MEDDELELSE FRA KOMMISSIONEN TIL EUROPA-PARLAMENTET OG RÅDET SAMT TIL MEDLEMSSTATERNE om en aftale mellem medlemsstaterne, Den Europæiske Union og Det Europæiske Atomenergifællesskab om fortolkningen af energichartertraktaten

EN EN
EUROPEAN
COMMISSION
Brussels, 5.10.2022
COM(2022) 523 final
ANNEX
ANNEX
to the
Communication from the Commission to the European Parliament and the Council, as
well as to the Member States
on an agreement between the Member States, the European Union, and the European
Atomic Energy Community on the interpretation of the Energy Charter Treaty
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Europaudvalget 2022
1
SUBSEQUENT AGREEMENT
ON THE INTERPRETATION OF THE ENERGY CHARTER TREATY
2
THE CONTRACTING PARTIES,
THE KINGDOM OF BELGIUM,
THE REPUBLIC OF BULGARIA,
THE CZECH REPUBLIC,
THE KINGDOM OF DENMARK,
THE FEDERAL REPUBLIC OF GERMANY,
THE REPUBLIC OF ESTONIA,
IRELAND,
THE HELLENIC REPUBLIC,
THE KINGDOM OF SPAIN,
THE FRENCH REPUBLIC,
THE REPUBLIC OF CROATIA,
THE ITALIAN REPUBLIC,
THE REPUBLIC OF CYPRUS,
THE REPUBLIC OF LATVIA,
THE REPUBLIC OF LITHUANIA,
THE GRAND DUCHY OF LUXEMBOURG,
3
HUNGARY,
THE REPUBLIC OF MALTA,
THE REPUBLIC OF AUSTRIA,
THE KINGDOM OF THE NETHERLANDS,
THE REPUBLIC OF POLAND,
THE PORTUGUESE REPUBLIC,
ROMANIA,
THE REPUBLIC OF SLOVENIA,
THE SLOVAK REPUBLIC,
THE REPUBLIC OF FINLAND,
THE KINGDOM OF SWEDEN,
THE EUROPEAN UNION and
THE EUROPEAN ATOMIC ENERGY COMMUNITY
4
HAVING in mind the Treaty on European Union (TEU), the Treaty on the Functioning of the
European Union (TFEU), the Treaty establishing the European Atomic Energy Community
(EURATOM) and general principles of European Union and EURATOM law,
HAVING in mind the Energy Charter Treaty (ECT),
HAVING in mind the rules of customary international law as codified in the Vienna Convention on
the Law of Treaties (VCLT), and in particular the rules as codified in Articles 31(3)(a) and Article
41 VCLT,
RECALLING that, as the Court of Justice of the European Union (CJEU) held in its judgment of 2
September 2021, in Case République de Moldavie v Komstroy, C-741/19 (EU:C:2021:655,
paragraph 64, the Komstroy judgment), despite the multilateral nature of the ECT, the ECT is
intended, in reality, to govern bilateral relations between two of the Contracting Parties, in an
analogous way to the provision of a bilateral investment treaty, and therefore, as explained by the
Advocate General of the CJEU in its opinion of 3 March 2021 in Komstroy (EU:C:2021:164,
paragraph 41), the rights and obligations under the ECT apply only bilaterally, between the two
Contracting Parties concerned, in accordance with the judgment of the International Court of Justice
of 5 February 1970, Barcelona Traction, Light and Power Company, Limited (Belgium v. Spain),
ICJ Reports 1970, p. 3, paragraphs 33 and 35,
RECALLING that according to Article 344 TFEU and Article 193 EURATOM, Member States
undertake not to submit a dispute concerning the interpretation or application of the TEU, the TFEU
and EURATOM to any method of settlement other than those provided for therein,
RECALLING that the CJEU held in its judgment of 30 May 2006, Commission v Ireland (Mox
Plant), C-459/03 (EU:C:2006:345, paragraphs 129 to 137) that that exclusive competence to
interpret and apply EU law and EURATOM law extends to the interpretation and application of
international agreements to which the European Union, EURATOM and the Member States are
parties, to the extent that it concerns the application of the international agreement in the
relationship between two Member States or the European Union or EURATOM and a Member
State,
RECALLING that in Achmea (Case C-284/16), the Court of Justice held that Articles 267 and 344
TFEU must be interpreted as precluding a provision in an international agreement concluded
5
between Member States, under which an investor from one of those Member States may, in the
event of a dispute concerning investments in the other Member State, bring proceedings against the
latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken
to accept,
RECALLING that the CJEU held in the Komstroy judgment (paragraph 66) that Article 26(2)(c)
ECT must be interpreted as not being applicable to disputes between a Member State and an
investor of another Member State concerning an investment made by the latter in the first Member
State,
RECALLING that the Komstroy judgment is an application of the judgment of the CJEU of 6
March 2016, Achmea, C-284/16 (EU:C:2018:158, the Achmea judgment), and that in the judgment
of 26 October 2021, PL Holdings, C-109/20 (EU:C:2021:875), the CJEU has rejected a request to
limit in time the application of the Achmea judgment; and that, as a result, the interpretation of the
ECT in the Komstroy judgment applies ex tunc as of the approval of the ECT by the Member States,
the European Union and EURATOM,
RECALLING that this rule on the application in time of the interpretation of international law given
by the competent international court reflects a general principle of public international law, as
confirmed by the Permanent Court of International Justice in its advisory opinion No. 40,
15.5.1931, Rights of minorities in Upper Silesia (Germany v Poland), Series A/B, n° 40, p. 19,
where that Court held, in relation to a Convention of 15 May 1922 between Germany and Poland
concerning Upper Silesia that “in accordance with the rules of law, the interpretation given by the
Court to the terms of the Convention has retrospective effect — in the sense that the terms of the
Convention must be held to have always borne the meaning placed upon them by this
interpretation.”,
SHARING the common understanding expressed in this Agreement between the parties to the TEU,
TFEU, EURATOM and the ECT that the ECT in its entirety does not apply and has never applied
in intra-EU relations,
NOTING that, for greater certainty, this has been specifically confirmed in relation to a number of
provisions in Article 24 of the modernised ECT based on the draft text communicated to the
Contracting Parties for adoption by the Energy Charter Conference of 22 November 2022,
6
SHARING the common understanding expressed in this Agreement between the parties to the TEU,
TFEU, EURATOM and the ECT that, as a result, a clause such as Article 26(2)(c) ECT could not in
the past, and cannot now or in the future serve as legal basis for arbitration proceedings,
RECALLING the position of the European Union and EURATOM and the Member States during
the negotiation of ECT, during which the European Union, EURATOM, and the Member States
acted as one single entity of public international law, that the ECT is inapplicable in its entirety in
intra-EU relations,
RECALLING that, in line with the case-law of the Permanent Court of International Justice
(Question of Jaivorzina (Polish- Czechoslovakian Frontier), Advisory Opinion, [1923] PCIJ Series
B No. 8, 37) and the International Court of Justice (Reservations to the Convention on Genocide,
Advisory Opinion, [1951] I.C.J. Reports, 15, 20), the right of giving an authoritative interpretation
of a legal rule belongs solely to the person or body who has the power to modify or suppress it,
which means that State parties to an international agreement have the inherent right in the matter of
its interpretation,
RECALLING that this subsequent agreement on the interpretation of the ECT concerns a
multilateral agreement that creates a bundle of bilateral relationships, and that this agreement only
concerns the bilateral relationships between the Member States, the European Union, and
EURATOM, respectively, and, by extension, the investors from those Contracting Parties, and that
as a result, this agreement does not affect the enjoyment by the other parties to the ECT of their
rights under the ECT or the performance of their obligations,
RECALLING that the Member States, the European Union and EURATOM have informed the
other Contracting Parties of the ECT of their intention to conclude this subsequent agreement on the
interpretation of the ECT in conformity with the rules of customary international law as codified in
Article 41(2) VCLT, and
CONSIDERING that Article 41(2) VCLT applies a fortiori to any subsequent agreement within the
meaning of Article 31(3)(a) regarding interpretation of the ECT,
CONSIDERING that arbitral tribunals established on the basis of Article 26 ECT have held in the
past and continue to hold, overwhelmingly, that they are not bound by the judgments of the CJEU,
and have held, including after the Komstroy judgment, that Article 26 ECT applies to disputes
7
between a Member State and an investor of another Member State concerning an investment made
by the latter in the first Member State,
REGRETTING that those arbitral tribunals have thus disregarded the applicable rules of public
international law and the clearly expressed intention of the relevant Contracting Parties to the ECT,
CONSIDERING that, in order to ensure that arbitral awards already rendered by arbitral tribunals in
a manner contrary to the intention of the contracting parties are not enforced in the European Union
or in third countries, and that in pending arbitration proceedings based on Article 26 ECT arbitral
tribunals decline competence and jurisdiction, and that arbitration bodies no longer register new
arbitration proceedings, but reject them as manifestly inadmissible due to lack of consent to an
arbitration agreement, it is necessary to reiterate, expressly and unambiguously, the authentic
interpretation of the ECT by means of a subsequent agreement on the interpretation of the ECT,
CONSIDERING that, in that manner, Member States, the European Union and EURATOM
implement the Komstroy judgment, in line with their legal obligations under EU and EURATOM
law, and create legal certainty concerning the unenforceability of existing awards, the obligation of
arbitration tribunals to immediately terminate any pending arbitration proceedings, and the
obligation for arbitration institutions not to register any future case, and for arbitration tribunals to
declare that any arbitration proceedings lack a legal basis,
UNDERSTANDING that this Agreement should cover investor-State arbitration proceedings
involving the European Union, EURATOM or its Member States as parties in intra-EU disputes
based on Article 26 ECT under any arbitration convention or set of rules, including the Convention
on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID
Convention) and the ICSID arbitration rules, the Arbitration Institute of the Stockholm Chamber of
Commerce (SCC) arbitration rules, the United Nations Commission on International Trade Law
(UNCITRAL) arbitration rules and ad hoc arbitration,
INVITING the secretariat of ICSID and the secretariat of the SCC not to register any new intra-EU
arbitration proceedings based on the ECT, in line with their respective powers under Article 36(3)
ICSID Convention and Article 12 SCC Arbitration Rules,
RECALLING that, when investors from Member States exercise one of the fundamental freedoms,
such as the freedom of establishment or the free movement of capital, they act within the scope of
8
application of Union law and, therefore, enjoy the protection granted by those freedoms and, as the
case may be, by the relevant secondary legislation, by the Charter of Fundamental Rights of the
European Union, and by the general principles of Union law, which include, in particular, the
principles of non-discrimination, proportionality, legal certainty and the protection of legitimate
expectations (judgment of 30 April 2014, Pfleger, C-390/12, EU:C:2014:281, paragraphs 30 to 37).
When a Member State enacts a measure that derogates from one of the fundamental freedoms
guaranteed by Union law, that measure falls within the scope of Union law and the fundamental
rights guaranteed by the Charter also apply (judgment of 14 June 2017, Online Games Handels, C-
685/15, EU:C:2017:452, paragraphs 55 and 56),
RECALLING that Member States are obliged under the second subparagraph of Article 19(1) TEU
to provide in their respective territories remedies sufficient to ensure effective legal protection of
investors' rights under Union law. In particular, Member States must ensure that their courts or
tribunals, within the meaning of Union law, meet the requirements of effective judicial protection
(judgment of 27 February 2018, Associação Sindical dos Juízes Portugueses, C-64/16,
EU:C:2018:117, paragraphs 31 to 37),
BEARING in mind that the provisions of this Agreement are without prejudice to the possibility for
the European Commission or any Member State to bring a case before the CJEU based on
Articles 258, 259 and 260 TFEU,
CONSIDERING that the references to the European Union in this Agreement are to be understood
also as references to its predecessor, the European Economic Community and, subsequently, the
European Community, until the latter was superseded by the European Union,
HAVE AGREED UPON THE FOLLOWING PROVISIONS:
9
ARTICLE 1
Definitions
For the purposes of this Agreement, the following definitions shall apply:
(1) “Energy Charter Treaty” means the Energy Charter Treaty, signed at Lisbon on 17 December
1994 (OJ 1994 L 380, p. 24; ‘the ECT’) approved on behalf of the European Communities by
Council and Commission Decision 98/181/EC, ECSC, Euratom of 23 September 1997 (OJ
1998 L 69, p. 1), both in its original form and as subsequently amended;
(2) “Intra-EU relations” means relations between Member States of the European Union and
EURATOM or between a Member State, on the one hand, and the European Union or
EURATOM, on the other hand;
(3) "Arbitration Proceedings" means any proceedings before an arbitral tribunal pursuant to
Article 26 of the Energy Charter Treaty to resolve a dispute between, on the one hand, an
investor of one Member State of the European Union and, on the other hand, another Member
State of the European Union, the European Union, or EURATOM ;
(4) "Arbitration Clause" means the investor-State arbitration clause laid down in Article 26 of the
Energy Charter Treaty;
SECTION 2
PROVISIONS CONFIRMING THE NON-APPLICABILITY OF THE ENERGY CHARTER
TREATY WITHIN THE UNION
ARTICLE 2
Continued non applicability of the Energy Charter Treaty
1. For greater certainty, the Contracting Parties confirm that the ECT does not apply, and has
10
never applied to intra-EU relations.
2. For greater certainty, the Contracting Parties confirm, in particular, that, in accordance with
paragraph 1, Article 47(3) ECT does not apply, and has never applied, to intra-EU relations.
Accordingly, that provision cannot have produced any intra-EU legal effects when a Member State
withdrew from the ECT prior to this agreement, nor shall it produce any intra-EU legal effects if a
Member State withdraws from the ECT subsequently.
ARTICLE 3
Common provisions
For greater certainty, the Contracting Parties hereby confirm, in particular, that, in accordance with
Article 2, Article 26 ECT does not apply, and has never applied, to intra-EU relations. Therefore,
Article 26 ECT cannot serve and has never been capable of serving as legal basis for Arbitration
Proceedings relating to intra-EU relations.
SECTION 3
PROVISIONS REGARDING CLAIMS MADE UNDER ARTICLE 26 ECT
ARTICLE 4
Concluded Arbitration Proceedings
1. Notwithstanding Article 2, this Agreement shall not affect any Arbitration Proceedings
which ended with a settlement agreement or with a final award issued prior to 6 March
2018 where:
(a) the award was duly executed prior to 6 March 2018, even where a related claim for
legal costs has not been executed or enforced, and no challenge, review, set aside,
annulment, enforcement, revision or other similar proceedings in relation to such final
award was pending on 6 March 2018, or
(b) the award was set aside or annulled before the date of entry into force of this
11
Agreement;
Those proceedings (“Concluded Arbitration Proceedings”) shall not be reopened.
2. In addition, this Agreement shall not affect any agreement to settle amicably a dispute being
the subject of Arbitration Proceedings initiated prior to 6 March 2018.
ARTICLE 5
Duties of the Contracting Parties concerning pending Arbitration Proceedings
Where the Contracting Parties are parties to Arbitration Proceedings that are not Concluded
Arbitration Proceedings pursuant to Article [6], they shall:
(a) inform, in cooperation with each other and on the basis of the statement in the Annex, arbitral
tribunals about the legal consequences of the Achmea and Komstroy judgments; and
(b) where they are party to judicial proceedings concerning an arbitral award issued on the basis
of Article 26 ECT, ask the competent national court, including in any third country, as the
case may be, to set the arbitral award aside, annul it or to refrain from recognising and
enforcing it.
SECTION 4
FINAL PROVISIONS
ARTICLE 6
Depositary
1. The Secretary-General of the Council of the European Union shall act as Depositary of this
Agreement.
12
2. The Secretary-General of the Council of the European Union shall notify the Contracting
Parties of:
(a) any decision on provisional application in accordance with Article 11;
(b) the deposit of any instrument of ratification, acceptance or approval in accordance with
Article 9;
(c) the date of entry into force of this Agreement in accordance with Article 10(1);
(d) the date of entry into force of this Agreement for each Contracting Party in accordance with
Article 10(2).
3. The Secretary General of the Council of the European Union shall publish the Agreement in
the Official Journal of the European Union and notify the Energy Charter Secretariat of its adoption
and entry into force.
[If applicable] ARTICLE 7
Annexes
The annex to this Agreement constitutes an integral part thereof.
ARTICLE 8
Reservations
No reservations shall be made to this Agreement.
ARTICLE 9
Ratification, approval or acceptance
13
This Agreement shall be subject to ratification, approval or acceptance.
The Contracting Parties shall deposit their instruments of ratification, approval or acceptance with
the Depositary.
ARTICLE 10
Entry into force
1. This Agreement shall enter into force 30 calendar days after the date on which the
Depositary receives the second instrument of ratification, approval or acceptance.
2. For each Contracting Party which ratifies, accepts or approves it after its entry into force in
accordance with paragraph 1, this Agreement shall enter into force 30 calendar days after the date
of deposit by such Contracting Party of its instrument of ratification, approval or acceptance.
ARTICLE 11
Provisional application
1. The Contracting Parties, in accordance with their own constitutional requirements, may
decide to apply this Agreement provisionally. The Contracting Parties shall notify the Depositary of
any such decision.
2. When two Contracting Parties have decided to apply this Agreement provisionally, the
provisions of this Agreement shall apply in relations between those Parties 30 calendar days from
the date of the later decision on provisional application.
ARTICLE 12
Authentic texts
14
This Agreement, drawn up in a single original in the Bulgarian, Croatian, Czech, Danish, Dutch,
English, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian,
Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages, the
text in each of these languages being equally authentic, shall be deposited in the archives of the
Depositary.
Done at Brussels on ……………………..


EN EN
EUROPEAN
COMMISSION
Brussels, 5.10.2022
COM(2022) 523 final
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL, AS WELL AS TO THE MEMBER STATES
on an agreement between the Member States, the European Union, and the European
Atomic Energy Community on the interpretation of the Energy Charter Treaty
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KOM (2022) 0523 - Meddelelse
Europaudvalget 2022
1
Introduction
The European Union, the European Atomic Energy Community (hereinafter - ‘EURATOM’) and
26 Member States are Contracting Parties to the Energy Charter Treaty (hereinafter ‘ECT’)1
. A
large number of arbitral tribunals have interpreted Article 26 ECT as applying to disputes between
an investor from one EU Member State and another Member State. In so doing, they have rejected
the contrary position taken by the Commission in the first case of this kind2
and in all similar cases
to date.
The Court of Justice of the European Union (hereinafter ‘CJEU’) has now confirmed in a binding
and authoritative manner that intra-EU arbitration under Article 26 of the ECT is incompatible with
the EU Treaties.3
And yet, in their consistent and almost unanimous decision-making practice,
arbitral tribunals continue to consider that Article 26 ECT applies intra-EU.4
According to the
CJEU, any such arbitral award must be regarded as incompatible with EU law, in particular Articles
267 and 344 TFEU. Such an award cannot therefore produce any effect and thus cannot be enforced
in order to pay the compensation awarded by it.5
Article 26 ECT provides for the possibility of ICSID arbitration. This creates the risk that third
countries will recognise and enforce these arbitration awards without the possibility for an EU court
to declare them null and void. As a matter of fact, Article 54 ICSID sets up a simplified recognition
and enforcement mechanism.6
To date, the Australian courts consider that this mechanism does not
allow a Member State to claim before them the lack of a valid arbitration agreement, once the
arbitral tribunal has rejected this argument.7
A request to take a position to that effect is also
pending before the US courts and courts in the UK.8
Even under the UNCITRAL rules or those of
the Arbitration Institute of the Stockholm Chamber of Commerce, arbitrators often decide to place
1
OJ 1998, L 69, p. 26. Italy withdrew from the ECT with effect from 1 January 2016.
2
Electrabel S.A. v Hungary, ICSID Case No ARB/07/19.
3
Judgment in République de Moldavie v Komstroy, C-741/19, EU:C:2021:655.
4
To this day there are no fewer than 31 arbitration awards holding, in one way or another, that Article 26 ECT,
applies intra-EU. The one exception is Green Power K/S and Obton A/S v Kingdom of Spain (SCC Case No. 2016/135).
5
Judgment in Romanian Air Traffic Services Administration (Romatsa), C-333/19, not yet published, paras 42
and 43 and operative part.
6
The Commission, on behalf of the Union, and the Member States faced with such scenarios insist that the court
must first, by virtue of the general principle of customary international law of immunity from jurisdiction enjoyed by a
State, establish the existence of a valid arbitration agreement. This interpretation of Article 54 ICSID is, however,
disputed.
7
See Full Federal Court of Australia interlocutory judgment of 1 February 2021, Kingdom of Spain v
Infrastructure Services Luxembourg S. à r.l. [2021] FCAFC 3. An appeal before the High Court of Australia is pending.
8
The US courts had stayed all pending cases brought before them on the basis of the comity principle pending a
ruling of the Court on the question of intra-EU applicability of Article 26 ECT. Since the judgment in Komstroy,
suspensions are being lifted and judgments are awaited.
2
the seat of the arbitral tribunal outside the European Union9
, thus avoiding review by the courts of
the Member States and, by extension, the CJEU.10
There is therefore a risk of conflict between the Treaties and the ECT as interpreted by some
arbitral tribunals which, if confirmed by the courts of a third country, would de facto turn into a
legal conflict because arbitration awards violating EU law would circulate in the legal orders of
third countries.
According to the case-law of the Court, the risk of legal conflict is such as to render an international
agreement incompatible with EU law11
. In the Commission’s view, in order for the ECT to be
compatible with the Treaties, all risk of conflict needs to be eliminated. It will also be important that
the risk is addressed from the perspective of public international law, if it is to have the desired
effect on the decision-making practice of arbitral tribunals. The Commission is, therefore, of the
view that the appropriate response is to adopt an instrument that is a ‘subsequent agreement
between the parties regarding the interpretation of the treaty or the application of its provisions’
within the meaning of Article 31(3)(a) of the Vienna Convention on the Law of Treaties (VCLT).
Factual context
The ECT is a trade and investment agreement for the energy sector gathering 53 Contracting
Parties, including the EU, EURATOM and 26 EU Member States12
, signed in 1994 and in force as
of 1998. It provides rules for trade and transit of energy products, as well as for the protection for
energy investments.
In the absence of any substantial update of the ECT since the 1990s, the ECT became increasingly
outdated whereas, at the same time, the EU has considerably developed its approach with regard to
the substantive standards on investment protection, which in more recent agreements are defined so
as to ensure that protection of investment does not affect its right to regulate. It also became one of
the most litigated investment treaties in the world, with EU Member States being the principal
target of claims by investors, most of them based in other EU countries.
In the face of growing dissatisfaction from Contracting Parties and civil society, a modernisation
process, driven by the EU and its Member States, was initiated in November 2018, and focused
mostly on investment protection standards, as well as on the limitation of the protection granted to
fossil fuels and on fostering sustainable development.
9
The Swiss Federal Court has so far refused to declare three intra-EU investment arbitration awards null and
void, see judgments of the Swiss Federal Court of 23 February 2021 on the arbitration award in AES Solar et al. (PV
Investors) v Kingdom of Spain, PCA Case No 2012-14, reference 4A 187/2020; of 7 February 2020 on the arbitration
award G.I.H.G. Limited, Natland Group Limited, Natland Investment Group NV, and Radiance Energy Holding
S.A.R.L. v Czech Republic, PCA Case No 2013-35, reference 4A_80/2018, and of 11 July 2015, on the arbitral award
EDF International S.A. v Hungary, UNCITRAL ad hoc, reference 4A_34/2015. However, for procedural reasons and
because the Czech Republic and Hungary did not rely on the Achmea judgment, none of these judgments discusses the
question of the legal effects of the Achmea judgment on the merits.
10
In certain arbitration cases, the arbitrators even decided to move the seat outside the EU after the Commission
had made an application to intervene as amicus curiae: Antaris Solar GmbH and Dr Michael Göde v Czech Republic,
PCA Case No 2014-01, arbitration award of 2 May 2018, paragraph 38 (the arbitral tribunal had initially established its
seat in Paris, after the Czech Republic had confirmed that it had no objections on the basis of the Achmea judgment but
moved its seat to Geneva in the order granting the Commission leave to be heard as amicus curiae).
11
Judgments in Commission v Sweden, C-249/06, EU:C:2009:119, paragraph 42; Commission v Austria, C-
205/06, EU:C:2009:118, paragraph 42; and, similarly, Judgment in Commission v Finland, C-118/07, EU:C:2009:715,
paragraph 33. See Judgment in Commission v Belgium (Open Skies), C-471/98, EU:C:2002:628, paragraphs 137 to 142.
12
Italy withdrew in 2015.
3
The negotiations took place between 2019 and 2022. An “agreement in principle” on the draft
modernised ECT was reached on 24 June 2022. On that occasion, the Member States, the European
Union and EURATOM informed the other Contracting Parties of the ECT of their intention to
conclude a subsequent agreement on the interpretation of the ECT. On 22 November 2022, the
Energy Charter Conference (‘the Conference’) will be called upon to formally approve the
negotiated amendments to the ECT and to its Annexes.
The modernised ECT will facilitate sustainable investments in the energy sector by creating a
coherent and up-to-date framework. It will provide legal certainty by ensuring a high level of
investment protection, while reflecting clean energy transition goals and contributing to the
achievement of the objectives of the Paris Agreement.
The ECT will offer investment protection reflecting the reformed and modernised standards
developed by the EU in its recent trade and investment agreements, preserving the right of
governments to pursue their public policy objectives, including in relation to climate change
mitigation and adaptation. It will reinforce the pursuit of the EU’s climate policies. The modernised
ECT will also allow the Contracting Parties, including the EU and EURATOM, to exclude new
fossil fuel related investments from investment protection and to phase out protection for existing
investments.
Finally, the modernised ECT includes, for greater certainty, a clause confirming that an investor
from a Contracting Party that is a member of a regional economic integration organisation (REIO),
like the EU, cannot bring an investor-state dispute settlement (ISDS) claim against another
Contracting Party member of the same REIO.
Legal context
In Achmea13
, the CJEU held that investor-State arbitration clauses in international agreements
concluded between the Member States of the European Union are contrary to the EU Treaties and,
as a result of this incompatibility, cannot be applied after the date on which the last of the parties to
an intra-EU bilateral investment treaty became a Member State of the European Union. Applying
the same principles, the CJEU held in Komstroy14
that Article 26(2)(c) ECT must be interpreted as
not being applicable to disputes between a Member State and an investor of another Member State
concerning an investment made by the latter in the first Member State. It is well-established that
judgments of the CJEU apply ex tunc.15
In PL Holdings16
, the CJEU rejected a request to limit in
time the application of the Achmea judgment. In Romatsa,17
the CJEU held that any intra-EU
arbitration award, including an ICSID award, rendered in violation of those findings, has to be set
aside and, therefore, may not, in any event, be enforced in order to enable its beneficiaries to obtain
payment of the damages which it awards them.
13
Judgment in Achmea, C-284/16 (EU:C:2018:158.
14
Cited in footnote 3 above.
15
Judgment in Vent de Colère, C-262/12, EU:C:2013:851, paragraph 39 and the case law cited there in. This
principle is also well-established in relation to decisions of international courts generally: Access to German Minority
Schools in Upper Silesia, 1931 P.C.I.J Series A/B, No. 40, at 19.
16
Judgment in PL Holdings, C-109/20 (EU:C:2021:875.
17
Judgment in Romanian Air Traffic Services Administration (Romatsa), C-333/19, not yet published, para 44
and operative part.
4
Process for adoption
On 22 November 2022, during its 33rd meeting, the Energy Charter Conference is to take four
decisions related to the modernisation of the ECT. These decisions will be taken simultaneously and
their purpose is to: (1) adopt the proposed amendments to the text of the ECT (CC 760); (2) approve
the proposed modifications and changes to the Annexes to the ECT (CC 761); (3) approve the
proposed changes to Understandings, Declarations and Decisions (CC 762); and (4) approve the
decision regarding the entry into force and provisional application of amendments to the text of the
ECT and changes/modifications to its Annexes (CC 763). These decisions will be subject to a
unanimity vote. If the vote is successful, i.e. if no Contracting Party raises an objection, the
decisions for the modernisation of the ECT will be considered as “adopted by the Energy Charter
Conference. This adoption will trigger subsequent processes for the ratification, provisional
application, and eventual entry into force of the various elements of the reform package.
In that context, the Commission is making a proposal for a Council decision under Article 218(9)
TFEU to establish the position to be taken on behalf of the Union at the Charter Conference, in
order to support and approve the four decisions related to the modernisation of the ECT. The
Commission is also making a parallel proposal for a Council decision under Article 101(2) of the
Treaty establishing the European Atomic Energy Community to establish the same position on
behalf of EURATOM.
The EU and its Member States have always considered that the ECT in its entirety does not apply
intra-EU. In light of the contrary view taken by arbitral tribunals, it is necessary, to address any risk
of conflict between the ECT and the EU Treaties, to clarify this point in a formal international
agreement. The present Communication, issued simultaneously with the two proposals to the
Council referred to in the previous paragraph, seeks to initiate a negotiation process on the
subsequent agreement between the Member States, the European Union, and EURATOM on the
interpretation of the ECT, and a preliminary draft of such agreement for negotiation is annexed to
this Communication as its integral part. Once negotiations are completed, the Commission will
make a proposal for the conclusion of the subsequent agreement on behalf of the Union and of
EURATOM. While that agreement will codify the interpretation of the EU and its Member States in
a separate treaty (something that is possible because of the bilateral nature of the obligations), the
ECT modernisation will embed in the text itself and via a “for greater certainty” clause, the
understanding of all Contracting Parties that its Article 26 does not apply intra-EU. Both elements
will help to remove any ambiguity and eliminate present or future risks of intra-EU
arbitration under the ECT with the necessary degree of legal certainty.
Conclusion
The Commission is, therefore, of the view that a subsequent agreement between the Member States,
the European Union, and EURATOM on the interpretation of the Energy Charter Treaty constitutes
the most appropriate tool offered by international law to put an end to the risk of a conflict between
the ECT and the Treaties. That agreement should include, in particular, a confirmation that the ECT
has never, does not and will not apply intra-EU, that the ECT cannot serve as a basis for arbitration
proceedings, and that the sunset clause does not apply. It should also set out the obligations of the
Member States in the event that they are involved in arbitration proceedings pursuant to a request
based on Article 26 ECT. In view of the retroactive effect attributed to such a subsequent
agreement, it would also apply to pending disputes.
A draft of such an agreement is attached to this Communication as the basis for discussion.