TITLE

Arbitration of Energy-Related Disputes under the Energy Charter Treaty

AUTHOR(S)
Gadiyev, Kamal
PUB. DATE
May 2008
SOURCE
Global Jurist;May2008, Vol. 8 Issue 2, p7
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Over the past ten years the issue of energy security concerning the major economies, and in particular the European Union, has occupied the minds of politicians and lawmakers around the world. For Europe, measures to decrease its oil and gas dependence on a limited number of energy suppliers have resulted in a search for alternative exporters and export routes and the establishment of new legal mechanisms, such as the Energy Charter Treaty (ECT), which has been a perfect starting point for international cooperation in the field of European energy security. At the same time, many large oil-producing economies, which export energy to the EU, are now in the process of market liberalization and energy-related reforms due to their aspiration to become members of the World Trade Organization (WTO). This tendency has diverse legal and economic implications for the current and future members of the ECT and the WTO, including legal consequences in terms of dispute settlement under the ECT. Economic data predict that the EU's dependence on oil imports from non-members of the ECT, mainly Middle Eastern countries, will increase dramatically after 2020 while gas imports from the Commonwealth of Independent States and especially Russia, (CIS: republics of the former Soviet Union) most of which are members of the ECT (Russia and Belarus apply the ECT on a provisional basis ), will steadily increase by that time. Therefore, one issue of energy security for the EU is that the protection offered by the ECT dispute settlement mechanism may become more necessary in the years to come. However, from a private investor's point of view it is still uncertain whether the ECT dispute settlement mechanism is the best tool for considering an energy-related investment dispute in terms of time and cost management for a number of reasons. First, the ECT is a complex legal document with numerous exceptions and limitations that are present in annexes, decisions and protocols to the treaty. A trade practitioner must pay particular attention to all provisions while advising on an ECT legal issue and few ECT cases have been adjudicated so far resulting in doubt and ambiguity in the interpretation of some provisions of the ECT. Second, the scope of the ECT is rather limited: the majority of energy producing countries in the Middle East, Africa and South America are not members of the treaty and investors in those states will continue to rely on the bilateral investment treaties (BITs). Nevertheless, this article intends to analyze some ECT-related arbitration cases in order to demonstrate that the ECT dispute settlement mechanism has become a reliable arbitration forum that can protect foreign investors' rights in trade in energy.
ACCESSION #
57524443

 

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