EU notifies exit from Energy Charter Treaty and puts an end to intra-EU arbitration proceedings

The EU has taken the final step to exit the Energy Charter Treaty (ECT), a multilateral trade and investment agreement applicable to the energy sector, which is not compatible with the EU’s climate and energy goals under the European Green Deal and the Paris Agreement.

Two written notifications have been sent by the Council and Commission to the Government of Portugal, which is the official depositary of the Treaty, notifying respectively the withdrawal of the European Union and Euratom. The withdrawals will take effect in one year. These notifications follow the agreement between EU Energy Ministers last month on the Commission’s proposals to pursue the withdrawal and Treaty modernisation in parallel.

This week, the Union and its Member States have also reached a formal agreement to put an end to the continuation of intra-EU arbitration proceedings under the ECT that are contrary to Union law. More specifically, the agreement is aimed at clarifying, for the benefit of courts and arbitral tribunals, that the arbitration clause provided in the ECT does not apply – and never has – in the relations between an EU investor and an EU country.
More information is available in our press release online.