The Energy Charter Treaty (ECT), is a multilateral treaty which primarily addresses investment, transit and trade matters – but also competition, environmental issues and other concerns in the energy sector. Moreover there are strong dispute resolution provisions to strengthen implementation of the Treaty. A binding treaty without a credible mechanism for effective implementation would have been of little benefit.
The ECT, in fact, contains several dispute resolution mechanisms, each one of which is designed to address a particular subject matter or aspect of the Treaty. This illustrates the importance and unique role of the dispute settlement provisions of the ECT. These dispute resolution mechanisms may be divid
- Dispute resolution between Contracting Parties (Article 27 of the ECT). The general system has some relevant exceptions so as to facilitate a better approach to competition disputes, environmental disputes, trade disputes and trade-related investment matters. There is an additional conciliation mechanism for transit disputes.
- Dispute resolution between an investor and a Contracting Party (Article 26 of the ECT).
The starting point for all these mechanisms is the desirability of an amicable early settlement between the parties to any dispute. The potential role of the Secretariat through its good offices, mediation and conciliation facilities was highlighted by the Energy Charter Conference in 2014 as an example of how to achieve amicable dispute settlement. Since 2014, the Secretariat has provided its good offices in advance of the investor resorting to international arbitration, and after the initial stages of arbitration. The Secretariat, can play an important role in proposing and helping to secure the agreement of parties to explore/start mediation proceedings; and even help the parties to overcome initial procedural hurdles, for example by providing the premises of the Secretariat for the initial meetings and administrative support for the mediation process.
Over the last three years (2014-2016), with the invaluable help of the delegates and the lead of the General Counsel of the Secretariat, Dr Alejandro Carballo, the Energy Charter Conference has modernised all these dispute resolution mechanisms to make them more effective. In particular, the Conference has (i) updated its transit conciliation rules (endorsing also a commentary as a helpful, non-binding explanatory tool to facilitate understanding and uniform application of the Conciliation Rules), (ii) welcomed a Model Early Warning Mechanism (to prevent and overcome emergency situations in the energy sector related to the transit and supply of electricity, natural gas, oil and oil products through cross-border grids and pipelines); (iii) endorsed a Guide on Investment Mediation; and (iv) confirmed the new policy on access to the travaux préparatoires, including the de-restriction of most of them and allowing the publication online of the different drafts of the Energy Charter Treaty.
This publication compiles the relevant documents related to the dispute resolution mechanisms under the ECT and provides some useful flowcharts to facilitate their understanding. We expect it to be a useful tool for both governments and companies.