Energy Charter Treaty: Member States sign declaration and initial Inter Se agreement clarifying non-applicability of ECT arbitration provisions intra-EU

Summary

On 25 June 2024, 26 member states agreed at the General Affairs Council that the European Union would sign an ECT Inter Se declaration. This declaration complements an Inter Se agreement, giving effect to the Komstroy judgment of the European Court of Justice (C-741/19) regarding the non-applicability of ECT arbitration provisions intra-EU. On 26 June, 26 member states and the Union signed the declaration. On the same day, member states were also asked to initial the agreement, the text of which is identical to the declaration.
 

Text

Both the agreement and the declaration are important to protect Member States, the EU and Euratom when dealing with intra-EU arbitration proceedings and enforcement actions against third-country courts. The agreement and the declaration ensure the effective implementation of the Court of Justice's Komstroy ruling, which follows that the Energy Charter Treaty must be interpreted to mean that it does not apply to disputes between a Member State and an investor from another Member State over an investment made by that investor in the former. The signing of the political declaration took place in the margins of the informal COREPER II meeting on 26 June 2024.
 

Next steps

With the initialling of the Inter Se agreement, member states are launching their internal approval process of the agreement. For the potential accession of the EU and Euratom to the agreement, the European Commission will soon present a proposal for a Council decision allowing for its discussion within the Council.

The Declaration will be published in the Official Journal and on the Commission's website, and then circulated to the Charter Conference.
 

Background

The Energy Council of 30 May 2024 adopted the decisions that ensure the withdrawal of the EU and Euratom from the Energy Charter Treaty, coupled with the possibility for member states to approve the modernisation of the ECT Treaty. Negotiations on an Inter Se agreement also took place over the past two years. This was complemented by the declaration. The purpose of the declaration is that, as an instrument, it has immediate effect, unlike the agreement, whose ratification process takes longer.