The Energy Charter Treaty

An Overview

in The Journal of World Investment & Trade

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  • 1 AES Summit Generation Ltd. (UK subsidiary of US-based AES Corporation) v. Hungary (ICSID Case no ARB/01/4); Nykomb Synergetics Technology Holding AB (Sweden) v. Latvia (SCC- Case no 118/2001); Plama Consortium Ltd. (Cyprus) v. Bulgaria (ICSID Case no ARB/03/24); Petrobart Ltd, (Gibraltar) v. Kyrgyzstan (SCCCase no 126/2003); Alstom Power Italia SpA, Alstom SpA (Italy) v. Mongolia (ICSID Case no ARB/04/10); Yukos Universal Ltd, (UK - Isle of Man) v. Russian Federation (UNCITRAL Arbitration Rules); Hulley Enterprises Ltd. (Cyprus) v. Russian Federation (UNCITRAL Arbitration Rules); Veteran Petroleum Trust (Cyprus) v. Russian Federation (UNCITRAL Arbitration Rules); Ioannis Kardossopoulos (Greece) v. Georgia (ICSID Case no ARB/05/18); Amto (Latvia) v. Ukraine (SCC); Hrvatska Elektropriveda d.d. (HEP) (Croatia) v. Republic of Slovenia (ICSID Case no ARB/05/24); Libananco Holdings Co. Limited (Cyprus) v. Republic of Turkey (ICSID Case no ARB/06/8); Azpetrol International Holdings B.V, Azpetrol Group B.V. and Azpetrol Oil Services Group B.V (Netherlands) v. Azerbaijan (ICSID Case no ARB/06/15); Cementownia "Nowa Huta" S.A, (Poland) v. Republic of Turkey (ICSID Case no ARB(AF)/06/2); Europe Cement Investment and Trade S.A. (Poland) v. Republic of Turkey (ICSID).

  • Plama Consortium Ltd. (Cyprus) v. Bulgaria (IcsID Case no AM/03/24); Yukos Universal Ltd. (UK - Isle of Man) v. Russian Federation (Ut·rciTttW Arbitration Rules); Hulley Enterprises Ltd. (Cyprus) v, Russian Federation (UNCITRAL Arbitration Rules); Veteran Petroleum Trust (Cyprus) v. Russian Federation (UNCITRAL Arbitration Rules); Ioannis Kardossopoulos (Greece) v. Georgia (ICSID Case no At�s/OS/18); Amto (Latvia) v. Ukraine (Scc); Hrvatska Elektropriveda d.d. (HEP) (Croatia) v. Republic of Slovenia (Icsii) Case no Arb/05/24; Libananco Holdings Co. Limited (Cyprus) v. Republic of Turkey (ICSID Case no Ax.H/06/8); Azpetrol International Holdings B.V, Azpetrol Group B.V. and Azpetrol Oil Services Group B.V (Netherlands) v. Azerbaijan (less!) Case no ARB/06/1S); Cementownia "Nowa Huta" S.A. (Poland) v. Republic of Turkey (ICSID Case no ARB(AF)/06/2); Europe Cement Investment and Trade S.A. (Poland) v. the Republic of Turkey (ICSID). 3 AES Summit Generation Ltd. (UK subsidiary of US-based AES Corporation) v. Hungary (ICSID Case no AKts/Ol/4) and Alstom Power Italia SpA, Alstom SpA (Italy) v. Mongolia (ICSID Case no Atts/04/10).

  • 4Seee.g. Graham Coop, The Energy Charter Treaty: More than a MIT, in C. Ribeiro (ed.), Investment Arbitration and the Energy Charter Treaty, p. 4-9. 5 Bamberger, Linehan, Waclde, Chapter from Energy Law in Europe, edited by Roggenkamp Martha M, Ronne Anita, Redgwell Catharine, Inigo Del Guayo, The Energy Charter Treaty in 2000: In a New Phase. 6 The ECT has been signed by Albania, Armenia, Austria, Australia, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Cyprus, Denmark, Estonia. European Communities, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Italy, Japan, Kazakhstan, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldavia, Mongolia, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, The former Yugoslav Republic of Macedonia, Turkey, Turkmenistan, Ukraine, Uzbekistan, United Kingdom. Signatory States that have not yet ratified the ECT are Australia, Belarus, Iceland, Norway, Russian Federation. See section 5, infra.

  • 8 Cf. Bamberger, Linehan, W�lde, op. cit. For a general overview of the various dispute settlement mechanisms of the ECT, see e.g. L. Gouiffes, The Dispute Settlement Mechanisms of thc Energy Charter Treaty, in C. Ribeiro (ed.), Investment Arbitration and the Energy Charter Treaty, p. 22-34. 10 The Trade Amendment has, as of August 2006, been ratified by 30 states and the European Union.

  • �� Official website of the Energy Charter Secretariat, http://www.cncharter.org/index.jsp?psk=1102&ptp= tDetail.jsp&pci=254&pti=26 (7 August 2006). 12 Energy Materials and Products means, inter alia, nuclear energy, coal, natural gas, petroleum products, electrical energy and fuel wood.

  • 13 T. Walde, Investment Arbitration Under the Energy Charter Treaty - From Dispute Settlement to Treaty Implementation, Arbitration International, Vol. 12 No. 4 (1996), p.437.

  • 1^ See e.g. Mm Equity San. Bhd. & MrD Chile S.A. v. Chile, ICSID Case No. A1ZB/O1/7 (Malaysia/Chile BIT), Award, 25 May 2004; Waste Management, Inc. v. Mexico (Number 2), ICSID Case No. Aas(AF)/00/3 (NAFTA), Final Award, 30 April 2004; Cnts Gas Transmission Company v. Argentina, ICSID Case No. AitB/O1/8 (United States/Argentina BIT), Final Award, 12 May 2005; Azinian, Davitian & Baca v. Mexico, ICSID Case No. ARB(AF)/9712 (NAFTA), Award, 1 November 1999; Metaldad Cotporation v. Mexico, ICSID Case No. APB(AF)/97/1 (NAFTA), Award, 30 August 2000; Tecnicas Medioambientales Tecmed, S.A. v. Mexico, Icsm Case No. AKts(AF)/00/2 (Spain/Mexico BIT), Award, 29 May 2003. Cf. T. Walde, Investment Arbitration under the Energy Charter Treaty: An Overview of Key Issues, Transnational Dispute Management, vol. 1:2 (2004).

  • 16See note 9 above. �� T. Walde, Investment Arbitration under the Energy Charter Treaty; An Overview of Key Issues, Transnational Dispute Management, vol. t:2 (2004).

  • "Seee.g. T. Walde, Contract Claims under the Energy Charter Treaty's Umbrella Clause: Original Intentions versus Emerging Jurisprudence, in C. Ribeiro (ed.), Investment Arbitration and the Energy Charter Treaty, p. 205-236. �`� Australia, Hungary and Norway have made such a reservation.

  • 211 C. Bamberger, J. Linehan, T. Waelde, Chapter from Energy Law in Europe, edited by Roggenkamp Martha M, Ronne Anita, Redgwell Catharine, Inigo Del Guayo, 'The Energy Charter Treaty in 2000: In a New Phase'. 21 See Section 6, infra.

  • Zz A. Sheppard, The Distinction between Lawful and Unlawful Expropriation, in C:. Ribciro (ed.), Investment Arbitration and the Energy Charter Treaty, p. 169-199.

  • 23 Australia, Hungary and Norway have made such a reservation.

  • z^ A. Michie, Journal ofConflict & Security Law (2005), vol. 10 No. 3, 'The Provisional Application ofa-nns Control Treaties', p. 346-347.

  • zs In the three arbitrations pending against the Russian Federation referred to in footnote 1, supra, the Russian Federation has argued that the ECT is not provisionally applicable to it. The tribunals sitting in these cases will thus in due course address this issue.

  • zb A similar situation arose in the Petrobart case, see Section 6.2.2, infra.

  • 27 See Anthony Aust, Modem Treaty Law and Practice, Cambridge University Press (Cambridge 2000), p.139-141.

  • =s The full text of the award is available in K. Hober, Investmenat Arbitration in Eastern Europe: In search of a Definition of Expropriation (Juris Net, LLc, Huntington 2007), Appendix 11. For an analysis of the case see Hober, Investment Arbitration in Eastern Europe, p. 202; and T. Walde and K. Hober, The First Energy Charter Award, Journal of International Arbitration, Vol. 22, No. 2 (2005), pp. 83-103. The author of this article represented Nykomb in the arbitration.

  • '0 Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, section 4.3.1. 1. 30 Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, section 4.3.2.(a). 31 The full text of the award is available in K. Hober, op. cit., Appendix 12.

  • 3= Petrobart Limited v. the Kyrgyz Republic, p. 76. 33 Judgment of Svea Court of Appeal, 19 January 2007, The Republic of Kirgizistan v. Petrobart Ltd, Case no. T 5208-05. ;'� The full text of the award is available e.g. at http://www.investmentclaims.com/decisions/Plama-Bulgaria- Jurisdiction-8Feb2005.pdf. 35 The Cyprus-Bulgaria BIT only provided for jurisdiction with regard to claims of expropriation. Since Plama's claim concerned other alleged breaches of the Cyprus-Bulgaria BIT, Plama tried to rely on the MFN-clause in the Cyprus-Bulgaria BIT to be able to invoke the dispute resolution clauses in other Bulgarian BITS, which gave investors the option to pursue dispute resolution for all breaches of the treaty. However, the tribunal found that the MFN treatment obligation contained in the Cyprus-Bulgaria BIT did not extend to Plama the protection of dispute

  • resolution provisions set out in other Bulgarian investment treaties. The tribunal emphasised that it is a well- established principle, both in domestic and international law that the parties to an arbitration must clearly express their agreement to arbitrate, and that "doubts as to the parties' dear and unambiguous intention can arise if the agreement to arbitrate is to be reached by incorporation by reference" such as through an MFN clause (see Plama Consortium Limited v. Republic of Bulgaria, p. 63, para. 199). 36 Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, section 4.3.3.(d). 3� Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, section 4.3.3.(a).

  • 3" Petrobart Limited v. the Kyrgyz Republic, p. 69. 39 Petrobart Limited v. the Kyrgyz Republic, p. 71. 4° Petrobart Limited v. the Kyrgyz Republic, p. 72. 11 Petrobart Limited v. the Kyrgyz Republic, p. 72.

  • 4= Petrobart Limited v. the Kyrgyz Republic, p. 62. ^3 Petrobart Limited v. the Kyrgyz Republic, p. 62-63.

  • ^4 Petrobart Limited v. the Kyrgyz Republic, p. 63. ^5 Petrobart Limited v. the Kyrgyz Republic, p. 64-66.

  • ab Petrobart Limited v. the Kyrgyz Republic, p. 66-68. 47 Islamic Republic of Iran v. United States of America, 1996, Iq Reports. a8 Islamic Republic of Iran v. United States of America, para. 32. a9 Islamic Republic of Iran v. United States of America, para. 34. 50 Plama Consortium Limited v. Republic of Bulgaria, p. 36, para. 119. 5� Plama Consortium Limited v. Republic of Bulgaria, p. 38, para. 126.

  • 52 Plama Consortium Limited v. Republic of Bulgaria, p. 38-39, para. 128. 53 Plama Consortium Limited v. Republic of Bulgaria, p. 39, para. 130. 54 Plama Consortium Limited v. Republic of Bulgaria, p. 14, para. 32. 55 Plama Consortium Limited v. Republic of Bulgaria, p.45-46, para. 147. ss Plama Consortium Limited v. Republic of Bulgaria, p. 46, para. 149.

  • 5� Plama Consortium Limited v. Republic of Bulgaria, p. 47, para. 149. Sa Article 31 (1) of the Vienna Convention reads: "a treaty shall be interpreted in good faith in aaordance with the ordinary meaning to begiven to the terms of the treaty in their context and in the light ofits object and purpose". 59 Plama Consortium Limited v. Republic of Bulgaria, p. 49-50, para. 155-158. fi" Plama Consortium Limited v. Republic of Bulgaria, p. 50-53, para, 159-165.

  • 61 Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, Stockholm International Arbitration Review, 2005:1, p. 104-105. (,2 Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, Stockholm International Arbitration Review, 2005:1, p. 105-108. 63 Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, Stockholm International Arbitration Review, 2005:1, p. 105. 64 Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, Stockholm International Arbitration Review, 2005:1, p. 107.

  • (,5 Nykomb v. Synergetics Technology Holding AB v. the Republic of Latvia, Stockholm International Arbitration Review, 2005:1, p. 108. sb Petrobart Limited v. the Kyrgyz Republic, p. 77-78. 67 Petrobart Limited v. the Kyrgyz Republic, p. 81. fi" Petrobart Limited v. the Kyrgyz Republic, p. 83-84. 11 Petrobart Limited v. the Kyrgyz Republic, p. 86-87.

  • 70 See e.g. MTD Equity Sdn. t3hd. and MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Award of 25 May 2004; CMS Gas Transmission Company v. The Argentine Republic, ICSID Case No. A2rs/O1/8, Award of 12 May 2005; Azurix Corp v. The Argentine Republic, ICSID Case No. ARB/01/12, Award of 14 July 2006; S.D. Myers, Inc. v. Canada, 8 ICSID Reports (2005) 18; Mamin Feldman v. Mexico, ICSID Case No. ARB(AF)/99/1, Award 16 December 2002.

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