Article 10: Promotion, protection and treatment of investments1
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This chapter provides a commentary of Article 10 of the Energy Charter Treaty (ECT). The commentary places emphasis on the ways in which Article 10 has been interpreted and applied by various arbitral tribunals constituted pursuant to the ECT. This chapter is based on a comprehensive survey of decisions of those ECT arbitral tribunals and the existing literature on Part III and Article 10. Article 10 belongs to Part III. Part III sets out obligations regarding ‘promotion, protection and treatment’ of investments under the ECT. Article 10 is a complex provision, which comprises Article 10(1) and 10(2)–10(12), and sets out the standards of investment protection under the ECT. Article 10(1), in particular, is divided into ‘five sentences’. The ECT and Article 10, in particular, do not operate in a vacuum, but as a special system of treaty law within the broader framework of general international law. Consequently, this chapter addresses various general international law questions arising in connection with arbitrations under the ECT, including issues governed by the law of treaties and the law of international responsibility.

  1. Each Contracting Party shall, in accordance with the provisions of this Treaty, encourage and create stable, equitable, favourable and transparent conditions for Investors of other Contracting Parties to make Investments in its Area. Such conditions shall include a commitment to accord at all times to Investments of Investors of other Contracting Parties fair and equitable treatment. Such Investments shall also enjoy the most constant protection and security and no Contracting Party shall in any way impair by unreasonable or discriminatory measures their management, maintenance, use, enjoyment or disposal. In no case shall such Investments be accorded treatment less favourable than that required by international law, including treaty obligations.2 Each Contracting Party shall observe any obligations it has entered into with an Investor or an Investment of an Investor of any other Contracting Party.3

  2. Each Contracting Party shall endeavour to accord to Investors of other Contracting Parties, as regards the Making of Investments in its Area, the Treatment described in paragraph (3).

  3. For the purposes of this Article, ‘Treatment’ means treatment accorded by a Contracting Party which is no less favourable than that which it accords to its own Investors or to Investors of any other Contracting Party or any third state, whichever is the most favourable.

  4. A supplementary treaty shall, subject to conditions to be laid down therein, oblige each party thereto to accord to Investors of other parties, as regards the Making of Investments in its Area, the Treatment described in paragraph (3). That treaty shall be open for signature by the states and Regional Economic Integration Organizations which have signed or acceded to this Treaty. Negotiations towards the supplementary p. 158treaty shall commence not later than 1 January 1995, with a view to concluding it by 1 January 1998.4

  5. Each Contracting Party shall, as regards the Making of Investments in its Area, endeavour to:

    1. limit to the minimum the exceptions to the Treatment described in paragraph (3);

    2. progressively remove existing restrictions affecting Investors of other Contracting Parties.

  6. (a) A Contracting Party may, as regards the Making of Investments in its Area, at any time declare voluntarily to the Charter Conference, through the Secretariat, its intention not to introduce new exceptions to the Treatment described in paragraph (3).

    (b) A Contracting Party may, furthermore, at any time make a voluntary commitment to accord to Investors of other Contracting Parties, as regards the Making of Investments in some or all Economic Activities in the Energy Sector in its Area, the Treatment described in paragraph (3). Such commitments shall be notified to the Secretariat and listed in Annex VC and shall be binding under this Treaty.

  7. Each Contracting Party shall accord to Investments in its Area of Investors of other Contracting Parties, and their related activities including management, maintenance, use, enjoyment or disposal, treatment no less favourable than that which it accords to Investments of its own Investors or of the Investors of any other Contracting Party or any third state and their related activities including management, maintenance, use, enjoyment or disposal, whichever is the most favourable.5

  8. The modalities of application of paragraph (7) in relation to programmes under which a Contracting Party provides grants or other financial assistance, or enters into contracts, for energy technology research and development, shall be reserved for the supplementary treaty described in paragraph (4). Each Contracting Party shall through the Secretariat keep the Charter Conference informed of the modalities it applies to the programmes described in this paragraph.

  9. Each state or Regional Economic Integration Organization which signs or accedes to this Treaty shall, on the date it signs the Treaty or deposits its instrument of accession, submit to the Secretariat a report summarizing all laws, regulations or other measures relevant to:

    1. exceptions to paragraph (2); or

    2. the programmes referred to in paragraph (8).

    A Contracting Party shall keep its report up to date by promptly submitting amendments to the Secretariat. The Charter Conference shall review these reports periodically.

    In respect of subparagraph (a) the report may designate parts of the energy sector in which a Contracting Party accords to Investors of other Contracting Parties the Treatment described in paragraph (3).

    In respect of subparagraph (b) the review by the Charter Conference may consider the effects of such programmes on competition and Investments.p. 159

  10. Notwithstanding any other provision of this Article, the treatment described in paragraphs (3) and (7) shall not apply to the protection of Intellectual Property; instead, the treatment shall be as specified in the corresponding provisions of the applicable international agreements for the protection of Intellectual Property rights to which the respective Contracting Parties are parties.

  11. For the purposes of Article 26, the application by a Contracting Party of a trade-related investment measure as described in Article 5(1) and (2) to an Investment of an Investor of another Contracting Party existing at the time of such application shall, subject to Article 5(3) and (4), be considered a breach of an obligation of the former Contracting Party under this Part.6

  12. Each Contracting Party shall ensure that its domestic law provides effective means for the assertion of claims and the enforcement of rights with respect to Investments, investment agreements, and investment authorizations.

COMMENTARY7

Various arbitral tribunals constituted under the Energy Charter Treaty (ECT) have interpreted and applied Article 10, and, more generally, commented on Part III.8 This p. 160p. 161commentary surveys relevant decisions of the aforementioned ECT arbitral tribunals and discusses, where apposite, selected decisions of other arbitral tribunals.

There is a vast body of scholarly literature which has analysed, with varying degrees of depth, Article 10 and, in general, Part III.9 This body of literature has also been comprehensively surveyed in this commentary.

This commentary provides an overview and analysis of Part III and Article 10 on the basis of the aforementioned bodies of decisions of arbitral tribunals and scholarly literature. This commentary comprises the following elements:p. 162

  1. the nature of the ECT, its place among treaties governing investment, with a particular focus on the character of Part III10 and the obligations and rights set out in Part III;11

  2. the relationships between the ECT, particularly Part III, and other treaties,12 including treaty-based systems of law,13 with a particular focus on the nature of the rule of Part III governing this relationship;14

  3. the rules of Part III concerning its own operation, including its non-application;15

  4. the bearing of Part III on dispute settlement under the ECT,16 including as to the scope of dispute settlement between Investors and Contracting Parties under the ECT,17 and the jurisdiction of ECT arbitral tribunals;18

  5. the bearing of Part III on the applicable law in ECT arbitrations19 and an analysis of the place of the internal law of a Contracting Party20 and the applicability of general international law,21 particularly the law of treaties22 and the law of state responsibility;23

  6. Article 10 and its various parts;24

  7. Article 10(1) and an analysis of the overlap and interactions among the standards of treatment it comprises;25

  8. the rules set out in the sentences contained in Article 10(1), the standards of treatment contained in each sentence and the interactions of each of those standards with other standards and rules of general international law;26 and

  9. the rules set out in the remainder of Article 10.27

A. Part III

Part III is entitled ‘Investment Promotion and Protection’.28 Part III contains the substantive investment provisions of the ECT.29 Treaties, whether bilateral or p. 163multilateral,30 may govern investment in whole or in part. Treaties governing investment in whole mainly consist in bilateral investment treaties (BITs) and multilateral investment treaties,31 the latter being mostly regional. Treaties governing investment in part contain investment provisions, often grouped in ‘parts’ or ‘chapters’, alongside provisions on other matters;32 they comprise mostly free trade agreements.33 By virtue of the provisions contained in Part III, the ECT has a special nature among treaties governing investment in part,34 particularly as a treaty which is both multilateral and sectoral.35 The ECT is the preeminent sectoral treaty governing investment, among p. 164various aspects of international cooperation, in the energy sector.36 Due to its wide scope of application,37 content38 and potential roles,39 the ECT is paramount among multilateral treaties containing investment provisions.40 Part III is not only special by reference to other treaties on investment; the provisions contained in Part III are also distinct, as compared to those in other substantive parts of the ECT.41p. 165

Part III provisions prescribe ‘the standards of treatment, “the conditions”’, under which a Contracting Party is bound to accord treatment.42 Part III provisions set out obligations regarding investment ‘promotion, protection and treatment’.43 Part III ‘substantial obligations’ are imposed upon one Contracting Party with regard to an ‘Investor’ of another Contracting Party and ‘Investments’ of that Investor44 in the Area of the host Contracting Party.45 Certain Part III obligations arise under provisions said to be expressly applicable for an ‘unlimited’ period.46 The rights created by Part III provisions are directly accorded to their holders;47 like most treaties on investment, the ECT affords various direct rights, including to international arbitration.48

Part III sets out rules on the operation of Parts III and V with regard to other treaties.49 Article 16 sets out a rule concerning other treaties relating to the same subject matter of the ECT.50 More specifically, Article 16 concerns the relations between Parts III and V, on one hand, and provisions in other, ‘prior’ or ‘subsequent’, bilateral or multilateral, ‘international agreements’ entered into by the Contracting Parties and p. 166‘whose terms in either case concern the subject matter’ of Part III (non-ECT treaty),51 on the other hand. Article 16 provides that ‘nothing in’ Parts III and V or a non-ECT treaty ‘shall be construed’ as derogating from a provision in Parts III and V or in the non-ECT treaty, ‘where any such provision is more favourable to the Investor or Investment’.

The bearing of Article 16 on the operation of Part III provisions raises some issues as to the nature of Article 16. It has been suggested that the legal consequence of Article 16 is general, precluding a non-ECT treaty from diminishing the level of protection accorded in Parts III and V.52 Nevertheless, Article 16 does not impose any general obligation, in the absence of a conflict of treaties, as to the level of protection to be accorded in non-ECT treaty provisions. Instead, Article 16 precludes interpretations whereby either Parts III and V provisions or non-ECT treaty provisions ‘derogate from’ one another ‘where […] more favourable’. Article 16 is a rule which concerns both the interpretation and application of conflicting treaties. Article 16 is primarily concerned with the content of the conflicting treaties, as a matter of interpretation.53 In this vein, Article 16 has been described as a ‘mobile priority’ provision.54 By virtue of ‘mobile priority’ provisions, mostly found in treaties for the protection of the individual, the treaty having the more favourable content prevails over other treaties.55 Article 16, furthermore, resolves a conflict of application among interpreted treaties. In this sense, Article 16 is said to depart from the lex posterior and lex specialis maxims.56 Since greater favourability of content, as opposed to time of entry into force and specificity of content, is the criterion whereby Article 16 solves conflicts of application between Parts III and V and non-ECT treaty provisions, the maxim ‘aliquid in mitiorem partem interpretari’ would describe more closely Article 16.57

The operation of Part III with regard to rules under other treaties includes rules under treaty-based systems of law. Such systems of law include the law of the European p. 167Union (EU). The relationship between Part III and the ECT, generally, and EU law raises issues. Part III is regarded as concerning matters regulated by EU law,58 most notably Article 10.59 In particular, the term ‘Investment’ in the ECT is regarded as corresponding to the concept of ‘freedom of establishment’ under EU law60 and ECT investor-state arbitration may overlap with the enforcement of EU law rules on freedom of movement of capital.61 The European Community (EC) Member States had concluded various treaties on investment,62 which have been generally regarded as similar to EC treaties.63 In turn, EU law has a bearing on the content of the ECT.64 Notwithstanding the aforementioned aspects, the obligations and rights created by the ECT and EU law instruments are not identical.65 It has been argued that neither the ECT nor EU law would preclude the application of the ECT to relations between EU Member States,66 in spite of any ‘tensions’ between the ECT investment and EU law internal market rules which may arise.67 Most notably, the ECT, unlike other international agreements concluded by EU Member States, does not include a ‘disconnection clause’.68 In this vein, Article 16 has been relied upon to argue that, should a conflict between the ECT and EU law arise, the ECT could be seen as complementing, but not superseding, EU law, where the former is more favourable.69 Latterly, the relationship between the ECT and EU law has been brought to the fore, most prominently in connection with various pending ECT investor-state arbitrations commenced by EU investors against EU Member States (intra-EU).70 Some ECT arbitral tribunals p. 168conducting intra-EU investor-state arbitrations have addressed the bearing, if any, of decisions of the Court of Justice of the EU.71

Part III sets out rules on the operation of Part III provisions themselves.72 Article 17, the ‘final article’ in Part III, concerns the ‘non-application’ of Part III.73 Under Article 17, which contains the ‘‘denial-of-benefits’ clause’ of the ECT,74 a Contracting Party may ‘deny the advantages of this Part’.75 If and until a Contracting Party exercises its right under Article 17,76 a putative investor has a legitimate expectation to be accorded protection under Part III.77

Part III does not govern dispute settlement under the ECT.78 Part III sets out ‘material rules’, whereas Part V comprises ‘dispute-resolution provisions’.79 In particular, this distinction is illustrated by Article 17.80 Article 17 does not relate to the ‘ECT as p. 169a whole’, but exclusively to Part III.81 The ‘express terms’ of Article 17, as confirmed by its ‘title’, confine a denial to Part III ‘advantages’.82 The ECT, unlike other treaties, does not provide for ‘a denial of all benefits to a covered investor’, but only of those under Part III.83 Since Article 17 does not apply to Part V, Article 17 has no bearing on the jurisdiction of an ECT arbitral tribunal.84 It has been argued that a denial depriving an Investor of its legal personality would preclude an ECT arbitral tribunal from exercising jurisdiction.85 Nevertheless, the character as an Investor is not a Part III advantage, nor is the definition thereof contained in Part III. Thus, whether an entitlement to Part III ‘advantages’ exists is a question of the merits of the dispute.86 In particular, a denial of benefits under Article 17 would only concern the admissibility of a claim regarding the denied benefit.87

Part III, nevertheless, has a bearing on the scope of dispute settlement under the ECT.88 Arbitration under Article 26 is exclusively for the settlement of disputes concerning an alleged breach of Part III obligations.89 Unlike dispute settlement procep. 170dures under Article 26, arbitration between the Contracting Parties under Article 27 is not confined to disputes concerning Part III.90 While Part III has a bearing on dispute settlement, Part III would not determine the question of the separability from the remainder of the ECT of Article 26 and other dispute settlement provisions.91

The ECT governs the jurisdiction of ECT arbitral tribunals.92 As for jurisdiction ratione personae, the disputing parties must be a Contracting Party and an Investor.93 As for jurisdiction ratione materiae,94 a dispute must arise in connection with an alleged breach of an obligation under Part III.95 Therefore, an ECT arbitral tribunal can only hear claims based on alleged violations of a claimant's rights under Part III.96 Part III provisions, thus, serve as ‘legal grounds’ for claims.97 Where an ECT provision not contained in Part III is involved, its reference to Part III is not sufficient for a tribunal to have jurisdiction over claims under that ECT provision.98 Furthermore, a counter-claim not related to Part III obligations would fall outside the jurisdiction of an ECT arbitral tribunal.99 Although the scope of jurisdiction ratione materiae of ECT arbitral tribunals is confined to alleged breaches of Part III obligations,100 ECT provisions not contained in Part III may be invoked in support of claims under Part III.101p. 171Furthermore, the alleged Part III breach must relate to an Investment,102 which, under Article 1(6)(f), must be in the energy sector.103 The ECT differs from other investment treaties,104 which may often provide for jurisdiction over ‘all’ or ‘any’ disputes105 or over disputes arising out of a certain instrument.106 While the ECT falls within a set of treaties providing for jurisdiction over alleged breaches of the substantive provisions of the treaties only,107 such treaties do not usually confine jurisdiction to a part of the treaties containing substantive provisions. A merely ‘alleged’ Part III breach suffices for an ECT arbitral tribunal to establish its jurisdiction, in accordance with Article 26.108 In this vein, the Plama tribunal adopted a ‘pro tem test’, whereby the facts as alleged by a claimant suffice to establish its jurisdiction.109 It has been argued that the pro tem test is suitable to determine whether the dispute arises out of an ‘alleged’ breach of a Part III obligation only.110 As for jurisdiction ratione temporis, the Nykomb tribunal held that it could hear claims over rights under contracts concluded prior to the date of entry into force of the ECT, provided that the conduct allegedly in breach of such rights occurs after that date.111 While not invoked by the Nykomb tribunal, Article 1(6)(f) provides a ground for this finding.112 The arbitration procedure is governed by the ECT113 and other applicable rules.114

The applicable law in ECT arbitrations is the ECT and other applicable principles and rules of international law, pursuant to Article 26(6).115 Article 26(6), as the ECT provip. 172sion on applicable law in ECT arbitrations, may, in turn, constitute the agreement on choice of law between disputing parties to ECT arbitrations.116 While provisions on applicable law may contain criteria to solve conflicts of law issues, Article 26(6) merely provides that disputes must be decided under the law it states to be applicable.117 As for the applicability of rules other than the ECT, it has been discussed whether the international law on the environment118 and on human rights119 are applicable. The reference to other rules of international law is without prejudice to the exclusive character of Part III as the substantive law governing the treatment accorded to Investors and their Investments under the ECT.120 For the Veteran, Hulley and Yukos tribunals, an ECT arbitral tribunal ‘is not a human rights court’, without prejudice to having jurisdiction over aspects of an alleged breach of Part III to which international law on human rights would be applicable, such as ‘allegations of harassment and intimidation’, if such aspects ‘form part of the factual matrix’ of the claim.121 The preeminent source of law in ECT arbitrations is, thus, the ECT and Part III in particular.122p. 173

The internal law of a Contracting Party is not stated in Article 26(6) to be applicable.123 As in NAFTA Article 1131(1), domestic law is omitted in Article 26(6).124 The internal law of a Contracting Party, albeit not applicable, may or may not be of relevance to ECT arbitral tribunals.125 In this vein, an ECT arbitral tribunal may have the power to decide certain questions regarding the application of the law of a Contracting Party as a ‘necessary corollary’ of its exercise of jurisdiction over claims of alleged breaches of Part III.126 Furthermore, a Contracting Party may not rely on its internal law to justify a breach of an obligation under the ECT. In this vein, the Stati tribunal denied that Article 18(2) has the effect of allowing a respondent state to rely on its domestic law in order to justify a failure to observe an ECT obligation.127 Similarly, the AES tribunal, having characterised EU law as internal, found that a respondent Contracting Party to the ECT who is an EU Member State may not rely on EU law in order to justify a breach of the ECT.128

The applicable law in ECT arbitrations includes general international law, most prominently customary international law.129 The customary international law applicable in ECT arbitrations comprises the law of treaties, as codified in the Vienna Convention on the Law of Treaties (VCLT),130 if not applicable qua treaty,131 and the law of state responsibility,132 as codified in the Articles on Responsibility of States for p. 174Internationally Wrongful Acts (ASR).133 General principles of law,134 such as good faith,135 may also be applicable in ECT arbitrations.

The interpretation of ECT provisions must be conducted in accordance with the rules set out in the VCLT.136 VCLT Articles 31 and 32 have been applied by ECT arbitral tribunals.137 The Plama tribunal stated that ‘the text’ was ‘[t]he starting point’ of the interpretation of Article 10(1).138 In particular, the perceived vagueness of parts of the text of Article 10 has been regarded as a feature requiring the application of VCLT Articles 31 and 32.139 The Antin tribunal observed that Article 10(1) ‘cannot be interpreted in separation from the treaty's context, object and purpose’.140 In particular, the context of the ECT is relevant.141 The context of the ECT includes the Preamble and its Annexes.142 The structure of the ECT has played a role in the interpretation of its provisions. In particular, the distinction between Part III and other parts of the ECT may have a bearing on the interpretation of provisions in those parts.143 For instance, the interpretation of Article 21, particularly as to the scope of operation of Article 21(1), must be consistent with ‘the purpose of Part III’.144 The context also comprises agreements relating to, and instruments made in connection with, the ECT.145 The p. 175Understandings and Decisions contained in the Final Act, which comprises the ECT, have been regarded as agreements relating to the ECT; the Declarations have equally been regarded as instruments made in connection with the ECT.146 The European Energy Charter is regarded as part of the context of the ECT.147 Declarations issued by the Energy Charter Conference,148 like decisions of treaty bodies under various investment treaties,149 could serve as evidence of a subsequent agreement.150 In this vein, the participation of a Contracting Party in an arbitration under an investment treaty in the making of an interpretative decision by a treaty body under that investment treaty may raise various issues.151 Some arbitral tribunals may take into account materials in addition to those pertaining to the context of the treaty. For instance, the Plama tribunal, in order to set out its ‘relevant definition of the standards’ applicable,152 took into account ‘practice under the ECT’ and decisions of arbitral tribunals constituted under other treaties.153 Supplementary means of interpretation under VCLT Article 32 may have more practical relevance in relation to a multilateral treaty like the ECT,154 given the greater availability of travaux préparatoires.155 The application of the VCLT is intended to reach an objective interpretation. As such, it should not yield a result favouring either disputing party in ECT arbitrations.156 The Plama tribunal observed that an appropriate interpretation is to be ‘balanced’157 and to take into account ‘the totality of the Treaty's purpose’.158 The Blusun tribunal, likewise, sought to interpret the text of Article 10(1) in a ‘balanced’ manner.159

The interpretation of ECT provisions is sometimes discussed by reference to rules of treaty interpretation not codified in the VCLT. For instance, the Plama tribunal p. 176sought to apply rules of interpretation to which it referred as having been specifically adopted during the adoption of the ECT,160 in addition to the rules set out in the VCLT, including VLCT Article 31(1).161 Other rules take the form of, among others, maxims.162 For instance, it has been asserted that the preferable interpretation is the one whereby a standard retains its ‘independent meaning’ from another standard.163 Such independence has been affirmed where the standards are ‘listed separately’ in the treaty interpreted164 and joined by the conjunctions ‘and’165 and ‘also’,166 without any statement that a listed standard derives from another listed standard.167 Furthermore, it has been asserted that an expression referring to a standard of treatment does not plausibly denote concepts governed by customary international law168 and that the latter would presumably be referred to directly.169 In particular, the ‘listing in sequence’ of standards of treatment has been relied upon by the Azurix tribunal, as an aspect of the interpretation of a complex provision, on grounds of the structure of its text and a specific purpose predicated of one part with respect to the content of other parts of the provision.170 These assertions may be based on the rule of effectiveness, which is grounded on the principle of good faith.171

Various ECT arbitral tribunals have applied the rules of general law of state responsibility with regard to reparation,172 particularly in the form of restitution173 and p. 177compensation174 and interests.175 This is due to the absence of rules on the content of responsibility for breaches of ECT obligations within the ECT.176 The absence of such rules is explained by the character of most substantive rules, including under treaties governing investment, as primary norms.177 Various ECT provisions which interact with Part III provisions seemingly operate as secondary rules. Article 22(1), concerning the conduct of a Contracting Party's state-owned entity, raises various issues touching on matters governed by Part III provisions. The obligation under Article 22(1) is confined to ensuring that a state-owned entity of a Contracting Party be capable of observing the obligations of the Contracting Party under Part III.178 While Article 22(1) might appear to provide for state responsibility where conduct of a state-owned entity is involved, it merely clarifies the content of primary obligations under Part III.179 Article 22(1) does not provide for the assumption by a Contracting Party of responsibility for the failure of the state-owned entity of a Contracting Party to discharge contractual obligations in relation to an Investment.180 Nor is Article 22(1) applicable to determine the attribution of conduct to a Contracting Party, since this is governed by customary international law.181 Furthermore, it has been argued that Article 22(3) would confirm the law of state responsibility.182 Nonetheless, Article 22(3) sets out primary obligations,183 and, therefore, has no direct bearing on matters of state responsibility, including attribution.184 In spite of the above interactions, the obligations under Articles 22 and 23 remain external to Part III.185 Hence, claims based on Articles 22 and 23 only would not be arbitrable under Article 26.186p. 178

Article 26(8) is regarded as an exception to the absence of ECT rules governing remedies for breaches of Part III.187 ASR Article 55, on ‘lex specialis’, provides that the ASR do not apply where the existence, content or implementation of international responsibility ‘are governed by special rules of international law’. In particular, special rules may exist where the primary rules are contained in treaties for the protection of individuals, such as the ECT.188 In particular, such special rules would concern the implementation of international responsibility, as opposed to its existence and content.189 Article 26(8) contains three sentences. Article 26(8) Second Sentence (2nd Sentence) provides that certain awards may order the payment of monetary damages ‘in lieu of any other remedy granted’. By providing for compensation as a remedy in lieu of other remedies granted, Article 26(8) 2nd Sentence sets out a special secondary rule, governing the implementation of international responsibility for breaches of Part III which arise out of conduct of a subnational organ of a disputing Contracting Party and which engage the international responsibility of that Contracting Party;190 the purpose of Article 26(8) 2nd Sentence is to give that Contracting Party a means to more efficiently implement its responsibility.191 Notwithstanding the character of Article 26(8) 2nd Sentence as a special secondary rule on implementation, the general law of state responsibility remains applicable to determinations as to the existence and content of responsibility for breaches of Part III. As for the content of such responsibility, Article 26(8) 2nd Sentence does not depart from the forms of reparation generally available, but merely provides for the possibility that one, compensation, substitutes others, such as restitution by performance of certain conduct;192 Article 26(8) 2nd Sentence merely provides for a combination of forms of reparation granted.193

An ECT arbitral tribunal first examines whether a breach of an ECT obligation exists.194 Prior to establishing a breach, the conduct in question must be attributable to a Contracting Party.195 Determinations of attribution may be particularly required p. 179where conduct by an entity distinct from the Contracting Party is involved, most notably a state-owned company.196 As put by the Electrabel tribunal, in the absence of attribution, no further enquiry ensues.197 The Al-Bahloul tribunal appeared to suggest that a finding of a breach is preceded by a determination of international responsibility, which it equated to the attribution of the act or omission in question.198 The Electrabel tribunal seemed to consider that attribution and breach would be cumulative conditions for a breach.199 Nevertheless, while predicable of the same conduct, determinations as to attribution and breach200 and, ultimately, as to international responsibility201 are not to be conflated. Only if attribution is established and conduct attributable to a Contracting Party constitutes a breach of an international obligation in force,202 an internationally wrongful act in violation of the ECT exists and entails, in the absence of any circumstance precluding wrongfulness,203 international responsibility.204 Where conduct consisting in a set of actions and omissions allegedly breaches Article 10(1), it may not be necessary to establish that the set of instances of conduct amounts to a ‘composite breach’, within the meaning of ASR Article 15;205 a claim of breach of Article 10(1) ‘is not materially stronger when the measures are taken in aggregate than separately’.206 As a preliminary to the question of damages caused by an established breach, establishing an alleged breach of Article 10(1) is likely to itself involve a claim of fact,207 in relation to which the claimant bears the onus probandi.208 Provided that a breach of Article 10(1) obligations is found to exist, an ECT arbitral tribunal examines whether and to what extent damage is caused by a breach of Article 10(1) obligations.209 As the Eskosol tribunal has observed, to address issues of causation before establishing the existence of an internationally wrongful act is like looking at international responsibility through ‘the proverbial “wrong end of the p. 180telescope”’, since ‘[t]he issue of causation logically becomes relevant only if a breach of duty is first shown’.210 Indeed, ‘[i]f a State has not violated its treaty obligations […], then it does not matter what consequences the State's non-wrongful action may have had for a particular business project’.211 Not only are attribution and breach the only necessary conditions for the existence of state responsibility; generally, they are also sufficient, under the secondary rules in which the law of state responsibility primarily consists. As the Electrabel tribunal noted, the character of attribution and breach as necessary and sufficient conditions for international responsibility is without prejudice to instances where the content of the primary obligation requires to establish the existence of other elements, such as damage.212

Where a breach of an obligation under Article 10 is found to exist, it is necessary to determine the appropriate standard for compensation due, if other forms of reparation are not accorded,213 and the quantum of compensation.214 In this connection, a determination of damages is necessary.215 Nevertheless, as with most primary rules of international law, Article 10 does not set out compensation standards for breach of the obligations it contains.216 The compensation for loss or damage caused by a breach of Article 10 is governed by the law of state responsibility.217 As with other aspects of the law of state responsibility,218 the ASR have been relied upon as an authoritative restatement of such rules of customary international law.219 In particular, ASR Article 31 is regarded as accurately reflecting the rule of customary international law applicable in relation to a breach of obligations under Article 10(1).220 ASR Article p. 18135 has also been relied upon in relation to restitution.221 As for quantum, it has been held that an Investor is not to be necessarily awarded an amount equivalent to a ‘reasonable return’.222 As for methods of valuation, most recently, the Masdar tribunal considered the appropriateness of income-based valuation methods223 to determine the fair market value of losses caused by a breach of the ECT, particularly the discounted cash flow (DCF) method.224 The Masdar tribunal majority deemed the DCF method to be ‘presumptively appropriate, absent persuasive reasons making it inappropriate in particular cases’.225 Article 10 does not govern the question of interests for breaches of its obligations.226 In this regard, Article 13(1) has been applied by analogy.227

B. Article 10

Article 10 is entitled ‘Promotion, Protection and Treatment of Investments’.228 The title of Article 10 sets out the ‘terms’ of some of the ECT's paramount ‘objectives and principles’.229

The remainder of this commentary is divided into two main parts, namely Article 10(1) and Article 10(2) to 10(12).p. 182

Article 10(1) is a general,230 ‘complex provision’,231 which comprises ‘five sentences’.232 These five sentences ‘embody commitments towards investments, in accordance with their terms’.233 As the Stadtwerke tribunal notes, ‘[w]hat is different about the legal commitments on investor treatment in the ECT is not substantive but structural’.234 Indeed, ‘[w]hereas most investment treaties state individual commitments in separate treaty articles’, the ECT consolidates them ‘into a single paragraph within a single article, Article 10(1) of the ECT’.235 Some tribunals consider that such structural features of Article 10(1) should not be overestimated, since, as the Silver Ridge tribunal reasoned, ‘eventually little turns on the question of whether to accept the existence of one integrated standard of protection including multiple sub-standards or to split Article 10(1) of the ECT up into several (relatively) autonomous protection standards’.236 Those various obligations237 have also been referred to as ‘the standards of protection under Article 10(1)’ allowing to ‘assess whether […] Disputed Measures violated the Treaty’.238 Accordingly, they are not ‘preambular’, ‘hortatory’239 or of ‘soft law’,240 as evidenced by the use of ‘[t]he modal verb ‘shall’,241 but rather ‘mandatory’.242 Various sentences of Article 10(1) ‘refer to various other obligations, some of which are well known in investment treaty law’,243 like other Part III provisions.244p. 183

The Petrobart tribunal considered that the ‘various specific elements’ of Article 10(1) are intended to ensure Fair and Equitable Treatment (FET).245 Accordingly, the Petrobart tribunal deemed it unnecessary to analyse the respondent's conduct by reference to such ‘specific elements’.246 This proposition of the Petrobart tribunal is held by other tribunals.247 The AMTO tribunal, likewise, observed that there is ‘clearly overlapping within Article 10(1)’.248 The AMTO tribunal further noted that Article 10(1) refers to both FET and the ‘minimum standard’249 and that conduct in breach of these standards also ‘breaches various obligations in Article 10(1)’.250

The Plama tribunal, by contrast, observed that ‘Article 10(1) contains a complex provision that refers equally’ to an obligation concerning conditions for the Making of Investments, in addition to a set of standards of protection.251 The Plama tribunal further observed that, albeit ‘closely interrelated’, Article 10(1) standards of protection ‘are separate and autonomous’.252 The Plama tribunal expressly rejected the stance of the Petrobart tribunal,253 as it considered that the Petrobart tribunal ‘opted for subsuming all standards’ set out in Article 10(1) under FET.254 Similarly, the Electrabel tribunal held that Article 10(1) contains standards ‘beyond the FET’.255 Other ECT arbitral tribunals have applied FET separately from other Article 10(1) standards.256 The separate character of ECT standards from FET has been accepted in annulment proceedings.257p. 184

Some tribunals have refrained from plainly asserting that FET and the standards set out in Article 10(1) are fully coextensive, confining themselves to positing that the question of overlapping of the aforementioned standards is a matter of degree. According to the Stati tribunal, the extent to which FET and the other standards in Article 10(1) overlap ‘may be arguable’.258

Some tribunals, while recognising the independence of the various Article 10(1) standards, ultimately regard them as relating to ‘essentially the same conduct’ of a respondent.259 The Al-Bahloul tribunal considered claims of breach of Article 10(1) first, second,260 third and fourth sentences as FET claims, emphasising their ‘highly overlapping’, albeit separate, nature.261

1 .Article 10(1) First Sentence and the Obligation regarding ‘stable, equitable, favourable and transparent conditions

Article 10(1) First Sentence (1st Sentence) sets out what the AMTO tribunal deemed an ‘expansive obligation’.262 Albeit expansive in various aspects, the AMTO tribunal also considered the scope of application ratione temporis of Article 10(1) 1st Sentence to be ‘ambiguous’.263 Article 10(1) 1st Sentence is a provision not found in most treaties governing investment.264

Article 10(1) 1st Sentence, in the RWE tribunal's view, ‘establishes an obligation with respect to the Investor, whereas the second sentence is concerned with treatment of the Investment’.265 For the Plama tribunal, Article 10(1) 1st Sentence conditions are applicable to ‘all’, including ‘pre-Investment’, ‘stages’ of an Investment.266 For the Blusun tribunal, the ‘requirement’ set out in Article 10(1) 1st Sentence is not confined to the stages preceding and constituting the Making of Investments, as it also ‘includes p. 185subsequent extensions of the investment as well as changes of form’.267 According to the Blusun tribunal, a determination as to whether conduct breaches Article 10(1) 1st Sentence is to be done ‘by examining each of the state acts complained of against ECT standards’.268 However, for the Stadtwerke tribunal, ‘the first sentence of Article 10(1) is far too general to create enforceable definite rights of investors against Contracting Parties’.269

The conditions set out in Article 10(1) 1st Sentence have been approached by various arbitral tribunals differently. For the Plama tribunal, Article 10(1) 1st Sentence conditions are ‘dependent on’ the other standards of protections under Article 10(1).270 Similarly, according to the Antin tribunal, stability under Article 10(1) 1st Sentence ‘merits’ a ‘joined assessment’ with FET under Article 10(1) 2nd Sentence.271 Such a joint assessment is without prejudice to the binding character of the obligation under Article 10(1) 1st Sentence.272 Conduct which breaches Article 10(1) 1st Sentence conditions may also breach the minimum standard of treatment.273 Accordingly, compliance with Article 10(1) 1st Sentence conditions has been assessed ‘in connection with the other standards’ set out in Article 10(1).274

The conditions of stability and being equitable are regarded as being ‘clearly part’275 of FET and, more generally, as required to further the ECT's objective of ‘long-term cooperation’.276 Stability of the legal regime governing an Investment is emphasised277 and regarded as an element of FET generally.278 In this vein, an ‘obligation to provide p. 186a stable and predictable legal framework for foreign investment’ has been found to exist as ‘a separate and distinguishable part of the treaty obligation to accord FET’,279 that is, independently of any ‘stabilization commitment, be it contractual, legislative, individual or otherwise’, towards an investor's investment by a host state.280 Such separate status, however, does not imply it has any entirely ‘autonomous character’, since ‘such an obligation cannot be read in isolation’.281 This distinct obligation calls for an ‘objective’ assessment and, thus, ‘does not require the demonstration of any reliance on the host State's conduct on the part of the foreign investor’.282 Though objective, ‘the requirement of stability is not absolute’ and, in particular, does not impinge on a host state's ‘inherent right to exercise its sovereign power to respond to changing circumstances’.283 As the RREEF tribunal noted, ‘[s]tability is not an absolute concept; absent a clear stabilization clause, it does not equate with immutability’.284 The relativity of stability and its conditionality on the existence of a Contracting Party's specific commitment have been grounded, as noted by the InfraRed tribunal, on ‘the principle of state sovereignty – enshrined in the ECT and considered by tribunals as part of the balancing exercise carried out when assessing an investor's bilateral relation with the state’.285 Indeed, given ‘the significant limitation that a “stability” obligation would impose on the host state's sovereign legislative powers’, the InfraRed tribunal reasoned, ‘such a significant limitation of state sovereignty’ cannot be given effect ‘in the absence of a specific expression of consent by the host state’.286

The ‘favourable and transparent conditions’ would be the only addition to ‘the FET standard as it is generally understood’.287 Transparency288 may be ‘related to’ FET, as an element significant for the protection of an Investor's legitimate expectations.289p. 187While interrelated, as the Sun Reserve tribunal elaborated, ‘a host State can be found guilty of having conducted itself in a non-transparent or inconsistent manner, without also having frustrated an investor's legitimate expectations, or vice versa’.290 Other elements, such as ‘good faith’, are deemed to be elements of FET rather than separate standards.291 For instance, as the Sun Reserve tribunal observed, ‘the requirement of good faith or bona fide conduct does not constitute a separate tenet of the FET obligation’.292

The protection of legitimate expectations is the ‘most important function’293 and ‘a core element’294 of the FET standard and, in the RREEF tribunal's view, ‘is implied by this provision and is part of the FET standard’.295 Notwithstanding their centrality, as put by the Cube tribunal, ‘the ECT does not protect legitimate expectations as such’,296 and, as the 9REN tribunal noted, ‘“[l]egitimate expectations” […] are only “a relevant factor” in assessing whether or not the Respondent violated the FET standard in Article 10(1)’.297 Furthermore, legitimate expectations, though possibly overlapping with other elements of the FET standard, are not to be confused with elements such as stability and predictability.298 Article 10(1) 1st Sentence would comprise an obligation to create ‘transparent conditions’, thus providing textual support for the view that the ‘FET standard entails a transparency component’,299 in connection with the exercise of a Contracting Party's right under Article 17.300 Transparency would include the obligation to inform of intended significant policy or regulatory changes ‘well in advance’,301 in order to allow an Investor to plan ‘adequately’ and ‘engage’ in p. 188any necessary ‘dialogue about protecting its legitimate expectations’.302 Favourability would involve creating ‘an investor-friendly environment’.303 Despite having a distinct role, as put by the RREEF tribunal, the absence of transparency, in and of itself, would not ‘constitute an autonomous breach of the FET standard embodied in Article 10(1) ECT’.304 Similarly, for instance, the tribunal noted ‘a finding of lack of transparency sufficient to constitute a violation of Article 10(1) of the ECT must be manifested in a continuing pattern of non-transparent actions by a government over time’.305

2 .Article 10(1) Second Sentence and the Obligation to accord fair and equitable treatment

Article 10(1) Second Sentence (2nd Sentence) provides that Article 10(1) 1st Sentence conditions include FET.306 FET is to be accorded ‘at all times’.307 In this vein, the RENERGY tribunal has rejected the view that ‘the FET standard applies only to the process of the “Making of the Investment”’, since it ‘is irreconcilable with the ordinary meaning of the term “at all times” in the second sentence of Article 10(1)’.308 As the RWE tribunal pointed out, ‘this second sentence […] is concerned with ongoing protection of the Investment once it has been made (as is the case with the remaining sentences of Article 10(1))’, as evidenced ‘by the use in the second sentence of the formula “at all times”’.309 The vagueness of terms employed in Article 10(1) 2nd Sentence is not intended to allow arbitral tribunals, as the Mamidoil tribunal stated, ‘to create a new standard of international law in disregard of the terms of the applicable treaties, generic as they may be’.310 Turning to the nature of conduct which breaches Article 10(1) 2nd Sentence, and notwithstanding that it is not necessary to establish that such instances of conduct are composite,311 arbitral tribunals have taken into account the cumulative character of such conduct. For instance, according to the Stati tribunal, conduct consisting in a ‘string of measures of coordinated harassment by various institutions’ of a Contracting Party, ‘seen cumulatively in context to each other and compared with’ an Investor's treatment before an order of a Contracting Party's head p. 189of state, has been found to breach FET under Article 10(1) 2nd Sentence.312 It sufficed to establish the above elements through an objective analysis of their temporal sequence.313

The ‘meaning’ of FET under Article 10(1) 2nd Sentence is to be assessed ‘in the context of the particular treaty in which it is found’, namely the ECT,314 and taking into account ‘the fact that Article 10(1) of the ECT contains no definition of fair and equitable treatment’.315 The absence of a definition does not entail ‘an automatic resort to the customary international law minimum standard’.316 Accordingly, a ‘specific’ FET standard ‘above the minimum standard’ is to be identified through interpretation of Article 10(1) 2nd Sentence and applied.317

The question of the independence of FET under Article 10(1) 2nd Sentence from other rules of international law has been raised in various arbitral decisions and the scholarly literature. Whether FET is independent of other standards and, in particular, of the minimum standard of treatment under customary international law, has been addressed by various arbitral tribunals.318 These arbitral tribunals have held divergent positions on these questions.319 This question has been deemed to concern, ultimately, the scope and content of FET under the respective treaty.320 In connection with the independence of FET from other standards listed ‘in sequence’ therewith, alongside a statement providing for treatment ‘not less than required by international law’, FET has been found to have a separate and ‘higher’ content than treatment under international law.321 In addition to matters of interpretation, the question of the independence of FET has also been discussed in connection with its application. It has been affirmed that the status of FET as an independent standard, with a distinct content, ‘may well p. 190be more apparent than real’ in its application, which may vary according to ‘the specific facts of a case’.322 Likewise, ECT arbitral tribunals have adopted divergent positions on the aforementioned questions. For the Blusun tribunal, Article 10(1) 2nd Sentence ‘incorporates the fair and equitable treatment standard under customary international law’.323 According to the RWE tribunal, although ‘[t]here is no reference to international law in this second sentence’, the Blusun's tribunal finding ‘that the FET standard was intended to be tied back to customary international law is consistent with the reference in […] the European Energy Charter to “conformity with the relevant international laws and rules on investment.”’324 For the LCO tribunal, the protection afforded by Article 10(1) 2nd Sentence ‘goes beyond the minimum standard of treatment under international law’.325 Similarly, the Silver Ridge reasoned, ‘the ECT's fair and equitable treatment standard differs from, and goes beyond, the minimum standard of protection under customary international law’;326 and, as the RENERGY tribunal has held, ‘the FET standard must go beyond those protections’ separately set out in other ECT provisions, notably Article 10(1) 3rd Sentence, Article 10(1) 4th Sentence, Article 10(3) and Article 10(7).327

The text of Article 10(1) 2nd Sentence has been interpreted in light of NAFTA Article 1105. In this vein, the RENERGY tribunal noted Article 10(1) 2nd Sentence ‘differs from NAFTA Article 1105 […] which contains an express reference to international law’.328 The interpretation of this reference in NAFTA Article 1105(1), to the effect that FET does not go beyond the minimum standard of treatment, stems from a decision of an entity constituted under NAFTA, empowered to issue interpretations of NAFTA binding to the parties to NAFTA only. This aspect of the interpretation of NAFTA is regarded as a reason for limiting the relevance of NAFTA practice to the relation between FET and the minimum standard of treatment under other treaties, in addition to those aspects which relate to the text of NAFTA Article 1105(1) itself.329 Indeed, as the Sun Reserve tribunal elaborated, by contrast to NAFTA Article 1105(1), which ‘explicitly equates the standard of treatment to the international law p. 191minimum standard, within which the FET obligations are subsumed’, Article 10(1) 2nd Sentence ‘does not create any such link between the FET obligation therein and the customary international law minimum standard’.330 Some tribunals consider that Article 10(1) 2nd Sentence set forth the FET standard in a manner entirely independent from customary international law. For instance, as the Belenergia tribunal reasoned, ‘FET under the ECT is set forth in its Article 10(1) ECT, which provides an autonomous, self-contained definition of FET, with no reference to the minimum standard of treatment of aliens under customary international law’.331 Similarly, the Sun Reserve tribunal observed that ‘the text of Article 10(1) ECT itself creates a distinction between the FET obligation therein, and the international minimum standard for FET obligations’.332 This is without prejudice to the role played by ‘the phrase “less favourable than … required by international law, including treaty obligations”’,333 contained in Article 10(1) 4th Sentence, which, as the Sun Reserve tribunal reasoned, ‘indicates that the customary international law minimum standard does get incorporated into the ECT, but only as the bare minimum threshold that the host State's treatment of investments must meet’.334 In sum, the Sun Reserve tribunal reiterates the view of other arbitral tribunals to the effect that the ‘minimum standard constitutes a “floor, [but] not a ceiling”, of the standard of treatment that may be required from host States under the ECT’.335

Under Article 10(1) 2nd Sentence, FET comprises an ‘obligation to provide fundamental stability in the essential characteristics of the legal regime relied upon’ by an Investor.336 The standard set out in Article 10(1) 2nd Sentence preserves the legislative and regulatory authority of a host Contracting Party to make and change its laws and regulations.337 Indeed, providing for ‘a regulatory framework that aims at attracting investors in certain business sectors by offering various incentives’ is as ‘possible’ and likely as ‘[d]ismantling such incentives for future investments’.338 FET under Article 10(1) 2nd Sentence does not imply that ‘regulatory regimes cannot evolve’.339 As the OperaFund tribunal observed, while ‘States are, in principle, free to change their regulatory framework for various business sectors’, what determines whether FET under Article 10(1) 2nd Sentence has been observed ‘is whether and to what extent the degree of the regulatory change was so radical that it amounts to a breach of the FET-inherent p. 192stability requirement’.340 Hence, where an Investor has made an Investment in reliance upon a regulatory regime, a radical alteration of the regulatory regime carried out in a manner which deprives of value the Investment has been deemed to breach FET under Article 10(1) 2nd Sentence.341 Thus, FET does not protect an Investor against ‘any and all changes’ of a Contracting Party's law, in the absence of a reasonable expectation.342 Such expectation may be created by a promise or representation to ‘freeze’ law343 or specific legislative guarantees or commitments,344 among other forms of conduct345 in which a Contracting Party engages346 or are attributable thereto.347 Thus, an Investor's subjective consideration alone is insufficient for a legitimate expectation to exist.348 A representation at the origin of a legitimate expectation and which induced an Investment, whether explicit or implicit,349 must be clear.350 For the Antaris tribunal, the origin of an alleged legitimate expectation must be identified in the respective claim.351 The ‘timing’ of assessment of legitimate expectations under Article 10(1) is that of the Making of an Investment by an Investor,352 from an ex ante position, in which the assessment ought not to involve any ‘hindsight’.353

Notwithstanding the emphasis placed upon the existence of a special commitment made to an Investor, it has been argued that a ‘legitimate expectation’ may also be created p. 193by the legal order in force at the time of the Making of Investments, in the absence of a specific commitment.354 This position stands in contrast to the school of thought whereby a commitment need be specific355 and whereby seemingly specific conduct, in the form of stabilisation provisions, cannot create legitimate expectations, being ‘offered in general legislation’.356 These two positions, according to the RENERGY tribunal, represent competing views on ‘the question as to which type of State conduct may qualify as a specific commitment’.357 The legal order of a Contracting Party is to be examined in order to establish whether a legitimate expectation not derived from a specific commitment exists.358 Indeed, as noted by the Cube tribunal, some regulatory ‘regimes are plainly intended to create expectations upon which investors will rely’, giving ‘rise to legitimate expectations when investments are in fact made in reliance upon them’.359 Such a legal order, while general in the abstract, may operate in relation to a ‘reduced number of potential addressees’,360 and not sine die, but for a limited period.361 In any case, as argued by the majority of the Isolux tribunal, where a general rule in a Contracting Party's law is addressed to both national and foreign investors, it can hardly be concluded that obligations are only imposed regarding the former.362 Where general legislation is regarded as a ‘source’ of a legitimate expectation, the Masdar tribunal has required that the Investor proves that ‘due diligence’ has been exercised363 and that the expectation was reasonable in light of the circumstances.364 The Masdar tribunal took into account the claimant's reliance on stabilisation clauses contained in general regulations.365 For the Masdar tribunal, a resolution specifically issued to individual companies confirming their eligibility for benefits under the general regulations was a sufficiently specific commitment.366 According to the RENERGY tribunal's analysis, only a few arbitral tribunals have adopted a form of ‘Absolute Stability’, whereby ‘a legislative provision’ is qualified ‘as a specific commitment’ preventing a p. 194‘host State from making any changes to the detriment of’ investors.367 In this vein, as the RWE tribunal warned, if ‘legitimate expectations […] could readily be generated by domestic law, the FET standard would in practical terms start to approximate an overarching stabilisation clause, elevating each change in a domestic legal regime to a source of potential breach of international law’.368 By contrast, the RENERGY tribunal reasons, most tribunals have been inclined towards a form of ‘Relative Stability’, whereby ‘even in the absence of any specific commitment, Article 10(1) ECT does protect investors against legislative changes that exceed a (wide) acceptable margin’.369

The legislative and ‘regulatory authority’ of a Contracting Party is, as put by the Blusun tribunal, ‘subject to respect for specific commitments made’.370 The basis for this restriction lies, according to the Charanne tribunal, in the principle of good faith, qua principle of customary international law.371 Accordingly, for the Charanne tribunal, ‘in the absence of a specific commitment’, there is no obligation to grant benefits or to maintain unchanged those granted.372 The failure to establish a special commitment or an undertaking not to amend laws may lead to the dismissal of a claim of breach of Article 10(1) 2nd Sentence.373 Where a legitimate expectation may be deemed to arise from general legislation in the absence of a specific commitment or the source of a rule containing a commitment with a specific scope of application is general legislation, a question as to whether a ‘margin of change’ exists, whereby changes of the relevant general legislation of a Contracting Party do not constitute a breach of FET, has arisen. For the majority of the Antaris tribunal, where an expectation has arisen, but a stabilisation clause is absent, there exists an ‘acceptable margin of change’, within which changes to general legislation modifying a regulatory framework relied upon by an Investor374 and made pursuant to the Contracting Party's normal regulatory power do not breach FET.375 Such a margin of change is contested on grounds of, among others, lack of support in the text of the ECT376 and inconsistency with the purposes of specific guarantees and of FET generally.377 Where a benefit has been lawfully granted, any amendment to the benefit should be necessary and proportionate to the aim of the amendment.378 Relatedly, changes resulting under ‘certain circumstances in disadvantages’ to an Investor have been held to be insufficient to breach FET under p. 195Article 10(1) 2nd Sentence.379 Article 10(1) 2nd Sentence entitles an Investor ‘to expect’ that a regulatory regime in reliance upon which an Investment is made is ‘not drastically and abruptly’ revised, in a value-destructive manner.380 Hence, it is not necessary to establish that an Investment has been ‘obliterated’ in order to find a breach of Article 10(1).381 Where a recipient's commitment of ‘substantial resources’ is made in reliance upon a regime to be amended, due regard should be had to a recipient's ‘reasonable reliance interests’.382 FET under Article 10(1) is breached if a reasonably relied-upon representation is ‘repudiated’ by a Contracting Party.383

Various ECT arbitral tribunals have analysed whether conduct of a Contracting Party in connection with the enactment, interpretation and application of the internal law of that Contracting Party constitutes a breach of Article 10(1), outside the context of a claim relying on a legitimate expectation. As for conduct of various state organs, in particular judicial, a mere error in the application of a Contracting Party's law is not constitutive of a breach of Article 10(1) 2nd Sentence;384 an ECT arbitral tribunal is not ‘an appeal body’ called upon ‘to correct errors, if any, […] committed by the host states’ national courts’.385 The Petrobart tribunal found that conduct of state organs in connection with domestic court proceedings amounted to a breach of FET under Article 10(1) 2nd Sentence, although not to expropriation.386 As for the conduct of legislative organs, the content of the legislative measure has a bearing on a determination of breach of Article 10(1). This is illustrated by legislative taxation measures. The enactment of a tax law is presumed to be bona fide.387 To rebut this presumption is a ‘high’ onus probandi, which falls on a claimant.388 An ECT arbitral tribunal lacks jurisdiction over measures covered by the carve-out in Article 21(1).389 Preliminarily, some arbitral tribunals have addressed the very concept of tax for these purposes.390 For instance, the OperaFund tribunal reasoned, ‘a tax under international p. 196law, as understood in arbitral case-law, […] is (1) established by law, (2) imposes obligations on a class of people, and (3) that obligation implies paying money to the State for public purposes’.391 In principle, a taxation measure in the form of a law falls within the scope of the carve-out in Article 21(1).392 A definitive determination of whether a tax law is covered by the carve-out in Article 21(1) depends on whether it is ‘truly’ a taxation measure. Such a determination is based on the bona fide criterion.393 In application of the bona fide criterion, the Novenergia II tribunal held that the onus probandi regarding an alleged breach of Article 10(1) by the enactment of a tax law is met not merely by proving that a general revenue raising purpose did not exist, but by showing that a different purpose existed;394 that different purpose must be a mala fide purpose.395 The Antin tribunal has not required that a mala fide purpose be proved. The Antin tribunal has held, instead, that a measure is not bona fide if it constitutes an abuse of a Contracting Party's rights under the ECT.396 For the Novenergia II tribunal, the mala fide element derives from the facts that ECT arbitral tribunals have accepted ‘substantial deprivation’ resulting from enforcement of a tax law397 and ‘contrasted’ bona fide measures with egregious measures.398 Hence, according to the Novenergia II tribunal, where conduct of a Contracting Party falls ‘short of extreme actions’, there are no ‘viable mala fide grounds’.399

Where a plurality of claims are made and forms of relief are sought in connection with the same set of conducts of a Contracting Party, giving rise to potential overlaps among the claims and prayers of relief, various ECT arbitral tribunals have addressed whether and to what extent it is necessary to decide all such claims and prayers for relief, and whether and to what extent departures from the structure set out in the disputing parties’ pleadings is possible. According to the Stati tribunal, a declaration that FET under Article 10(1) 2nd Sentence has been breached does not necessarily p. 197preclude a general declaration that the ECT has been otherwise breached, had such declaratory relief been sought.400 Hence, declaratory relief may be granted regarding each of a plurality of ECT provisions, even where the breach of only one ECT provision fully justifies the tribunal's award of damages. By contrast, a plurality of awards of compensation is unnecessary, where the entire damage is awarded for one breach only.401 This appeared to leave room for an analysis of the merits of the breaches for which no compensation was to be awarded. The Stati tribunal considered that, when an Investor's claim of breach of FET under Article 10(1) 2nd Sentence prevails, and the conduct breaching FET also serves as basis for a claim of breach of another obligation under the ECT, the latter claim is analysed only if any further relief sought is ‘not covered by the FET breach’.402 Ultimately, the Stati tribunal not only abstained from determining whether compensation was due, but also decided that it was not necessary to analyse whether a breach of any of the ECT provisions invoked in addition to the FET provision in Article 10(1) had also been ‘shown’403 or whether the ‘taking’ caused by a breach of the Article 10(1) FET standard had also resulted from a breach of Article 13.404

Various arbitral tribunals, including ECT arbitral tribunals, have grounded their decisions in disputes involving a plurality of claims and prayers of relief in the aforementioned circumstances on ‘considerations of economy’. Such considerations have been relied upon by ECT arbitral tribunals in relation to standards of treatment other than FET.405 By virtue of ‘considerations of economy’, as put by the Eiser tribunal, it is unnecessary to address ‘issues extraneous to those essential to its decision’.406 The Eiser tribunal established that the Article 10(1) 2nd Sentence FET standard provided ‘the most appropriate legal context for assessing the complex factual situation presented’ p. 198before it. The Eiser tribunal stated that a ‘decision of the remaining claims would not alter the outcome or affect the damages to which Claimants are entitled’. The Eiser tribunal reasoned that its decision regarding the claim of breach of FET under Article 10(1) 2nd Sentence ‘fully resolves Claimants’ claim’.407 Accordingly, the Eiser tribunal abstained from addressing in its analysis of the merits claims advanced under the Third Sentence, Second Clause, and the Fifth Sentence of Article 10(1), and under Article 13.408 The Eiser tribunal clarified that, where there is an overlap between FET claims and claims based on other provisions, no analysis of the plurality of claims is needed with respect to both merits and compensation.409 The above considerations of economy may be relevant where a decision concerns conduct concurrently breaching the ECT and another treaty.410 If the primary, non-ECT, claim prevails, the ECT claim is dismissed.411 They may also be relevant where a claim involves the determination of whether FET as set out in a Contracting Party's foreign investment law has been breached.412 It has been suggested that considerations of economy are grounded on the principle iura novit curia, presupposing an equivalence between arbitral and judicial dispute settlement.413 Relatedly, while a tribunal's choice to base its award on a single ground may be ‘pragmatic’, it has been suggested that decisions based on considerations of economy may involve risks at the enforcement stage, in particular the possibility that the award be set aside in its entirety. Such risks raise issues as to the appropriateness of a judicial decision-making method in arbitrations.414

3 .Article 10(1) Third Sentence and the Obligations of most constant protection and security and non-impairment by unreasonable or discriminatory measures

Article 10(1) Third Sentence (3rd Sentence) is composed of two clauses and sets out rules governing a Contracting Party's obligations concerning Investments of Investors p. 199of any other Contracting Parties.415 According to the Plama tribunal, Article 10(1) 3rd Sentence ‘links’ the remainder of Article 10(1) protections to Article 10(1) 1st Sentence and Article 10(1) 2nd Sentence.416 Other tribunals have held similar views.417

Article 10(1) 3rd Sentence First Clause (1st Clause) sets out a protection and security standard418 and incorporates a Full Protection and Security (FPS) standard.419 Various arbitral tribunals have been divided as to whether the FPS standard is independent from the FET standard,420 primarily based on their interpretations of the relevant treaty provisions.421 As for ECT arbitral tribunals, the Electrabel tribunal held that the FPS standard is ‘distinct’ from the FET standard.422 Such distinctiveness is more specifically reflected in references to ‘the MCPS standard in Article 10(1) ECT’.423 It has been asserted that this view is preferable.424 In addition to the independence of FPS from FET as a matter of treaty interpretation, it has been argued that the obligations they impose differ in nature:425 while FET consists in a negative obligation,426 FPS comprises a positive obligation.427 Article 10(1) 3rd Sentence 1st Clause comprises the ‘obligation to take reasonable steps’ for the protection of Investors against conduct ‘by third parties and/or state actors’.428 This obligation, in the Hydro Energy tribunal's p. 200opinion, ‘is simply reflective of the traditional duty of the State in public international law to protect property of aliens from interference by third parties or (sometimes) State actors’.429 Article 10(1) 3rd Sentence 1st Clause includes ‘an obligation actively to create a framework that grants security’.430 A breach of Article 10(1) 3rd Sentence 1st Clause may not lead to an award of damages in addition to those accorded for a breach of FET under Article 10(1) 2nd Sentence.431

The FPS standard, having originally encompassed ‘physical security’ only,432 is deemed to also comprise ‘legal security’,433 as the Plama tribunal held in relation to Article 10(1) 3rd Sentence 1st Clause.434 This dichotomy, for the Hydro Energy tribunal, underpins views as to the precise scope of the Article 10(1) 3rd Sentence 1st Clause FPS standard, ‘whether or not it is characterised as “constant” or “full”’.435 There may be a potentially significant overlap between the ‘legal … dimension’ of the FPS standard and the FET standard.436 While Article 10(1) 3rd Sentence 1st Clause may extend beyond ‘physical security’, it does not necessarily protect against the impact of a Contracting Party's exercise of its right to ‘legislate’ about or ‘regulate’ Investments.437 For instance, if a Contracting Party's ‘public policy goal’ and implementing measure are reasonable, a negative impact upon an Investment is not necessarily in breach of Article 10(1) 3rd Sentence 1st Clause.438 Indeed, given ‘the central notion of “due diligence” embodied in’ the FPS standard generally, the Eskosol tribunal noted, ‘a due diligence obligation cannot be stretched to require a State to provide […] mechanisms’ which can insulate investors ‘from any possible impact of regulatory change, in circumstances […] where p. 201that change took the form of general sector-wide enactment’.439 The FPS standard under Article 10(1) 3rd Sentence 1st Clause, though ‘perhaps stronger than’ FPS as set out in ‘the commonly used language in investment treaties’,440 is not ‘absolute’ nor does it imply ‘strict liability’.441 If the standard were absolute, any ‘change in law’ would be precluded, as if ‘a non-existent stability agreement’ were in place.442 To the extent that the standard requires the provision of a ‘reasonable measure of prevention’,443 no ‘strict liability’ is imposed.444

Article 10(1) 3rd Sentence Second Clause (2nd Clause) prohibits unreasonable or discriminatory measures.445 The term ‘unreasonable’ has been regarded as synonymous with ‘arbitrary’446 and ‘unjustified’.447 The standard contained in Article 10(1) 3rd Sentence 2nd Clause has been referred to by ECT arbitral tribunals, as well as those constituted under other treaties, as the ‘non-impairment’ standard448 and, as such, deemed ‘a separate and distinct standard of protection from FET, albeit related’.449 Relatedly, the PV Investors tribunal distinguished between, on one hand, ‘the obligation not to impair investments by unreasonable measures’ set out in Article 10(1) 3rd Sentence, as one among other ‘separate standards of protection’, and, on the other hand, ‘the prohibition of arbitrary or unreasonable measures’, as one among other ‘sub-elements of FET’.450 In the ESPF tribunal's view, ‘[w]hile conduct that breaches the FET standard will usually also breach the Impairment Clause (measures found to be unfair or inequitable will usually also be unreasonable), the converse is not necessarily true’.451 For the PV Investors tribunal, ‘it is not sufficient that the investor is in a “worse position” than it would have been under’ a given ‘regime’ whose abrogation p. 202is contested as a change in breach of Article 10(1) 3rd Sentence for such a breach to be established, since ‘the Treaty requires that the changes must be unreasonable, arbitrary, or disproportionate’.452

The relationship between the rights of Investors and Contracting Parties has been articulated in terms of a ‘balance’. According to the PV Investors tribunal, a ‘right balance’ should be struck between the rights of an investor's and the Contracting Party's hosting that investor's investment,453 notably in terms of the latter's ‘right to regulate and adapt its framework to changed circumstances, provided that right is exercised in a manner that is proportionate, reasonable, and non-arbitrary manner’.454 Such balance, in the Hydro Energy tribunal's view, would already be inherent in the ECT's ‘purpose of […] balancing State sovereignty and the State's responsibility to create an adapted and evolutionary framework for the development of economic activities and the necessity to protect foreign investment and its continuing flow’.455 While, as the CEF tribunal observed, ‘the dignity which attaches to sovereigns must be given deference’, it ‘is not infinite when balanced against a combination of international obligations freely assumed’.456 Indeed, as the STEAG tribunal reasoned, ‘Article 10(1) does not eliminate the regulatory power of the State, but rather establishes limits thereto’,457 and, as the Greentech tribunal observed, ‘[h]ost states certainly retain the sovereign prerogative to amend their laws’.458 Relatedly, as the Cube tribunal stated, while a Contracting Party may be called upon to ‘change in governmental policies that […] become unsustainable […] the scope for government action’ is ‘circumscribed by […] obligations under the ECT’ incumbent on that Contracting Party, ‘including its duty under Article 10(1) ECT to accord fair and equitable treatment’.459

Unreasonable conduct has been specifically addressed by ECT arbitral tribunals. Unreasonableness and proportionality are related: as the RWE tribunal observed, ‘the consideration of whether an act is unreasonable under Article 10(1) may engage an p. 203issue of disproportionality’.460 For the Plama tribunal, a measure is unreasonable if it is not based on ‘reason or fact’.461 It would, on the contrary, be based on ‘caprice’.462 Discriminatory conduct has also been individually addressed by ECT arbitral tribunals.463 According to the Plama tribunal, a measure is discriminatory if no ‘reasonable or justifiable grounds’ are set out in support of the differential treatment in which the measure consists.464 For the Nykomb tribunal, a comparison of ‘like with like’ may be involved.465 Where a differential measure affects one among a set of comparable companies, a Contracting Party implementing the differential measure must establish that no discrimination took place, and thus bears the onus probandi.466

There are various positions regarding the relations between the prohibition of unreasonable or discriminatory conduct set out in Article 10(1) 3rd Sentence 2nd Clause and other standards, in particular FET. As noted by the AMTO tribunal, conduct which breaches Article 10(1) 3rd Sentence 2nd Clause may also breach FET and the minimum standard.467 Article 10(1) 3rd Sentence 2nd Clause and FET may overlap,468 which arguably renders a distinction between these two standards difficult.469 As pointed out by the Plama tribunal, to the extent that rationality is an element in common between the Article 10(1) 3rd Sentence 2nd Clause prohibition and the FET standard, there is a ‘strong correlation’ between them.470 An overlap with FET may be found to exist where a treaty does not include a separate provision on arbitrary and discriminatory conduct, as exemplified, most prominently, by the NAFTA.471 In particular, various NAFTA arbitral tribunals have considered arbitrariness as an element p. 204of the FET standard under NAFTA Article 1105(1).472 An overlap with FET may be found to occur even where a separate treaty provision on arbitrary and discriminatory conduct exists. Various arbitral tribunals have represented such separate treaty provisions as being part,473 having the same content474 or necessarily involving a breach475 of the FET standard,476 as a component thereof.477 As for ECT arbitral tribunals, this position has found some support.478 Similarly, the Stati tribunal, for instance, held that a breach of Article 10(1) 3rd Sentence 2nd Clause may not necessarily lead to an award of damages in addition to those accorded for a breach of FET under Article 10(1) 2nd Sentence.479 Accordingly, a decision on a claim of breach of Article 10(1) 3rd Sentence 2nd Clause may not be required in these circumstances.480 The position whereby the prohibition of arbitrary and discriminatory conduct is held to be independent from the FET standard, in spite of a certain degree of overlap, has been asserted on grounds of treaty interpretation.481 Various arbitral tribunals have applied the prohibition of arbitrary and discriminatory separately from the FET standard482 and even explicitly examine circumstances in which a breach of one of these standards does not imply a breach of the other.483 This position also enjoys support among ECT arbitral tribunals. In particular, the Plama tribunal addressed the position of arbitral tribunals which, in its view, had practically merged provisions on arbitrary and discriminatory conduct with the FET standard,484 including where treaties lacking a separate provision on reasonableness are applied.485 The Plama tribunal held that, notwithstanding their apparent degree of overlap, the prohibition of arbitrary and discriminatory conduct p. 205may be ‘defined separately’ from the FET standard.486 Relatedly, for the RREEF tribunal, ‘had the ECT not contained an express provision on FET or protecting investors against non-discrimination, this principle would still be applicable on the basis of customary international law’.487

4 .Article 10(1) Fourth Sentence

Article 10(1) Fourth Sentence (4th Sentence), like Article 10(1) 3rd Sentence, sets out rules governing a Contracting Party's obligations concerning Investments of Investors of other Contracting Parties.488 The Electrabel tribunal referred to the obligation under Article 10(1) 4th Sentence as an ‘International Law Standard’.489 Other tribunals have stated Article 10(1) 4th Sentence guarantees a minimum standard of treatment.490 The Electrabel tribunal further noted that this ‘minimum standard’ was ‘similar’ in content to the ‘other standards expressly mentioned in Article 10(1) ECT, which also exist as standards of protection in customary international law’.491 The Electrabel tribunal concluded that certain conduct not violating FET was not in breach of Article 10(1) 4th Sentence.492 Article 10(1) 4th Sentence may encompass breaches of customary international law. It has been argued that Article 10(1) 4th Sentence would allow claims arising out of treatment less favourable than that required by customary international law, even where no breach of other specific Part III obligation is committed by a Contracting Party.493 Article 10(1) 4th Sentence also comprises breaches of ‘treaty obligations’. Article 10(1) 4th Sentence ‘treaty obligations’ may arise under treaties other than the ECT. Nevertheless, not every obligation relating to a treaty falls within the scope of application of Article 10(1) 4th Sentence. In particular, Article 10(1) 4th Sentence ‘treaty obligations’ appear to be confined to those directly set out in a treaty, to the exclusion of obligations arising under a treaty but the content of which is set out in instruments external to the treaty, such as decisions of international organisations constituted under the treaty. As set out in a relevant Understanding, the phrase ‘treaty obligations’ does not include ‘decisions taken by international organizations’, among other obligations.494p. 206

5 .Article 10(1) Fifth Sentence as ‘Umbrella Clause’

Article 10(1) Fifth Sentence (5th Sentence) contains an ‘umbrella clause’.495 In this vein, Article 10(1) 5th Sentence is said to reflect the principle of pacta sunt servanda.496 The scope of Article 10(1) 5th Sentence is ‘wide’.497 Article 10(1) 5th Sentence applies to obligations owed to either an Investor or an Investment of an Investor.498 The use of ‘any’ in Article 10(1) 5th Sentence implies that the ordinary meaning of ‘obligation’ comprises an obligation ‘regardless of its nature’, namely ‘whether it be contractual or statutory’,499 provided they are in the form of ‘bilateral relationships’,500 whether ‘arising from contracts or contract-like relationships’.501 In this vein, the Silver Ridge tribunal has distinguished between principal and ‘accessory contracts’, denying the latter p. 207falls within the scope of Article 10(1) 5th Sentence.502 For the Al-Bahloul tribunal, the existence of ‘a prima facie breach of contract’ and the respondent's failure to meet its onus probandi sufficed to find a breach of Article 10(1) 5th Sentence.503

The scope of Article 10(1) 5th Sentence is not limited to the content of the respective obligation, unlike other international investment agreements, which confine their umbrella clause to obligations ‘entered into with regard to investments’.504 For the RWE tribunal, since ‘the obligation must be “entered into with” as opposed to “entered into with regard to” an Investor or Investment […] a direct consensual link’ was likely envisaged.505 In terms of the process of creation of the legal relationship between a Contracting Party and an Investor, as the Eskosol tribunal reasoned, ‘[t]he very notion of “enter[ing] into” an obligation “with an investor” implies, as a matter of ordinary meaning, that there has been some interaction between the State and the investor, from which a particular obligation results’.506 In a similar vein, for the Sun Reserve tribunal, ‘the requirement in Article 10(1) ECT that “obligations” be “entered into” with an investor or an investment of an investor makes clear that privity is required between the Contracting Party and the investor or investment in question’.507

The aforementioned ‘privity’ would, ‘in most circumstances, involve discussions between the host State and the investors or investments in question, resulting in consensual arrangements’.508 Likewise, albeit in connection with its analysis of FET claims, the CEF tribunal referred to the fact of ‘greater level of engagement as between a sovereign and an investor […] resulting in legitimate expectations which are clear in both scope and origin’.509 This processual approach to the concept of obligations ‘entered into’ with an Investor partly overlaps with the nature of the instruments creating such obligations. In this vein, in particular, while the aforementioned ‘interaction presumably would be direct, such as through a contract or an investment authorization’, the Eskosol tribunal ‘does not rule out, at least at the level of theory, that in rare cases a State might be shown to have entered into obligations indirectly with a given investor’.510p. 208

The possibility of non-contractual, indirect, legal relationships constituting obligations ‘entered into’ by a Contracting Party does not imply that general laws can be unqualifiedly relied upon as sources of such obligations. As the Eskosol tribunal observed, ‘such obligations would be expected to be documented in some form other than through laws of general applicability’.511 In terms of the addressees of any general legal instruments purportedly relevant, as the Stadtwerke tribunal noted, ‘[t]he words “enter into” […] would not usually be used to refer to non-contractual like obligations assumed by governments in their regulations or legislators in respect of their laws with effect either erga omnes or in respect of an objectively defined group of beneficiaries’.512 Relatedly, as the Belenergia tribunal found, where a Contracting Party's ‘legal and regulatory framework’ is ‘clearly addressed to national and foreign investors’, it cannot ‘be interpreted as creating obligations specifically “entered into with”’ an Investor by that Contracting Party.513 Similarly, the Sun Reserve tribunal argued that ‘the requirement of privity or specificity still remains’ fulfilled where ‘unilateral legislative or regulatory acts’ serve as source of obligation.514 Indeed, for the Sun Reserve tribunal, ‘not every unilateral legislative or regulatory act directed at investors and/or investments generally can source obligations for the purpose of Article 10(1) ECT, but only those that are directed at a small and well-defined class of investors and/or investments’.515 In sum, for the Sun Reserve tribunal, the ‘privity requirement can be satisfied either by specific consensual or contractual arrangements between the host State and the particular investors or investments in question, or by unilateral legislative or regulatory acts directed at a small and well-defined class of investors’.516

While most tribunals, as observed in the foregoing discussion, have confined the umbrella clause in Article 10(1) 5th Sentence to bilateral legal relations specifically entered into by a Contracting Party with an Investor, some tribunals have exhibited a wider degree of openness to non-contractual instruments. For instance, the ESPF argued, ‘the ECT does not exclude the possibility of a state entering into commitments via legislation or decree, or unilaterally through statements made in offering memoranda designed to induce foreign investment’.517 Likewise, the Greentech tribunal have interpreted ‘“obligations” referred to in the ECT's umbrella clause as sufficiently broad p. 209to encompass not only contractual duties but also certain legislative and regulatory instruments that are specific enough to qualify as commitments to identifiable investments or investors’.518 The Greentech tribunal majority's view, however, risks conflating the scope of an instrument, which may be specific enough to refer to an identifiable set of entities, with the legal position of those entities pursuant to that instrument. The Greentech tribunal majority's view did not qualify its stance, unlike the ESPF tribunal, which indicated that ‘in order for such obligations’, created via legislation, decree or unilateral statements, ‘to be protected by the Umbrella Clause, a degree of specificity is required – the obligations must be made with investors and be in relation to investment’.519 In this vein, a distinction raised by the BayWa tribunal is apposite. Indeed, the BayWa tribunal distinguishes between right-holders pursuant to ‘obligations’ owed ‘to specific investors or their investments’ and those benefitting from a law, as ‘entities […] numbered among the beneficiaries of the law’.520 In short, ‘[a] general law is not a promise’,521 nor is ‘[a] general statute regulating a sector of the economy […] normally […] sufficient’.522 Other tribunals have expressed their disagreement with the Greentech tribunal majority's view, noting that interpretations limiting obligations ‘entered into’ to ‘contractual obligations’ were ‘more convincing’.523 Furthermore, the Greentech tribunal majority's analysis also appears to conflate obligations entered into with an Investor with specific commitments for the purposes of the FET standard.524

Notwithstanding the above analysis, the scope of Article 10(1) 5th Sentence would not be limited to any particular source of obligation, since, as pointed out by the RENERGY tribunal, ‘the term “any obligations” does not suggest any limitation as to the source of such obligation’.525 The absence of limitations as to the source of obligation under the Article 10(1) 5th Sentence umbrella clause does not entail that the existence of an obligation suffices to satisfy the requirements of that umbrella clause. An example of such a wide criterion is provided by the FREIF tribunal, which reasoned that ‘the form that an obligation takes, whether through contract or statute, is not the determining factor’.526 Instead, for the FREIF tribunal, the only ‘factor’ to take into account appears to be ‘the essential characteristic of an “obligation”’ namely ‘that it is mandatory and legally binding on the obligor’.527 While any source of obligation p. 210may in principle be relevant, the BayWa tribunal observes, ‘[t]he obligations to which the umbrella clause refers are paradigmatically obligations governed by the law of the host State (in the case of contractual obligations, the proper law of the contract)’.528 Consequently, ‘unless a national law creates vested rights, obligations under such a law cease when the law is relevantly and validly amended or repealed’, in which case there would be ‘nothing for the umbrella clause to operate upon’.529 Similarly, the CEF tribunal dismissed an umbrella clause claim, since the underlying obligations ‘owed’ to an Investor by a Contracting Party were ‘delineated by’ that Contracting Party's internal law, ‘which allowed’ that Contracting Party ‘to unilaterally modify such obligations’.530

The applicability of Article 10(1) 5th Sentence to ‘contractual obligations’ does not mean that Article 10(1) 5th Sentence may be breached by any unqualified conduct of organs or entities of a Contracting Party entering into such contractual obligations. It has been pointed out that a ‘wide interpretation of the umbrella clause’ under Article 10(1) 5th Sentence, read with Article 22(1), could lead to a host state's responsibility for ‘a wide range of actions or omissions of state enterprises’ in connection with the ‘sales of goods and delivery of services’.531 While arguably going beyond other international investment agreements with respect to the consequences of conduct of ‘subnational’ entities,532 Article 22(1) does not provide for vicarious responsibility.533

The interactions of an umbrella clause with other standards of treatment, particularly the FET standard, have been addressed in scholarship and decisions of arbitral tribunals.534 Some tribunals have held that, in general, a provision containing the FET standard may apply to contractual obligations535 and contract claims536 and found that conduct in breach of obligations under,537 or in connection with the performance of,538 acontract amounted to a breach of the FET standard. Some tribunals, on the p. 211contrary, have held that a breach which does not amount to ‘an outright and unjustified repudiation’ of a contract,539 nor involves the exercise of the respondent state's ‘puissance publique’,540 does not constitute a breach of the FET standard. As for ECT tribunals, the Eiser tribunal considered that a decision on a claim of breach of Article 10(1) 5th Sentence was not necessary, given that the tribunal's decision regarding the claim of breach of FET under Article 10(1) 2nd Sentence fully addressed the claims.541

Annex 1A, while excluding from investor-state arbitration conduct in breach of contract-based obligations under Article 10(1) 5th Sentence, does not preclude claims arising out of the same conduct, if constitutive of breaches of other Part III obligations.542

6 .Article 10(2)–10(12)

Article 10(2) provides for an obligation to ‘endeavour to accord’ to Investors treatment as described in Article 10(3) and with regard to the ‘Making of Investments’ in the Area of a Contracting Party.543 While the enforceability of rights under Article 10(2) through investor-state arbitration under Article 26 is debated,544 other mechanisms which may induce compliance with Article 10(2) are in place under the ECT. For instance, Contracting Parties’ measures not in conformity with Article 10(2) obligations are recorded in a register regularly reviewed by the ‘Investment Group’, a subsidiary organ of the Energy Charter Conference.545 This review is conducted alongside the Investment Group's country reviews of investment climate and restructuring of energy markets.546

Article 10(3) sets out the meaning of treatment for the purposes of Article 10. Such treatment is to be ‘no less favourable’ than that accorded to a Contracting Party's own Investors or of any third party. In addition, as pointed out by the Belenergia tribunal, ‘[a]s Article 10(1) ECT provides that treatment, including FET, cannot be p. 212“less favourable than that required by international law,” it requires treatment that is not strictly equivalent to international law’.547 Furthermore, such treatment is to be ‘whichever is the most favourable’.

Article 10(4) provides for a supplementary treaty. The Article 10(4) supplementary treaty is intended to set out an obligation to accord treatment to Investors regarding their Making of Investments in a Contracting Party's area, as described in Article 10(3), and to lay down the conditions for its fulfilment.548 A set of understandings and statements were issued in connection with Article 10(4). An Understanding regarding Article 10(4) states that the Article 10(4) supplementary treaty is to specify the conditions for Article 19(3) treatment. Such conditions would include provisions regarding ‘privatisation’ and ‘demonopolisation’. Connections, if any, between Articles 10(4) and 29(6) could be considered, according to another Understanding. According to a Chairman's Statement, negotiations regarding the Article 10(4) supplementary treaty should have achieved consistency, in light of the Uruguay Round, among others. Negotiations for the Article 10(4) supplementary treaty were to be commenced in 1995 and concluded in 1998.549 A draft has been prepared. The draft covers establishment,550 among other matters. Nevertheless, the Article 10(4) supplementary treaty has not been concluded.551

Article 10(5) sets out obligations regarding the Making of Investments in an Area.552 Article 10(5)(a) provides for an obligation to ‘endeavour’ to ‘limit to the minimum’ exceptions to Article 10(3) treatment.553 Article 10(5)(b) provides for an obligation to ‘endeavour’ to ‘progressively remove’ restrictions which affect Investors.554 The obligations under Article 10(5) have been described as being of ‘best efforts’, by contrast to the obligations of ‘result’ contained in other parts of Article 10.555 The distinction between obligations of ‘means’ and ‘result’, nevertheless, was rejected in the ASR.556 The distinction would, in any case, not distinguish the obligations under Article 10(5) from those other parts of Article 10: the use of the verbs ‘accord’ and ‘observe’ does p. 213not convey necessarily a commitment to achieve a ‘result’. Article 10(5) obligations are often regarded as providing for a ‘soft’ regime, applicable to the ‘pre-investment’ phase, as opposed to the ‘hard’ regime governing the ‘post-investment’ phase.557 The obligations under Article 10(5) have been considered not to be ‘merely hortatory’, regardless of the aforementioned controversies as to their character, content and scope.558 An obligation, even if characterised as being of ‘best effort’, remains binding.559 The decision that the Article 10(4) supplementary treaty is to regulate the Making of Investment,560 including those aspects to which Article 10(5) obligations relate, does not imply that obligations regarding the Making of Investments, as they stand at present, lack binding effect.561

The question at issue is not the character of such obligations as binding, but rather their content and scope.562 The arbitrability of Article 10(5) obligations is a question which has been mainly discussed in scholarship. The position that disputes regarding Article 10(5) obligations may be arbitrable has been advanced in scholarly commentary on ECT investor-state arbitration.563 According to this position, Article 26 allows for the submission to international arbitration, among other dispute settlement procedures, of disputes between an Investor and a Contracting Party ‘relating to an Investment’, provided that the disputes ‘concern an alleged breach’ of a Part III obligation. Article 10(5), among other provisions concerning the Making of Investments, is within Part III. Article 26 did not expressly exclude the Making of Investments,564 nor confined Investment to that which has been ‘made’565 or, like Article 10(11), to that which is ‘existing’.566 The contrary position, whereby disputes regarding Article also 10(5) are p. 214not arbitrable under Article 26, has also found expression in scholarly commentaries on the ECT.567 This view mainly argues that disputes arising out of alleged breaches of Article 10(5) are not arbitrable under Article 26, since an aggrieved person seeking to invest would not yet be an Investor.568 Nevertheless, Article 1(7), which defines ‘Investor’ under the ECT, does not require that an Investment be made by an entity for it to qualify as an ‘Investor’. ECT arbitral tribunals have not yet addressed the various questions discussed above, regarding the nature and content of Article 10(5) obligations,569 including those concerning the eventual arbitrability of disputes which may arise in connection with alleged breaches thereof.

Article 10(6) further provides for the rights to make voluntary declarations or commitments regarding the Making of Investments.570 Article 10(6)(a) provides for a right to ‘declare voluntarily’ the intention not to introduce new exceptions to Article 10(3) treatment. Such declaration is to be communicated to the Charter Conference through the Secretariat.571 Article 10(6)(b) provides that a voluntary commitment regarding the Making of Investments in economic activities in the energy sector of an Area of a Contracting Party may be made. Article 10(6)(b) commitments, to be notified to the Secretariat and listed in Annex V, are binding under the ECT.

Article 10(7) provides for an obligation to accord treatment to Investments of Investors and their related activities.572 Article 10(7) has been considered a ‘complex provision’.573 Article 10(7) ‘contains an obligation of non-discrimination underlying national and most favoured nation treatment’.574 To the extent that Article 10(7) provides for non-discrimination, it may overlap with the prohibition of discriminatory measures under Article 10(1) 1st Sentence 2nd Clause.575 The scope of application of Article 10(7) differs from that of similar provisions in other international investment agreements.576 Most prominently, Article 10(7), which does not apply to ‘establishment’ p. 215and ‘acquisition’,577 due to the ECT's primary focus on the protection of established Investments,578 differs in this respect from NAFTA Article 1102(1).579 Article 10(7) has been found to be breached if there is a ‘different treatment’ of an Investor or Investment in comparison to other Investors or Investments. The comparison may be made with respect to ‘the generality’.580 Various arbitral tribunals applying the NT standard, including ECT arbitral tribunals, appear to have been divided as to onus probandi aspects.581 Any diverging positions among arbitral tribunals regarding onus probandi of breaches of National Treatment (NT) may reflect the lack of a uniform position on the nature of such breaches.582 Treatment is to be no less favourable than the treatment accorded to national or third-state investors and their related activities. Such related activities include the management, maintenance, use, enjoyment or disposal of Investments. Treatment, in accordance with Article 10(7), is to be ‘whichever is the most favourable’.583

Article 10(7) may allow arbitral tribunals to assume jurisdiction over taxation measures falling under the Article 21(1) tax carve-out, which, in principle, fall outside their arbitral jurisdiction.584 In this regard, Article 21(3), which provides for a ‘claw-back of certain types of taxes’585 may operate, alongside Article 10(7) and any applicable BITs,586 in order to bring those taxes ‘back within the purview of ECT obligations’587 or of other ‘protections’ under any of those applicable ‘BITs that are corresponding to Article 10(1) ECT’.588 The protection available under those BITs would be rendered applicable ‘only if the claw-back of Article 21(3) ECT applied and referred […], via the most-favoured-nation (MFN) treatment of Article 10(7), to other investment treaties through which […] protection to foreign investors also in respect of taxation measures’ may be ‘accorded’.589 The BIT provisions applicable by virtue of MFN treatment under Article 10(7) would not ‘fall under the exclusionary provision of Article 21(3)(a)’, insofar as they would not be ‘tax provisions’, but ‘[r]ather, […] provisions that guarantee fair and equitable treatment, respect of obligations entered into […] (umbrella p. 216clauses), full protection and security as well as non-impairment’.590 However, Article 21(3) ‘excludes taxation on capital and income from taxation measures otherwise covered under Article 10(7)’.591 In this vein, although the term ‘income’ was not defined in the ECT,592 its use in Article 21(3) has not been deemed to be confined to ‘net income’ only.593 Furthermore, Article 25(1) allows for derogations from MFN treatment where preferential treatment under an Economic Integration Agreement is involved.594 Nevertheless, treatment not required by virtue of a derogation from the Article 10(7) MFN obligation under Article 25 may, nevertheless, be required under the Article 10(7) NT obligation.595

Article 10(1) and (7) contain the ECT's NT596 and MFN treatment597 standards of treatment, both giving effect non-discrimination.598 NT and MFN are regarded as ‘relative’ treatment standards.599 In this vein, Article 10(7) differs from the remainder of Part III standards, which are ‘non-contingent’ upon the treatment accorded by a Contracting Party to a national or third-state investor.600 The Article 10(7) MFN standard has been described as indeterminate in content601 and, unlike other provisions on MFN, does not condition MFN upon ‘like circumstances’.602 According to the PV Investors tribunal, the Article 10(7) MFN provision cannot ‘be used to import provisions from a third treaty […] to re-define the ratione personae requirements in the basic treaty, here the ECT’.603 Indeed, since ‘the application of the MFN clause in the ECT is predicated upon a requirement of diversity of nationality’, entities which are not ‘“Investors of other Contracting Parties” in respect to’ a given host state ‘cannot p. 217benefit from the MFN treatment in the first place’.604 This would be equally predicable of MFN treatment under Article 10(4).605

Pursuant to a Decision regarding Article 10(7), in the Russian Federation, legislative approval may be required for the leasing of federally owned property. This is subject to Russia's obligation to ensure that the process is applied in a non-discriminatory manner.

Article 10(8) provides that certain modalities of application of Article 10(7) are reserved for regulation by the Article 10(4) supplementary treaty. Article 10(7) application modalities concern programmes for the provision of grants or other financial assistance, or the conclusion of contracts, for energy technology research and development. According to the RREEF tribunal, the absence of Article 10(4) supplementary treaty does not have the ‘radical’ consequence of fully dispensing ECT signatories from their obligation to accord NT regarding the aforementioned programmes, since ‘absent modalities expressly regulated by a treaty, general international law applies’.606 Furthermore, as the RENERGY tribunal has noted, it ‘refers to the modalities of national treatment and MFN treatment only, not to FET’.607

Article 10(9) sets out an obligation to submit a report (Report). The Report, to be submitted to the Secretariat, is to summarise all laws, regulations and other measures relevant to exceptions to Article 10(2) (under Article 10(9)(a))608 and Article 10(8) programmes (under Article 10(9)(b)). With regard to Article 10(9)(a), the Report may designate parts of the energy sector in which Investors are accorded Article 10(3) treatment. With respect to Article 10(9)(b), the Charter Conference may consider in its review effects on competition and Investments. The Report is to be kept up to date and reviewed periodically by the Charter Conference.

Article 10(10) provides that, notwithstanding any other provision in Article 10, neither Article 10(3) nor Article 10(7) treatment applies to intellectual property.609 Intellectual property treatment is governed by the applicable international agreements.610 In addip. 218tion, it has been established that Article 10 may exceptionally apply to a tax measure, namely to the institution of a new tax, if this measure is not taken bona fide.611

Article 10(11) provides that the application of a trade-related measure to an Investment may be in breach of obligations under Part III, subject to Article 5(3) and (4).612 Articles 5(1) and (2) describe Trade-related Investment measures inconsistent with the General Agreement on Tariffs and Trade (GATT) or, in accordance with the Amendment to the Trade-related Provisions of the ECT, the Agreement Establishing the World Trade Organization (WTO Agreement).613 Article 10(11) incorporates into ECT Part III the obligations under the GATT and WTO rules to which Articles 5(1) and (2) relate.614 Article 10(11) enables the commencement of investor-state arbitration for breaches of rules which can, in principle, only be invoked in inter-state proceedings by WTO member states, within the WTO dispute settlement system.615 Where the ECT Contracting Party is a WTO Member, as is mostly the case at present, an Investor may rely on the WTO Agreement on Trade-Related Investment Measures (TRIMs Agreement),616 among other WTO instruments.617 ECT Article 5(2) reproduces an ‘illustrative list’ of Trade-related Investment measures inconsistent with GATT Articles III and XI annexed to the TRIMs Agreement.618 Pursuant to Article 10(11), Article 5 may only operate with regard to an Investment of an Investor ‘existing’ at the time of the application of the Trade-related Investment measures at issue, among other conditions.619

Article 10(12) sets out an obligation of providing effective claim assertion and right enforcement means. Such means relate to Investments and investment agreements and authorisations. While Article 10(12) may be said to partly overlap with FET under p. 219Article 10(1), the content of the former is considered more specific than the latter.620 A measure in breach of Article 10(1) obligations may also be in breach of Article 10(12) obligations.621 In particular, the conduct of legislative organs ‘affecting the administration of justice’ may be in breach of the Article 10(12) obligation.622 The ‘rule of law’ provides the basis to determine whether there is an ‘effective means’.623 In this vein, Article 10(12) is described as setting out a standard involving systemic and comparative aspects.624 Individual instances of conduct may not breach Article 10(12).625 In this vein, certain practical challenges posed by implementation may be relevant.626

Notes

1

See Final Act of the European Energy Charter Conference, Understandings, n. 9 with respect to Arts 9, 10 and Part V, p. 27 and Declarations, n. 4 with respect to Art 10, p. 31.

2

See Final Act of the European Energy Charter Conference, Understandings, n. 17 with respect to Arts 26 and 27, p. 28 and Chairman's Statement at Adoption Session on 17 December 1994, p. 157.

3

See Art 26(3)(c), p. 73; Art 27(2), p. 75 and Annex IA, p. 98.

4

See Final Act of the European Energy Charter Conference, Understandings, n. 10 with respect to Art 10(4), p. 27; n. 11 with respect to Arts 10(4) and 29(6), p. 28; Final Act of the European Energy Charter Conference, Declarations, n. 1 with respect to Art 1(6), p. 30 and Chairman's Statement at Adoption Session on 17 December 1994, p. 157.

5

See Decisions with respect to the Energy Charter Treaty (Annex 2 to the Final Act of the European Energy Charter Conference), n. 2 with respect to Article 10(7), p. 135; Article 32(1), p. 79 and Annex T pp. 113 and 126.

6

See Final Act of the European Energy Charter Conference, Declarations, n. 2 with respect to Arts 5 and 10(11), p. 30.

7

The author is grateful to Ali Al-Khasawneh and Christine Sim for their valuable comments on an earlier draft.

8

The Energy Charter Secretariat maintains in its website a ‘List of all Investment Dispute Settlement Cases’ (at https://energycharter.org/what-we-do/dispute-settlement/all-investment-dispute-settlement-cases/, consulted on 31 May 2023), in this list 150 cases, concluded and pending, are recorded as having been commenced under the ECT as of 1 June 2022. The list includes cases which have been settled and cases about which information is not publicly available. Likewise, the Energy Charter Secretariat provides a compilation of decisions for each of the cases listed which may draw on materials published by ‘specialized reporting services’, including materials not otherwise publicly available. Nykomb Synergetics Technology Holding AB v. The Republic of Latvia (SCC), Award, 16 December 2003 (Nykomb); Petrobart Ltd v. The Kyrgyz Republic (SCC 126/2003), Award, 29 March 2005 (Petrobart); Plama Consortium Ltd v. Republic of Bulgaria (ICSID ARB/03/24), Decision on Jurisdiction, 8 February 2005 (Plama Jurisdiction); Plama Consortium Ltd v. Republic of Bulgaria (ICSID ARB/03/24), Award, 27 August 2008 (Plama); Ltd Liability Company AMTO v. Ukraine (SCC 080/2005), Award, 26 March 2008 (AMTO); Europe Cement Investment & Trade SA v. Republic of Turkey (ICSID ARB(AF)/07/2), Award, 13 August 2009 (Europe Cement); Mohammad Ammar Al-Bahloul v. The Republic of Tajikistan (SCC V(064/2008)), Partial Award on Jurisdiction and Liability, 2 September 2009 (Al-Bahloul Jurisdiction and Liability); Hulley Enterprises Ltd (Cyprus) v. The Russian Federation (PCA AA 226), Interim Award on Jurisdiction and Admissibility, 30 November 2009 (Hulley Jurisdiction and Admissibility); Veteran Petroleum Ltd (Cyprus) v. The Russian Federation (PCA AA 228), Interim Award On Jurisdiction and Admissibility, 30 November 2009 (Veteran Jurisdiction and Admissibility); Yukos Universal Ltd (Isle of Man) v. The Russian Federation (PCA AA 227), Interim Award on Jurisdiction and Admissibility, 30 November 2009 (Yukos Jurisdiction and Admissibility); Ioannis Kardassopoulos and Ron Fuchs v. The Republic of Georgia (ICSID ARB/05/18 and ARB/07/15), Award, 3 March 2010 (Kardassopoulos); Mohammad Ammar Al-Bahloul v. The Republic of Tajikistan (SCC V(064/2008)), Final Award, 8 June 2010 (Al-Bahloul); Liman Caspian Oil BV and NCL Dutch Investment BV v Republic of Kazakhstan (ICSID ARB/07/14), Award, 22 June 2010 (LCO); AES Summit Generation Ltd, AES-Tisza Erömü Kft v. The Republic of Hungary (ICSID ARB/07/22), Award, 23 September 2010 (AES); Libananco Holdings Co Ltd v. Republic of Turkey (ICSID ARB/06/8), Award, 2 September 2011 (Libananco); Alapli Elektrik BV v. Republic of Turkey (ICSID ARB/08/13), Award, 16 July 2012 (Alapli); Khan Resources Inc, Khan Resources BV, CAUC Holding Company Ltd v. The Government of Mongolia, MonAtom LLC (PCA 2011-09), Decision on Jurisdiction, 25 July 2012 (Khan Jurisdiction); Electrabel SA v The Republic of Hungary (ICSID ARB/07/19), Decision on Jurisdiction, Applicable Law and Liability, 30 November 2012 (Electrabel Jurisdiction, Applicable Law and Liability); Energoalliance Ltd v. The Republic of Moldova (UNCITRAL, Ad Hoc), Arbitral Award, 23 October 2013 (Energoalliance); The AES Corporation and Tau Power BV v. Republic of Albania (ICSID ARB/10/16), Award, 1 November 2013 (AES & Tau); Anatolie Stati, Gabriel Stati, Ascom Group SA, Terra Raf Trans Trading Ltd v. The Republic of Kazakhstan (SCC V (116/2010)), Award, 19 December 2013 (Stati); Hulley Enterprises Ltd (Cyprus) v. The Russian Federation (PCA AA 226), Final Award, 18 July 2014 (Hulley); Veteran Petroleum Ltd (Cyprus) v. The Russian Federation (PCA AA 228), Final Award, 18 July 2014 (Veteran); Yukos Universal Ltd (Isle of Man) v. The Russian Federation (PCA AA 227), Final Award, 18 July 2014 (Yukos); The PV Investors v. The Kingdom of Spain (PCA 2012-14), Preliminary Award on Jurisdiction, 13 October 2014 (PV Investors Jurisdiction); State Enterprise Energorynok v. The Republic of Moldova (SCC V (2012/175)), Final Award, 29 January 2015 (Energorynok); Khan Resources Inc, Khan Resources BV, CAUC Holding Company Ltd v. The Government of Mongolia, MonAtom LLC (PCA 2011-09), Award on the Merits, 2 March 2015 (Khan Merits); Mamidoil Jetoil Greek Petroleum Products Société SA v. Republic of Albania (ICSID ARB/11/24), Award, 30 March 2015 (Mamidoil); Electrabel SA v. The Republic of Hungary (ICSID ARB/07/19), Award, 25 November 2015 (Electrabel); Hrvatska Elektroprivreda DD v. Republic of Slovenia (ICSID ARB/05/24), Award, 17 December 2015 (HEP); Charanne BV Construction Investments Sàrl v. Kingdom of Spain (062/2012), Final Award, 21 January 2016 (Charanne) [Dissenting Opinion of Tawil of 21 December 2015 (in Spanish) (Charanne Dissenting Opinion)]; RREEF Infrastructure (GP) Ltd and RREEF Pan-European Infrastructure Two Lux Sàrl v. Kingdom of Spain (ICSID ARB/13/30), Decision on Jurisdiction, 6 June 2016 (RREEF Jurisdiction); Isolux Infrastructure Netherlands, BV v. Kingdom of Spain (SCC V2013/153), Award, 12 July 2016 (Isolux) [Dissenting Opinion of Tawil of 6 July 2016 (in Spanish) (Isolux Dissenting Opinion)]; Blusun SA, Jean-Pierre Lecorcier and Michael Stein v. Italian Republic (ICSID ARB/14/03), Award, 27 December 2016 (Blusun); Eiser Infrastructure Ltd and Energia Solar Luxembourg Sàrl v. Kingdom of Spain (ICSID ARB/13/36), Award, 4 May 2017 (Eiser); Novenergia II - Energy & Environment (SCA) SICAR v. The Kingdom of Spain (SCC 2015/063), Final Arbitral Award, 15 February 2018 (Novenergia II); Antaris Solar and Dr Michael Göde v. The Czech Republic (PCA 2014-01), Award, 2 May 2018 (Antaris) [Dissenting Opinion of Mr Gary Born (Antaris Dissenting Opinion); Declaration of Judge Tomka (Antaris Declaration)]; Masdar Solar & Wind Cooperatief UA v. Kingdom of Spain (ICSID ARB/14/1), Award, 16 May 2018 (Masdar); Antin Infrastructure Services Luxembourg Sàrl and Antin Energia Termosolar BV v. The Kingdom of Spain (ICSID ARB/13/31), Award, 15 June 2018 (Antin); Foresight Luxembourg Solar 1 Sàrl and others v. The Kingdom of Spain (SCC 2015/150), Final Award, 14 November 2018 (Foresight); RREEF Infrastructure (GP) Ltd and RREEF Pan-European Infrastructure Two Lux Sàrl v. Kingdom of Spain (ICSID ARB/13/30), Decision on Responsibility and on the Principles of Quantum, 30 November 2018 (RREEF Responsibility and Quantum Principles); Greentech Energy Systems A/S, NovEnergia II Energy & Environment (S.C.A.) SICAR, and NovEnergia II Italian Portfolio SA v. The Italian Republic (SCC Arbitration V 2015/095), Final Award, 28 December 2018 (Greentech) [Dissenting Opinion of Arbitrator Giorgio Sacerdoti (Greentech Dissenting Opinion)]; CEF Energia BV v. The Italian Republic (SCC 158/2015), Award, 16 January 2019 (CEF); Cube Infrastructure Fund SICAV and others v. The Kingdom of Spain (ICSID ARB/15/20), Decision on Jurisdiction, Liability and Partial Decision on Quantum, 19 February 2019 (Cube Jurisdiction, Liability and Partially Quantum); NextEra Energy Global Holdings BV And NextEra Energy Spain Holdings BV v. The Kingdom of Spain (ICSID ARB/14/11), Decision on Jurisdiction, Liability and Quantum Principles, 12 March 2019 (NextEra Jurisdiction, Liability and Quantum Principles); WA Investments-Europa Nova Limited v. The Czech Republic (PCA 2014-19), Award, 15 May 2019 (WA); Voltaic Network GmbH v. The Czech Republic (PCA 2014-20), Award, 15 May 2019 (Voltaic); Photovoltaik Knopf Betriebs GmbH v. The Czech Republic (PCA 2014-21), Award, 15 May 2019 (Photovoltaik); ICW Europe Investments Limited v. The Czech Republic (PCA 2014-22), Award, 15 May 2019 (ICW); 9REN Holding Sàrl v. The Kingdom of Spain (ICSID ARB/15/15), Award, 31 May 2019 (9REN); InfraRed Environmental Infrastructure GP Limited and others v. The Kingdom of Spain (ICSID ARB/14/12), Award, 2 August 2019 (InfraRed); Belenergia SA v. The Italian Republic (ICSID ARB/15/40), Award, 6 August 2019 (Belenergia); OperaFund Eco-Invest SICAV PLC, Schwab Holding v. The Kingdom of Spain (ICSID ARB/15/36), Award, 6 September 2019 (OperaFund); BayWa r.e. Renewable Energy GmbH and BayWa r.e. Asset Holding GmbH v. The Kingdom of Spain (ICSID ARB/15/16), Decision on Jurisdiction, Liability and Directions on Quantum, 2 December 2019 (BayWa Jurisdiction, Liability and Quantum Directions); Stadtwerke München GmbH, RWE Innogy GmbH, and others v. The Kingdom of Spain (ICSID ARB/15/1), Award, 2 December 2019 (Stadtwerke) [Dissenting Opinion, Professor Kaj Hobér (Stadtwerke Dissenting Opinion)]; RWE Innogy GmbH and RWE Innogy Aersa SAU v. The Kingdom of Spain (ICSID ARB/14/34), Decision on Jurisdiction, Liability, and Certain Issues of Quantum, 30 December 2019 (RWE Jurisdiction, Liability and Quantum Issues); Watkins Holdings Sàrl and others v. The Kingdom of Spain (ICSID ARB/15/44), Award, 21 January 2020 (Watkins); The PV Investors v. The Kingdom of Spain (PCA 2012-14), Final Award, 28 February 2020 (PV Investors) [Concurring and Dissenting Opinion of Charles N. Brower (PV Investors Concurring and Dissenting Opinion)]; Hydro Energy 1 Sàrl and Hydroxana Sweden AB v. The Kingdom of Spain (ICSID ARB/15/42), Decision on Jurisdiction, Liability and Directions on Quantum, 9 March 2020 (Hydro Energy Jurisdiction, Liability and Quantum Directions); Sun Reserve Luxco Holdings Sàrl, Sun Reserve Luxco Holdings II Sàrl and Sun Reserve Luxco Holdings III Sàrl v. The Italian Republic (SCC 2016/32), Final Award, 25 March 2020 (Sun Reserve); Eskosol S.p.A. in liquidazione v. The Italian Republic (ICSID ARB/15/50), Award, 4 September 2020 (Eskosol); ESPF Beteiligungs GmbH, ESPF Nr. 2 Austria Beteiligungs GmbH and InfraClass Energie 5 GmbH & Co. KG v. The Italian Republic (ICSID ARB/16/5), Award, 14 September 2020 (ESPF); STEAG GmbH v. The Kingdom of Spain (ICSID ARB/15/4), Decision on Jurisdiction, Responsibility, and Instructions on Quantification of Damages, 8 October 2020 (in Spanish) (STEAG Jurisdiction, Responsibility, and Damage Quantification Instructions); Silver Ridge Power BV v. The Italian Republic (ICSID ARB/15/37), Award, 26 February 2021 (Silver Ridge); FREIF Eurowind Holdings Ltd v. The Kingdom of Spain (SCC 2017/060), Final Award, 8 March 2021 (FREIF); Antin Infrastructure Services Luxembourg Sàrl and Antin Energia Termosolar BV v. The Kingdom of Spain (ICSID ARB/13/31), Decision on Annulment, 30 July 2021 (Antin Annulment); STEAG GmbH v. The Kingdom of Spain (ICSID ARB/15/4), Award, 17 August 2021 (in Spanish) (STEAG); RENERGY Sàrl v. The Kingdom of Spain (ICSID ARB/14/18), Award, 6 May 2022 (RENERGY) [Dissent on Liability and Quantum, Professor Philippe Sands QC (RENERGY Dissenting Opinion)].

9

The collective works surveyed in this chapter include the following edited books, which, in turn, contain various relevant individual contributions: Peter Muchlinski, Federico Ortino and Christoph Schreuer (eds), The Oxford Handbook of International Investment Law (Oxford University Press 2008) [Muchlinski, Ortino, Schreuer (2008)]; August Reinisch (ed), Standards of Investment Protection (Oxford University Press 2008) [Reinisch (2008)]; Graham Coop and Clarisse Ribeiro (eds), Investment Protection and The Energy Charter Treaty (JurisNet 2008) [Coop & Ribeiro (2008)]; PM Dupuy, F Francioni and EU Petersmann (eds), Human Rights in International Investment Law and Arbitration (Oxford University Press 2009) [Dupuy, Francioni, Petersmann (2009)]; Christina Binder, Ursula Kriebaum, August Reinisch and Stephan Wittich (eds), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press 2009) [Binder, Kriebaum, Reinisch, Wittich (2009)]; Andrea K. Bjorklund and August Reinisch (eds), International Investment Law and Soft Law (Edward Elgar 2012) [Bjorklund & Reinisch (2012)]; Tarcisio Gazzini and Eric De Brabandere (eds), International Investment Law: The Sources of Rights and Obligations (Martinus Nijhoff 2012) [Gazzini and Brabendere (2012)]; Marc Bungenberg, Jorn Griebel, Stephan Hobe and August Reinisch (eds), International Investment Law: A Handbook (Nomos/Hart 2015) [Bungenberg, Griebel, Hobe, Reinisch (2015)].

10

See para 10.4.

11

See para 10.5.

12

See para 10.6.

13

See para 10.8.

14

See para 10.7.

15

See para 10.9.

16

See para 10.10.

17

See para 10.11.

18

See para 10.12.

19

See para 10.13.

20

See para 10.14.

21

See para 10.15.

22

See paras 10.16–10.17.

23

See paras 10.18–10.21.

24

See paras 10.22–10.23.

25

See paras 10.24–10.28.

26

See paras 10.15, 10.72, etc.

27

See paras 10.25–10.76.

28

Plama Jurisdiction, para 132.

29

ibid. (Part III contains ‘the ECT's principal substantive protections’); Veteran Jurisdiction and Admissibility, para 494; Yukos Jurisdiction and Admissibility, para 438; Hulley Jurisdiction and Admissibility, para 437 (Part III comprises ‘the Treaty's substantive articles on “Investment Promotion and Protection”’); Khan Jurisdiction, para 411; Electrabel Jurisdiction, Applicable Law and Liability, para 4.176 (referring to ‘the substantive protections in Part III of the ECT’). See also Thomas W. Wälde, ‘European Energy Charter Conference: Final Act, Energy Charter Treaty, Decisions and Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects’ (1995) 34(2) International Legal Materials 360 [Wälde (1995)] 360; Thomas W. Wälde and P.K. Wouters, ‘State Responsibility in a Liberalised World Economy: ‘State, Privileged and Subnational Authorities’ under the 1994 Energy Charter Treaty: An Analysis of Articles 22 and 23’ (1996) 27 Netherlands Yearbook of International Law 143 [Wälde and Wouters (1996)] 189; Kaj Hobér, ‘The Energy Charter Treaty: An Overview’ (2007) 8(3) The Journal of World Investment & Trade 323 [Hobér (2007)] 327; Lucy Reed and Lucy Martinez, ‘The Energy Charter Treaty: An Overview’ (2008) 14(2) ILSA Journal of International & Comparative Law 405 [Reed and Martinez (2008)] 407; Jorge E Viñuales, ‘Foreign Investment and the Environment in International Law: An Ambiguous Relationship’ (2010) 80(1) The British Year Book of International Law 244, 257; Thomas Roe, Matthew Happold and James Dingemans, Settlement of Investment Disputes under the Energy Charter Treaty (Cambridge University Press 2011) [Roe, Happold, Dingemans (2011)] 104; James Harrison, ‘The Life and Death of BITs: Legal Issues Concerning Survival Clauses and the Termination of Investment Treaties’ (2012) 13(6) The Journal of World Investment & Trade 928, 936; Rafael Leal-Arcas, Juan Alemany Ríos and Costantino Grasso, ‘The European Union and its Energy Security Challenges’ (2015) 8(4) Journal of World Energy Law & Business 291, 330 n. 255; Campbell McLachlan, Laurence Shore and Matthew Weiniger, International Investment Arbitration: Substantive Principles (Oxford University Press 2017) [McLachlan, Shore, Weiniger (2017)] 50 para 3.10.

30

Christoph H. Schreuer, Loretta Malintoppi, August Reinisch and Anthony Sinclair, The ICSID Convention: A Commentary (2nd ed, Cambridge University Press 2009) [Schreuer, Malintoppi, Reinisch, Sinclair (2009)] 604–5 para 171. Other classifications of treaties governing investment are used. Friedl Weiss, ‘Trade and Investment’ in Muchlinski, Ortino, Schreuer (2008) 365 [Weiss (2008)] 410 (‘[i]nvestment rules are […] included in bilateral, regional, interregional, and plurilateral’ agreements); Stefan D. Amarasinha and Juliane Kokott, ‘Multilateral Investment Rules Revisited’ in Muchlinski, Ortino, Schreuer (2008) 262 [Amarasinha and Kokott (2008)] 266 (describing the ECT as ‘inter-regional’).

31

Swiss Federal Tribunal, First Civil Law Court, Republic of Hungary v EDF International SA, Decision on Annulment (4A34/2015), 6 October 2015 (EDF Decision on Annulment) para 3.2.2 (referring to ‘[i]nvestment protection treaties, whether bilateral or multilateral’). See also Zachary Douglas, The International Law of Investment Claims (Cambridge University Press 2009) [Douglas (2009)] 2 para 2 (referring to the ECT).

32

The other matters tend to be economic. Weiss (2008) 410 (some treaties ‘integrate rules on foreign investment into a broader framework on economic cooperation and integration – such as EC, NAFTA’ and the ECT).

33

Lucy Reed and Robert Kirkness, ‘Old Seeland, new Netherland and New Zealand: Some thoughts on the possible ‘discovery’ of investment treaty arbitration in New Zealand’ (2012) 43(4) Victoria University of Wellington Law Review 687 [Reed and Kirkness (2012)] 693 n. 22; August Reinisch, ‘Legality of Expropriations’ in Reinisch (2008) 171 [Reinisch (2008b)] 173 n. 8 (referring to FTAs ‘with investment chapters as well as multilateral investment relevant treaties’, like the ECT); Christian Tietje and Emily Sipiorski, ‘The Evolution of Investment Protection Based on Public International Law Treaties: Lessons to Be Learned’ in Bjorklund and Reinisch (2012) 192 [Tietje and Sipiorski (2012)] 193 (the ECT is similar to FTAs which ‘include an investment chapter that can be seen as the equivalent of’ an investment treaty).

34

The ECT is often described as ‘unique’ among treaties on investment. Richard Happ, ‘The Energy Charter Treaty’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 240 [Happ (2015)] 245 para 15.

35

In addition to being described as multilateral, the ECT is described in various ways. Ratione materiae, the ECT is sectoral. Pia Acconci, ‘Most-Favoured-Nation Treatment’ in Peter Muchlinski, Federico Ortino and Christoph Schreuer (eds), The Oxford Handbook of International Investment Law (Oxford University Press 2008) in Muchlinski, Ortino, Schreuer (2008) 652 [Acconci (2008)] 666; Amarasinha and Kokott (2008) 266; L Liberti, ‘The Relevance of Non-Investment Treaty Obligations in Assessing Compensation’ in Dupuy, Francioni, Petersmann (2009) 557, 568 (the ECT exemplifies ‘investment-related norms in sectoral agreements’); Stephan Schill, The Multilateralization of International Investment Law (Cambridge University Press 2009) 43; Reed and Kirkness (2012) 693 n. 22 (being ‘sector-specific’, the ECT is ‘[o]ne notable exception’ among treaties on investment). The ECT is frequently described as regional. Stephen Vasciannie, ‘The Fair and Equitable Treatment Standard in International Investment Law and Practice’ (2000) 70(1) British Year Book of International Law 99 [Vasciannie (2000)] 117 (the ECT ‘is limited […] to the European continent’); Ioana Tudor, The Fair and Equitable Treatment Standard in the International Law of Foreign Investment (Oxford University Press 2008) [Tudor (2008)] 43 nn 125, 129 (describing the ECT as ‘regional’ and ‘sectorial’); I Knoll-Tudor, ‘The Fair and Equitable Treatment Standard and Human Rights Norms’ in Dupuy, Francioni, Petersmann (2009) 310, 315; Moshe Hirsch, ‘Sources of International Investment Law’ in Bjorklund and Reinisch (2012) 9, 10 n. 3; Chester Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 153, 181 para 70. Nonetheless, the ECT limits its scope ratione materiae only. McLachlan, Shore, Weiniger (2017) 16 para 1.60 (‘[t]he ECT is restricted ratione materiae to the energy sector’). Thus, the ECT is primarily sectoral and applies beyond a particular geographical region. McLachlan, Shore, Weiniger (2017) 26 para 2.02 (unlike NAFTA ‘and the ASEAN Comprehensive Investment Agreement (ACIA), which are […] regional’, the ECT ‘is focused on a particular economic activity’); Surya P. Subedi, International Investment Law: Reconciling Policy and Principle (Hart 2008) [Subedi (2008)] 109 (the ECT has been ratified also by Japan, Mongolia and Australia).

36

Andrei Konoplyanik and Thomas W. Wälde, ‘Energy Charter Treaty and Its Role in International Energy’ (2006) 4 Journal of Energy & Natural Resources Law 523 [Konoplyanik and Wälde (2006)] 526 (‘the ECT is currently the only major multilateral treaty in the energy field’); Happ (2015) 245 para 14 (‘[t]he ECT thus creates a specific legal regime for energy-related investments’).

37

Konoplyanik and Wälde (2006) 526 (‘the ECT is currently […] in terms of investment protection, the multilateral treaty with the largest geographical and country coverage’); Thomas W. Wälde, ‘Interpreting Investment Treaties: Experiences and Examples’ in Christina Binder, Ursula Kriebaum, August Reinisch and Stephan Wittich (eds), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press 2009) 725 [Wälde (2009)] 725 (describing the ECT as ‘the world's major multilateral investment treaty’); Happ (2015) 245 para 15 (the ECT's scope is broader than NAFTA’s).

38

Rudolf Dolzer and Margrete Stevens, Bilateral Investment Treaties (Martinus Nijhoff 1995) xiii (the ECT is ‘noteworthy given the long-standing absence of consensus’ on foreign investment among states); Thomas W. Wälde, ‘Investment Arbitration under the Energy Charter Treaty – From Dispute Settlement to Treaty Implementation’ (1996) 12(4) Arbitration International 429 [Wälde (1996)] 429–30 (unlike prior multilateral instruments, like the Havanna Charter and the Abs-Shawcross Convention, the ECT ‘has succeeded in achieving […] a legally binding’ character).

39

Karl-Heinz Böckstiegel, ‘The Future of International Investment Law – Substantive Protection and Dispute Settlement’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 1863, 1871 para 39 (the ECT may pave the way to ‘start replacing’ BITs); Happ (2015) 260 para 64 (the ECT is useful where ‘new sources of energy are available, but […] investments and political stability’ are not).

40

The ECT is not a multilateral investment treaty, in the sense of a multilateral treaty concerned in whole with investment. Veijo Heiskanen, ‘Arbitrary and Unreasonable Measures’ in Reinisch (2008) 87 [Heiskanen (2008)] 89; Reinisch (2008b) 173 n. 8 (using the term ‘multilateral investment relevant treaty’); Ole Spiermann, ‘Applicable Law’ in Muchlinski, Ortino, Schreuer (2008) 212 [Spiermann (2008)] 226; Andreas R. Ziegler, ‘Is the MFN Principle in International Investment Law Ripe for Multilateralization or Codification?’ in Bjorklund and Reinisch (2012) 238 [Ziegler (2012)] 245 (the ECT ‘comes closest to the concept of a multilateral binding agreement’ on investment); Christoph Schreuer, ‘The Future of International Investment Law’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 1863, 1909 para 22 (the ECT ‘represents a multilateral […] framework’).

41

Lawrence L Herman, ‘NAFTA and the ECT: Divergent Approaches with a Core of Harmony’ (1997) 15(2) Journal of Energy & Natural Resources Law 129 [Herman (1997)] 144–5; Rainer Liesen, ‘Transit Under the 1994 Energy Charter Treaty’ (1999) 71(1) Journal of Energy & Natural Resources Law 56, 66–7; RJ Stevenson, ‘Energy Charter Treaty: Implications for Australia’ (2001) 19(2) Journal of Energy & Natural Resources Law 113 [Stevenson (2001)] 128; Ole Kristian Fauchald, ‘International Investment Law and Environmental Protection’ (2007) 17(7) Yearbook of International Environmental Law 3 [Fauchald (2007)] 4 n. 8 (‘environmental provisions […] are placed in Part IV’, having ‘consequences in the context of dispute settlement’); Reed and Martinez (2008) 407.

42

Veteran Jurisdiction and Admissibility, para 494; Yukos Jurisdiction and Admissibility, para 438; Hulley Jurisdiction and Admissibility, para 437 (referring to Art 10 in particular); Electrabel Jurisdiction, Applicable Law and Liability, para 6.14 (referring to ‘standards of protection under Article 10 ECT’).

43

Al-Bahloul Jurisdiction and Liability, para 11. See also Crina Baltag, The Energy Charter Treaty: The Notion of Investor (Kluwer International Law 2012) [Baltag (2012)] 13.

44

Investment is only used in ‘lower case’, as modifier, within various nominal phrases contained in the ECT, such as ‘trade-related investment measure’, in Art 10(11), and ‘investment agreements and investment authorizations’, in Art 10(12). Baltag (2012) 171 n. 29 (describing the use of ‘investment’ as ‘adjectives and not as nouns’).

45

Antin, para 207; Eiser, para 183; AMTO, para 73.

46

AMTO, ibid. (referring specifically to the use of ‘at all times’ and ‘the most constant’ in Art 10(1)).

47

Plama Jurisdiction, para 141 (referring to Art 26 as a significant feature of the ECT, and to the ECT itself as ‘marking’ investors ‘transition from objects to subjects of international law’). See also Douglas (2009) 33 para 67; McLachlan, Shore, Weiniger (2017) 42 para 2.70 (listing ‘[t]he substantive rights protected under the ECT’).

48

Thomas W. Wälde, ‘Renegotiating Acquired Rights in the Oil and Gas Industries: Industry and Political Cycles Meet the Rule of Law’ (2008) 1(1) Journal of World Energy Law & Business 55, 57 (Art 26 illustrates that ‘rule of law’ notions underlie treaty-based investment protection, including under the ECT); Thomas W. Wälde and Walid Ben Hamida, ‘Questions and Observations: Interactive Session, Part I – The Energy Charter Treaty and corporate acquisition’ in Coop and Ribeiro (2008) p. 157 [Wälde and Ben Hamida (2008)] 166 (discussing availability of a ‘direct investor-state arbitration right’ in BITs and NAFTA Chapter XI); Happ (2015) 257 para 54; Chin Leng Lim, Jean Ho and Martins Paparinskis, International Investment Law and Arbitration: Commentary, Awards and Other Materials (Cambridge University Press 2018) 25 n. 53 (‘[t]he ECT 1994 is a multilateral treaty […] providing for investment arbitration under Art 29 [sic]’).

49

Moshe Hirsch, ‘Interactions between Investment and Non-investment Obligations’ in Muchlinski, Ortino, Schreuer (2008) 319, 325 (NAFTA Art 103, ‘the Energy Charter Treaty, the Canadian, and US model BITs include several provisions that explicitly set out the relationships between investment agreements and other treaties’); Eirik Bjorge, ‘EU Law Constraints on Intra-EU Investment Arbitration?’ (2017) 16(1) The Law & Practice of International Courts and Tribunals 71 [Bjorge (2017)] 79 (‘the ECT contains a provision which specifically deals with other international law’).

50

Tomás Fecák, International Investment Agreements and EU Law (Kluwer 2016) [Fecák (2016)] 397.

51

Art 16 (setting out rules applicable ‘[w]here two or more Contracting Parties have entered into a prior international agreement, or enter into a subsequent international agreement, […]’).

52

Fecák (2016) 397–8 (arguing that ‘this provision might be possibly construed as requiring that other international agreements (whether anterior or posterior) may not lower the level of investment protection accorded by the ECT and may not jeopardize the right of investors to pursue their claims in investment treaty arbitration’).

53

Art 16, which employs the clause ‘nothing […] shall be construed’, refers to interpretation. Robert Kolb, The Law of Treaties: An Introduction (Edward Elgar 2016) [Kolb (2016)] 188 (considering this type of priority among treaties to be ‘plainly an issue of interpretation’). But see Roe, Happold, Dingemans (2011) 35 (‘Article 16 refers to derogations from Part III and V; it does not cover how their provisions are to be interpreted in the first place’).

54

Kolb (2016) 188 (proposing this concept); Bjorge (2017) 79 (using the concept to describe Art 16).

55

ibid. (citing Art 53 of the European Convention on Human Rights as example).

56

Matthew Happold and Thomas Roe, ‘The Energy Charter Treaty’ in Gazzini and Brabandere 2012) 72 [Happold and Roe (2012)] (‘Article 16 would appear designed to avoid disputes as to whether one such agreement has displaced the other by application of the principles lex posterior derogate [sic] priori or lex specialis derogate [sic] generali’).

57

‘To put the more favourable construction upon a thing’. Cicero, Pro Munera, cited in ‘Favourable’, in William Smith and Theophilus D. Hall, Smith's English-Latin Dictionary (Bolchazy-Carducci Publishers 2000) 291.

58

Wälde (2009) 766 n. 141 (considering whether ‘accession by the former East European countries to the EU does, or does not, extinguish pre-existing, BIT or ECT-based, private investor rights’).

59

Angelos Dimopoulos, EU Foreign Investment Law (Oxford University Press 2011) 330 (including Arts 10, 11, and 14).

60

Wälde and Ben Hamida (2008) 184.

61

ibid., 168.

62

Wenhua Shan, The Legal Framework of EU-China Investment Relations: A Critical Appraisal (Hart 2005) [Shan (2005)] 71, 281 (discussing the role of the EC and its Member States, including in the conclusion of the ECT); Marc Bungenberg and Stephan Hobe, ‘The Relationship of International Investment Law and European Union Law’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 1602 [Bungenberg and Hobe (2015)] 1607 para 10 (the ECT reflected the EU position on investment prior to the Lisbon Treaty).

63

Wälde and Ben Hamida (2008) 209.

64

Konoplyanik and Wälde (2006) 528 (the ECT reflects directives reforming EU energy law, albeit in ‘diluted form’).

65

Wälde and Ben Hamida (2008) 214 n. 114–15 (‘[t]he rights and obligations under the Energy Charter Treaty have a separate existence and a separate procedural regime from those in the European Union instruments’, citing International Tribunal for the Law of the Sea, Mox Plant, Provisional Order, 30 December 2001, para 51 and Eritrea Ethiopia Claims Commission, Partial Award, 1 July 2003, para 21).

66

Happ (2015) 245 para 18 (adding that arbitral tribunals favour the applicability of the ECT).

67

Wälde and Ben Hamida (2008) 210 (the ECT did not provide for its non-application ‘within a regional economic integration organisation’).

68

ibid., 211 n. 108 (adding that the ECT does not contain other provisions to a similar effect, such as a ‘clause according to which the EU instruments prevail over the provisions of the agreement’, like Art 3(2) of Convention concerning International Carriage by Rail, of 9 May 1980).

69

ibid., 212 (unlike Art 26, EU law ‘does not provide a procedural remedy to the investor’).

70

McLachlan, Shore, Weiniger (2017) 43 para 2.74.

71

CJEU, Slovak Republic v. Achmea BV (Case C-284/16), Judgment, 6 March 2018 (Achmea). The Masdar tribunal concluded that the judgment of the Court of Justice of the EU (CJEU) in Achmea ‘has no bearing’ on that arbitration, since the ECT is not a BIT, and the CJEU remained ‘simply silent on the subject of the ECT’. Masdar, paras 678–683. See also Roe, Happold, Dingemans (2011) 94 (‘[t]he effects of EU law […] go (if at all) to the merits of the claim, not to whether a tribunal constituted under Article 26 has jurisdiction to hear it or whether it is admissible’).

72

Art 16 concerns the operation of Part V as well. Bjorge (2017) 79.

73

Veteran Jurisdiction and Admissibility, para 495; Yukos Jurisdiction and Admissibility, para 439; Hulley Jurisdiction and Admissibility, para 438.

74

Veteran Jurisdiction and Admissibility, para 496; Yukos Jurisdiction and Admissibility, para 440; Hulley Jurisdiction and Admissibility, para 439. See also Andrea K. Bjorklund, John F.G. Hannafor, Meg Kinnear, Investment Disputes under NAFTA: an Annotated Guide to NAFTA Chapter 11 (Kluwer 2006) para 1113–19(D) (noting that Art 17(l) is similar to NAFTA Art 1113(2)); Dominique D’Allaire, ‘The Nationality Rules under the Energy Charter Treaty: Practical Considerations’ (2009) 10(1) The Journal of World Investment & Trade 39 [D’Allaire (2009)] 53 (discussing similar provisions in US BITs and NAFTA); Douglas (2009) 318 para 592; Anne K. Hoffmann, ‘Denial of Benefits’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 598 [Hoffmann (2015)] 600 para 8; McLachlan, Shore, Weiniger (2017) 212 para 5.181 (like Art 17 of the 2012 US model BIT, Art 17 exemplifies denial of benefits clauses).

75

‘[T]his Part’, within the meaning of Art 17, is Part III. Veteran Jurisdiction and Admissibility, para 497; Yukos Jurisdiction and Admissibility, para 441; Khan Jurisdiction, para 411; Libananco, para 550 (under Art 17, ‘each Contracting Party ‘reserves the right’ to deny the advantages of Part III of the Treaty’); Alapli, para 326 (‘each Contracting Party reserves the right to deny the advantages of [Part III]’). See also D’Allaire (2009) 55.

76

Arbitral tribunals have been divided over whether the effect of a denial of benefits clause is retrospective or prospective. See Plama and LCO, paras 224–5 (holding that Art 17(1) had prospective effect). But see Ulysseas Inc v. Ecuador (Interim Award) (PCA 2009-19 (2010), para 172 (finding that the denial of benefits clause did not only apply prospectively, and that retrospective application was acceptable). For a discussion of this question, see Happ (2015) 256–7 para 52 (‘ascribing […] a merely prospective effect […] would severely curtail the scope of application’); McLachlan, Shore, Weiniger (2017) 213 paras 5.183–5.184 (discussing Plama, Liman and Ulysseas).

77

Plama Jurisdiction, para 161.

78

Veteran Jurisdiction and Admissibility, para 497; Yukos Jurisdiction and Admissibility, para 441; Hulley Jurisdiction and Admissibility, para 440 (‘[p]rovision for dispute settlement under the ECT is not found in’ Part III).

79

Veteran Jurisdiction and Admissibility, para 348; Yukos Jurisdiction and Admissibility, para 348; Hulley Jurisdiction and Admissibility, para 348 (referring to ‘the material rules for the protection of investments in Part III of the ECT’ alongside Part V provisions, as ‘specific elements of the ECT’).

80

Furthermore, this distinction is without prejudice to the obligation to apply jointly Parts III and V during the ECT's provisional application. Anatole Boute, ‘The Protection of Russian Investments in the EU Energy Market: A Case in Support of Russia's Ratification of the Energy Charter Treaty’ (2014) 29(3) ICSID Review – Foreign Investment Law Journal 525, 533.

81

Veteran Jurisdiction and Admissibility, para 497; Yukos Jurisdiction and Admissibility, para 441; Hulley Jurisdiction and Admissibility, para 440.

82

Plama Jurisdiction, para 147 (relying on VCLT Art 31(1) and noting the ‘substantive’ nature of Part III benefits).

83

ibid., para 149. But see Engela C Schlemmer, ‘Investment, Investor, Nationality, and Shareholders’ in Muchlinski, Ortino, Schreuer (2008) 140, 166 (stating that under ‘Article 17(1) […] each Contracting Party reserves the right to deny the benefits of the Treaty’, without specifying that only Part III benefits may be denied).

84

ibid., para 240(A)(1) (‘Article 17(1) ECT has no relevance to the Tribunal's jurisdiction’ regarding claims under Part III); Veteran Jurisdiction and Admissibility, para 497; Yukos Jurisdiction and Admissibility, para 441; Hulley Jurisdiction and Admissibility, para 440 (referring to the interpretation of Art 17(1)); Khan Jurisdiction, paras 411–12 (noting its concordance with Yukos and Plama). See also Pia Acconci, ‘Determining the Internationally Relevant Link between a State and a Corporate Investor: Recent Trends concerning the Application of the ‘Genuine Link’ Test’ (2004) 5(1) The Journal of World Investment & Trade 139, 152; Elvira R Gadelshina, ‘Burden of Proof under the ‘Denial-of-Benefits’ Clause of the Energy Charter Treaty: Actori Incumbit Onus Probandi?’ (2012) 29(3) Journal of International Arbitration 269, 281; Happ (2015) 255 para 48.

85

Happ ibid. (adding that ‘[t]he facts alleged by the claimants, even if taken to be true, cannot amount to a breach of the respondent contracting party's obligation under Part III of the ECT’).

86

Veteran Jurisdiction and Admissibility, para 497; Yukos Jurisdiction and Admissibility, para 441 (‘a question not of jurisdiction but of the merits’). Khan Jurisdiction, para 411 (a matter ‘for the merits, not jurisdiction’). See also Hobér (2007) 350–51 (commenting on Plama tribunal's rejection of the argument that ‘the applicability of Article 17 would affect the jurisdiction of the tribunal’, and adding that the Petrobart tribunal had not addressed this issue); Pyoungkeun Kang, ‘The Relationship between the Investor-State Dispute Settlement and the Denial of Benefits with Specific Reference to the Energy Charter Treaty’ (2017) 19 Asian Business Lawyer 15, 38 (noting that it has been questioned whether the application of Art 17(1) is ‘a problem of jurisdiction, or admissibility of the claims, or merits of the dispute’).

87

Hoffmann (2015) 610 para 44 (‘not directed against the forum, but rather at the claim being heard’).

88

Wälde (1996) 438 (‘Chapter [sic] III of the Treaty defines the proper scope for investment arbitration’); Hobér (2007) 328 (Part III ‘delineates the right to arbitration’); Kaj I. Hobér, Andrea J. Menaker and Heather van Slooten Walsh, ‘Interplay of the Energy Charter Treaty with Other Treaties’ in Coop and Ribeiro (2008) p. 235 [Hobér, Menaker, Slooten Walsh (2008)] 265 (‘[t]he scope of protection pursuant to Part III of the ECT also delimits the availability of arbitration under Article 26’).

89

The Russian Federation v. Veteran Petroleum Ltd, The Russian Federation v. Yukos Universal Ltd, The Russian Federation v. Hulley Enterprises Ltd (The Hague District Court Chamber for Commercial Affairs) Judgment, 20 April 2016, para 5.32 (Art 26 ‘only created the option for arbitration for an (alleged) breach of obligations’). See also Wälde (1996) 453; Emmanuel Gaillard, ‘Questions and Observations: Interactive Session, Part II – How does the so-called ‘fork-in-the-road’ provision in Article 26(3)(b)(i) of the Energy Charter Treaty work? Why did the United States decline to sign the Energy Charter Treaty?’ in Coop and Ribeiro (2008) 221, 227 (pointing out the unlikelihood of applying a fork-in-the-road provision, since an Investor may be unable to initiate proceedings before a domestic courts ‘based on alleged breaches of […] Part III’); Reed and Martinez (2008) 407 (Part II and Part IV claims are not arbitrable under Art 26); Lucy Reed, Jan Paulsson and Nigel Blackaby, Guide to ICSID Arbitration (Kluwer 2010) 116–17 (a dispute, albeit involving a foreign investor, is not arbitrable under Art 26, if ‘the relevant provision is not contained in Part III’).

90

Plama Jurisdiction, para 146 (‘unlike Article 27, Article 26 is a remedy limited to an alleged breach of Part III’). See also Konoplyanik and Wälde (2006) 545.

91

ibid., para 130 (upholding the effectiveness of the agreement to arbitrate). See Christoph Schreuer, ‘Consent to Arbitration’ in Muchlinski, Ortino, Schreuer (2008) 1405, 1406.

92

Europe Cement, para 140; Energorynok, para 57 (and the applicable institutional rules and the law of the lex arbitri).

93

Art 26(1). See also Reed and Martinez (2008) 418 (referring to ‘requirements […] ratione personae’).

94

Reed and Martinez (2008) 421; Wälde and Ben Hamida (2008) 176 (‘Article 26(1) […] regulates, inter alia, the jurisdiction rationae materiae of investor-state arbitral tribunals’ constituted under the ECT).

95

Al-Bahloul Jurisdiction and Liability, para 147. See also Zachary Douglas, ‘The Hybrid Foundations of Investment Treaty Arbitration’ (2004) 74(1) British Year Book of International Law 151, 238 (the ECT and NAFTA confine ‘ratione materiae jurisdiction […] exclusively to alleged violations of the substantive provisions of the treaty itself’).

96

Al-Bahloul Jurisdiction and Liability, para 163.

97

Electrabel Jurisdiction, Applicable Law and Liability, para 6.14 (namely, the ‘standards […] under Article 10’).

98

AES, paras 9.3.2, 9.3.3; Al-Bahloul Jurisdiction and Liability, para 172 (‘Article 22 is not contained in Part III of the Treaty (although it does cross-refer to Part III obligations)’).

99

Wälde (1996) 461.

100

The distinction between Part II and Part III has been raised in support of the annulment of an arbitral award concerning a claim arising out of a mere commercial transaction. Republique de Moldavie v. Société Komstroy (Cour d’Appel de Paris, RG N°13/22531), Arrêt, 12 Avril 2016 (discussing the distinction between Parts II and III in connection with an analysis of arbitral jurisdiction under Art 26(1), and setting aside an arbitral award involving claims over a contract of sale of energy, not deemed an investment).

101

Nykomb, 8 (since Art 22 did not ‘give rise to any separate claim’, its invocation was not to be ‘inadmissible’).

102

Reed and Martinez (2008) 423–4 (nevertheless a host state may be ‘estopped from objecting to a Tribunal's jurisdiction ratione materiae […] if the state approved the investment without objection as to its legality’); Douglas (2009) 242 para 463 (noting the similarity with NAFTA Art 1101 regarding this required ‘nexus’).

103

AMTO, paras 39–43. See also Lars Markert and Helene Bubrowski, ‘National Setting Aside Proceedings in Investment Arbitration’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 1460, 1472 para 13 n. 56 (noting that this may be taken into account in set aside proceedings); McLachlan, Shore, Weiniger (2017) 41 para 2.66 (discussing AMTO).

104

Douglas (2009) 234–5 paras 443–4 (identifying ‘four prototype provisions’).

105

ibid., para 443; Roe, Happold, Dingemans (2011) 45.

106

ibid. (treaties based on the US Model BIT (1994) restrict ‘ratione materiae jurisdiction to three legal sources’ of a dispute, namely the treaty, ‘an investment authorization’ or ‘an investment agreement’).

107

This set includes, most prominently, the ECT and NAFTA. Spiermann (2008) 226; ibid., 235 para 444.

108

Plama Jurisdiction, para 132 (referring to the ‘unambiguous wording’ of Art 26).

109

ibid. (referring to ‘Judge Higgins’ test in Oil Platforms’). See also Hobér (2007) 348 (discussing Plama Jurisdiction); Audley Sheppard, ‘The Jurisdictional Threshold of a Prima-Facie Case’ in Muchlinski, Ortino, Schreuer (2008) 1567, 1589–90 (noting that other tribunals have used a pro tem test without referring to Judge Higgin's approach); Happ (2015) 257 para 55.

110

Roe, Happold, Dingemans (2011) 44–5.

111

Nykomb, 4.4.3.(a). See also Wälde (1995) 364 (while investments made before the entry into force of the ECT are covered, ‘there is no retroactive protection’); Hobér (2007) 344 (discussing Nykomb).

112

McLachlan, Shore, Weiniger (2017) 232 para 6.58.

113

Energorynok, para 56 (referring to ‘general principles of international law’ as well).

114

Khan Merits, para 428.

115

Al-Bahloul Jurisdiction and Liability, para 159; AES, para 7.6.4; Electrabel Jurisdiction, Applicable Law and Liability, para 4.18. See also Wälde (1996) 457; Taida Begic, Applicable Law in International Investment Disputes (Eleven International Publishing 2005) 26 (Art 26(6) belongs to a ‘type of choice of law clauses’ which ‘refers only to the respective treaty and to the rules of international law’); Reed and Martinez (2008) 428; P.M. Dupuy, ‘Unification Rather than Fragmentation of International Law? The Case of International Investment Law and Human Rights Law’ in Dupuy, Francioni, Petersmann (2009) 45 [Dupuy (2009)] 56 (Art 26(6) contains ‘in substance’ the wording of NAFTA Art 1131); J Krommendijk and J Morijn, ‘‘Proportional’ by What Measure(s)? Balancing Investor Interests and Human Rights by Way of Applying the Proportionality Principle in Investor-State Arbitration’ in Dupuy, Francioni, Petersmann (2009) 422, 424; Schreuer, Malintoppi, Reinisch, Sinclair (2009) 562 para 36 (the ECT and NAFTA among ‘several multilateral treaties providing for ICSID arbitration […] contain clauses on applicable law that refer only to the respective treaty and to rules of international law’); Happold and Roe (2012) 71 n. 13 (citing AES); Ole Spiermann, ‘Investment Arbitration: Applicable Law’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 1373, 1385 para 36 (arguing that provisions listing sources of applicable law may have a ‘limited’ effect, contingent on their interpretation).

116

This double role of that provision is a feature of various investment treaties. Schreuer, Malintoppi, Reinisch, Sinclair (2009) 577 para 85 (which come into existence ‘upon the acceptance by the investor of the offer of consent to jurisdiction’).

117

Andrew E.L. Tucker, ‘The Energy Charter Treaty and ‘Compulsory’ International State/Investor Arbitration’ (1998) 11(3) Leiden Journal of International Law 513 [Tucker (1998)] 525 (discussing whether Art 26(6) ‘is intended to exclude the application of other conflict of laws rules’); Douglas (2009) 43 para 82 n. 11 (Art 26(6) is intended to confirm the competence of an arbitral tribunal ‘to apply the stipulated sources of law, rather than prescribe the connecting factors necessary to determine the applicable laws in any given case’).

118

R. Pavoni, ‘Environmental Rights, Sustainable Development, and Investor-State Case Law: A Critical Appraisal’ in Dupuy, Francioni, Petersmann (2009) 525, 528 n. 14 (arguing that under ICSID Convention Art 42(1) and ECT Art 26(6), ‘[a]s a branch of public international law, international environmental law is generally applicable in investor-state arbitrations’); Jorge E. Viñuales, ‘Investment Law and Sustainable Development: The Environment breaks into Investment Disputes’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 1714 [Viñuales (2015)] 1723 para 24.

119

Bruno Simma, ‘Foreign Investment Arbitration: A Place for Human Rights?’ (2011) 60(3) The International and Comparative Law Quarterly 573, 581 n. 31 (arguing that ECT Art 26(6), among others, may serve as a ‘means of intermediating human rights norms within the investment treaty framework’); Dupuy (2009) 56 (arguing that customary law providing for ‘obligations to protect’ various human rights including those of ‘peremptory character’, is applicable under Art 26(6)). But see C. Reiner and C. Schreuer, ‘Human Rights and International Investment Arbitration’ in Dupuy, Francioni, Petersmann (2009) 82, 82 (the ECT does not ‘[m]ention’ human rights).

120

Happ (2015) 259 para 60 (Art 26(6) ‘does not give a tribunal leeway to imply into the ECT further substantive investment protection provisions […] except due to provisions contained in Part III, such as the MFN obligation’).

121

Veteran, para 765; Yukos, para 765; Hulley, para 765.

122

This is the case of most arbitral tribunals. Schreuer, Malintoppi, Reinisch, Sinclair (2009) 605 para 171.

123

Energoalliance, para 387 (holding that ‘[n]o procedural norm or national legislation may be applied in respect of the Tribunal to the effect that it would oblige the Tribunal to award payments in any particular currency’). See also Schreuer, Malintoppi, Reinisch, Sinclair (2009) 581 para 96 (among treaties governing investment, ‘an exclusive reference to international law such as in the NAFTA and in the Energy Charter Treaty […] is also feasible’); Viñuales (2015) 1723 para 24 (arguing that Art 26(6), among others, allows for the ‘potential application of environmental norms stemming from both domestic and international law’).

124

Spiermann (2008) 230 (Art 26(6) and NAFTA Art 1131(1), among others, ‘list principles or rules of international law, but omit national law’).

125

Masdar, para 579 (‘[d]omestic case law is irrelevant to determining the calculation method for the fair market value of an investment under Article 10(1) of the ECT’); Plama, paras 138–9; Yukos, paras 1575–85. See also Jarrod Hepburn, Domestic Law in International Investment Arbitration (Oxford University Press 2017) 157–9 (critiquing the positions on the relevance of internal law in Plama and Yukos).

126

Eiser, para 337 (referring to a ‘question involving application of Spanish law’).

127

Stati, paras 831–41. See also McLachlan, Shore, Weiniger (2017) 42–3 para 2.71 (discussing Stati).

128

AES, para 7.6.6. See also Bungenberg and Hobe (2015) 1626 para 56 (discussing the character of EU law ‘as a “fact”’ in AES); McLachlan, Shore, Weiniger (2017) 43 para 2.74 (discussing AES).

129

Dupuy (2009) 56; Bruno Simma and Dirk Pulkowski, ‘Two Worlds, but Not Apart: International Investment Law and General International Law’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 360, 361 para 1 (‘[i]nvestment law is not […] a subsystem that functions in isolation from the remainder of public international law’); Happ (2015) 259 para 60 (Art 26(6), instead of incorporating substantive protection, ‘is the basis for the tribunal to apply, e.g., the principles of State responsibility’).

130

Concluded on 23 May 1969, and entered into force 27 January 1980. 1155 UNTS 331, 8 ILM 679 (1969). Antin, para 517 (noting that VCLT Art 31 ‘contains the general rule of customary international law’ on treaty interpretation); AES, para 7.6.5 (regarding the rules codified in VCLT Arts 31 and 32); RENERGY, para 598 (noting that ‘the interpretation of Article 10(1) ECT is governed by the VCLT, in particular the general rule of interpretation codified in Article 31(1) thereof’) See also Happold and Roe (2012) 71 n. 14.

131

Roe, Happold, Dingemans (2011) 28 (since ‘not all the parties to the ECT are also parties to the VCLT’).

132

Al-Bahloul Jurisdiction and Liability, para 164 (referring to the ‘question’ of ‘attribution to the State’ of conduct).

133

Adopted by the UN General Assembly (GA) in 2001. GA Res 56/83, UN Doc A/RES/56/83 (2001), Annex.

134

Antin, para 316 (stating that under Art 26(6), and as accepted by the respondent, cases are to be heard by ECT arbitral tribunals ‘not just under the ECT but taking into account also the rest of international law’).

135

ibid. (‘in application of the general principle of good faith, parties are not allowed to abuse their rights’).

136

Masdar, para 483; Eiser, para 375 (citing VCLT Art 31); Antin, para 259 (citing VCLT Art 31); EDF Decision on Annulment, para 3.5.1 (stating that the rule set out in VCLT Art 31(1) applies to the ECT, ‘[l]ike any other treaty’); Foresight, para 343. See also Reed and Martinez (2008) 406 n. 6; August Reinisch, ‘The Interpretation of International Investment Agreements’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 372 [Reinisch (2015)] 373 para 1.

137

Antin, para 207 (‘[t]he rule of Article 31 VCLT is an integral single rule […] Article 32 is a subsidiary rule’); Stadtwerke, para 193; STEAG Jurisdiction, Responsibility, and Damage Quantification Instructions, para 699 (referring to ‘el artículo 31 de la Convención de Viena sobre el Derecho de los Tratados, que contiene la norma general de derecho internacional consuetudinario para la interpretación de los tratados’); Silver Ridge, para 392 (noting it ‘must be guided by the customary rules of treaty interpretation as reflected in Articles 31 to 33 of the VCLT’); ESPF, para 749 (noting ‘Article 10(1) of the ECT must be interpreted in accordance with Article 31 of the VCLT, which sets out the general customary international law rules of treaty interpretation’); Sun Reserve, paras 674, 676, 937. But see Wälde (2009) 728–9 (arguing that Plama Jurisdiction, among others, shows that ECT arbitral tribunals depart from the VCLT, by ‘applying a very contract-text-focused standard commercial arbitration approach’).

138

Plama, para 168.

139

Mamidoil, paras 601, 602 (indicating the tribunal's agreement with the MTD v. Chile annulment decision). Reinisch (2015) 373 para 2 (investment treaties and the ECT ‘display a particularly high degree of generality and vagueness’).

140

Antin, para 518 (analysing the ordinary meaning of terms in the English and Spanish versions of Art 10(1)).

141

Wälde (2009) 756–7.

142

ibid., 756.

143

Wälde and Ben Hamida (2008) 179 (arguing that ‘the distinction between Part III issues and the obligations in other parts of the Treaty, which at times can seem overly strict, would not make sense’ and that ‘[t]he “effet utile” principle of treaty interpretation thus supports the view of justiciable pre-investment obligations’).

144

Veteran, para 1433; Yukos, para 1433; Hulley, para 1433 (finding that an interpretation whereby ‘the mere labelling of a measure as “taxation” would be sufficient to bring such measure within the ambit of Article 21(1) of the ECT’, would ‘seem difficult to reconcile such an interpretation with the purpose of Part III of the ECT’).

145

Wälde (2009) 757.

147

Wälde (1995) 362 (‘the Charter possesses considerable significance in the interpretation of the Treaty’); Happ (2015) 242 para 5 (‘the ECT must be read in the light of the European Energy Charter’). The European Energy Charter has been claimed to be an agreement. Wälde (2009) 757 (‘it is an Article 31(2)(a) VCLT “agreement” because it preceded and prepared for the ECT and was thus made “in connection with the conclusion of the treaty”’).

148

Wälde (2009) 766 (referring to ECT Art 34(3)(i)).

149

ibid. (noting that ‘[i]nterpretative agreements, at present, mainly take the form of interpretative decisions by treaty commissions, possible under both the NAFTA (Art 1131) and the CAFTA (Art 10.23)’).

150

ibid., 767.

151

ibid. (a respondent Contracting Party's support of an interpretative decision detrimental to the claimant raises ‘issues of third-party beneficiary rights, retroactive effect, self-judging, due process, and good faith’).

152

Plama, para 164.

153

ibid. Marc Bungenberg and Catharine Titi, ‘Precedents in International Investment Law’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 1505, 1513 para 15 (arguing that treating decisions of other arbitral tribunals as binding precedent is incompatible with the VCLT).

154

Wälde (2009) 732 (arguing that this holds true of multilateral treaties in general).

155

ibid., 777 (particularly those of the ECT and NAFTA, unlike most investment treaties).

156

ibid., 732 (arguing that a ‘consistent pro-State or pro-investor approach’ is absent from the VLCT).

157

Plama, para 167 (citing El Paso Energy International Co. v. Argentina and further noting that balance is to be struck between a Contracting Party's ‘sovereignty’ and ‘responsibility’ regarding the framework for economic development, on one hand, and the ‘necessity’ of foreign investment protection, on the other).

159

Blusun, para 319 (‘a balanced interpretation of the text of Article 10 read in the light of its object and purpose’).

160

Plama, para 164 (namely, ‘the rules of interpretation delineated by the Chairman's statement at the adoption session of the ECT on 17 December 1994’). ibid., n. 27 (citing Energy Charter Secretariat, The Energy Charter Treaty and Related Document. A Legal Framework for International Energy Cooperation, Chairman's Statement at Adoption Session on 17 December 1994, p. 158). See also Wälde (1995) 367 (since Chairman's Statement ‘was a basis for the willingness of several delegations to sign the Treaty and needs to be taken into account when interpreting the Treaty’).

161

Plama, ibid.

162

Wälde (2009) 733 (‘[t]he traditional interpretation maxims have not been dealt with’ in the VCLT).

163

Christoph H. Schreuer, ‘Selected Standards of Treatment Available under the Energy Charter Treaty, Part I – Fair and Equitable Treatment (FET): interactions with other standards’ in Coop and Ribeiro (2008) 63 [Schreuer (2008)] 68.

164

Schreuer (2008) 63.

165

ibid., 88.

166

OperaFund, para 425.

167

Schreuer (2008) 74.

168

ibid., 77.

170

Azurix Corp v. The Argentine Republic, Award, 14 July 2006 (Azurix), para 361 (noting that where a ‘paragraph consists of […] full statements, each listing in sequence a standard of treatment to be accorded to investments’ and ‘the last sentence’ sets out that treatment is to be ‘not less than required by international law’, the last sentence has ‘[t]he purpose’ of setting ‘a floor, not a ceiling’, which ‘ensures that, whichever content is attributed to the other two standards, the treatment accorded to investment will be no less than required by international law’). See also Schreuer (2008) 87 (discussing Azurix).

171

EDF Decision on Annulment, para 3.5.1 (‘the principle of good faith is intimately connected to the rule of interpretation of the effectiveness of the law, even if the latter does not expressly appear at Art. 31’ of the VCLT).

172

Masdar, paras 548–9, 551 (in accordance with ‘the default standard provided by customary international law’).

173

ibid., para 558.

174

Novenergia II, para 803 (as no rules in the ECT govern compensation for breaches of the ECT, it is ‘appropriate to apply general principles of customary international law to determine the relevant compensation standard’).

175

ibid., para 844 (Art 10 ‘moreover, is silent with respect to the interest rate that should apply’).

176

Antin, para 659 (noting the absence of provisions governing compensation for breaches of FET under the ECT); Masdar, para 548 (‘Article 10 of the ECT sets forth no express provisions regarding remedies or reparations for breach of the Treaty's protection’); Novenergia II, para 803 (‘the ECT does not embody a provision which regulates the applicable compensation standard for a state's violation of the obligation to accord fair and equitable treatment’). See also Wälde (1996) 440.

177

Stephan Wittich, ‘Investment Arbitration: Remedies’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 1391 [Wittich (2015)] 1395 para 9 (arguing that this holds true of general international law).

178

AMTO, para 112 (namely, a ‘general obligation’ of ensuring that a state-owned entity carry out a set of ‘activities which, in general terms of governance, management and organization’ enable it to observe Part III obligations).

179

Wälde and Wouters (1996) 168.

180

AMTO, para 112 (referring to ‘a commercial debt in a given instance’); Al-Bahloul Jurisdiction and Liability, para 172 (stating that, according to the AMTO tribunal, ‘Article 22 should not be understood as a rule of strict liability for the state, but rather as an independent obligation’).

181

Thomas W. Wälde; Kaj Hobér, ‘The First Energy Charter Treaty Arbitral Award’ (2005) 22(2) Journal of International Arbitration 83 [Wälde and Hobér (2005)] 90.

182

Wälde and Wouters (1996) 165.

183

Roe, Happold, Dingemans (2011) 168–9.

184

ibid., 169–70.

185

ibid., 171.

186

Al-Bahloul Jurisdiction and Liability, para 172 (‘Article 22 is not contained in Part III’). See ibid., 169 (concerning Art 23).

187

Wittich (2015) 1395 para 9 (arguing that Art 26(8) places the ECT among a few treaties on investment which ‘exceptionally do contain a provision concerning remedies’, which ‘usually narrows the range of available remedies’).

188

Douglas (2009) 94 para 165 (arguing there is ‘a sui generis regime of state responsibility for investment treaties’).

189

ibid. (‘[t]he secondary obligations generated by the implementation of state responsibility in these cases are different in their legal character from secondary obligations that arise on the inter-state plane’).

190

Art 26(8), 2nd Sentence (‘An award of arbitration concerning a measure of a sub-national government or authority of the disputing Contracting Party shall provide that the Contracting Party may pay monetary damages in lieu of any other remedy granted’).

191

Happ (2015) 259 para 62 (‘the national government […] might not be able to implement an award ordering specific performance’).

192

ASR Art 35, ILC Commentary (6), 98 (‘[t]he term “restitution” […] has a broad meaning, encompassing any action that needs to be taken by the responsible State to restore the situation resulting from its internationally wrongful act’); Happ (2015) 259 para 62 (under Art 26(8) 2nd Sentence, ‘specific performance is […] an available remedy’).

193

ASR Art 34 (‘[f]ull reparation for the injury caused by the internationally wrongful act shall take the form of restitution, compensation and satisfaction, either singly or in combination’).

194

Petrobart, p. 73 (‘this question is a preliminary’ to that concerning a damage resulting from a breach, if any).

195

Electrabel Jurisdiction, Applicable Law and Liability, para 758. See also Reed and Martinez (2008) 420.

196

Reed and Martinez, ibid.

197

Electrabel Jurisdiction, Applicable Law and Liability, para 758.

198

These relations among breach, international responsibility and attribution, in the order formulated by this tribunal, follow from its use of the phrase ‘in order to’ and ‘i.e’. Al-Bahloul Jurisdiction and Liability, para 164 (‘In order to find that Respondent is in breach of the ECT, we must find that its international responsibility is incurred, i.e. that the actions or omissions alleged to be in breach of […] the Treaty are in fact attributable to the State’ (emphasis added)).

199

This equivalence between attribution and violation follows from the use of ‘in order to’ and the conjunction ‘and’. Electrabel Jurisdiction, Applicable Law and Liability, para 758 (‘In order to constitute a violation of the ECT, an act has to be both attributable to the State and a violation of an international obligation under the ECT’ (emphasis added)).

200

ASR Art 2(a), on attribution, and 2(b), on breach, in aggregate, constitute an internationally wrongful act.

201

ASR Art 1.

202

ASR Art 13.

203

ASR Arts 20–26.

204

ASR Arts 1, 28.

205

Blusun, para 362 (adding that ‘The first two sentences of ECT Article 10(1) do not define an aggregate of acts as wrongful in the way that Article 1 of the Genocide Convention does’).

206

ibid., para 364 (referring to a claim of breach of the ‘stability undertaking’ under Article 10(1) 1st Sentence).

207

ibid., para 375.

208

ibid., paras 394, 395 (concluding that, since the claimant failed to prove that the respondent had caused the alleged failure of the claimant's project at issue, Art 10(1) had not been breached, thus precluding an analysis of damages).

209

Petrobart, p. 73 (referring to ‘an examination of whether or to what degree the breach resulted in damage’).

210

Eskosol, para 380.

211

ibid. (referring to ‘treaty obligations with respect to a particular investor and investment’).

212

Electrabel, para 120 n. 52 (citing the ILC Commentary to ASR Art 2 and stating that ‘damages (or loss) are generally not necessary to a finding of liability, whilst remaining necessary to the granting of compensation, unless of course loss or damage are a constituent part of the legal wrong’).

213

Masdar, paras 558–62 (denying restitution, like ‘[s]imilarly situated tribunals’ which ‘have denied restitution of regulatory regimes’, since ASR Art 35(b) ‘exempts responsible States from their primary obligation to make restitution when restitution is disproportionately burdensome compared to the benefit which would be gained’).

214

ibid., para 580 (‘[t]he standard of compensation for a breach of Article 10(1) of the ECT, as well as the method of quantification of such compensation, are prescribed by international law, and are defined autonomously’); Eiser, para 419; Novenergia II, para 803.

215

Electrabel, para 120.

216

Eiser, para 420.

217

Nykomb, p. 38; OperaFund, para 609 (finding that ‘[a]s the ECT does not specify the consequences of a breach of the Article 10(1) standards, customary international law applies’); Foresight, para 432. See also Hobér (2007) 354 (commenting on Nykomb and Petrobart).

218

Supra, para 10.18.

219

Antin, para 664; Masdar, para 550 (noting that ASR Art 31 ‘codified the Chorzów Factory principle, requiring that States responsible for an internationally wrongful act make full reparation for the moral and material injury caused’); Nykomb, p. 38; OperaFund, para 609 (noting that ‘the relevant principles of customary international law are derived from the PCIJ Judgment in the Chorzów Factory Case and are recorded in Articles 31–8 of the ILC Draft Articles’). See also Hobér (2007) 354 (noting that ‘[g]uidance is usually sought from’ the ASR).

220

Antin, paras 663–4; Novenergia II, paras 804–6; Eiser, para 424; Silver Ridge, para 512.

221

Masdar, para 558.

222

Eiser, para 434 (referring to the implications of FET as for quantum).

223

Masdar, para 575 (noting, in relation to asset-based valuation (ABV) and the DCF, that ‘both valuation methods – DCF and ABV – are widely accepted in valuation theory and […] used by tribunals in investment treaty arbitrations’).

224

ibid., paras 567, 577.

225

ibid., paras 575, 587.

226

Masdar, para 661; Eiser, para 475; Novenergia II, para 844; Foresight, para 544.

227

STEAG, para 102.

228

A Declaration was adopted by Canada and the US in relation to Art 10. This Declaration set out considerations for the application of Art 10 provisions. Such considerations concern treatment accorded to investors of Contracting Parties and their Investments. An assessment of treatment is to be considered on a ‘case-by-case basis’. The validity of a comparison of treatment is confined to that made regarding Investors and Investments in similar circumstances. Two factors are taken into account in determining the consistency of differential treatment, namely policy objectives and relevance of foreign ownership or control. Wälde (1995) 364 (‘the concept of ‘legitimate policy objectives’ […] has a GATT-understanding’, which is ‘hard to transfer to investment law’); Fauchald (2007) 13 n. 66. Furthermore, by virtue of a Contracting Party's inclusion in Annex IA, an Investor or a Contracting Party are not allowed to submit to international arbitration disputes concerning Article 10(1). See AES, paras 9.3.2, 9.3.3 (notwithstanding that Article 10(1) ‘is contained in Part III’). See also Wälde (1995) 364. Hence, an ECT arbitral tribunal lacks jurisdiction over an Investor's contractual claims under Art 10(1), last sentence. See AES, paras 9.3.2, 9.3.3 (by virtue of inclusion in Annex IA). See also Tucker (1998) 518.

229

Veteran Jurisdiction and Admissibility, para 514; Yukos Jurisdiction and Admissibility, para 458; Hulley Jurisdiction and Admissibility, para 457. See also Baltag (2012) 157 (critiquing the Veteran, Yukos and Hulley tribunal's rejection of ‘the retrospective effects of Article 17’, as incompatible with such objectives and principles).

230

Andrew Newcombe, ‘Yukos Universal Limited (Isle of Man) v The Russian Federation: An Introduction to the Agora’ 30(2) ICSID Review – Foreign Investment Law Journal 283, 289.

231

AMTO, para 73; Electrabel Jurisdiction, Applicable Law and Liability, para 7.57. See also Schreuer (2008) 64; Happ (2015) 248 para 26.

232

AMTO, ibid. (‘Article 10(1) is a complex provision of five sentences’).

233

Blusun, para 319(1).

234

Stadtwerke, para 180.

236

Silver Ridge, para 393.

237

RWE Jurisdiction, Liability and Quantum Issues, para 425 (noting ‘[t]he first sentence of Article 10(1) establishes, through the use of the word “shall”, certain obligations on the Contracting Parties concerned with the conditions for Investors to make Investments’).

238

PV Investors, para 556.

239

ibid. Contra, AES & Tau, para 380 (‘the first sentence of Article 10(1) of the ECT […] is an introductory sentence […]. As such, it has mainly programmatic character and does not provide for an independent standard of protection’). The AES & Tau appears to draw from its proposition that FET and Art 10(1) 1st Sentence overlap that the latter imposes no obligation, being thus devoid of legal consequences. See, AES & Tau, para 383 (since no protection is afforded ‘beyond the protection already afforded under the more specific protection standards set out in the remaining part of Article 10(1) of the ECT […] no independent claim may be based on the first sentence of Article 10(1) of the ECT’).

240

RENERGY, para 602 (rejecting the view that ‘the FET standard is mere “soft law”’, since ‘[t]he second sentence of Article 10(1) ECT – as, in fact, all sentences of this provision – is clearly cast in mandatory terms (“shall”) and, thus, is not merely hortatory in nature).

241

Antin, para 525 (this verb ‘expresses an instruction, command or obligation’).

242

RWE Jurisdiction, Liability and Quantum Issues, para 426 (observing ‘the first sentence of Article 10(1) is cast in mandatory terms’). But see Stadtwerke, para 198.

243

AMTO, para 73 (referring to the second to fifth sentences of Art 10(1)). See also Hobér, Menaker, Slooten Walsh (2008) 265; Roe, Happold, Dingemans (2011).

244

See Roe, Happold, Dingemans, ibid., 15.

245

Petrobart, p. 76 (‘this paragraph in its entirety is intended to ensure a fair and equitable treatment of investments’).

247

See Noble Ventures Inc. v. Romania, Award, 12 October 2005 (Noble Ventures), para 182; RREEF Responsibility and Quantum Principles, para 415 (referring to ‘the FET standard and its components as detailed in Article 10(1) ECT’); PV Investors, para 571 (referring to ‘the various elements inherent in Article 10(1) of the ECT’); RENERGY, para 599 (stating ‘the second sentence of Article 10(1) ECT […] is the main provision from which the ECT's FET standard derives’). See also Schreuer (2008) 65 (discussing Noble Ventures).

248

AMTO, para 74.

249

ibid. (adding that ‘these two standards may be identical in many contexts’).

250

ibid. (adding that claims based on the same conduct may be made ‘in circumstances where the content and relationship between these obligations is not clear’).

251

Plama, para 161 (‘fair and equitable treatment, constant protection and security, the prohibition of unreasonable or discriminatory measures and the observance of obligations entered into with an Investor or an Investment’). See also Baltag (2012) 205–6.

252

ibid. (‘The better view is that these standards, though related, are separate and autonomous. In fact, some tribunals have given them their own specific meaning’). See also Tarcisio Gazzini, ‘The Role of Customary International Law in the Field of Foreign Investment’ (2007) 8(5) The Journal of World Investment & Trade 691 [Gazzini (2007)] 699–700.

253

Plama, para 163 n. 25 (citing Petrobart, p. 76).

254

ibid., para 162 n. 25.

255

Electrabel Jurisdiction, Applicable Law and Liability, paras 6.119, 7.79.

256

Energoalliance, para 346 (finding that the adoption of a decree ‘constituted a violation’ of Art 10(1) 1st Sentence and FET under Art 10(1) 2nd Sentence).

257

EDF Decision on Annulment, para 3.5.3.1 (stating as to Art 10(1), that ‘the substantive commitments […] in the […] sentences of the same provision, such as […] fair and equitable treatment […], are not interchangeable’).

258

Stati, paras 1255, 1256 (regarding ‘the obligation to provide most constant protection and security’), 1281, 1282 (relating to the obligation not to take ‘unreasonable or discriminatory measures’), 1314, 1315 (concerning ‘the Umbrella Clause in Art 10(1)’).

259

Al-Bahloul Jurisdiction and Liability, paras 248, 254.

260

ibid., paras 178–9 (relying on Petrobart and noting that it ‘went even further’, by holding ‘that all of the provisions of Article 10(1) were interlinked’).

261

ibid., para 248 (referring to Plama in its proposition that ‘conduct under [the ‘Unreasonable and Discriminatory Measures’] heading is essentially the same conduct alleged in connection with his claim under the heading of unfair and inequitable treatment’); ibid., para 254 (referring to claims of ‘Treatment Less Favourable than Required by International Law under Article 10(1) ECT’ as being ‘essentially the same as those made under the heading of denial of due process’).

262

AMTO, para 73 (‘Article 10(1) […] opens with an expansive obligation’). But see Roe, Happold, Dingemans (2011) 107.

263

AMTO, ibid.

264

Happ (2015) 248 para 28.

265

RWE Jurisdiction, Liability and Quantum Issues, para 429.

266

Plama, para 172. See also Armand de Mestral, ‘Pre-Entry Obligations under International Law’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 685 [Mestral (2015)] 694 para 24.

267

Blusun, para 319(2).

268

ibid., para 321.

269

Stadtwerke, para 198. But see Stadtwerke Dissenting Opinion, para 6 (‘[w]hilst it could perhaps be argued that that the first sentence of Article 10(1) is not a separately enforceable obligation under Article 26 of the ECT, it does constitute “context” […] for purposes of interpreting the FET standard in the second sentence of Article 10(1)’).

270

Plama, para 173.

271

Antin, para 533.

273

AMTO, para 74 (‘[c]onduct that breaches these standards might also constitute […] failure to “create stable, equitable, favourable and transparent conditions for Investors”’).

274

Plama, para 174. See also Mestral (2015) 697 para 30.

275

ibid., para 173; Novenergia II, para 645 (agreeing ‘with the arbitral tribunals’ findings in Isolux, Plama and Eiser that the stability and transparency obligation is simply an illustration of the obligation to respect the investor's legitimate expectations through the FET standard, rather than a separate or independent obligation’); Sun Reserve, paras 684, 731 (finding ‘stability and transparency to be inherent in the meaning of the FET obligation under Article 10(1) ECT’). See also Hydro Energy Jurisdiction, Liability and Quantum Directions, para 547 (also citing Plama).

276

RENERGY, para 609; Hydro Energy Jurisdiction, Liability and Quantum Directions, para 543; ESPF, para 751. But see RENERGY Dissenting Opinion, para 26 (arguing that ‘the text of Article 10(1) indicates that the ECT stability obligation is free-standing, based on the explicit reference to stability in the first sentence of that provision’).

277

Eiser, para 380; PV Investors, para 566 (adding ‘the ECT appears to place a greater emphasis on “stable” conditions for investments than other treaties’); Watkins, para 541 (noting ‘[t]he ECT is distinct from BITs because […] the BITs do not contain the express obligations that are enshrined in Article 10(1)’).

278

Antin, para 533 (stating that FET ‘includes the obligation to provide a stable and predictable legal framework for investments’); Antaris, para 360(1) (referring to ‘legal and business stability’); Blusun, para 315(c); WA, para 570 (‘such a separate obligation exists as part of the FET standard’); Voltaic, para 487; Photovoltaik, para 483; ICW, para 529. See also Christoph Schreuer, ‘Fair and Equitable Treatment in Arbitral Practice’ (2005) 6(3) The Journal of World Investment & Trade 357, 359.

279

WA, para 569; Voltaic, para 486; Photovoltaik, para 482; ICW, para 528.

280

WA, para 569; Voltaic, para 486; Photovoltaik, para 482; ICW, para 528.

281

RREEF Responsibility and Quantum Principles, para 314 (noting ‘the autonomous character of the stability principle’ may raise ‘an artificial issue’). See also Cees Verburg, ‘Modernising the Energy Charter Treaty: An Opportunity to Enhance Legal Certainty in Investor-State Dispute Settlement’ (2019) 20 Journal of World Investment & Trade 425, 430 (noting, with regard to Article 10(1), that, ‘[a]t dispute is whether this sentence contains an autonomous standard […] or […] simply an introduction to the rest of Article 10(1) ECT, which outlines the various standards of investment protection, including the FET standard’).

282

WA, para 571; Voltaic, para 488; Photovoltaik, para 484; ICW, para 530.

283

WA, para 571; Voltaic, para 488; Photovoltaik, para 484; ICW, para 530.

284

RREEF Responsibility and Quantum Principles, para 284 (that is, ‘to the exclusion of general rules’). But see, InfraRed, para 366 (referring to ‘a legitimate expectation of stability (i.e. immutability)’).

285

InfraRed, para 366.

287

Electrabel Jurisdiction, Applicable Law and Liability, para 7.79. But see Foresight, para 361 (quoting the Novenergia tribunal's view to argue ‘the obligation of transparency and consistency’ simply forms part of FET).

288

Greentech, para 457 (noting ‘a duty of “transparency” is expressly required by Article 10(1) (1st sentence)’).

289

Plama, para 178 (referring also to its significance for the protection of ‘the stability of the legal framework’); Sun Reserve, para 910 (stating ‘the notions of transparency and consistency are a subliminal part of the investor's legitimate expectations on most occasions’). See also Happ (2015) 245 para 17 (discussing the role of legitimate expectations in Article 10(1) 1st Sentence).

290

Sun Reserve, para 910.

291

FREIF, para 572.

292

Sun Reserve, para 919 (adding that ‘good faith permeates across all other independent tenets of the FET obligation, including the tenets of legitimate expectations as well as transparent and consistent conduct’).

293

Electrabel Jurisdiction, Applicable Law and Liability, para 7.75. See also STEAG Jurisdiction, Responsibility, and Damage Quantification Instructions, para 502 (‘una de las funciones centrales del estándar de TJE’).

294

RENERGY, para 611.

295

RREEF Responsibility and Quantum Principles, para 260 (referring to the ‘respect’ for legitimate expectations).

296

Cube Jurisdiction, Liability and Partially Quantum, para 386.

297

9REN, para 308 (referring to those ‘based upon a specific representation’).

298

WA, paras 569–70 (noting ‘an obligation to provide a stable and predictable legal framework for foreign investment’ is ‘legally distinct from the protection of an investor's legitimate expectations’); Voltaic, paras 486–7; Photovoltaik, paras 482–3; ICW, paras 528–9.

299

WA, para 625; Voltaic, para 539; Photovoltaik, para 535; ICW, para 578. See also RENERGY, para 926 (finding ‘transparency […] finds explicit support in the wording of Article 10(1) ECT’).

300

Khan Jurisdiction, para 427 (by invoking Art 17 ‘right in time to give adequate notice to investors’); Kardassopoulos, paras 428, 441, 446 (holding that the respondent's conduct violated ‘requirements of consistency, transparency, even-handedness and nondiscrimination’, under Art 2(2) of the Georgia/Israel BIT, on FET, and inferring a breach of ECT Art 10(1) from ‘the overlap in the factual and treaty matrices and, in particular, the shared essential ingredients’ with the BIT FET claim).

301

WA, para 626 (stating that ‘transparency must include a requirement that information about relevant changes in the investment framework are communicated well in advance’); Voltaic, para 540; Photovoltaik, para 536; ICW, para 579.

302

Electrabel Jurisdiction, Applicable Law and Liability, para 7.79 (referring to ‘an obligation to be forthcoming with information about intended changes in policy and regulations that may significantly affect investments’).

304

RREEF Responsibility and Quantum Principles, para 415.

305

Stadtwerke, para 311.

306

Plama, para 172; Blusun, para 315(c). See also Vasciannie (2000) 117 n. 96; Reed and Martinez (2008) 410; Tudor (2008) 43 (describing Art 10(1) as ‘[a]mong […] regional agreements, one of the most complete provisions on FET’); Roland Kläger, ‘Fair and Equitable Treatment: A Look at the Theoretical Underpinnings of Legitimacy and Fairness’ (2010) 11(3) The Journal of World Investment & Trade 435, 436 n. 5; Moshe Hirsch, ‘Between Fair and Equitable Treatment and Stabilization Clause: Stable Legal Environment and Regulatory Change in International Investment Law’ (2011) 12(6) The Journal of World Investment & Trade 783, 789 n. 37; Happ (2015) 249 para 29.

307

Vasciannie (2000) 117 (this phrase reflects the OECD Draft of 1967).

308

RENERGY, para 599.

309

RWE Jurisdiction, Liability and Quantum Issues, para 428.

310

Mamidoil, para 610.

311

See supra, para 10.17.

312

Stati, paras 1086, 1095.

313

ibid., para 1086 (relying on a ‘timeline’ of relevant instances and declining to entertain the claim that ‘that there was a “playbook”’ establishing a respondent's alleged pattern of treatment of foreign investors).

314

Eiser, para 376 (adding that the assessment is not to be done ‘on some Platonic plane’).

315

Silver Ridge, para 390.

316

Sun Reserve, para 674 (adding ‘nor does it consider that interpretation of Article 10(1) ECT in accordance with the principles of interpretation in international law results in the application of the customary international law minimum standard’).

317

LCO, para 263.

318

For a discussion as to the general relations between FET and other standards of treatment under Art 10, see supra para 10.31. See PSEG Global Inc. and Konya Ilgin Elektrik Uretim ve Ticaret Ltd Sirketi v. Republic of Turkey (ICSID Cse N ARB/02/5), Award, 19 January 2007 (PSEG), para 239.

319

MTD Equity Sdn Bhd and MTD Chile SA v. Republic of Chile, Award, 25 May 2004 (MTD), paras 110–11; Occidental Exploration and Production Co v. Ecuador, Award, 1 July 2004 (Occidental), paras 189–190; CMS Gas Transmission Co v. Argentina, Award, 12 May 2005 (CMS), paras 282–4; Saluka Investments BV (The Netherlands) v. The Czech Republic, Partial Award, 17 March 2006 (Saluka), para 294; Siemens v. Argentina, Award, 6 February 2007 (Siemens), paras 299–300. See also Schreuer (2008) 83–4 (citing MTD, Occidental, CMS, Saluka, Siemens and others).

320

Siemens, para 293 (namely, ‘a question about the substantive content of fair and equitable treatment’).

321

Antin, para 530 (referring to FET under the ECT and denying that ‘the ECT sets no more limits on the regulatory power of States than the minimum standard of international law’); Azurix, para 361. See supra, para 10.17 n. 168.

322

Saluka, para 291. See also Schreuer (2008) 87.

323

Blusun, para 319(3) (adding that FET is incorporated ‘and as applied by tribunals’). See, nevertheless, Mamidoil, para 603 (noting, in relation to the tribunal's interpretation of FET, that ‘assistance is not only limited by the fact that international arbitral tribunals are under no obligation to rely on precedents, but also by the lack of a jurisprudence constante’).

324

RWE Jurisdiction, Liability and Quantum Issues, para 443 (emphasis omitted).

325

LCO, para 263.

326

Silver Ridge, para 401.

327

RENERGY, para 604.

328

ibid. (referring to the ‘interpretation given by the Free Trade Commission on 31 July 2001’). See also Schreuer (2008) 82.

329

Sun Reserve, para 672 (arguing ‘a demarcation between the legal standard for the FET obligation contained in the second sentence [of Article 10(1)] and the treatment required by international law […] becomes apparent when Article 10(1) ECT is juxtaposed against Article 1105 NAFTA’). See also Schreuer (2008) 83.

330

Sun Reserve, para 672.

331

Belenergia, para 568.

332

Sun Reserve, para 672.

333

ibid., para 673.

335

ibid. (citing Azurix).

336

Eiser, para 382; Antin, para 532 (concluding its interpretation of Art 10(1) with an almost identical statement).

337

Antin, para 530; Antaris, para 360(8); Blusun, para 319(4).

338

OperaFund, para 510.

339

Eiser, para 382.

340

OperaFund, para 509.

341

Antin, para 531 (citing Charanne, paras 513–14, 517, and Eiser); Novenergia II, para 656; Eiser, para 382; Antin Annulment, para 242 (considering the reasoning in Antin, paras 528–31, as sufficiently ‘[c]lear reasons’); Foresight, para 359 (relying on the Eiser and Novenergia tribunals’ reference to ‘a radical or fundamental change in the legal or regulatory framework under which the investments are made’).

342

Plama, para 219 (‘[u]nder the fair and equitable treatment standard the investor is only protected if (at least) reasonable and justifiable expectations were created in that regard’); Antaris, para 360(6) (‘[p]rovisions of general legislation applicable to a plurality of persons or a category of persons, do not create legitimate expectations’).

343

ibid. (‘It does not appear that Bulgaria made any promises or other representations to freeze its legislation on environmental law to the Claimant or at all’); Antaris, para 360(7), (10) (referring to ‘the absence of a stabilization clause’ and of ‘specific promises or representations’).

344

Masdar, para 484; Antaris, para 360(4) (referring to ‘what are construed as specific guarantees in legislation’, and citing LG&E v. Argentina, Decision on Liability, 3 October 2006 (LG&E), paras 162–263, and Enron Corporation Ponderosa Assets L.P. v. Argentine Republic (ICSID ARB/01l3), Award of 22 May 2007 (Enron), paras 264–6).

345

Antin, para 539 (referring to the respondent's ‘conduct prior to, and at the time of, the investment’); Antaris, para 360(5) (‘[a] specific representation […] is not indispensable to establish a claim based on legitimate expectation’, although it may affect an assessment of the ‘the reasonableness and legitimacy’ of the expectation).

346

Novenergia II, para 651 n. 496 (citing Ioan Micula, Viorel Micula, SC European Food SA, SC Starmill SRL and SC Multipack SRL v. Romania (ICSID ARB/05/20), Award, 11 December 2013, para 669, and stating that ‘an expectation that the regulatory framework will be stable can arise from, or be strengthened by, state conduct or statements’).

347

Antaris, para 360(3) (referring to ‘representations were made by or attributable to the state’).

348

Antin, para 538 (‘legitimate expectations cannot arise from subjective considerations of the investor absent an affirmative action of the State which, objectively determined, evidences that the State intended to describe a particular treatment or regime on which the investor could rely when making its investment’).

349

Antaris, para 360(3)(a) n. 537 (citing Parkerings-Compagniet AS v. Lithuania (ICSID ARB/05/8), Award, 11 September 2007 (Parkerings), para 331).

351

ibid., para 360(2) (‘identification of the origin’ is necessary ‘so that its scope can be formulated with precision’).

352

Antin, para 537; Novenergia II, para 535 (namely ‘at the time it made its investment in the Respondent's territory’).

353

ibid. (namely by considering ‘the information and conditions available at such time’).

354

Masdar, paras 490–94; Charanne Dissenting Opinion, para 5; Cube Jurisdiction, Liability and Partially Quantum, para 388.

355

Masdar, paras 489–90 (noting that ‘[t]here are two schools of thought on’ whether a commitment need be specific); InfraRed, para 366 (stating ‘a legitimate expectation of stability (i.e. immutability) can only arise in the presence of a specific commitment tendered directly to the investor or industry sector at issue’).

356

Masdar, para 507 (‘or political announcements, like press releases and others’).

357

RENERGY, para 640.

358

Masdar, para 491 (according to this view, ‘the starting point to determine an investor's legitimate expectations is the ‘legal order’ or ‘legal framework’ of the host State at the time when the investor made its investment’).

359

Cube Jurisdiction, Liability and Partially Quantum, para 388.

360

Charanne, Dissenting Opinion, para 8; Isolux Dissenting Opinion, para 4.

361

Charanne, ibid., para 9 (adding that the limited period of the legal regime in question consisted in a time frame for the Making of an Investment).

362

Isolux, para 771.

363

Masdar, para 494 (‘and that it has familiarised itself with the existing laws’).

364

ibid., para 498 (quoting Parkerings, para 333, in its statement that the claimant had met proven the two elements).

365

ibid., paras 499–500 (based on its due diligence, the claimant ‘believed that it had a legitimate expectation that the laws would not be modified, as they included stabilisation clauses’, on which ‘[p]articular reliance is place’).

366

ibid., paras 520–21.

367

RENERGY, para 642.

368

RWE Jurisdiction, Liability and Quantum Issues, para 461.

369

RENERGY, para 642.

370

Blusun, para 319(4).

371

Charanne, para 486.

372

Blusun, para 319(5) (referring to ‘subsidies such as feed-in tariffs’).

373

ibid., para 374.

374

Antaris, para 360(7) (‘the regulatory framework relied upon by the investor at the time of its investment’).

375

ibid. (‘the host State's normal regulatory power in the pursuance of a public interest’).

376

Antaris, Dissenting Opinion, para 42.

377

ibid., para 52.

378

Blusun, para 319(5).

379

AES & Tau, para 279 (referring to ‘the guarantee of ‘stability’ provided under the FET standard’ in the ECT).

380

Eiser, para 387.

381

Novenergia II, para 694 (‘the actions of the Respondent need not have obliterated the Claimant's investment entirely in order […] to consider that the Respondent has breached the FET […] [d]estruction of the value of the investment is clearly determinative in the assessment of whether a state has breached Article 13 of the ECT, but it is but one of several factors to consider when determining whether a state has breached Article 10(1) of the ECT’).

382

Blusun, para 319(5).

383

Antaris, para 360(3)(c).

384

LCO, paras 274, 279.

385

ibid., para 325.

386

August Reinisch, ‘Expropriation’ in Muchlinski, Ortino, Schreuer (2008) 726, 764.

387

Novenergia II, paras 521, 524 n. 380 (‘the starting point, or the assumption, should always be that the taxation measure was in fact adopted in good faith’ and observing that ‘[i]t is not easy to overthrow the presumption that a tax measure introduced by a state is enacted bona fide’).

388

ibid., para 523 nn 381–2 (citing RosInvestCo, para 580, and Yukos, para 1407, in support of the proposition that ‘the evidentiary threshold incumbent on the Claimant is high’).

389

ibid., paras 519, 525.

390

Such finding must be carried out primarily from a legal perspective. Foresight, para 258 (stating ‘the economic analysis of a measure should not displace a finding that a measure is a tax as a matter of law’).

391

OperaFund, para 404.

392

Novenergia II, para 519 (‘a tax of the domestic law of a Contracting Party’ under ‘Article 21, section (7)(a)(i) […] is indeed a taxation measure in its nature, which on its face is subject to the carve-out from the protection of the ECT’).

393

ibid., para 520 nn 738–9 (citing RosInvestCo UK Ltd v. Russian Federation (SCC 79/2005), Final Award, 12 September 2010 (RosInvestCo), para 628, and Renta 4 SVSA, Ahorro Corporación Emergentes FI, Ahorro Corporación Eurofondo FI, Rovime Inversiones SICAV SA, Orgor de Valores SICAV SA, GBI 9000 SICAV SA v. Russian Federation (SCC 24/2007), Award, 20 July 2012 (Renta), para 179, and quoting Yukos, para 1407, and stating that ‘[t]he bona fide criterion has been considered and confirmed by several arbitral tribunals’).

394

Novenergia II, para 521.

395

ibid. (namely, that ‘a different purpose, i.e. that the measure therefore was enacted mala fide’).

396

Antin, para 317 (whether a Contracting Party's measure is ‘adopted […] with the precise aim of abusing its rights […] to curtail the investors’ alleged rights […], in a manner that abusively sought to employ the taxation exclusion’).

397

Novenergia II, para 522 n. 381 (quoting a statement in RosInvestCo, para 580, in its statement that ‘the evidentiary threshold incumbent on the Claimant is high since “[s]tates have a wide latitude in imposing and enforcing taxation law, even if resulting in substantial deprivation”’).

398

ibid., n. 382 (further stating that the equivalence between a ‘different’ and a ‘mala fide’ purpose ‘is supported by the fact that the arbitral tribunals in the Yukos and RosInvestCo cases contrasted the bona fide measures with measures taken for the purposes of destroying a party or political adversary’).

399

Novenergia II, para 524.

400

Stati, paras 1202, 1203 (‘[r]egarding the first relief sought […], a declaration that Respondent has violated the ECT is possible already after a breach of the FET obligation has been found by the Tribunal’).

401

ibid., paras 1202, 1204 (‘[r]egarding the second relief sought […], if such damages are granted on the basis of one particular ECT provision, there is no need for the Tribunal to examine further whether the same relief would also have to be granted on the basis of another ECT provision’). But see Abba Kolo and Thomas Wälde, ‘Economic Crises, Capital Transfer Restrictions and Investor Protection under Modern Investment Treaties’ (2008) 3(2) Capital Markets Law Journal 154, 182 (arguing, in relation to ECT Art 14 and investment treaties generally, that ‘each separate treaty obligation […] involves an equally separate determination of compensation […] tribunals (and claimants) must carry out a separate remedy analysis for each claim’ and ‘avoid over-recovery […] when determining the overall remedy’).

402

Stati, paras 1205 (Art 13), 1231, 1232 (Art 10(12)), 1255, 1256 (Art 10(1) 3rd Sentence 1st Clause), 1281, 1282 (Art 10(1) 3rd Sentence 2nd Clause), 1314, 1315 (Art 10(1) 5th Sentence), 1322, 1323 (Art 11(2)).

403

ibid., paras 1257 (Art 10(1) 3rd Sentence 1st Clause), 1283 (Art 10(1) 3rd Sentence 2nd Clause), 1314, 1315 (Art 10(1) 5th Sentence), 1322, 1323 (Art 11(2)).

404

ibid., para 1207.

405

Masdar, para 667 (quoting Eiser, para 354). See also Heiskanen (2008) 92 (discussing Nykomb).

406

Eiser, paras 353–6 (referring to considerations ‘both jurisprudential and financial’ and citing SGS Société Générale v. Paraguay and Micula v. Romania); Energoalliance, paras 348, 366; Novenergia II, para 713 (‘[u]nder the rationale of procedural economy […] an arbitral tribunal does not need to address claims and issues that are already implied in those that are essential to its decision’). See also Ronald S Lauder v. The Czech Republic, Award, 3 September 2001 (Lauder), paras 193, 195; Saluka, paras 252–65. Heiskanen (2008) 92.

407

Eiser, para 353.

408

ibid., paras 352, 356.

409

ibid., paras 352, 356. See also Watkins, para 629 (declining to address an umbrella clause claim since the claimant's FET claim prevailed, ‘in the interest of judicial economy’).

410

Where conduct is claimed to concurrently breach provisions of the ECT and of another treaty applicable to the same relation between the parties to a dispute, an award of compensation for a breach of the latter implies that ‘[t]he Claimant has been deprived of nothing by the dismissal of its alternative ECT Claim’. HEP, para 580. See also Sumio Kozawa, ‘Depoliticization of International Dispute Settlement: A Comparison of the Dispute Settlement Provisions of the WTO and the Energy Charter Treaty’ (2002) 3(5) The Journal of World Investment & Trade 793, 815 (noting that under Art 10(1) a tribunal ‘may apply non-ECT treaties’).

411

HEP, para 602 (ECT claims were dismissed not for being ‘untenable, but because they were pleaded in the alternative to the primary and ultimately successful claims under the’ other treaty).

412

AES & Tau, para 259 (the tribunal did ‘not consider it necessary to determine whether the standards under […] the FET principle’ and the respondent's foreign investment law were ‘actually different’, since ‘changes in legislation effected and implemented […] were not of a nature to breach either of these two standards’).

413

Masdar, para 668 (referring to ‘[t]he principle of judicial economy’). See also Heiskanen (2008) 97–8 (citing Nykomb and Petrobart as instances of such approach).

414

Wälde and Hobér (2005) 96 n. 43 (arguing, by reference to the enforcement of the Metalclad award, for ‘the practical wisdom of resting an award not only on one particular claim’).

415

‘Such Investments’ under Art 10(1) Third and Fourth Sentences refer to the same category of ‘Investment’ as ‘an Investment of Investors of any other Contracting Party’, in Art 10(1) Fifth Sentence. Furthermore, the standards set out in Art 10(1) Third Sentence do not extend to the Making of an Investment. The reference to ‘[s]uch Investments’ in Art 10(1) Third and Fourth Sentences was considered ‘misleading’. During the negotiations of the ECT, it was suggested in the Legal Sub-Group that, since ‘such’ is used in Art 10(1) 1st Sentence, the use of ‘such’ to qualify ‘Investments’ in Art 10(1) Third and Fourth Sentences could be interpreted as extending the standards under Art 10(1) Third and Fourth Sentences to the Making of Investments. This confusion would have called for the inclusion of an Understanding to, or a rephrasing of, Art 10(1) Third and Fourth Sentences in order to ‘create a distinction between the pre- and post-Investment obligations’. Ultimately, none of the suggested avenues for addressing this perceived misleading wording was pursued. See Baltag (2012) 206 n. 182.

416

Plama, para 172. The reference to conditions does not imply that the application of the rules set out in each sentence of Art 10(1) is conditional. Happ (2015) 249 para 29.

417

Electrabel Jurisdiction, Applicable Law and Liability, para 7.80 (referring to Art 10(1) 3rd Sentence as ‘[t]he second part of Article 10(1)’).

418

Hobér, Menaker, Slooten Walsh (2008) 267.

419

Electrabel Jurisdiction, Applicable Law and Liability, para 7.80; BayWa Jurisdiction, Liability and Quantum Directions, para 571. See also Schreuer (2008) 66.

420

Roland Kläger, ‘Fair and Equitable Treatment’ in International Investment Law (Cambridge University Press, 2011) 290–91.

421

Wena Hotels Ltd v. Arab Republic of Egypt, Award on the Merits of 8 December 2000, ICSID Case No. ARB/98/4 (Wena Hotels), paras 84–95; Occidental, para 187; Azurix, para 407. See also Schreuer (2008) 66–8.

422

Electrabel Jurisdiction, Applicable Law and Liability, para 7.80 (‘The FET standard and this FPS standard are two distinct standards of protection under the ECT’).

423

RENERGY, para 944.

424

Schreuer (2008) 68.

428

AES, paras 13.3.2, 13.3.3 (specifically, ‘to protect its investors (or to enable its investors to protect themselves)’). Some arbitral tribunals have required evidence that a respondent state has actively provided support to third parties. See Técnicas Medioambientales TECMED SA v. The United Mexican States, Award, 29 May 2003 (TECMED), para 176; Eureko BV v. Poland, Partial Award, 19 August 2005 (Eureko), paras 236–237. See also Schreuer, ibid., n. 18 (citing Elettronica Sicula SpA (ELSI) (United States of America v. Italy), Judgment, ICJ Reports 1989, p. 15, paras 105–8, among others).

429

Hydro Energy Jurisdiction, Liability and Quantum Directions, para 561.

430

Plama, paras 179, 180. ibid, para 179 n. 36 (citing American Manufacturing & Trading v. Republic of Zaire, Award of 21 February 1997, ICSID Case No. ARl93/1, para 28; Wena Hotels Ltd v. Arab Republic of Egypt, para 84; Saluka, para 484).

431

Stati, para 1256 (adding that the former breach ‘leads to no further relief than that resulting from the FET breach’).

432

See Reed and Martinez (2008) 413 n. 38 (‘[t]his clause has traditionally been used for claims of violence and civil unrest affecting an investment’, and citing Asian Agricultural Products, Ltd v. Republic of Sri Lanka (ICSID 1991)).

433

ibid.; WA, para 633 (referring to ‘legal protection’); Voltaic, para 548; Photovoltaik, para 548; ICW, para 590; Hydro Energy Jurisdiction, Liability and Quantum Directions, para 563 (referring to ‘a duty to provide a legal framework which provides legal security’). See also Happ (2015) 249–50 para 31.

434

Plama, para 180 (thus becoming ‘closely connected with the notion of fair and equitable treatment’); PSEG, para 258. See also Schreuer (2008) 68.

435

Hydro Energy Jurisdiction, Liability and Quantum Directions, para 560.

436

WA, para 637 (sumarily disposing of the FPS-based claim based on its analysis of the FET-based claim, since the former emphasised ‘the “legal”, and not the “physical”, dimension of the FPS standard […] articulated in terms of the host country's obligation to guarantee a secure and stable investment environment’); Voltaic, para 553; Photovoltaik, para 548; ICW, paras 590–91.

437

AES, paras 13.3.2, 13.3.3.

438

ibid., para 13.3.3.

439

Eskosol, para 482 (specifically referring to ‘transitional mechanisms that would cover all possible investors, at any stage of their development plans whatsoever’, if a regulatory measure is ‘not discriminatory, […] taken in good faith, and […] reasonably related to a rational public policy goal’).

440

Hydro Energy Jurisdiction, Liability and Quantum Directions, para 559.

441

Plama, para 181. ibid., n. 38 (citing Tecmed, para 177; Saluka, para 484); AES, para 13.3.2.

442

AES, para 13.3.5.

443

ibid., paras 13.3.2, 13.3.3. See Noble Ventures, para 164.

444

ibid. See TECMED, para 177.

445

Hobér, Menaker, Slooten Walsh (2008) 267; Nicole Duclos and Stephen Jagusch, ‘Compensation for the Breach of Relative Standards of Treaty Protection’ (2009) 10(4) The Journal of World Investment & Trade 515, 517–18; Ursula Kriebaum, ‘Arbitrary/Unreasonable or Discriminatory Measures’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 790, 791 para 3.

446

Heiskanen (2008) 89.

447

Schreuer (2008) 69.

448

ESPF, para 698. See also Heiskanen (2008) 89.

449

ESPFibid. (‘[a]lthough this prohibition is found in the same article of the ECT as the FET protection’).

450

PV Investors, para 584 (referring to both ‘sub-elements of FET’ and ‘separate standards’ as ‘Treaty obligations’). See also Cube Jurisdiction, Liability and Partially Quantum, para 448 (stating that ‘[t]he prohibition against unreasonable or discriminatory measures is located not in the second sentence of Article 10(1) ECT, dealing with FET, but in the third sentence dealing with impairment’).

451

ESPF, para 698 (adding that ‘a two-part analysis is required’, so that ‘[i]f they are found to be either unreasonable or discriminatory, then an impairment must be shown’).

452

PV Investors, para 624.

453

ibid., para 639. See also Silver Ridge, para 391 (referring to ‘the balance to be struck between the State's sovereign prerogatives and the investor's legitimate expectations’).

454

PV Investors, ibid; PV Investors Concurring and Dissenting Opinion, para 5(i) (noting the Eiser tribunal also considered the right to regulate and contesting the majority's preference for a ‘reasonable rate of return’). See also STEAG Jurisdiction, Responsibility, and Damage Quantification Instructions, para 631 (‘no está en discusión el ius variandi de España’). For a commentary on how this ‘balance’ has been approached in recent decisions, see Amélie Noilhac, ‘Renewable Energy Investment Cases against Spain and the Quest for Regulatory Consistency’ (2020) 71 Questions of International Law 21, 24; Sondra Faccio, ‘The Assessment of the FET Standard: Between Legitimate Expectations and Economic Impact in the Italian Solar Energy Investment Case Law’ (2020) 71 Questions of International Law 3, 11.

455

Hydro Energy Jurisdiction, Liability and Quantum Directions, para 543. See also CEF, para 237.

456

CEF, para 240.

457

STEAG Jurisdiction, Responsibility, and Damage Quantification Instructions, para 633 (author's translation).

458

Greentech, para 452.

459

Cube Jurisdiction, Liability and Partially Quantum, para 409.

460

RWE Jurisdiction, Liability and Quantum Issues, para 648.

461

Plama, para 184. ibid., n 40 (citing Lauder, paras 221, 222, 232). See Lauder, para 232. See also Happ (2015) 250 para 32.

462

Plama, ibid.

463

RENERGY, para 604 (referring to ‘the separate protection against non-discrimination in the third sentence of Article 10(1) ECT’). Various arbitral tribunals constituted under other treaties have addressed issues related to discriminatory conduct not dealt with by known decisions of ECT arbitral tribunals. For instance, various arbitral tribunals have addressed whether intent is required to breach the prohibition of discriminatory conduct. See SD Myers v. Canada, Award on Liability, 13 November 2000, 8 ICSID Reports 18 (SD Myers), para 254; LG&E, paras 146–7; Siemens, para 321. See also Schreuer (2008) 76 n. 45. That ECT arbitral tribunals have not dealt with the question of intent is due to the absence of this requirement under the ECT. Reed and Martinez (2008) 411.

464

Plama, para 184. ibid., n. 41. See F. Ortino, ‘Non-Discriminatory Treatment in Investment Disputes’ in Dupuy, Francioni, Petersmann (2009) 344 [Ortino (2009)] 354 n. 27. See also Saluka, para 313.

465

Nykomb, 34. See Saluka, paras 314–23; Occidental, para 176. See also William W. Park, ‘Selected Standards of Treatment Available under the Energy Charter Treaty, Part III – Tax arbitration and investor protection’ in Coop and Ribeiro (2008) 115, 142; Reed and Martinez (2008) 412; Schreuer (2008) 76 n. 44.

466

Nykomb, ibid. Andrea K. Bjorklund, ‘National Treatment’ in Reinisch (2008) 29 [Bjorklund (2008)] 57 (the Nykomb tribunal ‘also endorsed a burden-shifting approach’, like the tribunal in Feldman v. United Mexican States, ICSID ARB(AF)/99/1, Award, 16 December 2002, para 177).

467

AMTO, para 74.

468

Hobér, Menaker, Slooten Walsh (2008) 267; Reed and Martinez (2008) 411.

469

Schreuer (2008) 69.

470

Plama, para 183. ibid., n. 39 (citing Saluka, para 460).

471

Schreuer (2008) 70.

472

SD Myers, para 263; Pope & Talbot v. Canada, Award in Respect of Damages, 31 May 2002 (Pope & Talbot), paras 63–4; Mondev Intl Ltd v. United States of America, Award, 11 October 2002 (Mondev), para 127; ADF Group Inc v. United States of America, Award, 9 January 2003 (ADF), paras 188, 191; Loewen Group Inc and Raymond L Loewen v. United States of America, Award, 26 June 2003 (Loewen), paras 131–133; Waste Management, Inc v. United Mexican States, Award, 30 April 2004 (Waste Management), para 98. See also Schreuer ibid., 70–71.

473

MTD, para 196; Antaris, para 360(11) n. 546 (citing Tecmed, para 154, CMS, para 290, and others, and stating that ‘[p]rotection from arbitrary or unreasonable behaviour is subsumed under the FET standard’).

474

Impregilo SpA v. Islamic Republic of Pakistan, Decision on Jurisdiction, 22 April 2005, ICSID Case No. ARB /02/2 (Impregilo), paras 270–71; Saluka, para 460.

475

CMS, para 290; PSEG, para 261.

476

Schreuer (2008) 72–4.

477

RREEF Responsibility and Quantum Principles, para 428 (stating that ‘FET encompasses the principle of non-discrimination’).

478

Antaris, para 360(12) (citing AMTO, para 74, and stating that ‘[p]rotection from arbitrary or unreasonable behaviour’, which was held to be ‘subsumed’ under FET, ‘also’ falls within non-impairment under Art 10(1)).

479

Stati, para 1256 (adding that the former breach ‘leads to no further relief than that resulting from the FET breach’).

480

Eiser, paras 352, 353.

481

Schreuer (2008) 74.

482

Genin, Eastern Credit Ltd Inc and AS Baltoil v. Republic of Estonia, Award, 25 June 2001 (Genin), paras 367–8. Lauder, paras 214–21, 292–4; Occidental, para 166; Noble Ventures, paras 175–83; Azurix, paras 361, 390–93; Siemens, paras 318–21.

483

Lauder, para 293; LG&E, paras 162–3.

484

Plama, para 184.; ibid., n. 39 (most notably by NAFTA tribunals, citing SD Myers, para 263; Waste Management Inc v. United Mexican States, Award, 30 April 2004, ICSID Case No. ARB(AF)/00/3, para 98).

485

ibid. (citing CMS, para 290; Impregilo, paras 264–70; MTD, para 196).

486

Plama, ibid.

487

RREEF Responsibility and Quantum Principles, para 428.

488

Supra, n. 160. 358.

489

Electrabel Jurisdiction, Applicable Law and Liability, para 7.155.

490

RENERGY, para 604 (referring to ‘the guarantee of MST in the fourth sentence of Article 10(1) ECT’).

491

Electrabel Jurisdiction, Applicable Law and Liability, para 7.158 (referring to ‘the development of investment protection in treaty law and customary international law’).

492

ibid., para 7.159.

493

Roe, Happold, Dingemans (2011) 118.

494

It also excludes ‘treaties entered into force before 1 January 1970’. See Gazzini (2007) 700 n. 56; Hobér, Menaker, Slooten Walsh (2008) 269; Happold and Roe (2012) 86 (the Understanding excludes ‘EU regulations or directives’).

495

AMTO, para 73; Al-Bahloul Jurisdiction and Liability, para 256; Khan Merits, paras 295, 366; EDF Decision on Annulment, para 3.2.2 (‘[t]he last sentence of Art 10(1) ECT unquestionably constitutes an umbrella clause’); InfraRed, para 353 (referring to ‘the “umbrella obligation” set out at Article 10(1) in fine of the ECT’). See also Wälde (1996) 454–5; Wälde and Hobér (2005) 92; Konoplyanik and Wälde (2006) 534–5 (referring to the ‘obligation to observe (contractual) obligations’); Lorenzo Cotula, ‘Stabilization Clauses and the Evolution of Environmental Standards in Foreign Investment Contracts’ (2007) 17(7) Yearbook of International Environmental Law 111, 125 n. 56 (discussing stabilization clauses); Axel Weissenfels, ‘Independent BIT Standard or Mere Affirmative Commitment? (2007) 10(1) Austrian Review of International and European Law 95, 95 n. 1 (‘[t]he umbrella clause (also labelled pacta sunt servanda clause, mirror effect clause, observation of commitments clause, observance of undertakings clause or sanctity of contract clause) is a provision that appears in a large number of today's BITs’); Anatole Boute, ‘Improving the Climate for European Investments in the Russian Electricity Production Sector: (I) the Role of Investment Protection Law’ (2008) 26(2) Journal of Energy and Natural Resources Law 267 [Boute (2008)] 293 (referring to the ‘sanctity of contracts clause’); Kaj Hobér, ‘State Responsibility and Attribution’ in Muchlinski, Ortino, Schreuer (2008) 960, 992; Hobér, Menaker, Slooten Walsh (2008) 267; Jean-Christophe Honlet and Guillaume Borg, ‘The Decision of the ICSID Ad Hoc Committee in CMS v. Argentina Regarding the Conditions of Application of an Umbrella Clause: SGS v. Philippines Revisited’ (2008) 7(1) The Law & Practice of International Courts and Tribunals 1, 3 n. 7; Schreuer (2008) 64; Reed and Martinez (2008) 413; Subedi (2008) 105; Tudor (2008) 193 n. 49 (referring to Art 10(1) as one among various ‘clauses’ having an ‘elevating, mirror or parallel effect’); Roe, Happold, Dingemans (2011) 16; Alexander J Belohlávek and Filip Cerný, ‘Law Applicable to Claims Asserted in International Investment Disputes’ (2012) 54(6) International Journal of Law and Management 443 n. 9; Happ (2015) 251 para 34; Mavluda Sattorova, ‘Investor Rights under EU Law and International Investment Law’ (2016) 17(6) The Journal of World Investment & Trade 895, 907.

496

Wälde (1995) 361; Tucker (1998) 523 (arguing that ‘[t]o the extent that this provision merely encapsulates the doctrine of pacta sunt servanda it arguably does not extend the host state's existing obligations under customary international law’); Thomas W. Wälde, ‘The ‘Umbrella’ Clause in Investment Arbitration: A Comment on Original Intentions and Recent Cases’ (2005) 6(2) The Journal of World Investment & Trade 183 [Wälde (2005)] 203 (referring to the ‘Abschinnungsklausel’); Konoplyanik and Wälde (2006) 535.

497

Plama, para 186. See also Wälde (2005) 203; Sheng Zhang, ‘The Energy Charter Treaty and China: Member or Bystander?’ (2012) 13 The Journal of World Investment & Trade 597 [Zhang (2012)] 614 (‘the coverage of the ‘umbrella clause’ also goes beyond Chinese BITs practice’).

498

AMTO, para 73; supra, n. 160. 358.

499

Plama, para 186. ibid., n. 42 (citing Enron, para 274); Khan Jurisdiction, para 438 (relying on the ‘the ordinary meaning of the term “any”’ and the respondent's failure to submit ‘arguments or authorities to the contrary’). See also Tucker (1998) 523; Priscilla M.F. Leung and Guiguo Wang, ‘State Contracts in the Globalized World’ (2006) 7(6) The Journal of World Investment & Trade 829 [Leung and Wang (2006)] 853; Boute (2008) 293 (‘unilateral commitments’ are included).

500

RREEF Responsibility and Quantum Principles, para 284 (namely those ‘existing between the Respondent and the Claimants’, and ‘to the exclusion of general rules’). See also 9REN, para 334 (noting ‘a bilateral obligation must have been agreed between the investor and the host State’).

501

Stadtwerke, para 382.

502

Silver Ridge, para 388.

503

Al-Bahloul Jurisdiction and Liability, paras 265–6 (namely the respondent's ‘burden to rebut such a prima facie breach of obligation’).

504

Leung and Wang (2006) 853; Zhang (2012) 614 n. 87 (citing Art 10(2) of the China/Germany BIT).

505

RWE Jurisdiction, Liability and Quantum Issues, para 678.

506

Eskosol, para 462.

507

Sun Reserve, para 989.

508

ibid., para 991.

509

CEF, para 243.

510

Eskosol, para 462 (‘for example by making a binding commitment to a narrow and targeted class of investors in which that investor is known to fall’).

512

Stadtwerke, para 380 (adding in that case ‘one would be more likely to refer to the government or legislature “assuming” a general obligation in respect of a beneficiary, rather than “entering into” an obligation with someone’). See also 9REN, para 342 (noting ‘[a] State does not “enter into” such legislation with a private party’); Cube Jurisdiction, Liability and Partially Quantum, para 452 (referring to a ‘specific engagement entered into by an ECT Contracting Party with a specific claimant or a specific group of claimants’).

513

Belenergia, para 618.

514

Sun Reserve, para 991.

516

ibid., para 995.

517

ESPF, para 755.

518

Greentech, para 464.

519

ESPF, para 755.

520

BayWa Jurisdiction, Liability and Quantum Directions, para 442.

522

ESPF, para 755.

523

OperaFund, para 569.

524

Greentech Dissenting Opinion, para 61 (noting ‘provisions of prospective application not addressed to specific investors do not engender’ obligations protected by the umbrella clause in Article 10(1) 5th Sentence, without prejudice to giving ‘rise to assurances of stability that may be protected by the FET standard’).

525

RENERGY, para 974.

526

FREIF, para 592.

527

FREIF, para 592 (noting this is so ‘according to the ordinary meaning of the word’).

528

BayWa Jurisdiction, Liability and Quantum Directions, para 443.

530

CEF, paras 254–5.

531

Hobér, Menaker, Slooten Walsh (2008) 268; Wälde and Wouters (1996) 174; Happ (2015) 252 para 35.

532

Anna Turinov, ‘“Investment” and “Investor” in Energy Charter Treaty Arbitration: Uncertain Jurisdiction’ (2009) 26(1) Journal of International Arbitration 1, 4.

533

Tucker (1998) 524; Hobér, Menaker, Slooten Walsh (2008) 268.

534

EDF Decision on Annulment, para 3.5.3.1 (holding that the umbrella clause in Art 10(1) is independent from FET); RREEF Responsibility and Quantum Principles, para 287 (stating that, although ‘the umbrella clause contained in the last sentence of Article 10(1) ECT has no particular role to play in the present case […] the Respondent was expected nonetheless to observe and enforce domestic law as a part of the FET standard and basis for legitimate expectations’). Questions as to both treaty-based standards of treatment and customary international law have been discussed. Wälde (2003) 183.

535

Noble Ventures, para 182. See also Schreuer (2008) 91–2.

536

Mondev, para 134. See also Schreuer, ibid., 90.

537

SGS v Philippines, Decision on Jurisdiction, 29 January 2004 (SGS), para 162. See also Schreuer, ibid., 90–91.

538

Iurii Bogdanov, Agurdino-Invest Ltd and Agurdino-Chimia JSC v. Republic of Moldova, Award, 22 September 2005 (Bogdanov) 17. See also Schreuer, ibid., 91.

539

Waste Management, para 115. See also Schreuer, ibid., 92 n. 99.

540

Impregilo, paras 266–70. See also Schreuer, ibid., 93 (critiquing the reliance on the criterion of use of ‘puissance publique’ by the Impregilo tribunal, since ‘an action that abrogates a contract through an act of puissance publique would probably more accurately be described as an expropriation’); Anthony Sinclair, ‘Umbrella Clause’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 887 [Sinclair (2015)] 943 para 160 (arguing that the view whereby the ‘umbrella clause should only protect State contracts concluded de iure imperii’ has no basis on the text of the ECT).

541

Supra, para 7. 10.18.

542

Wälde (1996) 456.

543

Ignacio Gómez-Palacio and Peter Muchlinski, ‘Admission and Establishment’ in Muchlinski, Ortino, Schreuer (2008) 434 [Gómez-Palacio and Muchlinski (2008)] 447.

544

Roe, Happold, Dingemans (2011) 190 n. 17 (‘Article 10(2) does not give rise to any rights enforceable by Investors’). Contra Wälde and Ben Hamida (2008) 180.

545

The ECT established the Energy Charter Conference (Conference) in Art 34, and, the Energy Charter Secretariat, in Art 35. The Conference, in turn, set up various subsidiary organs, including the Investment Group. Energy Charter Secretariat, The Blue Book: Making Investments in Energy Charter Member Countries: Exceptions to the Principle of Non-discriminatory Treatment (Energy Charter Secretariat, 2009); Roe, Happold, Dingemans (2011) 24.

546

ibid., 23.

547

Belenergia, para 569 (adding ‘[t]his non-restrictive standard confers on the Tribunal some interpretation leeway’).

548

A.F.M. Maniruzzaman, ‘Towards Regional Energy Co-operation in the Asia-Pacific: Some Lessons from the Energy Charter Treaty’ (2002) 3(6) The Journal of World Investment & Trade 1061 [Maniruzzaman (2002)] 1087; Acconci (2008) 667; Amarasinha and Kokott (2008) 315 n. 87; Gómez-Palacio and Muchlinski (2008) 447.

549

Gómez-Palacio and Muchlinski, ibid. (‘negotiations began in 1995’ and ‘were suspended in 2002, pending the outcome of discussions over a multilateral framework on investment in the WTO, but have not been resumed’).

551

Shan (2005) 285 n. 71; Konoplyanik and Wälde (2006) 533; Wälde and Ben Hamida (2008) 164 n. 14; Roe, Happold, Dingemans (2011) 16.

552

Roe, Happold, Dingemans, ibid., 106.

553

Gómez-Palacio and Muchlinski (2008) 447 (‘Article 10(5) introduces a “standstill” on new restrictions’).

554

ibid. (‘Article 10(5) introduces […] “rollback”’).

555

PV Investors Jurisdiction, para 286 n. 323. See also Wälde and Ben Hamida (2008) 179; Baltag (2012) 207.

556

James Crawford, State Responsibility: The General Part (Cambridge University Press 2013) 224. But see Roe, Happold, Dingemans (2011) 98 (‘Part III ECT contains obligations of results rather than of conduct or means’).

557

Wälde (1995) 361, 363; Wälde (1996) 454; Wälde and Wouters (1996) 157; Tucker (1998) 518; Kepa Sodupe and Eduardo Benito, ‘Los problemas energéticos en la Unión Europea a la luz del Tratado sobre la Carta de la Energía’ (2000) 16 Anuario de Derecho Internacional 421, 433; Stevenson (2001) 118–19; Maniruzzaman (2002) 1087; Konoplyanik and Wälde (2006) 533; Hobér (2007) 328; Hobér, Menaker, Slooten Walsh (2008) 259; Wälde and Ben Hamida (2008) 160; Thomas W. Wälde, ‘Organization of The Petroleum Exporting Countries’ in Christian Tietje and Alan Brouder (eds), Handbook of Transnational Economic Governance Regimes (Brill 2010) 989, 1005–6; Roe, Happold, Dingemans (2011) 107; Baltag (2012) 207–8; Happold and Roe (2012) 86; Zhang (2012) 605 n. 38; Wenhua Shan and Sheng Zhang, ‘Market Access Provisions in the Potential EU Model BIT: Towards a ‘Global BIT 2.0’?’ (2014) 15(4) The Journal of World Investment & Trade 422, 434.

558

Wälde (1995) 361; Wälde and Ben Hamida (2008) 162; Baltag (2012) 208; Zhang (2012) 613. But see Roe, Happold, Dingemans (2011) 16.

559

Wälde and Ben Hamida, ibid., 180.

560

Supra para 10.47.

561

Maniruzzaman (2002) 1087; Wälde and Ben Hamida (2008) 180 (referring to ‘[t]he pre-investment language, in Article 10(1), (2) (6) (5) and Article 18(4)’, and arguing that ‘a legally binding obligation was introduced and maintained, even after the decision to postpone more specific regulation to the Supplementary Treaty’).

562

Wälde and Ben Hamida (2008) 186.

563

ibid., 180.

564

ibid., 187.

565

ibid. (‘[t]he French version of the ECT, in contrast with the other versions of the ECT referred to ‘investissement réalisé’ (investment made)’).

567

Roe, Happold, Dingemans (2011) 106–7.

569

Konoplyanik and Wälde (2006) 533.

570

Roe, Happold, Dingemans (2011) 106; Gómez-Palacio and Muchlinski (2008) 447.

571

ibid., 106 n. 7 (noting that, as of 2011, no ‘such notification’ had been made).

572

Victor Mosoti, ‘Non-Discrimination and its Dimensions in a Possible WTO Framework Agreement on Investment: Reflections on the Scope and Policy Space for the. Development of Poor Economies’ (2003) 4(6) The Journal of World Investment & Trade 1011, 1025 n. 50 (noting, in relation to Arti. 10(7), that it ‘only grants MFN treatment to the investment and not to the investor’). But see Ana Stanič, ‘Doing Business in Uzbekistan: A Guide to its Foreign Investment Framework’ (2003) 4(6) The Journal of World Investment & Trade 1047, 1067 (‘[i]nvestors from a State party to the ECT have, under Part III of the Treaty, the following rights in respect of investments […] to MFN treatment’). See also Ortino (2009) 347.

573

Electrabel Jurisdiction, Applicable Law and Liability, para 7.57 (referring also to Art 10(1)).

575

Reed and Martinez (2008) 414.

576

Paul D. Friedland, ‘Selected Standards of Treatment Available under the Energy Charter Treaty, Part II – The scope of Most Favoured Nation treatment under the Energy Charter Treaty’ in Coop and Ribeiro (2008) 101 [Friedland (2008)] 111 (the ECT MFN clauses do not address whether they apply to dispute settlement).

577

Acconci (2008) 667.

578

Reed and Martinez (2008) 415; Subedi (2008) 70.

579

Herman (1997) 147; Subedi, ibid., 69.

580

AES, para 10.3.53 (‘[d]iscrimination necessarily implies that the state benefited or harmed someone more in comparison with the generality’).

581

Bjorklund (2008) 56.

582

ibid. (namely, ‘a uniform approach to analysing the existence of a violation’).

583

August Reinisch, ‘National Treatment’ in Bungenberg, Griebel, Hobe, Reinisch (2015) 846, 850 paras 11–12.

584

RENERGY, para 486 (that is, however, ‘other than in relation to Article 13 ECT’).

585

InfraRed, para 310.

586

RENERGY, para 468 (referring to ‘Spanish BITs’).

587

InfraRed, para 310.

588

RENERGY, para 468 (referring to ‘Spanish BITs’).

589

RENERGY, para 486. See also BayWa Jurisdiction, Liability and Quantum Directions, paras 310, 314.

590

RENERGY, para 487.

591

NextEra Jurisdiction, Liability and Quantum Principles, para 383.

592

InfraRed, para 318.

593

NextEra Jurisdiction, Liability and Quantum Principles, para 383 (concluding ‘there is not basis […] to pursue a claim under Article 10(7)’ for ‘a tax on revenue derived from the supply of electricity’, as ‘a tax on gross income’); InfraRed, paras 318–19 (declining jurisdiction on grounds that the tax at hand was ‘a tax on the energy producers’ gross income’, which ‘is “substantially similar” – if not squarely identical – to a tax on income or on capital’).

594

Roe, Happold, Dingemans (2011) 98–9; Acconci (2008) 667.

595

ibid., 100.

596

Tietje and Sipiorski (2012) 232–3 (Art 10(1) contains a provision on ‘national treatment of investors’).

597

Andrei V. Belyi, ‘Reciprocity as a Factor of the Energy Investment Regimes in the EU-Russia Energy Relations’ (2009) 2(2) Journal of World Energy Law & Business 117, 119; Ziegler (2012) 245 (the Preamble's ‘strong affirmation’ of MFN culminates in Art 10).

598

Boute (2008) 293.

599

Wälde and Ben Hamida (2008) 172.

600

Roe, Happold, Dingemans (2011) 16.

601

Acconci (2008) 667 (the ECT ‘the most-favoured-nation clause […] cannot be considered unconditional, although it is reciprocal and indeterminate’).

602

Acconci (2008) 667; Ortino (2009) 354 (like French and German BITs).

603

PV Investors Jurisdiction, para 285 (referring to provisions from the Spain-Colombia BIT).

604

ibid., para 286.

605

ibid, para 286 n. 323 (adding ‘the MFN treatment in that clause is also accorded to “Investors of other Contracting Parties”, and is thus equally inapplicable’ to entities not fulfilling this requirement).

606

RREEF Responsibility and Quantum Principles, para 249 (denying the respondent's inference to that effect from ‘the non-conclusion of the “supplementary treaty”’).

607

RENERGY, para 604.

608

Roe, Happold, Dingemans (2011) 106 (Art 10(9)(a), among others, concerns ‘exceptions to MFN treatment as regards the making of Investments’).

609

Happold and Roe (2012) 88; Friedland (2008) 111.

610

Happold and Roe, ibid. (suggesting that Art 10(7) does not preclude claims of breach of ‘the “corresponding provisions of the applicable international agreements” under the penultimate sentence of Article 10(1)’).

611

RREEF Jurisdiction, para 195 (in the alternative, it may be found that ‘the Respondent cannot avail itself of the exemption provided for in Article 21(1)’). See also Happold and Roe, ibid., 86.

612

A Declaration regarding Arts 5 and 10(11) was issued by Australia. Australia noted that its GATT rights and obligations, including as elaborated in the Uruguay Round and the Agreement on Trade-Related Investment Measures, are not diminished by Arts 5 and 10(11). Australia further noted that interpretation of GATT Arts III and XI by Treaty bodies settling disputes between GATT parties or involving a GATT party's Investor would be inappropriate. With particular regard to Art 10(11), Australia considered that the issue of an arbitral award is the only issue which can be considered, if the inconsistency of a trade-related measure with the GATT or the Agreement on Trade-Related Investment Measures is first established by a GATT panel or the WTO dispute settlement body.

613

Happold and Roe (2012) 89.

614

Wälde (1995) 365; Happold and Roe, ibid., 89.

615

Happold and Roe, ibid.

616

ibid; Happ (2015) 250–51, para 33.

617

Happ, ibid. (suggesting that ‘further provisions of the GATT/WTO law […] might be actionable, if their content is investment-related and is directly applicable to the case’).

618

Happold and Roe (2012) 90 (‘such measures can, and frequently are, conditions imposed on persons wishing to make an investment, as well as for obtaining advantages (for example subsidies) once an investment has been made’).

619

ibid. (adding that ‘for a trade-related investment measure to be inconsistent with the provisions of Articles III or XI GATT it must be related to trade in goods’).

620

Roe, Happold, Dingemans (2011) 131 (quoting AMTO paras 87–8).

621

Petrobart, 77.

622

AMTO, para 75.

623

ibid., para 87.

624

ibid., para 88 (‘The difficulty is to identify the criteria by which to assess the effectiveness of the legislation and rules […] under Article 10(12) ЕСТ […] ‘effective’ is a systematic, comparative, progressive and practical standard’).

625

ibid. (they may establish ‘systematic inadequacies but are not themselves a breach of Article 10(12)’).

626

ibid. (‘it is a practical standard in that […] the application of legislation in certain circumstances, raise particular difficulties which should not be ignored in assessing effectiveness’).