On 7 July 2023 the European Commission published a formal proposal for the withdrawal of the European Union (EU) from the Energy Charter Treaty (ECT or the Treaty). The move comes after many years of intensive efforts (notably by the EU) to modernize the ECT, in response to concerns that the Treaty prevented ECT Contracting States from meeting their climate change mitigation obligations as set out in the Paris Agreement. The European Commission’s current proposal leaves much to be desired in terms of clarity and legal certainty. Energy companies covered by the ECT should therefore be well-advised to explore alternative sources of protection to ensure that their investments enjoy adequate coverage in case of disputes.
