CYIL vol. 13 (2022)

MONIKA FEIGERLOVÁ CYIL 13 ȍ2022Ȏ which would exclude the application of the sunset clause (i.e., a provision that provides for a continued 20-year investment protection after termination of the ECT) between willing contracting parties of the ECT. 13 Unlike the European Commission, these representatives believe that ECT will hamper the transition away from fossil fuels, and that the ECT cannot co-exist with EU’s green policies. The most recent recommendation to repeal the ECT is contained in the UN Special Reporter’s thematic report on the promotion and protection of human rights in the context of climate change that will be presented at the upcoming UN General Assembly session in September 2022. 14 On the other hand, there are views that international investment agreements support the energy transition by encouraging and protecting low-carbon investment, and holding States accountable for regulatory changes, including in relation to renewable energy. 15 Anumber of countries have reformed or started to reform their bilateral investment treaties to better balance the rights and obligations of investors and States. The initial motivation of such redesign did not include climate change considerations, but such changes will also provide host States with more regulatory space in the area of climate policies. Nowadays, a few new bilateral and multilateral agreements contain detailed environmental provisions, 16 express references to climate change, and commitments under the Paris Agreement. 17 The link between climate change and investment protection is subject to ongoing research and various initiatives. 18 These efforts are not always coordinated and many of them are not primarily focused on climate change although they can produce positive effects in the climate change context. The initiatives include attempts to reform investor-state dispute settlement (ISDS) under the auspices of the UN Commission on International Trade Law, 19 negotiations to modernise the Energy Charter Treaty, 20 termination of existing international investment agreements, recalibration of substantive standards of protection and renegotiation 13 European Parliament, Report on the future of EU international investment policy (2021/2176(INI)), A9 0166/2022. [online]. 25 May 2022, [cit. 1 September 2022]. Accessible at: https://www.europarl.europa.eu/ doceo/document/A-9-2022-0166_EN.pdf. 14 Report of the Special Rapporteur on the promotion and protection of human rights in the context of climate change. 26 July 2022, UN Document A/77/226. 15 VANDUZER, J. A. The complex relationship between international investment law and climate change initiatives: exploring the tension. In: DELIMATSIS, Panagiotis. Research Handbook on Climate Change and Trade Law . 1. edition. Cheltenham: Edward Elgar Publishing, 2016, p. 457. 16 E.g., the United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA. 17 E.g., the Comprehensive Economic and Trade Agreement (CETA) between Canada on the one hand and the European Union and its Member States on the other, the EU-Japan Free Trade Agreement, and the Australia-UK Free Trade Agreement. 18 For a high-level overview see e.g., TUERK, E., BAUMGARTNER, J., ATANASOVA, D.. Trends and reform debates. In: KRAJEWSKI, M. a HOFFMANN, R. Research Handbook on Foreign Direct Investment. Cheltenham: Edward Elgar Publishing, 2019, pp. 150–172. 19 UNCITRAL Working Group III deals with the reform of ISDS and the shift from traditional ad hoc arbitral tribunals to permanent investment tribunals. Available at: https://uncitral.un.org/en/working_groups/3/investor state. 20 The negotiations were anticipated to be finished before COP 26 in 2021 in order to be successful. It, however, appears that, in June 2022, the Contractual Parties to the ECT were ultimately able to reach an “agreement in principle” to modernize the ECT. The final text shall be available for adoption at the Energy Charter Conference in November 2022. See Energy Charter Secretariat, Decision of the Energy Charter Conference: Public communication explaining the main changes contained in the agreement in principle, CCDEC 2022, 10 GEN, 24 June 2022.

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