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The Commentary on the Energy Charter Treaty (ECT) provides a unique, article-by-article, textual analysis of this important international agreement. The ECT outlines a multilateral framework for cross-border cooperation in the energy sector based on the principles of open competitive markets and sustainable development.
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Gloria Alvarez


The State’s right to regulate is a right that often needs to be balanced against the investor’s substantive protections. In the context of tax measures, ECT Article 21 safeguards the State’s right to regulate when exercising bone fide tax measures that could have an effect on foreign energy investors. Article 21 is often described as a ‘carve-out’ provision as it protects the State’s regulatory tax measures against possible challenges made by foreign investors. This means that the ECT does not create rights nor imposes obligations in relation to taxation measures, however, there are some conditional limitations. ECT Article 21(5)(b) provides that when there is a question on whether a tax measure constitutes expropriation and discrimination the issue should be referred to competent tax authorities

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