Energy Charter Treaty

The Energy Charter Treaty (ECT) is a plurilateral investment agreement between 53 European and Central Asian countries. It was signed in 1994 and entered into force in April 1998.

About 30 countries around the world are at different stages of joining the ECT. Burundi, Eswatini (formerly Swaziland) and Mauritania are first in line, followed by Pakistan and Uganda.

The original objective of the ECT was to overcome the political and economic divisions between Eastern and Western Europe after the demise of the Soviet Union, as well as to strengthen Europe’s energy security. European countries wanted to secure the access to fossil fuel resources of the former Soviet countries by protecting foreign energy investments in these countries.

The ECT provides for an Investor State Dispute Settlement (ISDS) mechanism to resolve disputes between an investor and a member state. To this day, it is the world’s most widely used legal instrument for initiating ISDS arbitrations. It has been invoked by investors in 124 cases.

Critics argue that as with most other investment agreements, it places investors’ economic rights and interests over the social, ecological and economic interests of host states and their societies. The ECT imposes obligations on the host state but not on foreign investors. The ECT has also been condemned by environmental activists for protecting the fossil fuel industry and undermining serious climate action.

Spain has been subject to 45 arbitration disputes under the ECT after it implemented a series of energy reforms affecting the renewables sector, including a reduction in subsidies for producers. While some cases are still pending, Spain has already been ordered to pay over €800 million.

You can find out more about the Energy Charter Treaty on the ECT’s dirty secrets website.

Key cases include:

Vattenfall (Sweden) vs. Germany: In 2007 the Swedish energy corporation was granted a provisional permit to build a coal-fired power plant near the city of Hamburg. In an effort to protect the Elbe river from the waste waters dumped from the plant, environmental restrictions were added before the final approval of its construction. The investor initiated a dispute, arguing it would make the project unviable. The case was ultimately settled in 2011, with the city of Hamburg agreeing to the lowering of environmental standards.

Yukos (Isle of Man) vs. Russia: Yukos was a Russian oil and gas company. It was acquired from the Russian government during the controversial “loans for shares” auctions of the mid 1990s, whereby some of the largest state industrial assets were leased (in effect privatized) through auctions for money lent by commercial banks to the government. The auctions were rigged and lacked competition, and effectively became a form of selling for a very low price. In 2003, the Yukos CEO was arrested on charges of fraud and tax evasion and the following year Yukos’ assets were frozen or confiscated. In 2007 Yukos’ former shareholders filed a claim for over US$100 billion, seeking compensation for their expropriation. The dispute resulted in 2014 in the arbitrators awarding the majority shareholders over US$50 billion in damages. The investors have been trying to enforce the award in several countries since then.

NextEra (Netherland) vs. Spain: The Dutch investor filed for arbitration in May 2014, after Spain changed the regulatory framework applicable to its investment, namely the construction of two solar power plants. NextEra claimed that Spain abolished the long-term premium and tariff system, negatively affecting the profitability of the project. However, Spain alleged that NextEra should have been aware that changes could be made to the regulatory regime. In May 2019, the investor was awarded around €290 million. Spain filed for annulment in October 2019.

Last update: April 2020

bilaterals.org | 3-Jul-2020
Entrevista con Yamina Saheb que fue la Jefa de la Unidad de Eficiencia Energética en el Secretariado del Tratado de la Carta de Energía entre 2018 y 2019.
bilaterals.org | 3-Jul-2020
Interview with Yamina Saheb, former head of unit in the Energy Charter Treaty Secretariat .
bilaterals.org | 3-Jul-2020
Interview de Yamina Saheb, ancienne responsable de l’unité efficacité énergétique au secrétariat du Traité de la Charte de l’énergie entre 2018 et 2019.
ShareCast | 2-Jul-2020
The claims had arisen out of certain measures taken by Poland, allegedly in breach of the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty.
El Salto Diario | 30-Jun-2020
Más de 220 personas y colectivos han apoyado una carta impulsada desde la campaña No a los Tratados de Comercio e Inversión dirigida a la Ministra de Transición Ecológica, Teresa Ribera, pidiendo la salida de España de este tratado.
No al TTIP | 30-Jun-2020
¿Cuántas leyes contra el cambio el cambio climático y la pobreza energética nunca saldrán adelante por culpa del Tratado de la Carta de la Energía? Nunca lo sabremos. Lo que sí sabemos es que abandonar este tratado es la única salida. ¿Por qué? Spanish Revolution te lo explica en este video.
Global Legal Chronicle | 29-Jun-2020
On June 11, 2020, an ICSID ad hoc committee issued a unanimous decision to annul a €128 million award against Spain in its entirety.
RT | 23-Jun-2020
The Supreme Court of the Netherlands has agreed to consider Russia’s appeal against a lower court ruling, which awarded multi-billion-dollar compensation to former shareholders of the defunct Russian oil giant, Yukos.
The Corner | 18-Jun-2020
The ICSID has lifted the suspension on the execution of the €290 million award NextEra obtained a year ago.
Energía16 | 15-Jun-2020
El Centro Internacional de Arreglo de Disputas entre Inversores del Banco Mundial encontró un conflicto de intereses en el árbitro propuesto por el demandante y anuló un laudo arbitral que condenaba a España a pagar 128 millones de euros al fondo Eiser.

0 | 10 | 20 | 30 | 40 | 50 | 60 | 70 | 80 | ... | 210