Report on Energy Charter Treaty (ECT) and Investment Arbitration
Added on 2020-01-07
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Investment Arbitration and the EnergyCharter Treaty
TABLE OF CONTENTS1. Introduction..................................................................................................................................42 OVERVIEW OF THE ENERGY CHARTER TREATY.............................................................54 SETTLEMENT OF DISPUTES BETWEEN CONTRACTING PARTY AND INVESTOR...135 PROVISIONAL APPLICATION OF ECT................................................................................166 AWARD RENDERED...............................................................................................................16CONCLUSION..............................................................................................................................17REFERENCES..............................................................................................................................18
ABSTRACTThe formation of investment arbitration and Energy Charter Treaty is the effective forstate as well as investors due to benefit for the both parties. It promotes the investment in thesector of energy and ensure development of the same in an effectual manner. The currentinvestigation is based on assessing the benefit from the investment arbitration and its directimpact on states attracting the foreign investors towards the specific sector. For this purpose,secondary data are collected on the treaty in context of energy sector which in turn itseffectiveness can be determined that how investors get their dispute resolved on right time. Inaddition to this, investment arbitration is helpful for the investors to protect their right andprovide them equal opportunities to determine the activities related investment and associatedrisk with the same. It has been found that, investment arbitration is contributing towards thebenefits of the investors through appropriate return for investors and catering their requirementin an effectual manner.
1. INTRODUCTIONAn investment is considered as the most effective aspect for the purpose of growth anddevelopment of a particular sector. However, issues in the procedures of investment affect theperformance of the sector to a great extent. Present report is based on Energy Charter Treaty(ECT) and investment arbitration which promote the secured investment between foreigninvestors and host state. In this context in-depth analysis has been done by covering the allrelated aspects of ECT and assessing its link between investment arbitration. Moreover, the studyis completed with the help of inclusion of suitable articles related to ECT1.Importance of the topicThe energy sector is considered as the most prominent aspect for the world due to itssignificant contribution in ensuring the development and growth of the businesses. Investment isconsidered as the most significant aspect to operate organization running in the energy sector inorder to increase the flow of money and contribute towards economic growth. However,investors face several kind of issue in context of investment protection regime of the ECT andarbitration mechanisms of the same2. However, several cases of investment arbitration are to besettled effectively as many of the cases are still pending and affecting the procedure ofinvestment to a great extent. Owing to this, it is important to shed light on investment relatedcases and resolve the dispute related to the same on right time3. However, ICSID arbitrationtribunals introduced the final aware on the merits so as to resolve the dispute. At this juncture,investment protection provision related to decision was passed in context of ICT but still limitednumber of cases are resolved and issues are being with regard to issues of generate interest forthe application of the ECT. Definition of key terms1Caron, D.D., Schill, S.W., Smutny, A.C. and Triantafilou, E.E., Practising virtue: insideinternational arbitration. Oxford University Press (2015)2(The EU and investment arbitration under the Energy Charter Treaty, 2017)<http://www.law.qmul.ac.uk/events/items/168149.html> Accessed on 7th April 20173Matsushita, M. and Schoenbaum, T.J., Emerging Issues in Sustainable Development:International Trade Law and Policy Relating to Natural Resources, (2016) Energy, and theEnvironment. Springer
The definition of the most important terms in included in the essay are presented asfollows-Energy Charter TreatyThe Energy Charter Treaty (ECT) is the multilateral instrument used for the internationalcommunication in order to promote the and cooperate the energy sector. It is helpful for theoperation of the business without any kind of non-discriminatory energy market. The NorthAmerican Free Trade Agreement (NAFTA) is also connected with its for the promotion andprotection of investment. 2 OVERVIEW OF THE ENERGY CHARTER TREATYBackgroundThe development of energy corporation between Western Europe and Eastern during the1990s was the significant task. This is because some of the countries like Russia and itsneighboring countries were quite well in the same sector. However, the potential issues wasrelated to need of investment so as to reconstruct their economies under West European countriesso as ensure that sources of energy are diversified through which dependence on anothercountries will be reduced4. Owing to this, requirement of well settled foundation was felt for thespecific energy corporation and accordingly phase of initiation of Energy Charter began. In thiscontext, first of all European Energy Charter (EEC) was signed and adopted for the EnergyCharter. This step or phase converted into the ECT along with setting of the protocols5. Further, in December of 1994 Energy Efficiency and connected environmental aspectscontext were signed. This would be effective for the purpose of integrating the 51 states andEuropean union whereby it becomes easy to integrate all related activities. At the same time, 45states and European union too signed the treaty. This in turn energy sector is being promotedwith the joint cooperation of varied countries. The biding force is associated with the ECT so asto limit its scope towards the mentioned sector. The main reason behind promoting this particulartreaty is to provide the mutual benefits for the parties or countries ans support them to make huge4Dolzer, R. and Schreuer, C.,Principles of international investment law (OxfordUniversity Press, 2012).5Dolzer, R. and Schreuer, C.,Principles of international investment law (OxfordUniversity Press, 2012).
investment on different activities. This would be effective for the cooperation and developmentof the nation. For this purpose, Article 2 consists of clear benefits in term of long termcooperation of the energy sector in accordance with profit for the associated parties. However,objectives and principles are focused effectively so as to ensure the ethical conduct of thebusiness activities and accordingly ensure the successful transaction regarding the investmentbetween different parties. In this manner, inter-governmental cooperation in the sector of energyis dealt through the formation of multilateral instrument. This proves to be effective forcontracting parties to promote the investigation and determine the long term growth of the sectorin an effectual manner. Apart from this, several provisions are included in the Energy CharterTreaty such as protection of investment and other related provision on trade. Along with that,energy efficiency and transit on the same as well as dispute resolution. In addition to this,environmental protection is also included under the treaty whereby it becomes easy to handle theall related task support or issues which are being faced by the investors. Therefore, all relatedaspects are considered under the Energy Charter Treaty whereby objectives regarding the higherrate of return and protection of the investment. Though, it increases several issues in order tomanage the work and completing the requirement of the all related parties so as to cater therequirement of the business effectively. Not only this but the growth of energy sector is alsodetermined with the effective implementation of the treaty. Investment arbitrationInvestment arbitration is the procedure applied to resolve the conflicts or dispute amonghost states and foreign investors. It is helpful for foreign investors to bypass nationaljurisdictions so as to resolve the dispute as per the different protections afforded underinternational treaties. It is important for foreign investors to take the consent of host state for theinitiation of investment arbitration6. However, three different aspects such as Internationalinvestment agreements including multilateral agreements, Free Trade Agreement and BilateralInvestment Treaties are involved to give the consent by host states. There are several contractingparties who do not allow investors to resubmit the same dispute to international arbitration at alater stage under article 26 such as Australia, Croatia, Cyprus and Japan as well as Poland and6De Luca, A., Non-Pecuniary Remedies Under the Energy Charter Treaty. (2015)Transnational Dispute Management (TDM). 12(3).
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