The Commission draft proposal for the modernisation of the Energy Charter Treaty

The briefing critiques the European Commission's draft proposal to modernise the Energy Charter Treaty (ECT), asserting that it fails to adequately protect the EU's regulatory autonomy or shield climate policies from investor-state dispute settlement (ISDS) challenges. It argues that the proposal maintains an outdated focus on investment protection and lacks binding sustainability mechanisms, a requirement to exhaust local remedies, and a specific carve-out for climate response measures. The author concludes that without fundamental shifts—such as differentiating between low-carbon and carbon-intensive investments and establishing a supremacy clause for environmental obligations—the ECT will continue to create a 'chilling effect' on essential environmental and social regulations.

• The draft proposal fails to incorporate essential EU investment standards, such as an investment court system (ICS) or guarantees of independence and impartiality for arbitrators, which are necessary to comply with the CJEU's Opinion 1/17 and address the bias towards investors in ISDS.
• The ECT's ISDS mechanism allows foreign corporations to sue states over policy changes that impact profitability, leading to damages in the hundreds of millions or billions of EUR and discouraging governments from implementing stringent environmental regulations.
• The proposed sustainability provisions are deemed ineffective because their language is not binding or enforceable, and the EU's current cooperative approach to enforcement via dialogues and expert panels has not proven successful.
• The briefing argues that the ECT should be redesigned to distinguish between low-carbon and carbon-intensive investments, potentially using the EU taxonomy of sustainable activities as a basis, to ensure preferential treatment is not granted to polluting industries.
• The draft proposal's approach to the 'fair and equitable treatment' (FET) standard is criticized for expanding rather than limiting the standard by codifying the 'frustration' of an investor's 'legitimate expectations' without requiring a written commitment.
• To prevent 'regulatory chill,' the author recommends introducing a specific climate carve-out and a supremacy clause to ensure that international environmental and human rights obligations prevail over investor protections.
• The briefing highlights a lack of accountability for investors, noting that the ECT does not explicitly allow for state counterclaims or provide full participation rights for affected third parties beyond amicus curiae briefs.

APA

Van Den Berghe, A. (2020). The Commission draft proposal for the modernisation of the Energy Charter Treaty. ClientEarth. https://www.clientearth.org/media/4eopttsr/legal-briefing-on-the-commission039s-draft-proposal-for-the-ect-modernisation-ce-en.pdf

Chicago

Van Den Berghe, Amandine. The Commission draft proposal for the modernisation of the Energy Charter Treaty. ClientEarth, 2020. https://www.clientearth.org/media/4eopttsr/legal-briefing-on-the-commission039s-draft-proposal-for-the-ect-modernisation-ce-en.pdf.

Wikipedia

{{cite report |last1=Van Den Berghe |first1=Amandine |title=The Commission draft proposal for the modernisation of the Energy Charter Treaty |publisher=ClientEarth |date=April 2020 |url=https://www.clientearth.org/media/4eopttsr/legal-briefing-on-the-commission039s-draft-proposal-for-the-ect-modernisation-ce-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vandenberghe2020commission, author = {Van Den Berghe, Amandine}, title = {{The Commission draft proposal for the modernisation of the Energy Charter Treaty}}, institution = {ClientEarth}, year = {2020}, month = apr, url = {https://www.clientearth.org/media/4eopttsr/legal-briefing-on-the-commission039s-draft-proposal-for-the-ect-modernisation-ce-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }