Following the withdrawal of several European countries, including France, from the Energy Charter Treaty, the European Commission has submitted a proposal for a simultaneous withdrawal by all the Member States of the European Union. This is mainly the result of failed efforts to modernize the Energy Charter Treaty.
The European Commission has called on the Member States of the European Union (EU) to withdraw from the Energy Charter Treaty (ECT). After Germany, France, Spain and the Netherlands had already announced their intention to withdraw from the Treaty, the European Commission followed suit by proposing to the Council of the European Union a legislative text to formalise the EU’s withdrawal from the ECT.
The EU is thus changing its stance on the matter, as the European Commission had initially proposed ratification of a modernised version of the ECT. In its press release, the Commission stated that efforts to modernise the ECT had not been met with majority approval amongst Member States. Withdrawal would therefore be the “most coherent approach, from a legislative and political point of view“.
The European Commission, in line with the Member States that have already withdrawn from the ECT, is stressing the the ECT’s discordance with current climate issues, to which very little consideration was given when the ECT was drafted in the 1990s.
What will happen to claims made under the ECT remains, however, to be seen.
Article 47.3 of the ECT contains a “sunset clause”, i.e. a provision that maintains its effects on investments made in the area of a contracting party for a period of 20 years following that party’s withdrawal from the ECT. According to the European Commission, a general and coordinated withdrawal by the Member States would render Article 47.3 null and void and neutralise its effects. The Commission has thus stated that Article 47.3 of the ECT would have “no impact on intra-EU relations, to which the ECT has never been, is not and will not be intended to apply“.
However, it is uncertain whether such measure would comply with international law. The answer to this question will surely have to be provided by arbitral tribunals.
