Browsing by Subject "FET"

The Energy Charter Treaty (ECT) is a multilateral investment treaty with over 50 contracting parties that solely concerns the energy sector, which is of crucial importance in combatting climate change. Further, more investor claims have been brought forward under the ECT than under any other investment agreement, and some of the largest arbitral awards have been rendered under its auspices. These factors combined make the ECT a very significant instrument for the global climate as a whole. This paper is based on the premise that more and more countries would wish to cut back on their use of highly polluting fossil fuels to produce energy. However, it is often argued that the investment protection clauses, which are also included in the ECT, cause ‘regulatory chill’, meaning that states are wary of passing stricter regulations, as such measures might well result in investor-state dispute settlement proceedings. Therefore, it is plausible that the investment protection clauses of the ECT are in fact slowing down the transition from fossil fuels to renewable forms of energy, and various NGOs in fact view the ECT solely as a tool of the fossil fuel industry used for this purpose. In this paper, I challenge such simplified take on the ECT and argue that states are in fact able to pass stricter regulations to protect the environment without breaching their ECT obligations towards foreign investors, and further, also should do so. This paper can most readily be described as a doctrinal research, as it concerns specific treaty provisions and all the claims made within it can be traced back to formal legal sources. In particular, I have relied on the texts of the ECT framework, and various judicial decisions. Therefore, large parts of this paper are comprised of treaty interpretation and analogic reasoning. The precise questions to which I have sought answers using these methods are: 1) What are the environmental aspects of the ECT; 2) Can the ECT, in its current form, be interpreted and applied in an environmentally sustainable way, and if so, how this could be done; 3) Why the ECT should be interpreted and applied in such way; and 4) Does the ECT require amendments to its current text? It is well known that the ECT framework contains a plethora of environmental provisions, however, due to their soft formulation, they are often overlooked as it would be difficult to find a state to be in breach of them. According to the findings of this paper this is, however, erroneous. Based on the sheer volume of environmental provisions, and the great significance placed upon them within the Preamble of the ECT and European Energy Charter, I have developed a novel, more balanced, take on the object and purpose of the ECT, which places significance on both the protection of investments and environment, unlike the tribunals applying the ECT have thus far done. Furthermore, I have found that despite the soft formulation of the environmental provisions, a state may still rely on them when responding to investor claims. However, the degree to which a state can do so depends greatly on the claims made – the text of the ECT places little to no significance to environmental matters in cases of alleged expropriation, whereas on alleged breaches of e.g. the FET standard environmental matters may be of great significance. Additionally, the text of the ECT allows for a state to argue that measures to protect the environment fall under the allowed exceptions of the ECT. Having identified the various environmental aspects of the ECT, and developed techniques for responding states to utilise them, I have also discussed why the presented findings should be applied, and whether it would be enough. It is evident that matters such as sustainable development and protection of the environment are gaining foothold within the law both on national and international level. As the ECT is not situated in a void, these global trends should be considered when applying it. As the findings of this paper would encourage states to pass legitimate measures for the protection of the environment, there are relatively clear policy reasons as to why the application of the findings would be desirable. Many of the findings made in this paper were reached through teleological interpretation of the ECT. While such interpretative approach is perfectly valid, it would nevertheless be beneficial for the text of the ECT to be amended to explicitly incorporate the interpretations made within this paper. Amending a multilateral treaty such as the ECT is, however, difficult. Therefore, the findings of this paper can be of great importance for states wishing to pass measures to protect the environment, as they offer greater certainty of the legality of their actions towards foreign investors.