Energy Charter Treaty Reform: Why withdrawal is an option

The Energy Charter Treaty (ECT) is criticized for allowing fossil fuel investors to use Investor-State Dispute Settlement (ISDS) to challenge climate policies, such as the Netherlands' phase-out of fossil fuels by 2030. While the EU has attempted to modernize the ECT, the requirement for unanimity among 56 contracting states has stalled progress. The document argues that withdrawal is a viable alternative, provided that the 20-year 'survival clause'—which continues to protect existing investments after withdrawal—is neutralized. Using the Vienna Convention on the Law of Treaties (VCLT), the authors argue that a group of states can legally modify the treaty 'inter se' to extinguish this clause because the ECT consists of reciprocal bilateral relations rather than obligations binding on all parties. Such a coordinated withdrawal would immediately end treaty-based fossil fuel protection and ISDS for the withdrawing states, reducing legal risks and aligning with EU climate objectives.

• The Energy Charter Treaty (ECT) creates significant financial risks for governments pursuing climate action, as evidenced by RWE and Uniper initiating arbitration against The Netherlands over its 2030 fossil fuel phase-out, with combined claims exceeding EUR 3.5 billion.
• EU efforts to modernize the ECT are hindered by the requirement for unanimity among all 56 contracting states, with resistance noted from the United Kingdom, Switzerland, Norway, and Japan.
• The EU's own modernization proposals are criticized for lacking ambition, as they would allow existing fossil fuel investments to remain protected for 10 years and provide exceptions for gas-related investments until 2030 or 2040.
• Withdrawal from the ECT is complicated by a survival clause in Article 47(3), which extends investment protection for 20 years after a state's withdrawal takes effect; Italy's 2016 withdrawal resulted in at least seven claims exceeding USD 400 million.
• There is a legal basis under Article 41 of the Vienna Convention on the Law of Treaties (VCLT) for a group of states to 'neutralize' the survival clause through an 'inter se' modification, as the ECT is a bundle of reciprocal bilateral relations rather than obligations erga omnes.
• A coordinated withdrawal with neutralization of the survival clause would immediately terminate treaty-based fossil fuel protection and ISDS among withdrawing states, which would be particularly effective given that 60% of ECT cases are intra-EU.

APA

ClientEarth (n.d.). Energy Charter Treaty Reform: Why withdrawal is an option. https://www.clientearth.org/media/ub1b4hmk/ect-reform-withdrawal-itn-july-2021.pdf

Chicago

ClientEarth. Energy Charter Treaty Reform: Why withdrawal is an option. n.d. https://www.clientearth.org/media/ub1b4hmk/ect-reform-withdrawal-itn-july-2021.pdf.

Wikipedia

{{cite report |author=ClientEarth |title=Energy Charter Treaty Reform: Why withdrawal is an option |url=https://www.clientearth.org/media/ub1b4hmk/ect-reform-withdrawal-itn-july-2021.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{clientearthndenergy, author = {{ClientEarth}}, title = {{Energy Charter Treaty Reform: Why withdrawal is an option}}, institution = {ClientEarth}, url = {https://www.clientearth.org/media/ub1b4hmk/ect-reform-withdrawal-itn-july-2021.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }