CYIL vol. 12 (2021)

Miriama Kiselyova

CYIL 12 (2021)

4. The ongoing modernisation of the ECT and the future cross border investment protection In November 2017, the Energy Charter Conference confirmed the launching of a discussion on the potential modernisation of the ECT. In November 2018, the Conference approved the list of 25 topics for the modernisation of the ECT 45 . These topics can be divided into the following groups: investment protection and ISDS, transit, sustainable development, obsolete provisions and the definition of the Economic activity in the energy sector. In November 2019, the Conference established the Modernisation Group, prompted it to conclude negotiations expeditiously and to report to the Conference on progress made. The negotiations started in July 2020 and as of October 2021, seven rounds took place. The negotiations are confidential, however, after each negotiation round the Secretariat publishes the summary report of the negotiation round online 46 . As to the possible interaction of the Komstroy judgment and the pending modernisation, the question is relevant. However, after taking a closer look at the content of the modernisation one can conclude that the question of the intra EU ECT arbitration is not in the list of m25 modernisation topics. Also, there is no reference to the intra EU ECT arbitration in the mandate and the negotiating directives from 2019 47 (Although these do contain statement that “ the Modernised ECT should include appropriate standards of protection for investors and investments, in line with EU law and the EU’s reformed approach on investment protection, in particular… 48 ” (emphasis added ). Hence, whether and to what extent the Komstroy judgment affects the modernisation is too early to say. Moreover, it is necessary to take note of the public statements by several Member States and Commissioner Dombrovskis on potential withdrawal from the ECT and the public request of over 400 NGOs for the withdrawal. 49 This is because apart from the issue of intra EU inapplicability, there is a strong perceived environmental aspect in relation to the ECT 50 . The ECT via its wide definition of economic activity in energy sector provides protection 45 The 25 topics of the ECT modernization are: Pre-investment, Definition of ‘charter’, Definition of ‘economic activity in the energy sector’, Definition of investment, Definition of investor, Right to regulate, Definition of Fair and Equitable Treatment (FET), MFN Clause, Clarification of ‘most constant protection and security, Definition of indirect expropriation, Compensation for losses, Umbrella clause, Denial of benefits, Transfers related to investments, Frivolous claims, Transparency, Security for costs, Valuation of damages, Third- party funding, Sustainable development and corporate social responsibility, Definition of ‘transit’, Access to infrastructure (including denial of access and available capacities), Definition and principles of tariff setting, REIO1 and obsolete provisions. 46 For more information, you can visit the website www.energychartertreaty.org. 47 Energy Charter Treaty modernisation: Commission welcomes Council’s mandate. Available at https://trade. ec.europa.eu/doclib/press/index.cfm?id=2049. 48 10745/19 ADD 1 Negotiating Directives for the Modernisation of the Energy Charter Treaty – Adoption, p. 4. 49 Simon, F.: France puts EU withdrawal from Energy Charter Treaty on the table . Available at https://www. euractiv.com/section/energy/news/france-puts-eu-withdrawal-from-energy-charter-treaty-on-the-table/. Aarup, S. A., Mathiesen, K.: Energy pact divides EU as Spain threatens walkout . Available at https://www. politico.eu/article/eu-split-over-energy-charter-treaty-as-spain-floats-unilateral-withdrawal/. Civil Society Organisations’ Statement against the Energy Charter Treaty. Available at https://caneurope.org/ content/uploads/2021/07/CSO-Statement-ECT_July-2021.pdf. Parliamentary questions of 2 December 2020. Answer given by Executive Vice-President Dombrovskis on behalf of the European Commission. Available at https://www.europarl.europa.eu/doceo/document/P-9-2020- 005555-ASW_EN.html. 50 Eckes, Ch., Ankersmit, L.: Komstroy: the beginning of the end for the Energy Charter Treaty? Available at https://europeanlawblog.eu/2021/10/04/komstroy-the-beginning-of-the-end-for-the-energy-charter-treaty/.

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