Energy Charter Treaty and the European Union: Is Conflict Inevitable?

Abstract

The European Union (EU) is a venerable institution. Today’s EU is the result of continuing development, becoming both wider and deeper over more than half a century. And yet the EU cannot live in isolation. The EU imports vast quantities of energy from third states and is also both a significant exporter and a significant importer of capital investment. It is, therefore, not surprising that numerous investment protection treaties exist, both between EU member states inter se and between EU member states and third states.The Energy Charter Treaty (ECT) was intended to foster energy exchanges in the Eurasian context, particularly between the developed economies of Western Europe and Japan and the emerging economies of the former CIS. The ECT contains extensive investment protection provisions and is a mixed agreement to which the European Communities and their 27 member states are parties, alongside 24 non-EU members. The present article is intended to review the implications of this in relation to the key area of investment protection. In several respects, the competence exercised by EU institutions in this area is undergoing expansion. The key question is whether this must inevitably lead to conflict between EU and other institutions which to a large extent share common objectives, or whether, with moderation and mutual understanding, an accommodation is possible.