9 Part III: Investment Promotion and Protection

Abstract

This chapter explores Part III of the Energy Charter Treaty, which sets forth the provisions on substantive protection of investments. Promotion and protection of investments are different things. Promotion of investment is concerned with attracting and permitting foreign investments. Protection of investment deals with the way in which investments must be treated, once they have been made. As a matter of policy, however, promotion and protection of investments are closely linked. That explains why the two concepts are addressed in one and the same article of the ECT: Article 10, which is entitled ‘Promotion, Protection and Treatment of Investments’. The chapter then describes the concept of fair and equitable treatment (FET). Article 11 of the ECT obliges Contracting Parties to treat key personnel of Investors in a fair way. Article 12 deals with loss of and damage to the property of Investors in situations where Article 13, concerning expropriation, is not applicable. Article 14 in essence creates a right for Investors to repatriate capital and earnings in a prompt and effective way. Article 15, a so-called subrogation clause, provides for the transfer of rights that a foreign investor may have in relation to the host State, if it has received compensation from its home state under an investment insurance or guarantee. Meanwhile, Article 16 addresses the situation when the ECT overlaps with other treaties. Lastly, Article 17 restricts the benefits of Part III of the ECT to certain categories of legal entities or Investments of Investors.