{"id":6654,"date":"2019-09-19T00:40:18","date_gmt":"2019-09-19T05:40:18","guid":{"rendered":"https:\/\/www.iisd.org\/itn\/?p=6654"},"modified":"2024-08-09T18:30:13","modified_gmt":"2024-08-09T16:30:13","slug":"energy-charter-treaty-eu-council-endorses-negotiating-directives-for-brussels","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2019\/09\/19\/energy-charter-treaty-eu-council-endorses-negotiating-directives-for-brussels\/","title":{"rendered":"Energy Charter Treaty: EU Council endorses negotiating directives for Brussels"},"content":{"rendered":"\r\n

The European Council has approved negotiating directives for the EU<\/span>\u2019s participation in talks to modernize the ECT<\/span><\/a><\/u>, confirming its decision during a meeting on July 2, 2019.<\/p>\r\n

The European Commission submitted a proposal for a negotiating mandate<\/a><\/u> in May 2019, citing the need to bring the 1994 trade and investment agreement in line with current practice and norms relating to investment protection. The ECT<\/a><\/u> applies to the energy sector, with the stated objective of setting \u201ca legal framework in order to promote long-term cooperation in the energy field, based on complementarities and mutual benefits.\u201d<\/p>\r\n

Contracting parties have been actively looking at updating the accord over the past two years, though formal negotiations are not due to start until later in 2019.<\/p>\r\n

\u201cThose outdated provisions are no longer sustainable or adequate for the current challenges; yet it is today the most litigated investment agreement in the world,\u201d the European Commission said in May when requesting approval of the negotiating mandate. To date, 122 disputes<\/a><\/u> have been filed under the treaty, which has over 50 contracting parties<\/a><\/u>. This includes nearly all EU member states, as well as the EU and Euratom in their own rights.<\/p>\r\n

The European Council decision<\/a><\/u> authorizing the negotiating directives has a dedicated section on investment protection, calling for the modernized ECT to be aligned with the relevant provisions of the latest EU agreements, along with ensuring \u201ca high level of investment protection\u201d and \u201clegal certainty for investors and investments of Parties in each other\u2019s market.\u201d<\/p>\r\n

Notably, the directives say that the EU should aim to have the ECT be subject to its proposed MIC<\/span><\/a><\/u>, which it has proposed in the context of the UNCITRAL<\/span><\/a><\/u> Working Group III process on multilateral ISDS<\/span><\/a><\/u> reform. The EU\u2019s approach of negotiating an ICS<\/span><\/a><\/u> in its more recent investment agreements is meant to lay the groundwork for a future MIC, even if the proposal does not gain traction within UNCITRAL.<\/p>\r\n

The directives also note that ISDS reform processes underway in other forums\u2014specifically UNCITRAL and ICSID<\/span><\/a><\/u>\u2014should be reflected in the modernized ECT, though it stops short of saying that ECT negotiations should wait until those other deliberations are completed.<\/p>\r\n

Items slated to come up in the ECT modernization negotiations, according to a list of priority topics<\/a><\/u> approved by the Energy Charter Conference last year, include the definition of FET<\/span><\/a><\/u>, a regular feature of ECT arbitrations, including some high-profile cases involving renewable energy. The EU negotiating directives say that an updated FET clause should be \u201cappropriately circumscribed for interpretation purposes.\u201d<\/p>\r\n

The directives also say that the modernized ECT \u201cshould explicitly reaffirm the right of ECT Contracting Parties to take measures to achieve legitimate public policy objectives, such as the protection of health, safety, the environment or public morals, social or consumer protection (\u2018right to regulate\u2019).\u201d The \u201cright to regulate\u201d was also in the list approved by the Energy Charter Conference in 2018.<\/p>\r\n

The EU\u2019s directives also call for the revised treaty to \u201ccontribute to the achievement of the objectives of the Paris Agreement,\u201d referring to the United Nations agreement on tackling greenhouse gas emissions that has been in force since November 2016. It also states that the modernized ECT\u2019s sustainable development provisions should feature language on \u201cclimate change and clean energy transition in line with the Paris Agreement\u201d as well as terminology in the latest agreements negotiated by Brussels, along with those currently being developed.<\/p>\r\n