Energy Charter Treaty

Signed in 1994, the Energy Charter Treaty promotes energy security via open and competitive energy markets. So far, fifty-two states have signed up, together with the European Union and Euratom.

The Treaty declares that every participating state shall “encourage and create stable, equitable, favourable and transparent conditions for investors”. It explicitly guards against illegal expropriation: investments shall not be nationalised or expropriated except where such a measure is in the public interest, non-discriminatory, lawful and duly compensated.

As a founding father of the Treaty, the Russian Federation argued for its provisional application: upon signature the Treaty should come into force immediately so that participating states would quickly assume their obligations. The Russian Federation has long respected the notion of provisional application, and today it is bound by more than 30 international treaties that include such a clause.

Regarding the Energy Charter Treaty, the Russian Federation did not invoke its right, set out in article 45, to declare itself unable or unwilling to accept provisional application. This option was open to any country that had doubts about the Treaty or its provisional application, and Russia decided not to pursue it. On the contrary, in 1996, the Russian government stated in its explanatory memorandum for ratification of the Treaty that:

The Energy Charter Treaty provides for independent, international arbitration. It states that any awards of arbitration shall be “final and binding upon the parties to the dispute.” The Treaty provides the legal basis for the arbitrations commenced in 2005 by GML's wholly owned subsidiaries.