Decision on the interpretation and application of the Energy Charter Treaty

Background

The Energy Charter Treaty (ECT, 1998) is a multilateral trade and investment agreement applicable to the energy sector. The ECT is the most used investment treaty by multinational corporations to sue countries, and the number of investor-state dispute settlement (ISDS) cases is rising each year.

Eleven Member States and the UK, representing more than 70% of the European population, already decided to exit the ECT.  On May 30, 2024, the EU decided to withdraw as well, due to concerns that the treaty's provisions, particularly those protecting fossil fuel investments, were incompatible with the EU's climate objectives under the European Green Deal and the Paris Agreement.

The proposed decision aims to codify the interpretation of the European Court of Justice that the ECT does not apply to disputes between a Member State and an investor of another Member State concerning an investment made by the latter in the first Member State.

Key points

In the opinion the EESC:

• endorses the proposed decision and points out that the ECT protects, inter alia, investments in fossil energy sources, which run counter to the climate objectives, such as those set out in the European Green Deal and the Paris Agreement;
• stresses furthermore that the ECT allows foreign investors to challenge any domestic legislation that might harm their profit expectations, as the arbitration system allows investors to challenge national environmental and climate laws;
• encourages the Commission, the Member States and the European Parliament to conclude other inter se agreements with third countries which have withdrawn from the ECT, such as the UK, to eliminate the risk of arbitration proceedings due to the ECT's 20-year survival clause;
• calls for a new multilateral framework for energy cooperation to be developed that prioritises sustainable and renewable energy sources, ensuring that any future agreement is fully aligned with the objectives of the EU Green Deal.

Additional information

EESC section: External Relations (REX)

Opinion number: REX/593-EESC-2024

opinion type: Mandatory

Referral:  COM(2024) 257 final 2024/0148 COD, COM(2024) 257 final 2024/0148 COD

Rapporteur: Christophe QUAREZ, (Workers-GR II/France)

Date of adoption by section: 12/11/2024

Date of adoption in plenary: 4 December 2024

Result of the vote in plenary: 187 in favour/2 against/4 abstentions

Contact

Millie Tsoumani

Press Officer, Tel.: +32 (0) 2 546 9088, Email: Amalia.tsoumani@eesc.europa.eu

Marco Ristori

Administrator, Policy Officer, Tel.: +32 (0) 2 546 9969, Email: Marco.Ristori@eesc.europa.eu