Energy Charter Treaty disputes – Recent statistics and developments



Global Publication October 2018

The Energy Charter Treaty (ECT) resulted from an international effort to facilitate crossborder energy transactions following the end of the Cold War. The ECT – now with over 50 state signatories from Europe, Central Asia and other regions – was signed in 1994 and came into force in 1998. The ECT focuses on the protection and promotion of foreign energy investment, free trade in energy products, freedom of energy transit, and energy efficiency and environmental matters.


The ECT, like many bi-lateral investment treaties (BITs), provides protections to certain investments of foreign investors, including

  • Fair and equitable treatment.
  • Full protection and security.
  • Protection against discriminatory measures.
  • Protection against unlawful expropriation.
  • A right to bring international arbitration claims directly against the host state for the violation of these protections.

Under the ECT, investors may bring claims at the International Centre for Dispute Resolution, under the UNCITRAL Arbitration Rules or at the Stockholm Chamber of Commerce.

The most notable difference between the ECT and BITs is that the ECT is a specialized multilateral treaty that protects investments associated with economic activity in the energy sector, a concept that has been broadly defined. In contrast, BITs do not generally contain industry or subject matter limitations on what claims are permissible.

Another notable difference with BITs is that the ECT has a regime for provisional application, i.e. pre-ratification. The ECT provides in Article 45(1) that:

“Each signatory agrees to apply this Treaty provisionally pending its entry into force … to the extent that such provisional application is not inconsistent with its constitution, laws or regulations.”

The ECT’s provisional application regime was among the issues that arose in the Yukos shareholder arbitration, where the tribunal held that the ECT applied on a provisional basis in the Russian Federation. The Yukos award, however, was subsequently set aside by the Hague District Court, which found that the tribunal lacked jurisdiction because the arbitration provision in the ECT was incompatible with Russian law. Russia has since withdrawn from the provisional application of the ECT. Of the three original signatory countries that have not yet ratified the ECT, only Belarus has accepted provisional application; the two other countries – Norway and Australia – filed declarations at the time of signing to the effect that they were unable to accept provisional application.

Latest statistics

The Energy Charter Secretariat tracks investment arbitration cases where the ECT has been invoked. As arbitrations can be confidential, the Secretariat can only track those cases that are publicly known. Since 2001, when the first investment arbitration case invoking the ECT was registered, there have been 114 publicly known cases.

Forty of these cases – over one-third – have involved Spain; many arising from the country’s recent solar reforms. Awards against Spain have been issued in at least three of these cases. Italy, which faces ten cases, is the next most frequent respondent. Germany is the country whose nationals have most frequently been ECT claimants.

Cases invoking the ECT spiked significantly in 2015, when almost 30 cases were registered (only 12 cases were registered in each of the years before and after).

Of the 114 known cases, 37 have reached final awards, 11 have settled (or been withdrawn or discontinued) and 66 remain pending. The 37 cases that reached an award were decided as follows: 9 failed on jurisdictional grounds; 11 failed based on a finding of no liability; 2 involved a finding of liability but a determination that no damages were incurred; and 15 resulted in a finding of liability and damages.

Seventy-two of the 114 cases used the ICSID Rules, with the rest almost evenly split between UNCITRAL and the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) rules.

In recent years, the Secretariat has been promoting the use of “good offices and mediation” for the settlement of investment disputes under the ECT. In 2016, the Energy Charter Conference endorsed a Guide on Investment Mediation, and the Secretariat established a Conflict Resolution Centre. The latter provides assistance and support for the use of good offices and mediation in both investor-state and state-to-state disputes under the ECT.

Recent developments

The most recent development is found in the form of a 2018 decision of the Court of Justice of the EU (CJEU) in Slovak Republic v Achmea BV. In that case, the CJEU held that ISDS provisions in BITs as between EU Member States are incompatible with EU law and therefore those provisions have no legal effect. There was some question over the impact of this case on ISDS provisions in multilateral treaties, in particular the ECT, to which EU Member States are parties. Immediately following Achmea, states (including, of course, Spain) commenced challenges to ECT arbitrations and awards on that basis. The EU Commission has now sought to clarify the position, publishing guidance which asserts that, in its view, the decision in Achmea is also relevant for the application of the ECT as between EU Member States. It has stated that the ECT “cannot be used as a basis for dispute settlement between EU investors and EU Member States”.

This is a highly significant development. Only time will tell whether courts and tribunals will follow this guidance; it may take a further referral to the CJEU to definitively decide the point. Even then we may still see a divergence of approach to the question, particularly where challenges to jurisdiction or awards are brought before tribunals seated in, or before national courts of, states that are not bound to follow EU law.


Head of Arbitration, United States Partner-in-Charge, Houston

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