Sunset Clauses in International Law and their Consequences for EU Law
PE 703.592
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6.
CONCLUSIONS AND POLICY RECOMMENDATIONS
6.1.
Remaining in the ECT and raising procedural and substantive
objections before investment tribunals
The ECT entered into force on April 1998, and just three
years later, in 2001, the first case before the
arbitral tribunals was registered. Up until January 2021, a total of 135
cases have been recorded
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making the ECT a very useful legal instrument for investors to challenge governmental policies before
arbitration- and making it the ‘most frequently invoked’.
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According to the available data, the
claimant (investor) in most of the cases, based on either an award or a settlement, was compensated,
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making the ECT an effective mechanism of protection and a substantive limit on governmental policies
in the energy sector.
States have the option to remain in the ECT, and they can change their regulatory framework to comply
with the goals of the Paris Agreement. As it was mentioned above, it is probable that the new regulation
policies might affect existing investments from nationals of contracting parties to the ECT and this
might lead to disputes before investment tribunals.
First, EU Member States and the
EU can raise, the procedural objection that the investment tribunals
lack jurisdiction based on the
Komstroy
decision. Such procedural objection is obviously relevant to the
intra-EU disputes. In addition, EU Member States and the EU can raise substantive objections, based on
their obligations deriving from the Paris Agreement. Such substantive objections can be raised,
erga
omnes
, not only at intra-EU level.
6.1.1.
Procedural objections
The jurisdiction of the investment tribunals is specifically based on the ECT provisions. The investment
tribunals have the
kompetenz-kompetenz
to decide as to the extent of their own competence on a
dispute before them. Article 26 of the ECT is the basis for the jurisdiction of an investment tribunal,
which for instance defines that the investment tribunal has jurisdiction for ‘disputes between a
Contracting Party and an Investor of another Contracting Party relating to an
Investment of the latter
in the Area of the former’ only if the dispute concerns an alleged breach of an obligation of the
Contracting Party and host state of the investment under Part III of the ECT.
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Based on the
Komstroy
judgment, it is possible to argue the offer from EU Member States to arbitrate
under the ECT at intra-EU level is not valid, and hence the investment tribunals have no jurisdiction.
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According to the data of
the Energy Charter Secretariat, 135 investment arbitration cases invoked the ECT and it is
possible that some cases have been kept secret as the parties in a dispute do not have the obligation to report the case.
For
more details, see https://www.energychartertreaty.org/cases/list-of-cases/ and for the list of cases up to January
2021 see
https://www.energychartertreaty.org/fileadmin/DocumentsMedia/Statistics/Chart_ECT_cases_-
_15_January_2021.pdf
(last date accessed 31 August 2021).
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The Energy Charter Treaty (ECT) Remains the Most Frequently Invoked IIA (11 January 2019) available at
https://www.energycharter.org/media/news/article/the-energy-charter-treaty-ect-remains-the-most-frequently-
invoked-iia
(last date accessed 31 August 2021).
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See
https://www.energychartertreaty.org/fileadmin/DocumentsMedia/Statistics/Chart_ECT_cases_-
_15_January_2021.pdf
(last date accessed 31 August 2021).
233
Energy Charter Treaty 2080 UNTS 100. ECT 1994, Article 26(1).
IPOL | Policy Department for Citizens’ Rights and Constitutional Affairs
54
PE 703.592
To evaluate the prospect of success of a procedural objection, suffice to mention two recent decisions
from Investment Tribunals,
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