Selected Standards of Treatment Available Under the Energy Charter Treaty - Chapter 2 - Investment Protection and The Energy Charter Treaty
Christoph H. Schreuer, Professor of Law University of Vienna, School of Law, Department of International Law and International Relations, Vienna
Paul D. Friedland, Partner, White & Case LLP (New York)
William W. Park, Professor of Law, Boston University. General Editor, Arbitration International. Vice President, London Court of International Arbitration.
Originally from Investment Protection and The Energy Charter Treaty
Article 10(1) Energy Charter Treaty
"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. 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."
The Energy Charter Treaty (ECT), like most bilateral investment treaties (BITs), guarantees fair and equitable treatment (FET). In Article 10 of the ECT, the standard of FET is embedded in a complex provision that also refers to constant protection and security, to a prohibition of unreasonable or discriminatory measures to treatment required by international law, and to the observance of obligations entered into (an umbrella clause).
Practice on the FET provision in Article 10 of the ECT is scant. But there is an interesting remark in the Award in Petrobart v. The Kyrgyz Republic. The Tribunal said:
The Arbitral Tribunal does not find it necessary to analyse the Kyrgyz Republic's action in relation to the various specific elements in Article 10(1) of the Treaty but notes that this paragraph in its entirety is intended to ensure a fair and equitable treatment of investments.
From that passage, it would appear that the Tribunal regarded FET as an overarching principle that embraces all the other standards mentioned in that Article. The Petrobart Tribunal was not alone in this assessment. The Tribunal in Noble Ventures v. Romania, a case decided on the basis of the Romania-United States BIT, also seemed to think that the fair and equitable treatment standard was just a more general label for a number of standards:
Considering the place of the fair and equitable treatment standard at the very beginning of Art. II(2), one can consider this to be a more general standard which finds its specific application in inter alia the duty to provide full protection and security, the prohibition of arbitrary and discriminatory measures and the obligation to observe contractual obligations towards the investor.
Chapter 2 -- Selected standards of treatment available under the Energy Charter Treaty
Part I -- Fair and equitable treatment (FET): interactions with other standards
Christoph H. Schreuer
II FET and constant protection and security
III FET and unreasonable or discriminatory measures
IV FET and customary international law
V FET and the observance of contracts
VI FET and the observance of domestic law
VII FET and expropriation
Part II -- The scope of Most Favored Nation treatment under the Energy Charter Treaty
Paul D. Friedland
I A sampling of treaties on the subject of MFN clauses in relation to dispute resolution
II ICSID case law
III The ECT’s MFN and dispute resolution clauses
Part III -- Tax arbitration and investor protection
William W. Park
II The Matryoshka
III The nature of tax measures
IV The architecture of investment protection
V A tale of two cases: Occidental and Encana
VI Abusive taxes
VII Conclusion: The art of taxation
Appendix: Illustrative investment conventions