Charting fossil fuel investment protection in the EU beyond the Energy Charter Treaty
(2023) JURM02 20231Department of Law
Faculty of Law
- Abstract
- Under international law, foreign direct investments are protected by a patchwork of bilateral or multilateral investment treaties. International investment agreements have been criticised for protecting foreign direct fossil fuel investments and limiting the regulatory space of host states, thus creating obstacles for a green transition. At the time of writing, the European Union and its member states are on the brink of withdrawing from the Energy Charter Treaty, the world’s largest international investment agreement. This raises the question of what regulation takes its place once it is gone. The purpose of this thesis is to clarify the legal framework for investment protection that currently coexists with the Energy Charter Treaty.... (More)
- Under international law, foreign direct investments are protected by a patchwork of bilateral or multilateral investment treaties. International investment agreements have been criticised for protecting foreign direct fossil fuel investments and limiting the regulatory space of host states, thus creating obstacles for a green transition. At the time of writing, the European Union and its member states are on the brink of withdrawing from the Energy Charter Treaty, the world’s largest international investment agreement. This raises the question of what regulation takes its place once it is gone. The purpose of this thesis is to clarify the legal framework for investment protection that currently coexists with the Energy Charter Treaty. Initially, the study examines the scope of two provisions that are often invoked in investor-state arbitration, namely the fair and equitable treatment standard and provision on expropriation found in the Energy Charter Treaty. These are then compared with substantive protection offered under two different sets of legal frameworks: bilateral investment treaties and internal EU law.
In the first part of the study, it is concluded that the bilateral investment treaties that overlap geographically with the Energy Charter Treaty contain the same standards as it and offer investors equivalent protection. In the second part, the scope of the fair and equitable treatment standard and expropriation provision are compared with the direct investment protection found in EU law, especially in its general principles and Charter of Fundamental Rights. It is found that this substantive protection largely overlaps and is mainly equivalent to that of the Energy Charter Treaty. The analysis nonetheless gives reason to conclude that the space for host states to regulate for public interest purposes, such as environmental protection, is likely to be wider under EU law than under the Energy Charter Treaty. The chief difference between the frameworks, however, lies in the elimination of access to international arbitration in investor-state disputes that withdrawal from the Energy Charter Treaty will bring for internal EU investors. Without that possibility, their only recourse is to domestic judicial proceedings. (Less) - Abstract (Swedish)
- Det folkrättsliga skyddet för utländska direktinvesteringar utgörs av ett lapptäcke av multi- och bilaterala investeringsavtal. Internationella investeringsavtal kritiseras regelbundet för det skydd de ger bland annat investerare i fossila bränslen och för att de begränsar staters frihet att reglera verksamheter för allmänna intressen. Detta uppges sätta hinder för den gröna omställningen. Energy Charter Treaty är världens största investeringsavtal, men mycket tyder på att EU och dess medlemsstater inom kort kommer lämna avtalet. Det väcker frågor om vilken alternativ reglering som kommer ta dess plats. Syftet med den här uppsatsen är att klargöra de rättsliga regelverk som just nu överlappar med investeringsskyddet i Energy Charter... (More)
- Det folkrättsliga skyddet för utländska direktinvesteringar utgörs av ett lapptäcke av multi- och bilaterala investeringsavtal. Internationella investeringsavtal kritiseras regelbundet för det skydd de ger bland annat investerare i fossila bränslen och för att de begränsar staters frihet att reglera verksamheter för allmänna intressen. Detta uppges sätta hinder för den gröna omställningen. Energy Charter Treaty är världens största investeringsavtal, men mycket tyder på att EU och dess medlemsstater inom kort kommer lämna avtalet. Det väcker frågor om vilken alternativ reglering som kommer ta dess plats. Syftet med den här uppsatsen är att klargöra de rättsliga regelverk som just nu överlappar med investeringsskyddet i Energy Charter Treaty. Studien inleds med en detaljerad överblick över två klausuler i Energy Charter Treaty som ofta åberopas i tvister mellan investerare och stater, nämligen standarden för ’fair and equitable treatment’ och regleringen av expropriering. Innehållet i dessa jämförs sedan med det rättsliga skyddet som erbjuds under två andra regelverk: bilaterala investeringsavtal och intern EU-rätt.
Första delen av studien visar att bilaterala investeringsavtal som överlappar geografiskt med Energy Charter Treaty innehåller samma klausuler och erbjuder investerare motsvarande skydd. I den andra delen av studien jämförs ’fair and equitable treatment’ och regleringen av expropriering i Energy Charter Treaty med skyddet för direktinvesteringar som återfinns i EU-rätten, särskilt i dess människorättsstadga och generella principer. Analysen visar att det materiella skydd som finns för direktinvesteringar i EU-rätten motsvarar det som finns i Energy Charter Treaty, och att regelverket ger ett liknande skydd. Dock ger undersökningen vid handen att anta att utrymmet för stater att reglera verksamheter till fördel för allmänna intressen är större i EU-rätten. Den huvudsakliga skillnaden mellan regelverken är dock processuell snarare
än materiell. Utan Energy Charter Treaty har investerare inom EU inte längre möjlighet att lösa tvister med stater direkt i skiljedomstol, utan blir tvungna att vända sig till nationella domstolar. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9116464
- author
- Gierow, Sofia LU
- supervisor
- organization
- course
- JURM02 20231
- year
- 2023
- type
- H3 - Professional qualifications (4 Years - )
- subject
- keywords
- public international law, EU law, international investment law, Energy Charter Treaty, foreign direct investment, bilateral investment treaty, fossil fuels, fair and equitable treatment, expropriation, legitimate expectations
- language
- English
- id
- 9116464
- date added to LUP
- 2023-06-09 14:00:58
- date last changed
- 2023-06-09 14:00:58
@misc{9116464,
abstract = {{Under international law, foreign direct investments are protected by a patchwork of bilateral or multilateral investment treaties. International investment agreements have been criticised for protecting foreign direct fossil fuel investments and limiting the regulatory space of host states, thus creating obstacles for a green transition. At the time of writing, the European Union and its member states are on the brink of withdrawing from the Energy Charter Treaty, the world’s largest international investment agreement. This raises the question of what regulation takes its place once it is gone. The purpose of this thesis is to clarify the legal framework for investment protection that currently coexists with the Energy Charter Treaty. Initially, the study examines the scope of two provisions that are often invoked in investor-state arbitration, namely the fair and equitable treatment standard and provision on expropriation found in the Energy Charter Treaty. These are then compared with substantive protection offered under two different sets of legal frameworks: bilateral investment treaties and internal EU law.
In the first part of the study, it is concluded that the bilateral investment treaties that overlap geographically with the Energy Charter Treaty contain the same standards as it and offer investors equivalent protection. In the second part, the scope of the fair and equitable treatment standard and expropriation provision are compared with the direct investment protection found in EU law, especially in its general principles and Charter of Fundamental Rights. It is found that this substantive protection largely overlaps and is mainly equivalent to that of the Energy Charter Treaty. The analysis nonetheless gives reason to conclude that the space for host states to regulate for public interest purposes, such as environmental protection, is likely to be wider under EU law than under the Energy Charter Treaty. The chief difference between the frameworks, however, lies in the elimination of access to international arbitration in investor-state disputes that withdrawal from the Energy Charter Treaty will bring for internal EU investors. Without that possibility, their only recourse is to domestic judicial proceedings.}},
author = {{Gierow, Sofia}},
language = {{eng}},
note = {{Student Paper}},
title = {{Charting fossil fuel investment protection in the EU beyond the Energy Charter Treaty}},
year = {{2023}},
}