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EU courts may refuse to recognise those awards, a non-EU court can take a different view. Since Brexit, the United Kingdom seems a natural forum for such enforcement proceedings. Indeed, in January 2023 the English Commercial Court denied the EU Commission’s application to intervene in such an enforcement case to advocate the EU law position.17 The solution the non-paper proposes is to bring countries like the UK and Switzerland (both frequent arbitration venues) into a separate agreement to neutralise the ECT.


It is not clear whether there would be any appetite for this, and the proposal is therefore less effective than a modernised ECT which would by its plain terms prohibit intra-EU dispute settlement. Avoiding the “sunset clause” may also be subject to legal difficulties. Without descending into the


References


[1] As reported on the Energy Charter website, https://www.energycharter.org/media/ news/article/written-notifications-of-withdrawal-from-the-energy-charter-treaty/?tx_news_ pi1%5Bcontroller%5D=News&tx_news_pi1%5Baction%5D=detail&cHash=da7935d6899f348 360408dfaad518bc9


[2] Hansard, House of Commons Debates, 21 March 2023, Vol. 730, col. 47WH to 53WH, https://hansard.parliament.uk/Commons/2023-03-21/debates/97E78295-CC1E-


492F-ABD8-B570D781D2A2/EnergyCharterTreaty


[3] Letter to the President of the EU Parliament dated 13 February 2023, https://www. energycharter.org/fileadmin/DocumentsMedia/News/0047-SG-13022023-EP_ President.pdf


[4] The International Energy Charter Consolidated Energy Charter Treaty with Related Documents https://www.energycharter.org/fileadmin/DocumentsMedia/Legal/ECTC-en.pdf


[5] Energy Charter Secretariat, “Public Communication explaining the main changes contained in the agreement in principle” 24 June 2022. https://www.energycharter.org/fileadmin/ DocumentsMedia/CCDECS/2022/CCDEC202210.pdf


[6] Rt Hon Chris Skidmore MP, supra, n. 2 at col. 48WH


[7] Arthur Nelsen, “Oil firm Rockhopper wins £210m payout after being banned from drilling” The Guardian, 24 August 2022 https://www.theguardian.com/business/2022/aug/24/oil-firm- rockhopper-wins-210m-payout-after-being-banned-from-drilling


[8] Jennifer Raskin, “Why activists fear little-known treaty could slow fossil fuel phase-out” The Guardian, 3 November 2021 https://www.theguardian.com/environment/2021/nov/03/ why-activists-fear-little-known-treaty-could-slow-fossil-fuel-phase-out


[9] Achmea B.V. v Slovakia, Case C-284/16, 6 March 2018. https://curia.europa.eu/juris/ document/document.jsf?text=&docid=199968&pageIndex=0&doclang=EN&mode =req&dir=&occ=first&part=1&cid=3720003


[10] République de Moldavie v Komstroy LLC. Case C-741/19, 2 September 2021. https://eur- lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62019CJ0741


[11] Hydro Energy 1 sarl and Hydroxana Sweden AB v Spain (ICSID case no. ARB/15/42), annulment decision dated 20 March 2023.


[12] Supra, n. 3.


[13] “statistics of cases under the energy Charter Treaty” International Energy Charter Annual Report 2022, pp. 20-21. https://www.energycharter.org/fileadmin/DocumentsMedia/ AR/IEC_Annual_Report_2022_WEB.pdf


[14] European Parliament resolution of 24 November 2022 on the outcome of the modernisation of the Energy Charter Treaty (2022/2934(RSP)), full text available at https://www. europarl.europa.eu/doceo/document/TA-9-2022-0421_EN.html


[15] Our translation. “La France se retire du Traité de la charte de l’énergie, signé à la chute de l’URSS”, La Tribune, 22 October 2022, p. 52; Arthur Nelsen, “France becomes latest country to leave controversial Energy Charter Treaty”, The Guardian, 22 October 2022.


[16] Full text available at: https://www.euractiv.com/section/energy/news/exit-from- energy-charter-treaty-unavoidable-eu-commission-says/


[17] Infrastructure Services Luxembourg SARL and Energia Termosolar B.V. v Spain, [2023] EWHC 324 (Comm).


[18] Supra n.3. 12 | May 2023 | www.waterpowermagazine.com


legal technicalities, there are at least doubts as to whether the proposed inter se agreement would be lawful considering other provisions in the ECT. A difficulty also arises given that Italy already left the ECT and other EU members will have done so before an inter se treaty is concluded. If these concerns are valid, and the issues are obviously debatable, then there is a risk that some fossil fuel investments will in fact obtain 20-years of protection, which is more advantageous than were modernisation approved and a phase-out introduced in line with the “flexibility mechanism”. Any investments from investors in non- EU member states will also obtain full benefit of the sunset clause, unless persuaded to join in a separate inter se agreement. There is no evidence that any other state might be intending to do so.


What next? The ECT modernisation process is in a state of


paralysis. With the largest bloc of its members preparing to abandon modernisation, the fate of those states that remain in the un-modernised ECT is uncertain.


Although considered as the “third option” in the non-paper, its authors discounted it. However, the reasons for doing so are not very compelling: it would contradict political statements made to date and would be “disingenuous” towards the remaining non-EU Contracting Parties. It is not clear what route the EU will follow but there is a risk that this crisis may impede the promotion and protection of investments in renewable and clean energy. The “non-paper” expresses the view that the EU is such a desirable energy market, and its justice system so exemplary, that the absence of international treaty protection should not trouble investors. This may or may not be the case, but it surely reflects a Eurocentric view that ignores the risks that European investors will need to assess when considering renewable energy investments in non-EU countries. There is also likely to be a period of substantial uncertainty, which is never desirable. In the event of a withdrawal according to the EU blueprint, one can easily foresee complex and costly jurisdiction debates before arbitration tribunals about whether the “sunset clause” continues to apply as a matter of international law. Withdrawing nations may have to wait out a relatively lengthy period of uncertainty before eventually free of the ECT. The risk of enforcement in non-EU jurisdictions may mean that withdrawing EU states may never fully be free until the expiry of the “sunset clause”. The EU position is, on one possible view, an assault on the global ISDS system of international arbitration. The system is not unique to the ECT or the energy sector, nor the exclusive preserve of fossil fuel investors. However, assertions by critics and interested politicians, specific to one economic sector that have been neither tested empirically nor challenged, risk undermining the investment dispute settlement system. It may not be a perfect system, but it has numerous advantages that do not seem to have been much considered in this debate.


It would be open to the EU to proceed with modernisation and then withdraw from the ECT. This option is preferred by the Energy Charter Secretary- General.18


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