2017

In November 2017, the Energy Charter Conference confirmed in Ashgabat the launching of a discussion on the potential modernisation of the Energy Charter Treaty (ECT). Within the framework set out by the Conference (CCDEC2017 23), it was also agreed to establish a subgroup of the Strategy Group to centralise and conduct the discussions in the most effective way.

2018

At its first meeting of 2 February 2018, the Subgroup confirmed the nominations of Ms. Sofía Sanz Estébanez (Spain) and of Mr. Sunao Orii (Japan) as Chair and Vice-Chair of the Subgroup. The Subgroup further convened five more times: on 23 March, 14 May, 15 May, 5 July and 6 of September. In addition, the Subgroup reported to the Strategy Group both on 22 March (when some procedural issues were considered) and 25 October (when final list of topics was recommended for approval by the Conference).

Following the mandate of the Conference (CCDEC2017 23), some of the meetings of the Subgroup took the format of consultation with the Observers (2 February) and the industry – through the Industry Advisory Panel – (14 May). Particular reports were prepared with the conclusions of those consultations. In addition, the Industry Advisory Panel circulated a position paper on the potential modernisation of the ECT, which was considered by the Subgroup and that is also annexed to the Report of the Industry Advisory Panel to the Conference (CCDEC2018 23).

On 27 November 2018, the Conference approved the list of topics for the modernisation of the ECT (CCDEC2018 21).

  • Pre-investment

  • Definition of ‘charter’

  • Definition of ‘economic activity in the energy sector’

  • Definition of investment

  • Definition of investor

  • Right to regulate

  • Definition of Fair and Equitable Treatment (FET)

  • MFN Clause

  • Clarification of ‘most constant protection and security’

  • Definition of indirect expropriation

  • Compensation for losses

  • Umbrella clause

  • Denial of benefits

  • Transfers related to investments

  • Frivolous claims

  • Transparency

  • Security for costs

  • Valuation of damages

  • Third party funding

  • Sustainable development and corporate social responsibility

  • Definition of ‘transit’

  • Access to infrastructure (including denial of access and available capacities)

  • Definition and principles of tariff setting

  • REIO

  • Obsolete provisions

2019

On 6 October 2019, the Conference approved some suggested policy options for modernisation of the ECT (CCDEC2019 08).

On 6 November 2019, the Conference established and mandated the Modernisation Group to start negotiations on the modernisation of the Energy Charter Treaty, with a view to conclude negotiations expeditiously, as well as approved several procedural issues to be followed during the negotiations (CCDEC2019 10). The Conference also invited the Modernisation Group to report to the next meeting of the Conference on progress made in fulfilling the negotiations mandate.

The Chairpersons of the Modernisation Group are: 

Chair: Mr. Lukas Stifler (Austria)

Vice-Chair: Mr. Orii Sunao (Japan)

Vice-Chair: Mr. Guy Lentz (Luxembourg)

Vice-Chair: Mr. Samir Abdurahimov (Azerbaijan)

Vice-Chair: Mr. Felix Imhof (Switzerland)

2020

On 6 November 2019 (see Conference Decision CCDEC 2019 10), the Energy Charter Conference established and mandated the Modernisation Group to start negotiations on the modernisation of the Energy Charter Treaty, with a view to conclude negotiations expeditiously.  

The First Negotiation Round on the Modernisation of the Energy Charter Treaty took place on 6-9 July 2020 by videoconference. 

Initial proposals and discussion papers were presented and discussed in detail by the delegations. The Modernisation Group took note of the comments and positions of the delegations as well as the progress made at the meeting. Taking into account the list of topics for modernisation of the Energy Charter Treaty (see Conference Decision CCDEC 2018 18), the discussion was based on the following agenda: 

  • Definitions 
    •         Definition of ‘charter’ 
    •         Definition of ‘economic activity in the energy sector’
  • Investment protection 
    •         Definition of investment 
    •         Definition of investor
    •         Clarification of ‘most constant protection and security’ 
    •         Compensation for losses 
    •         Definition of Fair and Equitable Treatment 
    •         Definition of indirect expropriation 
    •         Denial of benefits 
    •         MFN clause 
    •         Right to regulate 
    •         Transfers related to investments 
    •         Umbrella clause 

The Second Negotiation Round is taking place by videoconference on 8-11 September. The Modernisation Group envisages to address the following topics:

  • Dispute settlement 
    •         Frivolous claims 
    •         Security for costs 
    •         Third party funding
    •         Transparency 
    •         Valuation of damages 
  • Transit 
    •         Access to infrastructure (including denial of access and available capacities) 
    •         Definition and principles of tariff setting 
    •         Definition of ‘transit’ 
  • Sustainable development and corporate social responsibility 
  • Remaining topics from previous negotiation round 

 

Public communication in English

Публичное сообщение на русском 

On 8-11 September 2020, the Second Negotiation Round on the modernisation of the Energy Charter Treaty (ECT) was held by videoconference.1 

Taking into account the list of agreed topics for modernisation of the Energy Charter Treaty (see Conference Decision CCDEC 2018 18) and the suggested policy options for modernisation of the ECT (see Conference Decision CCDEC 2019 08), the Modernisation Group has discussed this Round the following topics:

  • Transit 
    • Definition of ‘transit’ 
    • Access to infrastructure (including denial of access and available capacities) 
    • Definition and principles of tariff setting 
  • Sustainable development and corporate social responsibility 
  • Dispute settlement 
    • Frivolous claims 
    • Security for costs 
    • Third party funding
    • Transparency 
    • Valuation of damages 
  • Remaining topics from the previous negotiation round  

The Modernisation Group discussed the aforementioned issues on the basis of text proposals submitted by the delegations. The goal of this Round was to explain and clarify the proposals and find common ground for the discussion without prejudice to any delegation’s final position. 

The discussion on ‘Transit’ was based upon comments submitted by delegations pertaining to possible amendments of Article 7 ECT. These initial considerations focused in particular on the possible modification of the definition of “transit” with a view to reflecting recent developments. It was also suggested to introduce new language to clarify the main principles of tariff setting for the transit of energy resources, and on access to existing infrastructure, as well as grounds for denying this access.

In connection with ‘Sustainable development and corporate social responsibility’, delegations considered objectives related to sustainable development, environment, climate change and corporate social responsibility. The discussions included comments and proposals on the right to regulate, relevant multilateral environmental agreements, climate change and the clean energy transition such as the Paris Agreement, international standards of labour protection, responsible business practices, the conduct of environmental impact assessment and good governance (transparency).

During the deliberations on ‘Dispute Settlement’, several delegations took the view that a modernised ECT should reflect modern trends in treaty practice pertaining to the topics encompassed in the list of topics for modernisation of the Energy Charter Treaty (CCDEC2018 18), including discussions taking place in UNCITRAL and ICSID. Some delegations presented proposals to ensure the expedited disposal of unmeritorious and/or abusive claims and to avoid costs linked to the litigation of such claims. An initial discussion took place on proposals to regulate the issues of Security for costs and Third Party Funding in the context of the Energy Charter Treaty. It was generally felt that the Modernisation Group should further explore the possibility of increasing transparency in investor-State dispute settlement. The Group discussed if and to what extent the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration could be integrated. Some delegations stressed the need for maintaining a balance between transparency on the one hand, and other legitimate interests on the other. Discussions also took place on a proposal to regulate interventions by non-disputing parties and third parties to cases under the ECT. The Modernisation Group also had a preliminary discussion on questions relating to the valuation of damages. 

Under the item ‘Remaining topics from previous negotiation round’, delegations availed themselves of the possibility to seek clarifications on comments and proposals discussed during the first round of negotiations (6-9 July 2020; see Public Communication). In this context, inter alia, a provision on Public Debt was discussed.

The Third Negotiation Round will take place by videoconference on 3-6 November 2020. The Modernisation Group envisages to address the following topics:

  • Pre-investment
  • REIO
  • Obsolete provisions 
  • Remaining topics from previous negotiation rounds. 

After the third round, the Modernisation Group will present a first progress report to the Energy Charter Conference. 

No consensus was reached on a request by one delegation to discuss a broader reform of ISDS beyond the list of topics for modernisation (CCDEC2018 18).


                                             

On 6 November 2019 (see Conference Decision CCDEC 2019 10), the Energy Charter Conference established and mandated the Modernisation Group to start negotiations on the modernisation of the Energy Charter Treaty, with a view to conclude negotiations expeditiously. The First Negotiation Round on the Modernisation of the Energy Charter Treaty took place on 6-9 July 2020.

 

Public communication in English

Публичное сообщение на русском 

On 3-6 November 2020, the Third Negotiation Round on the modernisation of the Energy Charter Treaty (ECT) was held by videoconference.[1]

Taking into account the list of agreed topics for modernisation of the ECT (see Conference Decision CCDEC 2018 18) and the suggested policy options (see Conference Decision CCDEC 2019 08), during the Third Negotiation Round held by the Modernisation Group, the following topics were addressed:

  • Pre-investment;
  • REIO;
  • Obsolete provisions;
  • Remaining topics from the previous negotiation rounds. 

The Modernisation Group discussed the aforementioned topics on the basis of submissions and comments provided by the delegations before and during the negotiation round. The goal of this round was to explain and clarify the positions and find common ground for the discussion without prejudice to any delegation’s final decision.

The discussion on ‘Pre-investment’ was based on a discussion paper as well as positions expressed by delegations during the meeting, taking into account that the current Energy Charter Treaty provides that Contracting Parties shall endeavor to provide non-discriminatory treatment to investors from other Contracting Parties in the making of investments.

In connection with Regional Economic Integration Organisation (REIO), delegations considered whether it was necessary to clarify the legal relationship between members of a REIO under the ECT. Currently, one REIO – the European Union – is a member of the Energy Charter Conference. Some ECT Contracting Parties and Signatories are members of other REIOs.

Further, the delegations addressed the potential ‘Obsolete provisions’ included in the policy options approved by the Conference in 2019 (CCDEC 2019 08), such as Article 32 on transitional arrangements, and requested the Secretariat to provide some text proposals.

The Modernisation Group availed itself of the possibility to revert to the ‘Remaining topics from the previous negotiation rounds’ to seek clarifications on comments and proposals discussed during the first and the second round of negotiations. In particular, the Modernisation Group discussed the following topics: definition of investment, definition of investor, right to regulate, most constant protection and security, frivolous claims, third party funding, security for costs. The Group discussed the possible consolidation of proposals on, for example, the definition of investment and investor, most constant protection and security, and the right to regulate, as there appears to be common ground between the texts proposed. Some Contracting Parties expressed support for the textual proposals made by other delegations. One Contracting Party presented a proposal for a possible combined format of the texts tabled at previous rounds on the issues of frivolous claims, security for costs and third-party funding. The Group had an initial discussion on the possible future format of the negotiation texts. Different Contracting Parties welcomed this proposal as a possible basis for discussion at future rounds but indicated that they would need more time to review and assess it in detail, and pointed out that the format of future proposal should not be restricted. Some delegations who submitted text proposals signalled their willingness to discuss ahead of the next round the possibility to find a possible format on how to combine their respective text proposals on these issues.

Finally, an initial discussion took place on the reporting to the Energy Charter Conference. The mandate for negotiations on modernisation of the ECT (point n of Conference Decision CCDEC2019 10) envisages that in December 2020 “the Conference should take stock of the progress made”. This year, the Energy Charter Conference will take place on 16-17 December 2020 under the Chairmanship of Azerbaijan.

On 18 December 2020, the Modernisation Group will hold a meeting to consider and adopt the agenda for the negotiations to be held in 2021.

 


[1] On 6 November 2019 (see Conference Decision CCDEC 2019 10), the Energy Charter Conference established and mandated the Modernisation Group to start negotiations on the modernisation of the Energy Charter Treaty, with a view to conclude negotiations expeditiously. The First Negotiation Round and the Second Negotiation Round on the Modernisation of the Energy Charter Treaty took place on 6-9 July and 8-11 September 2020 respectively. 

 

Public communication in English

Публичное сообщение на русском

The Energy Charter Conference at its 31 st Statutory Meeting held on 16 December 2020 took note of the Report of the Modernisation Group on Progress Made in Fulfilling the Negotiations Mandate (CCDEC 2020 16). 

Following the meeting of the Energy Charter Conference, on 18 December, the Modernisation Group discussed plan for negotiations in 2021. It is expected that in 2021 the Modernisation Group will hold five rounds of negotiations (CCDEC 2020 17). 

2021

From 2-5 March 2021, the Fourth Negotiation Round on the modernisation of the Energy Charter Treaty (ECT) was held by videoconference.[1] All parties present engaged in fruitful discussions on all topics covered.

The following topics were addressed:

  • Definitions
    • Definition of ‘charter’
    • Definition of ‘economic activity in the energy sector’
  • Investment protection
    • Definition of investment
    • Definition of investor
    • Clarification of ‘most constant protection and security’
    • Compensation for losses
    • Definition of Fair and Equitable Treatment
    • Definition of indirect expropriation
    • Denial of benefits
    • MFN clause
    • Right to regulate
    • Umbrella clause

The Modernisation Group discussed the aforementioned topics on the basis of the progress made last year,[2] as well as submissions and comments provided by the delegations before and during the Fourth Negotiation Round.

In their deliberations, Contracting Parties continued to clarify similarities and differences in their positions with a view to advance negotiations to the drafting of compromise proposals.

Good progress was made and the Modernisation Group mandated the Energy Charter Secretariat, and the Chair and Vice-Chairs, with the drafting of draft compromise proposals to be considered during one of its next negotiation rounds in 2021.

With respect to the topic of ‘definition of ‘economic activity in the energy sector’, text-based discussions were held for the first time. The Modernisation Group decided to intensify discussions on this topic before the next negotiation round.

The Fifth Round of negotiations will take place from 1-4 June 2021.[3]

 


[1] On 6 November 2019 (see Conference Decision CCDEC 2019 10), the Energy Charter Conference established and mandated the Modernisation Group to start negotiations on the modernisation of the Energy Charter Treaty, with a view to conclude negotiations expeditiously. For the previous negotiation rounds, please consult https://www.energychartertreaty.org/modernisation-of-the-treaty/.

[2] The Energy Charter Conference at its 31st Statutory Meeting held on 16 December 2020 took note of the Report of the Modernisation Group on Progress Made in Fulfilling the Negotiations Mandate (CCDEC 2020 16). 

[3] It is expected that in 2021 the Modernisation Group will hold five rounds of negotiations (CCDEC 2020 17).

 

Public Communication in English

Публичное сообщение на русском

On 1-4 June 2021, the Fifth Negotiation Round on the modernisation of the Energy Charter Treaty (ECT) was held by videoconference.

The following topics were addressed:

  • Remaining topic from previous negotiation round
    •      Transfers related to investments
  • Transit
    •       Definition of ‘transit’
    •       Access to infrastructure (including denial of access and available capacities)
    •       Definition and principles of tariff setting
  • Sustainable development and corporate social responsibility
  • Dispute settlement
    •       Frivolous claims
    •       Security for costs
    •       Third party funding
    •       Transparency
    •       Valuation of damages
  • Definition of Economic Activities in the Energy Sector

 

The Modernisation Group discussed the aforementioned topics on the basis of the progress made in the previous negotiation rounds,[1] as well as submissions and comments provided by the delegations before and during the Fifth Round of Negotiations.

Contracting Parties engaged to clarify and aligned some of their positions. In particular, they advanced the degree of consensus on transfers as well as on certain issues related to Sustainable Development (notably CSR/RBP and impact assessment).

With respect to Transit, it was decided to explore outstanding issues in a dedicated informal workshop in order to facilitate a draft compromise.

In relation to Dispute Settlement, Contracting Parties advanced the discussion on the prevention and the early disposal of frivolous claims in investor-state proceedings.

With respect to security for costs, third party funding and valuation of damages, common ground was identified as regards the introduction of relevant provisions.

Furthermore, Contracting Parties considered to what extent the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration should be incorporated. 

Delegations exchanged positions on “Definition of Economic Activities in the Energy Sector”, including on the need to amend the relevant provisions in light of the Contracting Parties’ individual climate goals and their specific energy mixes. Support was expressed for a continuation of the discussion in the course of the sixth round of negotiations with a view to analyse compromise options. 

With the view to conclude the negotiations expeditiously and to solve the divergences in their positions, the discussion of the topics of this negotiation round will be continued on the basis of compromise proposals to be drafted by the Energy Charter Secretariat. The Contracting Parties will informally meet in between the negotiating rounds to discuss the draft compromise proposals.

The Sixth Round of negotiations will take place on 6-9 July 2021 by videoconference.[2]

 


[1] For public communications with respect to the previous negotiation rounds, please consult https://www.energychartertreaty.org/modernisation-of-the-treaty/.

[2] It is expected that in 2021 the Modernisation Group will hold five rounds of negotiations (CCDEC 2020 17).

 

Public Communication in English

Публичное сообщение на русском

On 27 June 2021, the Energy Charter Conference approved the appointment of Mr. Akiyoshi Kawabata as Vice Chair of the Modernisation Group with effect as of 1 July 2021 (CCDEC 2021 11), thereby replacing Mr. Sunao Orii who informed about his resignation as Vice-Chair of the Modernisation Group on 29 June 2021. 

The Chairpersons of the Modernisation Group are: 

Chair: Mr. Lukas Stifler (Austria)

Vice-Chair: Mr. Akiyoshi Kawabata (Japan)

Vice-Chair: Mr. Guy Lentz (Luxembourg)

Vice-Chair: Mr. Samir Abdurahimov (Azerbaijan)

Vice-Chair: Mr. Felix Imhof (Switzerland)

 

On 6-9 July 2021, the Sixth Negotiation Round on the modernisation of the Energy Charter Treaty (ECT) was held by videoconference.

The following topics were addressed:

  • Pre-investment
  • Regional Economic Integration Organization (REIO)
  • Obsolete provisions
  • Definition of Economic Activity in the Energy Sector
  • Investment protection provisions

The Modernisation Group discussed the aforementioned topics on the basis of the progress made in the previous negotiation rounds,[1] submissions and comments provided by the delegations before and during the Sixth Round of Negotiations, as well as draft compromise proposals which were prepared on some of the topics.

On “Pre-investment”, further discussions may take place on the basis of the comments made and subject to the availability of text proposals. Regarding “REIO”, the Contracting Parties further clarified their positions and agreed to address this topic also during the informal workshop on transit issues in September. In addition, it was tentatively agreed to conclude the discussion of “Obsolete provisions”.

The Modernisation Group continued discussions on the “Definition of “economic activity in the energy sector”. Recalling the benefits of differential implementation and taking into account Contracting Parties’ individual climate goals and energy mixes, multiple approaches should be considered to address this topic. In this respect, some initial options to implement such flexibility were presented to the Contracting Parties by the Secretariat. As a result of the constructive discussions, the Secretariat was mandated to further elaborate on these options with a view to continue discussions at the next Round.

With respect to the topics on investment protection, the Contracting Parties considerably progressed on definitions of “investment” and “investor”, on the “Definition of indirect expropriation” as well as on “Denial of benefits”.

A high degree of convergence on the “Clarification of “most constant protection and security”, “Compensation for losses”, the “MFN Clause” and “Transfers related to investments” was reached.

The Modernisation Group continued to consider the introduction of treaty language preserving the “Right to regulate”. 

On “Definition of Fair and Equitable Treatment (FET)”, the Contracting Parties reached a common view that this topic will be subject to further detailed discussion.

With the view to conclude the negotiations expeditiously, the Secretariat will reflect the discussions of this negotiation round in draft compromise proposals, which are based on the original text proposals submitted by the Contracting Parties.

The Seventh Round of negotiations will take place on 28 September -1 October 2021 by videoconference.[2]

 


[1] For public communications with respect to the previous negotiation rounds, please consult https://www.energychartertreaty.org/modernisation-of-the-treaty/.

[2] It is expected that in 2021 the Modernisation Group will hold five rounds of negotiations (CCDEC 2020 17).

 

Public Communication in English

Публичное сообщение на русском

On 28 September – 1 October 2021, the Seventh Negotiation Round on the modernisation of the Energy Charter Treaty (ECT) was held by videoconference.

The following topics were addressed:

  • Remaining topic from the previous negotiation round
    • Umbrella clause
  • Transit
    • Definition of ‘transit’
    • Access to infrastructure (including denial of access and available capacities)
    • Definition and principles of tariff setting
  • Sustainable development and corporate social responsibility
  • Dispute settlement
    • Frivolous claims
    • Security for costs
    • Third party funding
    • Transparency
    • Valuation of damages
  • Definition of Economic Activities in the Energy Sector

The Modernisation Group discussed the aforementioned topics on the basis of the progress made in the previous Negotiation Rounds, submissions and comments provided by the delegations during this Negotiation Round, as well as draft compromise proposals which were prepared on some of the topics.

Contracting Parties discussed the Umbrella Clause and agreed to continue the discussion together with other provisions.

After holding an informal workshop in the beginning of September, the Modernisation Group had a constructive discussion with respect to the topics pertaining to Transit. The Contracting Parties were able to further clarify available text proposals and expressed diverging positions, in particular regarding the broadening of the scope of the transit provisions. Consequently, the Secretariat was instructed to draft a compromise proposal for further discussions.

The Modernisation Group advanced the discussion on Sustainable Development and Corporate Social Responsibility. In this context, the Contracting Parties considered compromise drafts on possible references to international instruments and agreements in the field of sustainable development and responsible business conduct. Discussions also covered environmental impact assessments, a proposed amendment of the ECT provisions on transparency as well as a proposal on climate change and clean energy transition.

The discussions on dispute settlement topics (Frivolous claims, Security for costs, Third-Party Funding, Transparency and Valuation of damages) made progress on the basis of compromise proposals.

The Modernisation Group continued discussions on the definition of “Economic Activity in the Energy Sector”. In this context, Contracting Parties discussed draft provisions on options to bring about the flexibility considered necessary by individual Contracting Parties, taking into account their individual energy security and climate goals.

Taking into account the common goal of Contracting Parties to finalise negotiations expeditiously, the Modernisation Group will focus on the most advanced topics in the context of the Eighth Negotiation Round scheduled for the second week of November 2021.

 

Public Communication in English

Публичное сообщение на русском

 

In case of online meeting the negotiation round will be 4 days.

For any further queries on modernisation of the Energy Charter Treaty please contact modernisation@encharter.org