On Wednesday 27 March, the European Commission published a proposal for the partial suspension of the application of the Energy Charter Treaty (ECT) between the Union, on the one hand, and Euratom, on the other, and any legal entity owned or controlled by citizens or nationals of Russia or Belarus, and any investment, within the meaning of the Treaty, which is an investment by an investor from one of these two countries.
This proposal is part of the adoption and maintenance of sanctions against Russia following the launch of its war of aggression in Ukraine in February 2022, and against Belarus as an accomplice in this war.
The sanctions include measures which prohibit transactions with investors from these two countries and which could be violated or circumvented if certain provisions of the ECT were still granted to these investors or their investments.
The ECT is a multilateral trade and investment agreement applicable to the energy sector, which came into force in 1998. It has recently come under scrutiny because several Member States have questioned its incompatibility with the EU’s climate objectives, and it is the subject of negotiations for modernisation (see EUROPE 13363/4) and withdrawal from the Union and Euratom (see EUROPE 13366/9).
Neither the Russian Federation nor the Republic of Belarus are contracting parties to the ECT. “However, investors from these countries could use corporations established in the territory of a contracting party to the ECT to allege that the European Union or its Member States have acted inconsistently with the investment protection obligations of the ECT” and, consequently, bring proceedings against the EU or its Member States.
The proposal therefore aims, on the basis of Article 17 of the EC Treaty, to deny the benefits of Part III of this agreement (concerning the promotion and protection of investments) to any legal entity owned or controlled by citizens or nationals of Russia or Belarus and which does not have substantial commercial activities in the area of the contracting party in which it is organised.
It also refuses these advantages to any investment, within the meaning of the ECT, which is an investment by an investor from the Russian Federation or the Republic of Belarus.
To see the proposal concerning the Union: https://aeur.eu/f/bjh
To see the proposal concerning Euratom: https://aeur.eu/f/bji
To see the attached statement: https://aeur.eu/f/bjj (Original version in French by Pauline Denys)