The Next 10 Year ECT Investment Arbitration: A Vision for the Future – From a European Law Perspective

This paper, originating from the London School of Economics and Political Science (LSE) Law Department, examines the complex interplay between investment treaty law and European Union law, particularly concerning the Energy Charter Treaty (ECT). It identifies and discusses potential and existing legal challenges arising from the overlap of these legal regimes, with a focus on the energy sector. The paper explores how the European Union's evolving competence in foreign direct investment, particularly after the Lisbon Treaty, impacts existing and future investment agreements. It also delves into the specific issues related to intra-EU investment treaties and their compatibility with EU law, offering an outlook on future resolutions. The research highlights the significant consequences of the Lisbon Treaty's redefinition of the EU's common commercial policy to include foreign direct investments, shifting much of this competence to the EU level. This has led to obligations for member states to align their bilateral investment treaties (BITs) with EU law. The paper traces the development of these compatibility issues, starting from accession negotiations of Central and Eastern European countries and leading to legal actions concerning member states' failure to renegotiate incompatible BITs. The core argument is that member states must ensure their international treaty obligations, including those under the ECT, do not conflict with their obligations under the European Treaties.