Investment Disputes and Fight Against Climate Change in Light of the Energy Charter Treaty: The Delicate Position of the European Union
Published 8 February 2023
The fight against climate change has become a priority for the future of the international community. On the one hand, foreign investments can play a fundamental role for the safeguard of the environment, while, on the other, the enforcement of International Investment Agreements (IIAs) could have a negative impact on the fight against climate change and, in general, on environmental protection. In this context, the Energy Charter Treaty (ECT) has a special relevance, since it exclusively covers investments in the energy sector, which is responsible for 84% of anthropogenic CO2 emissions and 64% of greenhouse gas emissions. This Treaty was concluded in 1994 with the aim of facilitating energy relations throughout the Eurasian continent. During the years, the economic, political, and legal context has changed. In particular, the European Union (EU) and its Members, which originally highly supported this Treaty, have assumed fundamental international commitments for the environmental protection, that could conflict with the ECT rules.
At the moment, the ECT is the most often invoked IIA in investor-State disputes. After a complex process started in 2020, the ECT Contracting Parties reached an Agreement in principle for the reform of the Treaty on June 24, 2022, which should be approved by the Energy Charter Conference to enter into force, but several EU Member States disagree.
Starting from the idea that the outcome of the "modernisation process" could favour or, instead, hinder the transition from fossil-based energy to renewable energies, with important consequences on the phenomenon of climate change, the article tries to understand if the "modernised Treaty" may settle the numerous critical aspects that the ECT in this time presents or which could be the alternative options in case of failure of negotiations.
This paper will be part of the TDM Special Issue on "International Investment Arbitration - Environmental Protection and Climate Change Issues". More information here www.transnational-dispute-management.com/news.asp?key=1893