The new international energy charter : sustainable energy transition, investment dispute resolution and market regulation

Abstract

The 2015 International Energy Charter, a political declaration, and the 1994 Energy Charter Treaty (ECT), a legal agreement, pursue three objectives: 1) Provide stable, transparent and fair conditions to mobilise the investment needed for the sustainable energy transition and achieve universal energy access; 2) Facilitate enforcement of investors’ rights through international dispute settlement mechanisms; and, 3) Offer an international benchmark of market-based principles and rules for energy market regulatory reform. Enforcement has traditionally been ensured through investor-state dispute settlement (ISDS), which today is under serious scrutiny due to concerns regarding legitimacy, transparency, impartiality, inde¬pendence and accountability. ISDS clauses are included in thousands of international investment agreements, with the ECT being the most invoked in terms of investment arbitration. At the same time, the overwhelming success of the 2015 International Energy Charter in attracting countries and regions across the world shows long-term political commitment to comply with international standards. Signatories aim to share experiences, lessons learnt and best practices in energy market regulation. A rules-based international energy order, based on steady regulatory convergence, with respect to national sovereignty and sovereign rights over natural resources, will improve the level playing field to achieve global energy goals.