In a report published on Wednesday 13 June, which puts at US$35 billion the total amount thus far claimed by investors in arbitration cases against states, the Corporate Europe Observatory (CEO) and the Transnational Institute (TNI) warn that the Energy Charter Treaty gives investors in the energy sector unprecedented influence on the energy policies of ECT signatory countries (nearly 50, including those of the EU).
The ECT makes it more difficult for signatory countries to distance themselves from polluting energy and enables foreign investors to take states to court for their actions in favour of the energy transition that could have a negative impact on the foreign investors' profits. Companies are using the ECT to demand exorbitant sums of money in compensation for the loss of future profits, the authors of the report state.
The report reveals how big companies in the gas, oil and coal sector have used the ECT and similar investment agreements to contest policies on clean energy, bans on drilling, taxes on fossil fuels and environmental regulations.
Swedish energy company Vattenfall is thus suing Germany for its decision to phase out nuclear energy and is claiming €4.3 billion in compensation, while UK oil company Rockhopper is suing Italy over a ban on new offshore oil drilling projects, and is suing Bulgaria and Hungary after they curbed big profits in the energy sector and pushed for lower electricity prices.
The ECT had led investors to take states to court more than any other investment agreement. Altogether, states have already been sued 114 times under the ECT – with most of these claims (75 lawsuits) filed in the last five years alone, primarily against western European states. In 16 court cases, investors demanded US$1 billion or more from governments. In 61% of resolved cases, the outcome has favoured the investor, the report points out.
Investors who have filed lawsuits under the ECT come mostly from Western Europe. Companies and individuals registered in the Netherlands, Germany, Luxembourg, and the UK (or Cyprus) make up 60% of the 150 investors involved in claims
The majority of ECT claims are intra-EU disputes: 67% of ECT investor lawsuits were brought by an investor from one EU member state against the government of another member state.
The report says that many more ECT investor-state cases could follow if governments enact stronger measures to respond to climate change and energy poverty – and it is all the more likely that more cases will follow, with dozens of countries in Africa, Asia, the Middle East and Latin America set to sign the ECT despite the huge political, legal and financial risks it will bring them. (Original version in French by Emmanuel Hagry)