonic era. Ashgate, Burlington, pp 39–59, at 22
Telò M (ed) (2013) European union and new regionalism: regional actors and global governance in a post-hegemonic era. Ashgate, Aldershot
For a full discussion on the benefits of regionalism, see Nalule VR (2018) Energy poverty and access challenges in sub-Saharan Africa: the role of regionalism. Springer
For a full discussion on this, see Nalule VR (2019) Regional cooperation in the establishment of regional energy infrastructure. In: Energy poverty and access challenges in sub-Saharan Africa. Palgrave Macmillan, Cham, pp 143–168
For a full discussion on this, see Nalule VR (2019) Regional cooperation in renewable energy and fossil fuel development. In: Energy poverty and access challenges in sub-Saharan Africa. Palgrave Macmillan, Cham, pp 91–141
For a full discussion on this, see Nalule VR (2019) Harmonisation of regional energy regulations. In: Energy poverty and access challenges in sub-Saharan Africa. Palgrave Macmillan, Cham, pp 169–196
Article 6 (1) of the ECOWAS Energy Protocol. The provision further emphasizes the need for contracting parties so that such competition laws are enforced within national jurisdiction; see Article 6(2) of the ECOWAS Energy Protocol.
See Article 2 (1) (1) of the Treaty on the West African Gas Pipeline Project. Treaty can be accessed at https://drive.google.com/file/d/12Q8KkP9p3sWn4xn60TNA3bmGSbLTrlxi/view
For a full discussion on regional energy infrastructure, see Nalule VR (2019) Regional cooperation in the establishment of regional energy infrastructure. In: Energy poverty and access challenges in sub-Saharan Africa. Palgrave Macmillan, Cham, pp 143–168
For a detailed analysis of the ECT, see Leal-Arcas R (2018) Commentary on the energy charter treaty. Edward Elgar Publishing, Cheltenham. For analyses of energy law and policy more broadly, see also R. Leal-Arcas, A. Filis and E. Abu Gosh, INTERNATIONAL ENERGY GOVERNANCE: SELECTED LEGAL ISSUES, Cheltenham: Edward Elgar Publishing Ltd, 2014; R. Leal-Arcas, THE EUROPEAN ENERGY UNION: THE QUEST FOR SECURE, AFFORDABLE AND SUSTAINABLE ENERGY, Claeys & Casteels Publishing, 2016; R. Leal-Arcas et al., ENERGY SECURITY, TRADE AND THE EU: REGIONAL AND INTERNATIONAL PERSPECTIVES, Cheltenham: Edward Elgar Publishing Ltd, 2016; R. Leal-Arcas and J. Wouters (eds.), RESEARCH HANDBOOK ON EU ENERGY LAW AND POLICY, Cheltenham: Edward Elgar Publishing Ltd, 2017.
The last country to join the ECC was Afghanistan, in 2013. See http://www.encharter.org/index.php?id=21&id_article=349&L=0
See http://www.encharter.org/index.php?id=61&L=0 for a list of members and observers. There are 54 members. Also note that parties that have ratified may withdraw; however, this cannot be until 5 years post-ratification. Parties who had ratified before withdrawing from the ECT remain bound by ECT investment protection obligations for 20 years post-withdrawal (see Article 47 ECT). For those parties who have signed but not ratified, it is possible to withdraw with effect within a shorter timeframe – namely, 60 calendar days (see Article 45(3)(a)), as has been the case with Russia, which had not ratified the ECT before its notification to the Energy Charter Secretariat to withdraw from the provisional application of the ECT. See Leal-Arcas R (2010) International trade and investment law: multilateral, regional and bilateral governance. Edward Elgar, Cheltenham, Part 2, Chap. 7; Leal-Arcas R (2009) The EU and Russia as energy trading partners: friends or foes? Eur Foreign Aff Rev 14(3):337–366. See also Hober K (2009) Arbitrating disputes under the energy charter treaty. OGEL 2.
See Part III ECT (Articles 10 to 17), which exclusively deals with obligations to protect foreign investment, thus elevating investor interests to legally protected rights flowing from the ECT. These include the right to compensation (see Article 12(2) ECT, which embeds the Hull formula of compensation that is “prompt, adequate, and efficient” named after Cordell Hull, the US Secretary of State in 1938, who articulated the US’s position in relation to the expropriations carried out of its interests in Mexico during the Mexican Revolution of 1910). For further details, see Leal-Arcas R (2009) The multilateralization of international investment law. N C J Int Law Commer Regul 35(1):33–135. The ECT also heavily restricts sovereign rights of expropriation so that expropriations may be permissible to the extent they are ECT-compliant (see Article 13 ECT).
For a fuller analysis of the protection that might exist under general international law, see Sornarajah M (2004) The international law on foreign investment. Cambridge University Press, Cambridge (at p. 135 onwards)
Do note, however, that the ECT’s efficacy has significantly been undercut by the withdrawal of Russia from the ECT’s provisional application, a state of considerable energy relevance in terms of energy-related natural resource reserves. On the Russian proposal regarding an energy security convention, see also Belyi A, Nappert S, Pogoretskyy V (2011) Modernizing the energy charter process? The energy charter conference road map and the Russian draft convention on energy security. J Energy Nat Resour Law 29(3):383.
As defined in an UNCTAD report, MFN treatment in the context of international investment law means that “a host country treats investors from one foreign country no less favourably than investors from any other foreign country.” See UNCTAD (1999) Most-Favoured-Nation treatment. UNCTAD series on issues in international investment agreements. United Nations, New York/Geneva, p 1. For further detail, see Newcombe A, Paradell LL (2009) Law and practice of investment treaties: standards of treatment. Kluwer Law International, Alphen aan den Rijn, Chap. 5.
As defined in an UNCTAD report, national treatment is the principle whereby a host country extends to foreign investors treatment, that is, at least as favorable as the treatment that it accords to national investors in like circumstances. In this way, the national treatment standard seeks to ensure a degree of competitive equality between national and foreign investors. See UNCTAD (1999) National treatment. UNCTAD series on issues in international investment agreements. United Nations, New York/and Geneva, p 1. For further detail, see Newcombe A, Paradell LL (2009) Law and practice of investment treaties: standards of treatment. Kluwer Law International, Alphen aan den Rijn, Chap. 4.
See the section entitled “An Introduction to the Energy Charter Treaty” of the Energy Charter Treaty and Related Documents: A Legal Framework for International Energy Cooperation (at p. 14).
For more details on the ill-fated International Trade Organization under the 1948 Havana Charter and on investment matters within WTO, see http://www.wto.org/english/thewto_e/whatis_e/tif_e/bey3_e.htm and http://www.wto.org/english/tratop_e/invest_e/invest_e.htm
As contemplated in Article I:2(c) GATS
See Article XVI on market access obligations and Article XI in relation to the prohibition of restrictions over transfers and payments.
BITs form the bulk of International Investment Agreements (IIAs), namely, 2,833 out of 3,164 IIAs. Thirty-three out of the 47 IIAs signed in 2011 were BITs. Sixty-nine BITs were signed in 2010. The number of BITs may be decreasing annually; however, regionalism (through regional trade agreements/free trade agreements and customs unions) is on the increase. See UN Conference on Trade and Development, ‘World Investment Report 2012: Towards a New Generation of Investment Policies’ UNCTAD 2012 (at pp. xx, cvii and 84). See also Leal-Arcas R (2011) Proliferation of regional trade agreements: complementing or supplanting multilateralism? Chic J Int Law 11(2):597–629; Leal-Arcas R (2010) International trade and investment law: multilateral, regional and bilateral governance. Edward Elgar, Cheltenham, Part 2; Leal-Arcas R (2009) The multilateralization of international investment law. N C J Int Law Commer Regul 35(1):33–135; Leal-Arcas R (2011) The fragmentation of international trade law: is now the time for variable geometry? J World Invest Trade 12(2):145–195.
See Schrijver N (1997) Sovereignty over natural resources: balancing rights and duties. Cambridge University Press, Cambridge, Chap. 6, in relation to the view that this proliferation of BITs, though illustrative of State practice, “may not in itself be able to reflect or generate customary international law including opinio juris communis” (at p. 193).
See, for instance, EU efforts to engage Russia and the Ukraine in separate bilaterals discussed above. For further information on each EU trade negotiation partner, see http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/. For a detailed analysis of EU trade law and policy, see R. Leal-Arcas, EU TRADE LAW, Elgar European Law Series, Edward Elgar Publishing Ltd, 2019; R. Leal-Arcas, THEORY AND PRACTICE OF EC EXTERNAL TRADE LAW AND POLICY, London: Cameron May, 2008.
4 ILM 532 (1965)
See Article 42(1) ICSID Convention.
The financial help from two European Union (EU) grants is gratefully acknowledged: Jean Monnet Chair in EU International Economic Law (project number 575061-EPP-1-2016-1-UK-EPPJMO-CHAIR) and the WiseGRID project (number 731205), funded by the EU’s Horizon 2020 research and innovation program. Both grants have been awarded to Professor Dr. Rafael Leal-Arcas.
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Leal-Arcas, R., Nalule, V. (2019). Multilateral and Bilateral Energy Investment Treaties. In: Chaisse, J., Choukroune, L., Jusoh, S. (eds) Handbook of International Investment Law and Policy. Springer, Singapore. https://doi.org/10.1007/978-981-13-5744-2_32-1
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