New Wine in Old Wineskins? Climate Cases and the Energy Charter Treaty

The Energy Charter Treaty (‘ECT’) went through a process of modernisation. However, the adoption of the modernised ECT has been delayed because most European countries were unable to reach an agreement on the revised text and announced their withdrawal from the treaty. Regardless of whether the modernised ECT is adopted, foreign investors will most likely continue to rely on its text, as, upon withdrawal by a State from the treaty, the sunset clause will apply, implying that foreign investors will still be able to rely on the ECT to initiate arbitration proceedings against a withdrawing State for a period of twenty years from the date of withdrawal. Even in the scenario of a coordinated withdrawal from the ECT by the European Union (‘EU’) that can eradicate the sunset clause intra-EU, the ECT will be still applicable for non-EU States that are the contacting parties to the treaty. Hence, the ‘old’ ECT will not be forgotten any time soon, and climate change investment cases may continue to arise under the existing treaty. This chapter investigates the potential of the ‘old’ ECT to argue the State position to invoke climate change or other environmental measures in ECT disputes. An analysis of current ECT environmental provisions shows that, despite the limited direct applicability of articles 19 and 24(2) of the ECT in inter-State dispute settlement (‘ISDS’), a few tribunals have referred to these provisions either to underscore the environmental objectives of the ECT in combination with its preambular statements, or to interpret the meaning of the fair and equitable treatment standard under ECT article 10(1). In the context of growing climate cases, this can foster a compelling interpretation of the objectives under the ECT preamble in order to overcome the environmental limits of the ‘old’ treaty.