The Application of Investment Treaties to Overseas Territories and the Uncertain Provisional Application of the Energy Charter Treaty to Gibraltar

Abstract

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.