CYIL vol. 10 (2019)

CYIL 10 ȍ2019Ȏ HYBRID THREATS TO ENERGY SECURITY: PERSPECTIVES OF INTERNATIONAL LAW in a manner inconsistent with the obligations of the state under the Treaty.” 81 Furthermore, this obligation extends to bodies established or maintained by the state and entrusted with regulatory, administrative or other governmental authority, the state is obliged to ensure that “such entity shall conduct its authority in a manner consistent with the obligations of the contracting party under the Treaty. In addition, each contracting party is responsible for the observance of the provisions of the Treaty by regional or local governments or authorities.” 82 The exceptions to the obligations set out in Article 7 are that “no obligation of the Treaty may endanger human, animal or plant life or health. A condition of short supply exempts a contracting party from performance of the obligations, as does the protection of essential security interests or the maintenance of public order of the contracting parties.” 83 Furthermore, for the transit it is important that for the states which are not parties of the World Trade Organisation (hereinafter – WTO), certain provisions of GATT agreement as indicated in Article 29 of the Charter apply for relations regarding transit of energy products. “All the importation, exportation and transit-related provisions of the WTO apply fully under the Treaty. However, a special, simpler dispute resolution procedure has been established under the Treaty, replacing similar provisions under the WTO. The general exceptions of the WTO rules apply.” 84 2.2.2 Importance of freedom of investment in energy security sector Another important feature of the Energy Charter treaty are its rules on the protection of investments in energy sector. It provides rules on the promotion, protection and treatment of investments, key personnel, compensation for losses and expropriation. The importance of investments in energy sector lies in the fact that “Right now, a major instrument used to diminish volume risks is the diversification of energy supply. The latter means, for example, ‘multiple supplies’ (‘multiple pipelines’) concepts, or similar tools that give opportunities to consumers to switch between suppliers and (sic) vice versa – to give opportunities to suppliers to switch between consumers. Diversification means new investments. That is why international energy security in the long run depends on international energy investment, and on the management and minimisation of risks to such investment, which means an adequate, investment-friendly investment climate reflecting the balance of interests between the state and the investor.” 85 It can also be underscored that the Energy Charter and the Treaty supports and aids the development of policies to remove barriers to the international energy investment and promotes fair access tomarkets. “The Energy Charter unites among its members and observers both energy producers and consumers representing developed, developing and transition economies.” 86 Other important article is Article 26, which introduces a novelty in energy sector – that is, the procedures of resolving disputes among investors and states. “As noted by the Palma Tribunal, “Article 26 is a very important feature of the ECT which is itself a very significant treaty for investors, marking another step in their transition from objects to subjects of

81 WAERN, Karl Petter. Transit provisions of the energy charter treaty and the energy charter protocol on transit. Journal of Energy Natural Resources Law , 20(2), (2002). p. 172-191. 82 Ibid .

83 Ibid , p. 175. 84 Ibid , p. 175. 85 KONOPLYANIK, op. cit. 43, p. 531. 86 Ibid.

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