Energy Charter Treaty

The Energy Charter Treaty (ECT) is a plurilateral investment agreement between 53 European and Central Asian countries. It was signed in 1994 and entered into force in April 1998.

About 30 countries around the world are at different stages of joining the ECT. Burundi, Eswatini (formerly Swaziland) and Mauritania are first in line, followed by Pakistan and Uganda.

The original objective of the ECT was to overcome the political and economic divisions between Eastern and Western Europe after the demise of the Soviet Union, as well as to strengthen Europe’s energy security. European countries wanted to secure the access to fossil fuel resources of the former Soviet countries by protecting foreign energy investments in these countries.

The ECT provides for an Investor State Dispute Settlement (ISDS) mechanism to resolve disputes between an investor and a member state. To this day, it is the world’s most widely used legal instrument for initiating ISDS arbitrations. It has been invoked by investors in 124 cases.

Critics argue that as with most other investment agreements, it places investors’ economic rights and interests over the social, ecological and economic interests of host states and their societies. The ECT imposes obligations on the host state but not on foreign investors. The ECT has also been condemned by environmental activists for protecting the fossil fuel industry and undermining serious climate action.

Spain has been subject to 45 arbitration disputes under the ECT after it implemented a series of energy reforms affecting the renewables sector, including a reduction in subsidies for producers. While some cases are still pending, Spain has already been ordered to pay over €800 million.

You can find out more about the Energy Charter Treaty on the ECT’s dirty secrets website.

Key cases include:

Vattenfall (Sweden) vs. Germany: In 2007 the Swedish energy corporation was granted a provisional permit to build a coal-fired power plant near the city of Hamburg. In an effort to protect the Elbe river from the waste waters dumped from the plant, environmental restrictions were added before the final approval of its construction. The investor initiated a dispute, arguing it would make the project unviable. The case was ultimately settled in 2011, with the city of Hamburg agreeing to the lowering of environmental standards.

Yukos (Isle of Man) vs. Russia: Yukos was a Russian oil and gas company. It was acquired from the Russian government during the controversial “loans for shares” auctions of the mid 1990s, whereby some of the largest state industrial assets were leased (in effect privatized) through auctions for money lent by commercial banks to the government. The auctions were rigged and lacked competition, and effectively became a form of selling for a very low price. In 2003, the Yukos CEO was arrested on charges of fraud and tax evasion and the following year Yukos’ assets were frozen or confiscated. In 2007 Yukos’ former shareholders filed a claim for over US$100 billion, seeking compensation for their expropriation. The dispute resulted in 2014 in the arbitrators awarding the majority shareholders over US$50 billion in damages. The investors have been trying to enforce the award in several countries since then.

NextEra (Netherland) vs. Spain: The Dutch investor filed for arbitration in May 2014, after Spain changed the regulatory framework applicable to its investment, namely the construction of two solar power plants. NextEra claimed that Spain abolished the long-term premium and tariff system, negatively affecting the profitability of the project. However, Spain alleged that NextEra should have been aware that changes could be made to the regulatory regime. In May 2019, the investor was awarded around €290 million. Spain filed for annulment in October 2019.

Photo: Marc Maes / Twitter

Last update: April 2020

L’Echo | 8-Jul-2021
Un litige portant sur une raffinerie de pétrole et de gaz au Kazakhstan a amené à la justice belge à geler plus d’un demi-milliard d’euros de cette république sur un compte belge.
El Salto | 7-Jul-2021
Esta semana se celebra la sexta ronda de negociaciones para modernizar el Tratado de la Carta de Energía (TCE) que, según desvelan unas filtraciones de documentos oficiales de la Comisión Europea, no aspira a dar resultados reales para alinear el Tratado con los objetivos del Acuerdo de París.
Euractiv | 7-Jul-2021
Little progress has been made to modernise a controversial agreement on energy investments that activists warn could derail decarbonisation efforts in Europe and across the globe, according to leaked documents.
Collectif Stop Tafta | 6-Jul-2021
400 organisations de la société civile lancent un ultimatum à la Commission européenne et aux États-membres les appelant à « sortir du TCE d’ici à la COP26.
S2B Network | 6-Jul-2021
More than 400 are calling on political leaders across all European countries to prioritise climate policies, to stick to their climate commitments, and therefore to initiate withdrawal from the Energy Charter Treaty by COP26.
OLCA | 2-Jul-2021
El Tratado de la Carta de la Energía, creado específicamente para el sector energético en 1991, es uno de los acuerdos que cuentan con este mecanismo de resolución de controversias. De hecho, es el tratado que más demandas entre inversores y Estado ha generado a nivel mundial.
CEO | 30-Jun-2021
Estamos en el noreste de Eslovenia en una pequeña comunidad llamada Petišovci. Es aquí donde la empresa británica Ascent Resources pretendía extraer gas mediante fracking.
CEO | 30-Jun-2021
Nous sommes au nord-est de la Slovénie dans une petite communauté qui s’appelle Petišovci. C’est ici qu’une société britannique appelée Ascent Resources voulait exploiter du gaz de schiste.
CEO | 30-Jun-2021
Amid the climate and environmental emergency, a British oil and gas company is threatening to sue Slovenia for requiring an environmental impact assessment for a controversial gas fracking project.
CNCD 11.11.11 | 30-Jun-2021
Des solutions existent pour mettre ce traité anachronique et contraire aux objectifs climatiques hors d’état de nuire.

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