1(6) - Energy Charter Treaty

Article 1(6)

“Investment” means every kind of asset, owned or controlled directly or indirectly by an Investor and includes:

(a) tangible and intangible, and movable and immovable, property, and any property rights such as leases, mortgages, liens, and pledges;
(b) a company or business enterprise, or shares, stock, or other forms of equity participation in a company or business enterprise, and bonds and other debt of a company or business enterprise;
(c) claims to money and claims to performance pursuant to contract having an economic value and associated with an Investment;
(d) Intellectual Property;
(e) Returns;
(f) any right conferred by law or contract or by virtue of any licences and permits granted pursuant to law to undertake any Economic Activity in the Energy Sector.

A change in the form in which assets are invested does not affect their character as investments and the term “Investment” includes all investments, whether existing at or made after the later of the date of entry into force of this Treaty for the Contracting Party of the Investor making the investment and that for the Contracting Party in the Area of which the investment is made (hereinafter referred to as the “Effective Date”) provided that the Treaty shall only apply to matters affecting such investments after the Effective Date.

“Investment” refers to any investment associated with an Economic Activity in the Energy Sector and to investments or classes of investments designated by a Contracting Party in its Area as “Charter efficiency projects” and so notified to the Secretariat.

UNDERSTANDING with respect to Article 1(6)

For greater clarity as to whether an Investment made in the Area of one Contracting Party is controlled, directly or indirectly, by an Investor of any other Contracting Party, control of an Investment means control in fact, determined after an examination of the actual circumstances in each situation. In any such examination, all relevant factors should be considered, including the Investor’s

(a) financial interest, including equity interest, in the Investment;
(b) ability to exercise substantial in influence over the management and operation of the Investment; and
(c) ability to exercise substantial in influence over the selection of members of the board of directors or any other managing body.

Where there is doubt as to whether an Investor controls, directly or indirectly, an Investment, an Investor claiming such control has the burden of proof that such control exists.

DECLARATION with respect to Article 1(6)

The Russian Federation wishes to have reconsidered, in negotiations with regard to the supplementary treaty referred to in Article 10(4), the question of the importance of national legislation with respect to the issue of control as expressed in the Understanding to Article 1(6).

From Basic Protocol (20/08/91) to BP 2 (11/09/91): Article 1.1(e) - Definitions
From BA 4 (31/10/91) to BA-31 (21/12/92): Article 1.4 - Definitions
From BA-35 (09/02/93) to BA-37 (01/03/93): Article 1.5 - Definitions
From (Compromise text) ECT 1 [CONF 50] (15/03/93) to ECT 3 [CONF 60] (01/06/93): Article 1.6 + 1.8 - Definitions
From ECT 4 [CONF 64] (07/07/93) to ECT 6 [CONF 82] (20/12/93): Article 1.6 - Definitions
From ECT 7 [CONF 96] (17/03/94) to Compromise text [CONF 98] (22/04/94): Article 1.6 – Definitions + Ministerial Declaration 3 – To Article 1(6)
From Interim Text (20/06/94) to Interim Text (25/06/94): Article 1.6 – Definitions + Understanding 3 – To Article 1(6) + Declaration 1 – To Article 1(6)
From CONF 104 (Text for adoption) (14/09/94) to Final Act and ECT as adopted (17/12/94): Article 1.6 – Definitions + Understanding 3 – With respect to Article 1(6) + Declaration 1 – With respect to Article 1(6)