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Investment | Brussels, 27 May 2020

Commission presents EU proposal for modernising Energy Charter Treaty

The Commission has today published the EU’s proposal for modernising the Energy Charter Treaty (ECT).

Set up in the early 1990s to create a forum for East-West policy cooperation on energy, investment protection, trade and transit, the ECT now needs modernising. The EU is at the vanguard of the efforts to do so.

The ECT’s investment protection provisions have not been updated since the 1990s and are now outdated compared to the new standards of the EU’s reformed approach on investment policy. Similarly, there is a growing perception that the ECT does not sufficiently meet today’s climate policy commitments.

The EU’s proposal to modernise the ECT has three main aims.

Firstly, to bring the ECT’s provisions on investment protection in line with those of agreements recently concluded by the EU and its Member States.

Secondly, to ensure the ECT better reflects climate change and clean energy transition goals and facilitates a transition to a low-carbon, more digital and consumer-centric energy system, thus contributing to the objectives of the Paris Agreement and our decarbonisation ambition.

Thirdly, to reform the ECT’s investor-to-state dispute settlement mechanism in line with the EU’s work in the ongoing multilateral reform process in the United Nations Commission on International Trade Law (UNCITRAL).

The amendments to the ECT set out by the EU in its proposal do not affect the Commission’s view, as expressed in the Communication on the Protection of intra-EU Investment of 19 July 2018, that the ECT does not contain an investor-to-state arbitration mechanism applicable to investors from one EU Member State investing in another.

The Commission has also sent its proposal to the Energy Charter’s Secretariat. The first formal round of talks between the ECT’s 50 plus Contracting Parties is scheduled for July 2020; the next is due in October 2020.

All EU Member States are Contracting Parties except for Italy, which withdrew in 2016.


News item: Energy Charter Treaty modernisation: Commission welcomes Council’s mandate, 15 July 2019