Energy Charter Treaty

General Information

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What is it about?

The Energy Charter Treaty (ECT) is a framework agreement which promotes international co-operation in the energy sector. The treaty implements the principles of the European Energy Charter (17 December 1991). The Treaty has four major sections : investment protection, trading in energy, energy products and energy transit. The treaty calls for the development of open energy markets. It also promotes direct investment in the energy sector under the principle of non-discrimination. It as well acknowledges the sovereignty of a state over its energy resources and recognizes the necessity for a State to have an environmentally friendly and efficient energy policy. There is an arbitration mechanism for disputes in connection with the Treaty under Part V. These disputes may be between investors and contracting parties, or between contracting parties. The Energy Charter Protocol (17 December 1994) provides guidance on the development of energy efficiency programs, indicates areas of cooperation, and provides a framework for the development of co-operative and coordinated action. The Protocol has three objectives. First, to promote energy efficiency policies consistent with sustainable development. Second, to create conditions which induce producers and consumers to use energy as efficiently and environmentally sound as possible (particularly through the organization of efficient energy markets and a recognition of environmental costs and benefits). Third, to foster cooperation in the field of energy efficiency. The Amendment to the Trade-Related Provisions of the Energy Charter Treaty of 17 December 1994 (Brussels, 24 April 1998) provides interim measures on trade related matters so as to integrate the Agreements of the Uruguay Round of the World Trade Organization.

Why is it relevant?

State parties which export energy benefit from the opening of Western European markets. States also agree to reduce damage to the environment related to energy production. State parties which are victims of cross border pollution can also find remedy against the State where the pollution is produced.

Additional Information

In order to become a party to this instrument, a State must have previously adopted the European Energy Charter (The Hague, 17 December 1991).In addition to countries on the European continent, the caucus States and Russia, the Treaty on the Energy Charter has also been adopted by Japan and Australia. State parties meet periodically at the Energy Charter Conference. There is also a Secretariat which provides the Charter Conference with all necessary assistance for the performance of its duties. The Secretariat also carries out certain functions assigned to it in the Treaty.

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