On how the ECT fuels the fossil fuel economy: Rockhopper v Italy as a case study

The investment arbitration launched by Philip Morris Asia (PMA) against Australia in 20111 in relation to Australia's mandatory plain packaging of tobacco products is a recent reminder of the significant protections for intellectual property rights (IPRs) in international investment agreements. Given its focus on trademarks, the Philip Morris dispute provides a useful case study for exploring the relationship between intellectual property and international investment law. The parallel legal challenges brought by various tobacco companies against Australia in the High Court of Australia2 on constitutional grounds and by Ukraine,3 Honduras,4 the Dominican Republic,5 Cuba6 and Indonesia7 against Australia in the World Trade Organization (WTO) also make this a valuable case for demonstrating the fragmenting nature of intellectual property law at the domestic and international levels. That fragmentation poses challenges for international trade and investment law, raising questions concerning the relationship between intellectual property rights conceived at the domestic level with the protections available in international fora. For example, what significance does the High Court's conception of intellectual property under Australian law have for the claims against plain packaging under the Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments (‘Hong Kong-Australia BIT’)8 and the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)? By using the Philip Morris case study, this chapter aims to explore the complex interaction between intellectual property and international investment agreements (IIAs), meaning bilateral investment treaties (BITs), plurilateral investment treaties such as the Energy Charter Treaty, and preferential trade agreements containing investment provisions. After explaining the background to the Philip Morris dispute in its various forms, we consider the protection of intellectual property as an ‘investment’ under IIAs. We then examine three substantive investment obligations in connection with intellectual property: most-favourednation obligations, expropriation, and so-called ‘umbrella clauses’. This chapter reveals the high degree of uncertainty permeating the relationship between intellectual property and international investment law.

<p>This article (published in the Austrian Yearbook On <span>International </span><span>Arbitration 2026)</span><span>  examines whether the European Union and its Member States can effectively eliminate investment protection for fossil fuel investments under the Energy Charter Treaty (ECT) either by remaining parties to the modernised ECT or by withdrawing from it. Following the adoption of the ECT modernisation package in December 2024, the  novel “flexibility mechanism” was introduced through amendments to Annex NI of the ECT, enabling contracting parties to phase out protection for fossil fuel investments within their territories. The EU makes use of this mechanism. The article shows that this technique—based on modifications of annexes rather than the treaty text—has immediate and legally binding effects for newly made fossil-fuel based investments from September 2025 onwards, irrespective of provisional application or the entry into force of the modernised ECT, and that it establishes a differentiated phase-out regime for existing </span><span>fossil-fuel based investments</span><span> .</span></p> <p>The article contrasts this mechanism with the alternative strategy of withdrawal from the ECT combined with the EU’s inter se agreement excluding intra-EU investor–State arbitration and the operation of the sunset clause. It argues that, while withdrawal eliminates protection for fossil fuel investments in principle, its legal effects are delayed and structurally limited by the survival clause, which continues to apply in extra-EU relations, and by the contested permissibility of inter se modifications under the ECT and the Vienna Convention on the Law of Treaties.</p> <p>The article concludes that neither modernisation nor withdrawal can, on their own, comprehensively neutralise fossil fuel investment protection. In particular, it highlights the need for additional inter se arrangements with non-EU ECT parties and for the reform of extra-EU bilateral investment treaties, which continue to provide parallel protection for fossil fuel investments irrespective of both modernisation of the ECT and withdrawal from the ECT. </p>

The Energy Charter Conference, an intergovernmental organization, is the governing and decision-making body for the Energy Charter process, and was established by the 1994 Energy Charter Treaty (ECT). All states who have signed or acceded to the ECT are members of the Conference, which meets on a regular basis for three primary purposes: to discuss policy issues affecting energy cooperation among ECT signatories; to review implementation of the provisions of the ECT and the Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA); and to consider possible new instruments and projects on energy issues. Russia and many of its neighbour-states of the Former Soviet Union (FSU) were rich in energy resources but needed major investments to ensure their development, whilst the states of Western Europe had a strategic interest in diversifying their sources of energy to diminish their dependence on the Middle East. Keywords: Energy Charter Conference; Energy Charter Treaty (ECT); Former Soviet Union (FSU); PEEREA

In the past decade, five Investor-State tribunals constituted under the Energy Charter Treaty (ECT), examined its territorial application to Gibraltar, an overseas territory of the United Kingdom (UK). This article shows that the application of the ECT to Gibraltar and — to a limited degree to other overseas territories — is still fraught with uncertainty. Setting out from this premise, this article first examines the territorial application of investment treaties to overseas territories in general and the application of the ECT to such territories in particular. Special attention is paid to Articles 40 and 45 of the ECT that provide for its territorial and provisional application, respectively. The article then turns to the findings of ECT tribunals and specifically criticizes the approach adopted in Stati v Kazakhstan. In this case, the Tribunal failed to adequately explain why the ECT applies to Gibraltar even after the termination of the ECT’s provisional application with respect to the UK. In defence of this criticism, this article shows that ECT’s plain wording and customary international law do not provide for the provisional application of a treaty to part of a signatory’s territory even after the entry into force of this treaty for such signatory.

Over the past ten years the issue of energy security concerning the major economies, and in particular the European Union, has occupied the minds of politicians and lawmakers around the world. For Europe, measures to decrease its oil and gas dependence on a limited number of energy suppliers have resulted in a search for alternative exporters and export routes and the establishment of new legal mechanisms, such as the Energy Charter Treaty (ECT), which has been a perfect starting point for international cooperation in the field of European energy security. At the same time, many large oil-producing economies, which export energy to the EU, are now in the process of market liberalization and energy-related reforms due to their aspiration to become members of the World Trade Organization (WTO). This tendency has diverse legal and economic implications for the current and future members of the ECT and the WTO, including legal consequences in terms of dispute settlement under the ECT.Economic data predict that the EU's dependence on oil imports from non-members of the ECT, mainly Middle Eastern countries, will increase dramatically after 2020 while gas imports from the Commonwealth of Independent States and especially Russia, (CIS: republics of the former Soviet Union) most of which are members of the ECT (Russia and Belarus apply the ECT on a provisional basis ), will steadily increase by that time. Therefore, one issue of energy security for the EU is that the protection offered by the ECT dispute settlement mechanism may become more necessary in the years to come.However, from a private investor's point of view it is still uncertain whether the ECT dispute settlement mechanism is the best tool for considering an energy-related investment dispute in terms of time and cost management for a number of reasons. First, the ECT is a complex legal document with numerous exceptions and limitations that are present in annexes, decisions and protocols to the treaty. A trade practitioner must pay particular attention to all provisions while advising on an ECT legal issue and few ECT cases have been adjudicated so far resulting in doubt and ambiguity in the interpretation of some provisions of the ECT. Second, the scope of the ECT is rather limited: the majority of energy producing countries in the Middle East, Africa and South America are not members of the treaty and investors in those states will continue to rely on the bilateral investment treaties (BITs).Nevertheless, this article intends to analyze some ECT-related arbitration cases in order to demonstrate that the ECT dispute settlement mechanism has become a reliable arbitration forum that can protect foreign investors' rights in trade in energy.

563Arbitration — International Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 1965 (“ICSID Convention”) — Energy Charter Treaty, 1994 — Article 26 — Arbitration proceedings initiated against a Member State of the European Union under ICSID Convention for violation of Energy Charter Treaty — Intra-EU arbitration — Where arbitration initiated under ICSID by entity registered within EU Member State against another EU Member State — Compatibility of ICSID Convention and Energy Charter Treaty with EU law — Primacy of EU law — Whether ICSID tribunal part of court system of EU — Whether Article 26 of Energy Charter Treaty applicable in intra-EU arbitral proceeding — Whether EU Member States must have capacity to review arbitral proceedings that consider EU law — Whether German courts can review arbitral proceedings initiated under ICSIDRelationship of international law and municipal law — International Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 1965 — Energy Charter Treaty, 1994 — Treaty on the Functioning of the European Union, 2007 — Arbitration proceedings initiated against European Union Member State under ICSID Convention for violation of Energy Charter Treaty — Intra-EU arbitration — Where arbitration initiated under ICSID by entity registered within EU Member State against another EU Member State — Compatibility of ICSID Convention and Energy Charter Treaty with EU law — Primacy of EU law — Whether ICSID tribunal part of court system of EU — Whether Article 26 of Energy Charter Treaty applicable in intra-EU arbitral proceeding — Whether EU Member States must have capacity to review arbitral proceedings that consider EU law — The law of Germany

This essay explores the possibility that a claim may be brought against the EU under the Energy Charter Treaty (ECT) for a breach by an EU Member State. The extent to which the EU might be held responsible is relevant in situations where the Member State is no longer a party to the ECT, such as Italy. This essay takes into account the impact of the Achmea judgment on Article 26 ECT and analyses whether an intra- EU dispute (i.e. against the EU) might still be brought under the ECT. Moreover, it attempts to address the issue of which parties can bring this claim and discusses how to allocate and attribute responsibility to the EU in case of a breach of the ECT by a Member State. Further, it considers the hypothetical case where a national court does not enforce an ECT award on the basis of the Achmea judgment. This author concludes that foreign investors in Italy, including ones from EU Member States, may bring a claim against the EU under the ECT when the breach is due to the implementation of EU binding decisions by EU Member States. Finally, the essay briefly deals with the jurisdictional immunity of the EU.

The Achmea judgment of the Court of Justice of the EU (CJEU) found that arbitration clauses in bilateral investment treaties (BITS) between Member States of the European Union are incompatible with European Union law. Following this, Member States attempted to invoke this judgment in relation to similar intra-EU arbitrations under the Energy Charter Treaty (ECT). Tribunals established under the ECT have however generally rejected the applicability of the Achmea judgement. While the EU Commission and the majority of Member States concluded that this judgment also precludes intra-EU ect arbitrations, a few Member States held the opposite view. The future of intra-EU ECT arbitrations therefore seems fragile in the least. A closer analysis of the decisions of ECT Tribunals, and the relationship between obligations under European Union law and international law however argues that the future of such intra-EU ECT arbitrations is not as fragile as it may seem.

The article notes that investments in solar energy have already led to a number of arbitration cases related to the subsequent change in investment incentives. The so-called Solar Cases, initiated by investors under the Energy Charter Treaty (ECT) against Kingdom Spain, Italy and the Czech Republic, focused on the question of whether states could adjust incentives (subsidies and feed-in tariffs) to the detriment of investors after these investors relied on these subsidies to make their investments. Following the results of these arbitration proceedings, the European Union in 2019 decided to revise the text of the ECT. Eight rounds of negotiations were held during 2020 and 2021, the last of which took place in November 2021. Many believe that the reform of the existing treaty has taken too long. In February 2021, France sent a letter to the European Commission on the need for a coordinated EU exit from the ECT. Against this background, Italy’s withdrawal from the ECT on January 1, 2016, as well as Russia’s withdrawal of the signature on the treaty in 2018, are actions that determine the inevitable collapse of the ECT in the very near future. This article is devoted to the study of the causes and legal consequences of these events. Since Russia’s withdrawal from the ECT has already been the subject of study by many Russian and foreign scholars, the author focused their attention on the study of Italian arbitration disputes based on the ECT provisions, as well as on the study of foreign doctrine on this issue.

On 24 June 2022, the Contracting Parties of the Energy Charter Treaty (ECT) finalized discussions on the modernization of the treaty. After fifteen rounds of negotiations, an agreement in principle was reached to be adopted by the Energy Charter Conference on 22 November 2022 in Ulaanbaatar, Mongolia.1 The ECT, adopted in 1994, establishes a legal framework that aims to promote international cooperation in the energy sector.2 It has a membership of 53 countries primarily from Europe and Central Asia, as well as the European Union (EU) and the European Atomic Energy Community. In recent years, the ECT attracted widespread public attention due to its impact on states’ environmental and climate policies. Particularly, the treaty’s provisions on investment protection, with investor-to-state dispute settlement (ISDS) at the centre, allow foreign investors in the energy sector to challenge adverse state action before international arbitration and claim compensation for measures affecting their business activities. Fossil fuel investors have increasingly used the ECT to challenge environmental and climate measures, such as phasing out coal-fired power generation, banning offshore oil drilling in coastal areas, and prohibiting gas fracking projects. Such cases have fuelled concerns regarding the abilities of governments to roll-out large-scale climate action. The Intergovernmental Panel on Climate Change (IPCC) has warned that international investment agreements (IIAs) like the ECT could ‘be used by fossil-fuel companies to block national legislation aimed at phasing out the use of their assets’.3 With some of these damage claims running into billions of euros, the ECT enables fossil fuel investors to offload the costs and risks associated with their affected assets onto society at large in the face of necessary climate action. This would go, in the words of the editorial board of the Financial Times, against the ‘heart of the capitalist social contract’ and the ‘ability of markets to deal adequately with the challenge of climate change’.4

This chapter also looks at issues that typically arise in Energy Charter Treaty (ECT) cases. In particular, it explores those cases in which respondent states have made use of EU law in mounting a jurisdictional or substantive defence under the ECT. First, regarding EU law as a jurisdictional defence, the chapter looks both at intra-European BIT cases and intra-European ECT cases. Regarding the latter, the chapter addresses, among other things, the critical question of whether the ECT is applicable to disputes between an EU member state and a national of another EU member state, or whether such application is precluded by an implicit ‘disconnection clause’ under the ECT, as argued by the EU Commission. Second, regarding EU law as a substantive defence, the chapter analyzes scenarios in which EU law arguably requires conduct, on the part of a member state, that the ECT itself forbids, or vice versa.

The Energy Charter Treaty (ECT) in its Part III which regulates standards of protection guaranteed to foreign investors by the ECT States members, together with the Article 24 of the ECT, constitutes a kind of autonomous investment treatment within the ECT. The ECT provides for a very broad spectrum of standards of protection: fair and equitable treatment; most constant protection and security; prohibition of unreasonable or discriminatory measures; „umbrella clause”; national treatment; most favoured-nation standard and effective means to assert the claims. It can be said that at the time of its drafting the ECT enclosed all standards of protection as recognized in BITs and NAFTA. There have been more than 100 publicly known investment arbitration cases where the ECT was invoked, more than 30 of which concluded by arbitral awards. This comprehensive arbitral practice strongly influences the practice applying other IIAs and vice versa.

This article discusses the place of both the World Trade Organization (WTO) and the Energy Charter Treaty (ECT) and their role in global energy governance in the light of the fragmentation debate roughly twenty years after their establishment. The Energy Charter Secretariat (ECS), the administrative body overseeing the ECT, has taken tension and overlap between the WTO and the ECT into account by providing extensive guidelines on incorporation of WTO rules into the Treaty. This so-called ‘coordination ex ante’ was aimed at functioning as a conflict prevention tool. However, gaps, conflicts and uncertainties remain. Moreover, developments in the past two decades, such as changes in membership to both the ECT and WTO, combined with an attention shift in a rapidly changing trading landscape, invite a re-evaluation of both treaties in view of fragmentation.

This article envisions the future of international investment law and arbitration amidst the need to accelerate the shift towards renewable energy. Recognizing the risks of predicting the unknown, the article charts the delicate balance between forecasting a future legal framework and respecting past complexities. Focusing on the Energy Charter Treaty (ECT), the article analyses ‘known-knowns’ rooted in positive law and ‘known-unknowns’ in the ECT’s future. The article examines the ECT’s design and scope in the first part, showing its pivotal role in organizing the renewable energy market through fair and equitable treatment and expropriation provisions. Against this backdrop, the article explores potential continuation, modernization, or abandonment scenarios and argues for a nuanced and anticipatory approach to the Treaty’s evolving dynamics. It underscores the variety of pending cases, the potential resurgence of State contracts, and the shift to contract-based arbitration influenced by ECT decisions. Given the impasse over the ECT’s modernization and the paradoxical nature of the ongoing energy transition, the ECT will continue to shape international investment law and international energy governance for the foreseeable future.

The European Union (EU) has a recognised international legal personality and it has signed the Energy Charter Treaty (ECT) as a Regional Economic Integration Organisation (REIO). As a result, the ECT, the EU and national legislation together establish different regulatory layers governing energy markets. Although those layers are in principle complementary, rules adopted in different periods and frameworks may cause inconsistencies at national, regional and international levels.In this chapter we will look into some of the dynamics and tensions between the EU internal energy market and policy and the ECT. We will endeavour to shed light on the developments of the EU internal energy market from the perspective of the transit regime, which was at the origins of the EU internal energy market and is part of the ECT core business. In subsequent sections we will review the different approaches to long-term energy contracts under the EU and ECT contexts. We will also identify existing and open difficulties concerning the implementation of legislation regarding renewable energy sources and, on the other hand, the EU decision-making process in external energy relations concerning hydrocarbons.The review of selected measures and case law will reveal the existence of tensions at regional and international levels and the way they are addressed to simultaneously accommodate regional and international legal orders. This chapter will help to understand what kind of interactions are happening today between the EU and ECT legal systems and will offer a particular view to explain those relations.