CYIL vol. 12 (2021)

CYIL 12 (2021) THE MODERNIZATION OF THE ENERGY CHARTER TREATY TO ENABLE CLIMATE… Ministerial Conference approved a list of 25 topics for the reform. 27 Many of the topics reflected developments that occurred in international investment policy and case law since the adoption of the ECT, e.g., modifications to the notion of ‘investment’ and ‘investor’, substantive provisions on fair and equitable treatment, indirect expropriation, and ‘most constant protection and security’, procedural provisions on frivolous claims, security for costs, etc. It also included a few topics that could be relevant to energy transition, such as the insertion of a right to regulate, sustainable development, and corporate social responsibility. The EU and its Member States have been engaged in the process of modernizing the ECT since 2019 based on a negotiating mandate from the EU Council. 28 The European Commission, when submitting the proposal for a negotiating mandate, claimed the need to bring the ECT in line with current practice pointing to the fact that the ECT is today the most litigated investment agreement in the world. 29 In November 2019, the Energy Charter Conference dissolved the Subgroup on Modernisation and established a Modernisation Group to start negotiations. Not all contracting parties supported the need for negotiations. For example, Japan proposed to keep all the ECT’s provisions as they are. 30 Some states acknowledged that investment activities and the practice of investor-state dispute settlement, the interpretation of various legal concepts of investment protection have greatly evolved since the conclusion of the ECT 31 and added their own topics for consideration. The EU stressed out that the modernized ECT should reflect climate change and clean energy transition goals and contribute to the achievement of the objectives of the Paris Agreement. 32 On 19 May 2020, the EU sent its text proposal for the modernization to the ECT Secretariat (EU Proposal). 33 Official negotiations commenced on 2 June 2020. The negotiation talks, however, did not progress at sufficient speed. In December 2020, the Spanish Minister for the Ecological Transition declared the ECT as a major obstacle in climate action and highlighted the ECT’s incompatibility with the Paris Agreement. 34 Subsequently, in February 2021, France urged the European Commission to consider a coordinated withdrawal from the ECT. 35 27 Energy Charter. Approved topics for the modernisation of the Energy CharterTreaty. 29 November 2018. [on-line]. Available at: <>https://www.energycharter.org/media/news/article/approved-topics-for-the-modernisation-of- the-energy-charter-treaty/>. Visited on 1 June 2021. 28 Council of the European Union: Negotiating Directives for the Modernisation of the Energy Charter Treaty. 2 July 2019. [online] Available at: . Visited on 1 June 2021. 29 European Commission: Energy Charter Treaty modernisation: European Commission presents draft negotiating directive. 2December 2020. [online] Available at: < https://trade.ec.europa.eu/doclib/press/index.cfm?id=2017>. Visited on 1 June 2021. 30 Decision of the Energy Charter Conference. CCDEC 2019 08 STR. 6 October 2019. 31 For example, Georgia. Ibid. 32 Ibid. 33 EU text proposal for the modernisation of the Energy Charter Treaty. [online] Available at:< https://trade. ec.europa.eu/doclib/docs/2020/may/tradoc_158754.pdf>. Visited on 1 June 2021. 34 Ribera, T. ‘ That’s it. Either we ensure it is compatible to the #ParisAgreement or we need to withdraw from the #ECT! ’ 15 December 2020. Tweet. [online]. 35 According to French representatives, the slow progress in the reform talks does not give hope to achieve EU climate goals in time. Letter from French government to European Commission regarding possible withdrawal from Energy Charter Treaty. January 2021 [online]. Available at: < https://www.euractiv.com/wp-content/ uploads/sites/2/2021/02/Letter_France_ECT.pdf >. Visited on 1 June 2021.

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