Originally from Investment Protection and The Energy Charter Treaty

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The arbitrability of ECT pre-investment (access) rights, investment character of tender offers and parallel application of Energy Charter Treaty and European Community law

Context and relevance

The current climate (high energy prices, legal and slowly increasing practical integration of the EU energy markets and buoyant liquidity) is leading to a wave of intra-EU, cross-border corporate consolidation through mergers and acquisitions. Existing "national champions" seek to reinforce their position and aim at becoming European energy champions. Opinions are divided as to the concept of a politically supported "champion" but one of the political drivers of the current wave of industry consolidation is the perception that larger EU companies are necessary as a countervailing weight to the energy monopolies on which EU energy supply depends, in particular Gazprom and Rosneft in Russia and Sonatrach in Algeria.

In all countries where pre-existing national champions are affected by corporate take-over activities, political pressure and governmental instinct, apart, to some extent, from the UK, has led to attempts to protect national champions and create consolidation on the national rather than EU level. Such pressures are, in most cases, contrary to the freedom of movement disciplines of the EC Treaty. In spite of such legal obligations, the political pressure in most member states may escalate sufficiently in order to compel governments to devise strategies that appear to be in compliance with EU-law whilst simultaneously erecting visible or preferably invisible barriers to obstruct corporate takeovers from abroad and favour internal, politically favoured corporate consolidation. In areas with new regulatory regimes such as energy, competition law and stock markets, it is in particular the politically and legally independent regulatory agencies, and also the remaining regulatory powers of the energy ministries that are used. They can be deployed, directly and indirectly, for making life more difficult for foreign energy companies and easier for a preferred national company. The national company is usually more deeply rooted in and connected with the political, regulatory, labour union, administrative and judicial networks and institutions.