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Fair and Equitable Treatment under the Energy Charter Treaty: Reassessing Investor Protection and Environmental Regulation after Modernization

Shivakhanli, Ziya LU (2025) HARN63 20251
Department of Business Law
Abstract
This thesis examines the Energy Charter Treaty's (ECT) Fair and Equitable Treatment (FET) standard, how it was modernized in 2024, and how this modernization affects the legal position of developing and energy-exporting nations, especially those in the Caspian Sea region. The goal is to determine whether modernization broadens states' regulatory latitude to pursue the energy transition and climate goals while also lowering legal uncertainty. How the updated FET standard impacts developing, fossil fuel-dependent states' legal standing under the ECT is the research question.
The pre-modernization ECT, which revealed both the vagueness of the FET clause and arbitral tribunals’ expansive interpretations of it, is analysed first. It then... (More)
This thesis examines the Energy Charter Treaty's (ECT) Fair and Equitable Treatment (FET) standard, how it was modernized in 2024, and how this modernization affects the legal position of developing and energy-exporting nations, especially those in the Caspian Sea region. The goal is to determine whether modernization broadens states' regulatory latitude to pursue the energy transition and climate goals while also lowering legal uncertainty. How the updated FET standard impacts developing, fossil fuel-dependent states' legal standing under the ECT is the research question.
The pre-modernization ECT, which revealed both the vagueness of the FET clause and arbitral tribunals’ expansive interpretations of it, is analysed first. It then assesses the modernization, which included new provisions on climate change (Article 19 bis), sustainable development (Article 19), and a comprehensive list of FET violations. Although these changes reflect current treaty practice, they are still constrained, as the Investor-State Dispute Settlement (ISDS) system is unaltered, sustainability provisions are mainly non-binding, and reasonable expectations are still protected, giving tribunals considerable discretion.
The implications of ECT modernization for developing and energy-exporting states are further examined in the thesis. Due to their heavy reliance on the export of fossil fuels, Caspian states like Kazakhstan and Azerbaijan joined the ECT in an attempt to draw in investment.
The conclusion is that the FET standard is only partially clarified by modernization, which does not address the fundamental conflicts between climate imperatives and investment protection. With little leeway for their energy transitions, developing and energy-exporting states continue to be legally vulnerable. (Less)
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author
Shivakhanli, Ziya LU
supervisor
organization
course
HARN63 20251
year
type
H1 - Master's Degree (One Year)
subject
keywords
energy charter treaty, ECT, modernization, fair and equitable treatment, investor-state dispute settlement, legitimate expectations, regulatory chill, sustainable development, environmental regulation, sunset clause, Caspian sea region, developing countries
language
English
id
9215845
date added to LUP
2025-12-01 12:26:04
date last changed
2025-12-01 12:26:04
@misc{9215845,
  abstract     = {{This thesis examines the Energy Charter Treaty's (ECT) Fair and Equitable Treatment (FET) standard, how it was modernized in 2024, and how this modernization affects the legal position of developing and energy-exporting nations, especially those in the Caspian Sea region. The goal is to determine whether modernization broadens states' regulatory latitude to pursue the energy transition and climate goals while also lowering legal uncertainty. How the updated FET standard impacts developing, fossil fuel-dependent states' legal standing under the ECT is the research question.
The pre-modernization ECT, which revealed both the vagueness of the FET clause and arbitral tribunals’ expansive interpretations of it, is analysed first. It then assesses the modernization, which included new provisions on climate change (Article 19 bis), sustainable development (Article 19), and a comprehensive list of FET violations. Although these changes reflect current treaty practice, they are still constrained, as the Investor-State Dispute Settlement (ISDS) system is unaltered, sustainability provisions are mainly non-binding, and reasonable expectations are still protected, giving tribunals considerable discretion.
The implications of ECT modernization for developing and energy-exporting states are further examined in the thesis. Due to their heavy reliance on the export of fossil fuels, Caspian states like Kazakhstan and Azerbaijan joined the ECT in an attempt to draw in investment. 
The conclusion is that the FET standard is only partially clarified by modernization, which does not address the fundamental conflicts between climate imperatives and investment protection. With little leeway for their energy transitions, developing and energy-exporting states continue to be legally vulnerable.}},
  author       = {{Shivakhanli, Ziya}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Fair and Equitable Treatment under the Energy Charter Treaty: Reassessing Investor Protection and Environmental Regulation after Modernization}},
  year         = {{2025}},
}