Edited by Rafael Leal-Arcas
ARTICLE 17: NON-APPLICATION OF PART III IN CERTAIN CIRCUMSTANCES
Article 17 of the ECT is the so- called ‘denial of benefits clause’. It safeguards the home state contracting party against the ‘free riders’, i.e., the nationals of third countries who could gain rights despite the fact that the contracting parties to the ECT did not agree on according them those benefits. Article 17 allows the contracting party to reserve the right to deny the benefits set out in Articles 10–16 of the ECT to: (i) the legal entities which are owned or controlled by nationals of a third state and do not have substantial business activity in the contracting party in which it is organized; and (ii) the investments of investors of third states towards which the respondent contracting party took certain economic and political measures.
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