The Protection of Energy Investments under the ECT: An Extra-EU Country’s Perspective

Abstract

This article examines the issues arising from the tension between EU law and the ECT that have significant implication on extra-EU disputes. First, it examines the relationship between secondary EU legislation and the ECT obligations, to demonstrate that they should be understood to form a hierarchical relationship in which the latter has primacy over the former. It then addresses the question of attribution and responsibility for breaching acts between the EU and its Member States, and proposes that a joint liability should be the norm for the ECT. It proceeds to examine the principle of ‘harmonious interpretation’ between EU law and the ECT provisions, the principle applied by the tribunal in Electrabel v. Hungary. It argues that, by effectively prioritising EU law (including secondary EU legislation) over the ECT obligations, the Electrabel tribunal’s approach fails to reflect the balance between the protections of foreign investors under the ECT and the economic integration of EU Member States. This article concludes by arguing that, given that the ECT is a multilateral treaty with a wide geographical distribution, a clear recognition of the nature of the ECT as an international agreement by relevant adjudicatory bodies and the European Commission would be necessary for a sustainable and effective protection of energy investments under the ECT.