CYIL vol. 10 (2019)

BIRUTĖ PRANEVIČIENĖ – VIOLETA VASILIAUSKIENĖ CYIL 10 ȍ2019Ȏ of adequate, sustainable supplies of energy at reasonable cost, i.e. energy security.” 75 Those are the aims of Energy Charter process and Energy Charter Treaty, which therefore help to develop such policies aiming to remove barriers to the flow of investments in international energy sector. 2.2.1 Energy transit rules in Energy charter treaty One of important aspects of security of energy supply is the question of transit of energy. Transit is by its nature an international question. “Political volatility in transit states threatens the enormous investments typical of energy ventures; from an investor’s viewpoint, energy projects, particularly in eastern European countries, involve a high political risk.” 76 Not only the security of the energy sector is concerned, but in general the other sectors of economy are also dependant on the fluent flow of energy resources. Thus the intended actions to disrupt transit of energy by a state which is acting directly or undercover, may be very damaging to the security of the state. The EU reserves in Netherlands, Norway and the North Sea are not sufficient to meet Europe’s oil and gas demand. 77 Thus the transit rules have huge importance on the sustaining of Europe’s needs for energy. Article 7 of Energy Charter Treaty regulates transit in its signatory countries. It states that “Each Contracting Party shall take the necessary measures to facilitate the Transit of Energy Materials and Products consistent with the principle of freedom of transit and without distinction as to the origin, destination or ownership of such Energy Materials and Products or discrimination as to pricing on the basis of such distinctions, and without imposing any unreasonable delays, restrictions or charges.” 78 Furthermore, the cooperation in modernisation of facilities of transit is encouraged and required; cooperation in development of services serving more than one country that has signed the ECT is encouraged; as is cooperation in developing measures to mitigate the effects of interruptions in the supply of Energy Materials and products and facilitation of interconnection of Energy Transport Facilities. 79 The non-interruption of transit principle is also established; the Treaty stipulates that “A Contracting Party through whose Area Energy Materials and Products transit shall not, in the event of a dispute over any matter arising from that Transit, interrupt or reduce, permit any entity subject to its control to interrupt or reduce, or require any entity subject to its jurisdiction to interrupt or reduce the existing flow of Energy Materials and Products prior to the conclusion of the dispute resolution procedures set out in paragraph (7) [of Article 7], except where this is specifically provided for in a contract or other agreement governing such Transit or permitted in accordance with the conciliator’s decision.” 80 Thus the treaty establishes rules for the uninterrupted transit of energy and establishes the rules for resolving disputes. The addressee of the obligations of this provision is firstly the state, as the states are obliged to comply with their international provisions. But furthermore, the contracting parties are under an obligation not to encourage any state entity or entity “which they establish or maintain, which is granted exclusive or special privileges, to conduct its activities 75 Ibid, p. 531. 76 LIESEN Rainer, Transit under the 1994 Energy Charter Treaty, 17 Journal of Energy & Natural Resources Law . 56 (1999), p. 57. 77 Ibid. 78 The International Energy Charter. op. cit. 55, p. 48. 79 Ibid. 80 Ibid, p. 50.

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