Juris Coop Maier ECT BITs EU PDF

THE LEADING
PRACTITIONERS
GUIDE TO
INTERNATIONAL
OIL & GAS
ARBITRATION
Editor
James M. Gaitis
JURIS
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~TABLE OF CONTENTS~
FOREWORD .............................................................. Tim Martin
ix
PREFACE ......................................................................................
xiii
ABOUT THE EDITOR .............................................................
xv
ABOUT THE CONTRIBUTORS ..........................................
xvii
INTRODUCTION ...................................................................
Chapter 1
The Changing Landscape of International Oil & Gas

Arbitration......................................................... James M. Gaitis
TREATY-BASED ISSUES IN INTERNATIONAL

OIL & GAS ARBTRATION.................................................
23
Chapter 2
Resource Nationalism, Expropriation and Risk Mitigation

.............................................. Elisabeth Eljuri and Gustavo Mata
25
Chapter 3
Regulatory Change In Oil & Gas Arbitration:

The Latin American Experience
........................................... Nigel Blackaby and Caroline Richard
79
Chapter 4
The Relevance of Stabilisation Clauses In Oil & Gas

Investment Treaty Arbitrations
.............................................Sophie J. Lamb and Aimee-Jane Lee
iii
115
iv
LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
Chapter 5
Fair and Equitable Treatment Issues In Oil & Gas

Investment-Treaty Arbitration
................................. Mark W. Friedman and Samantha J. Rowe
151
Chapter 6
Determining Compensation for Expropriation

In Treaty-Based Oil & Gas Arbitrations
........................................ David W. Rivkin and Floriane Lavaud
217
THE ENERGY CHARTER TREATY

AND BEYOND..........................................................................
263
Chapter 7
The Energy Charter Treaty and Related Jurisprudence

................................. Arif Hyder Ali and Alexandre de Gramont
265
Chapter 8
Denial of Benefits Under Article 17 of the

Energy Charter Treaty ..................................... Philippe Pinsolle
345
Chapter 9
A Comparative Analysis of the ECT and BITs in Light

of Evolving EU Policy
...............................................Graham Coop and Bernhard Maier
367
Chapter 10
Russias Policy on International Investment

Agreements: Reflections After The Yukos Awards
........................................... Sophie Nappert and Yulia Selivanova
425
TABLE OF CONTENTS
COMMERCIAL ISSUES IN INTERNATIONAL

OIL & GAS ARBITRATION...............................................
505
Chapter 11
Arbitration of Oil & Gas Disputes in Brazil

............... Joaquim Tavares de Paiva Muniz and Grant Hanessian
507
Chapter 12
Price Re-Openers In Long-Term Gas Supply Agreements

........................ Michael Polkinghorne and Sven-Michael Volkmer
525
Chapter 13
Beyond Price Reviews: Adjudicating Claims of Financial

Hardship ...................... George M. von Mehren and Ben Holland
559
Chapter 14
Complexity and Commercial Disputes in Production

Sharing Contracts ........................................ James Lloyd Loftis,
Robert Reyes Landicho and Francesca Fraser
585
Chapter 15
International Arbitration of LNG Disputes

..................................... David E. Harrell, Jr., Derrick B. Carson
and Ann Ryan Robertson
605
Chapter 16
Arbitration and Joint Operating Agreements:

An Overview ................... Kevin OGorman and Mark Stadnyk
633
Chapter 17
International Arbitration of Oilfield Services Disputes

.......................................... Derrick Carson, Ann Ryan Robertson
and David E. Harrell, Jr.
667
vi
Chapter 18
Corruption And International Energy

Arbitration.......................................................Gordon E. Kaiser
693
PROCESS AND PROCEDURE IN INTERNATIONAL

OIL & GAS ARBITRATION...............................................
749
Chapter 19
Provisional Remedies and Interim Relief in

Oil & Gas Arbitrations
.................................................. David R. Haigh and Joanne Luu
751
Chapter 20
Examining Expert Witnesses In International

Oil & Gas Arbitrations ........................................... Doug Jones
797
Chapter 21
Drafting Dispute Resolution Provisions for

International Oil & Gas Contracts
............................................................................ Jennifer L. Price
813
Chapter 22
Useful Post-Dispute Agreements for International

Oil & Gas Arbitrations
.......................................................................... Thomas J. Brewer
875
Chapter 23
Selecting Arbitrators for Commercial Oil & Gas

Industry Arbitrations ................................... Michael McIlwrath
901
Chapter 24
Serving as the Chairperson in International Commercial

Oil & Gas Arbitrations ...................................... Murray Smith
921
TABLE OF CONTENTS
MISCELLANEOUS .................................................................
vii
935
Chapter 25
Resources on Resources: Publications and Databases

Available to Help Advocates in International
Oil & Gas Disputes
.......................................John P. Bowman and Jorge Mattamouros
937
Chapter 26
Mediating International Oil & Gas Disputes

............................................................................ Gary McGowan
967
Index .................................................................................................
983
~FOREWORD~
The international oil & gas business has a lot of disputes, at least
compared to other businesses. The international energy sector, along
with its associated infrastructure projects, makes up the largest
portfolio of international commercial and investor-state arbitrations
in the world. As an example, oil & gas arbitrations regularly make up
about 10% of the ICC International Court of Arbitrations caseload
(with another 15% for construction cases, many of which are energy
infrastructure projects) and around 25% of the International Centre
for the Settlement of Investment Disputes caseload arises from the
natural resources sector with oil & gas cases representing 40% of its
largest awards.
Why is this the case? It is not because oil & gas companies are
looking for a fight. They have enough problems on their plates
without seeking out disputes. It is primarily because they invest in
large, complex, capital-intensive projects that have long life spans.
Circumstances, economics, governments, and parties invariably
change in their investments and projects. There is a lot of money
involved, the stakes are high, the many players involved make
conflicting demands, misunderstandings arise, and disputes often
follow.
Disputes are therefore a significant risk in the international oil &
gas sector. As a result, this guide edited by James Gaitis is a welcome
addition for practitioners in both the dispute and energy worlds.
Mr. Gaitis and his contributing authors have focused mostly on
international arbitration, rather than litigation and alternative forms
of dispute resolution. That reflects the reality of disputes in the
international energy sector. Unlike domestic projects in countries
such as the United States, a big risk in international energy projects is
that a dispute will be submitted for resolution in a hostile forum
using an unfavorable law and process. Companies need assurance on
where and how their potential dispute will be resolved and who will
resolve it. That usually does not include the local courts in many
developing countries where oil and gas companies make many of
ix
their investments or in the home jurisdictions of their counterparties.

International oil & gas companies therefore regularly provide for
international arbitration as the dispute resolution mechanism of
choice in their contracts.
The petroleum industry is a huge, complex, and multifaceted
business, which has operated globally for more than a century and a
half. It engages in millions of transactions on a daily basis in every
corner of the world. All of which requires myriad contracts with
many kinds of parties; including states, national oil companies,
international oil & gas companies, multinational service contractors
and equipment vendors, and individuals. Many of these contracts
involve large sums of money, significant risk, huge liabilities and
many difficult issues. Petroleum contracts and the disputes that arise
from them thus set important international legal precedents. Many of
the most significant and historically important international
arbitration cases came from the oil sector. As a result, oil & gas
companies and their legal advisors have become quite sophisticated at
managing risk from the inception of their deal through to the point
when a dispute arises. All of this is reflected in the quality and
breadth of the analysis and insight provided in The Leading
Practitioners Guide to International Oil & Gas Arbitration.
When looking at the players involved, there are essentially four
types of disputes in the international oil and gas sector. They
generally fall into the following categories: (1) state vs. state (which
are primarily boundary disputes), (2) investor vs. state (commonly
referred to as investor-state disputes), (3) company vs. company (which
are commercial in nature), and (4) individual vs. company (which cover
many of the human rights cases that have developed over the last
decade). The Leading Practitioners Guide focuses on the second and third
categories: investor-state and international commercial arbitrations. It
does an exceptional job of covering these two categories.
The authors address various investment treaty protections used by
oil & gas investors, such as fair and equitable treatment, stabilization,
and compensation for expropriation. There is particular focus on the
Energy Charter Treaty, given its relevance to the international oil & gas
business. On the international commercial arbitration side, there are
FOREWORD
xi
chapters that address unique forms of oil & gas disputes such as price
reopeners and reviews, LNG, production sharing contracts, oilfield
service contracts, and joint operating agreements.
In addition, a variety of procedural issues, such as provisional
remedies, examining expert witnesses, and chairing arbitrations, that
directly relate to oil & gas disputes are included in the book. There
are also chapters that in-house counsel can rely upon to properly
manage their oil & gas disputes, including drafting dispute resolution
provisions, selecting arbitrators, and post-dispute agreements. Finally,
there is a useful compendium of resource materials and advice on
mediating international oil & gas disputes.
Given their prevalence and significance in the energy sector, it is
essential to plan well ahead for any dispute. They will arise. The
numbers tell us that. If they are not properly managed, disputes can
undermine the economic viability of a project. Parties therefore need
to begin addressing potential disputes from the drafting of their
agreements, to identifying the important issues, to the selection of
counsel and adjudicators, and to the running of an actual
international arbitration. Knowledge about these matters will mean
the difference between success and failure. Readers will find that The
Leading Practitioners Guide to International Oil & Gas Arbitration is a
most useful reference for achieving success in an international oil &
gas dispute.
Tim Martin
Past President
Association of International Petroleum Negotiators
Chairman
Executive Committee & Editorial Board
~PREFACE~
The late Professor Thomas Wldemy former colleague at
CEPMLP, University of Dundeelong argued that there was an
urgent need for a book on the subject of international oil and gas
arbitration or, more accurately, a book that focused both on
international investor-state arbitration and international commercial
arbitration through the prism of oil and gas industry disputes. On
more than one occasion, Thomas and I debated both the prospects
for such a book and the logistical and practical difficulties that might
be involved in bringing such a book to publication. And then our
lives moved in different directions and the book did not come to
fruition.
More recently, Mike Kitzen at JURIS invited me to serve as the
Editor for the very type of book Thomas Wlde and I had previously
considered. After some hesitation and a considerable amount of
assessment, I accepted Mike Kitzens offer, in part because I had
come to believe that Thomas Wldes vision was realistic and timely
and also because I knew from past experience that JURIS was the
perfect publisher for such a work.
Over the past half century, the field of international arbitration
encompassing both investor-state arbitration and commercial
arbitrationhas evolved from an alternative form of dispute
resolution into the primary means of final and binding dispute
resolution in use for disputes relating to the international oil and gas
industry. The path from the early arbitral decisions to the present has
not been without its hazards and setbacks. But it nonetheless has
been progressive and increasingly reliable, due in part to the
involvement of many different types of playersarbitral institutions
that focus on international arbitration, governments that have the
foresight to imbed arbitration processes in trade agreements and
treaties, a rapidly growing expert body of international lawyers and
arbitrators who specialize in various branches of the field, and a
wealth of academic and professionals who offer commentary and
analysis that together help to ensure that every relevant issue relating
xiii
xiv
to the viability and fairness of arbitral processes is identified and

examined ad infinitum.
The lead or sole authors of the chapters found in this book are
literally some of the leading practitioners in the world in the field of
international oil and gas industry arbitration. Their collective
experience and wisdom provides an extraordinary resource from
which many of the most critical issues facing arbitrating parties and
counsel in international oil and gas arbitrations may draw valuable
guidance. As the Editor of, and a contributor to, this book, I extend
both my gratitude and congratulations to each and every contributor
to this publication. For their efforts bring reality and promise to the
belief that the future of international arbitration remains bright.
James M. Gaitis
Whitefish, Montana, USA
~ABOUT THE EDITOR~

James M. Gaitis is a long-standing member of the State Bar of
Texas and a specialist in complex oil & gas/energy arbitrations. As
the former Director of the International Dispute Resolution
Programme and a Full-Time and Global Faculty Member at the
Centre for Energy, Petroleum & Mineral Law and Policy, University
of Dundee (CEPMLP), Scotland, during 2006-2008 he taught classes
in investor-state arbitration and commercial international arbitration
and worked extensively with the late Professor Thomas Wlde, the
former UN Inter-regional Advisor on Petroleum and Mineral
Legislation and EU Jean-Monnet Chair of International Economic,
Natural Resources & Energy Law. In private practice he served
variously as in-house counsel, lead outside trial counsel, and special
outside counsel for a diverse array of domestic and international
companies, individuals, and other entities involved in the oil & gas
industry.
Over the past 26 years, Mr. Gaitis has been listed on a broad
variety of international and domestic arbitration panels, including the
AAA National Energy Panel and Large, Complex Case Panel, the
ICDR Panel and International Energy Arbitrators Panel, the British
Columbia International Commercial Arbitration Centre, and the
CPRs Oil & Gas/Energy Panel and Cross-Border Panel. He
frequently serves as chair, party-appointed, and list-appointed
arbitrator on tripartite panels in international and domestic
arbitrations involving all aspects of the oil & gas industry and is a
member of the prestigious Energy Arbitrators List. His arbitrations
have involved many of the largest oil companies in the world.
A Fellow and former Director of the College of Commercial
Arbitrators and a Fellow and Chartered Arbitrator of the Chartered
Institute of Arbitrators, Mr. Gaitis is the author of numerous articles
and book chapters relating to international and U.S. arbitration law
and practice, several of which have been cited repeatedly to the
United States Supreme Court, various U.S. federal district and
appellate courts, and other courts, such as the Supreme Courts of
xv
xvi
Texas and Puerto Rico. He served respectively as an Editor and then

repeatedly as the Editor-in-Chief of the first, second, and third
editions of The College of Commercial Arbitrators Guide to Best Practices in
Commercial Arbitration (Juris 2006, 2010, 2013). He is a graduate of the
University of Notre Dame (BA, cum laude 1976) and the University of
Iowa College of Law (JD 1978), where he served as a Note &
Comment Editor on The Iowa Law Review.
~ABOUT THE CONTRIBUTORS~

Arif Hyder Ali is the Co-Chair of Weil, Gotshal & Manges LLP,
international arbitration practice, which consists of some 30 partners
and associates spread across the firms 21 offices. Mr. Ali is based in
the firms Washington, DC office. He is consistently rated as one of
the worlds leading international arbitration and public international
lawyers by: Chambers and Partners (USA, Global and Latin America),
Global Arbitration Review, Whos Who in American Law, Whos Who in
Public International Law, The Legal Media Groups Guide to the Worlds
Experts in Commercial Arbitration, Lawdragon, PLC Which Lawyer?, The
International Whos Who of Business Lawyers, Washington Super Lawyers,
and The International Whos Who of Commercial Arbitration Lawyers. He
has also received several awards for client service and results. For
example, in 2011, he received the International Law Offices Client Choice
Award for International Arbitration (USA); and in 2011, he was
decorated by the King of Bahrain with the Order of Bahrain (II) for his
role in representing Bahrain in its territorial and maritime border
dispute with Qatar before the International Court of Justice. Mr. Ali
has represented parties from the United States and Canada, Central
and South America, Europe, the Middle East and North Africa, and
across Asia in international commercial and investment arbitrations
under many of the major international and regional arbitral regimes
(e.g., ICC, ICSID, LCIA, UNCITRAL, ICDR, CRCICA, DIAC). He
has also represented parties before inter-governmental tribunals,
including the US-Iran Claims Tribunal and the United Nations
Compensation Commission.
Nigel Blackaby is Global Co-Head of Freshfields international
arbitration practice. He has acted as counsel and arbitrator in over
100 ad hoc and institutional arbitrations, both commercial and
investor-state under bilateral investment treaties, with a focus on
Latin America and energy. These include landmark disputes such as
CMS v Argentina, BG Group v Argentina, SGS v Pakistan, Iberdrola v
Guatemala, Bureau Veritas v Paraguay, Rurelec v Bolivia, Burlington v
xvii
xviii LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
Ecuador and Repsol v Argentina. He is currently acting in investor-state

arbitrations in the energy and infrastructure sectors involving
Argentina, Bolivia, Guatemala, Ecuador and Venezuela. Nigel is a
former president of the IBA Subcommittee on Investment
Arbitration and an editor since 1995 of Arbitration International. He
is co-author of the leading treatise Redfern and Hunter on
International Arbitration (5th edition, Oxford, 2009), Guide to
ICSID Arbitration (2nd edition, Kluwer, 2010), and International
Arbitration in Latin America (Kluwer, 2003). He is an Adjunct
Professor of Law at the Washington College of Law, American
University in Washington, D.C. Nigel speaks English, French,
Spanish and Portuguese and has law degrees from the University of
Exeter (UK) and the Universit dAix-Marseille III (France). He is
qualified as an English solicitor and a Special Legal Consultant of the
Bar of the District of Columbia.
Thomas J. Brewer has served as a sole or panelist Arbitrator since
1985 in more than eight hundred arbitrations, involving U.S.,
European, Latin American and Asian parties, in cases administered
by AAA, ICDR, JAMS, ICC, LCIA, SIAC and under the
UNCITRAL, CPR, Society of Maritime Arbitrators and American
Association of Railroads rules, and in numerous other nonadministered cases. He often serves as the chair of three-arbitrator
panels. He is a member of the ICDRs International Roster of
arbitrators and of its International Energy Arbitrators List, the AAAs
Large Complex Case and National Energy Panel of arbitrators, and
of the CPR Institutes International/Cross-Border panel of
arbitrators and Energy, Oil and Gas panel. He frequently serves as
an arbitrator in energy and other international commercial
arbitrations. He is a Fellow of the College of Commercial Arbitrators
and of the Chartered Institute of Arbitrators. He writes and speaks
frequently on arbitration topics, and has been a contributing author
to all three editions of the College of Commercial Arbitrators Guide to Best
Practices in Commercial Arbitration (Juris Net). He is a graduate of
Dartmouth College, Oxford University, and of the Harvard Law
School. He is based in Seattle, Washington, USA.
ABOUT THE CONTRIBUTORS
xix
John P. Bowman is a Partner with King & Spalding LLP in

Houston, where he is engaged in an arbitration and litigation practice
representing primarily international oil companies and service
companies in a wide range of commercial and investment disputes.
He is a frequent writer and speaker on international arbitration and
international oil and gas topics. He is currently President of the
Association of International Petroleum Negotiators and a member of
the governing Council of the Texas State Bar Oil, Gas and Energy
Resources Law Section. Increasingly, he is called upon to assist IOCs
and international NOCs design, draft, negotiate, and assess
stabilization mechanisms in upstream and project agreements with
host governments and NOCs. Among his recent professional
honors, Chambers Global 2014, Chambers USA 2014, Best Lawyers
in America 2015, and International Whos Who of Commercial
Arbitration 2014 rank Mr. Bowman as a leader in International
Arbitration. Legal 500 U.S. 2014 identifies him among the elite
leading lawyers in International Arbitration. Whos Who Legal:
Energy 2014, Best Lawyers in America 2014, the Guide to the
Worlds Leading Energy Attorneys (11th ed.), and International
Whos Who of Business Lawyers Oil & Gas 2014 recognize Mr.
Bowman as one of the worlds leading oil and gas lawyers. He was
awarded the AIPN Education Award for 2010-2011 and 2011-2012
and its Legacy Award for 2012-2013. Mr. Bowman was Adjunct
Professor for International Arbitration at the University of
Oklahoma College of Law (2012, 2013, 2014). Mr. Bowman is a
member of the Advisory Boards of the Institute for Transnational
Arbitration and the Institute for Energy Law. He is a Fellow of the
College of Commercial Arbitrators and of The Chartered Institute of
Arbitrators. He received his J.D. from the University of Kansas
School of Law in 1980, where he was Editor-in-Chief of the Kansas
Law Review.
Derrick B. Carson, a Partner in Locke Lord LLPs Houston office,
is Chair of the Firms Construction Law Practice Group and Deputy
Chair of the Firms Energy Dispute Resolution Practice Group. His
practice focuses on global dispute resolution, primarily representing
xx
clients in the energy, petrochemical, and construction industries.

Derrick has tried cases as lead counsel to juries and judges and served
as lead counsel on appeals, including arguing cases before U.S. Courts
of Appeal. He is well-versed in international arbitration, having
represented clients before a host of international arbitral bodies on
issues as diverse as development of oil and gas fields, pipeline and
offshore rig construction, alternative energy projects, maritime
matters, and other contractual disputes. Derrick is currently serving a
three-year term on the Executive Committee for the North American
Branch of the Chartered Institute of Arbitrators, where he serves as
Vice Chair of Arbitrator Training & Education.
Graham Coop is qualified as a Barrister and Solicitor in New
Zealand and as a Solicitor in England and Wales. He advises and
represents companies, governments and international organisations
on international dispute resolution and public international law, with
a particular focus on the energy, natural resources and infrastructure
sectors. His work on contentious matters has focused on the Energy
Charter Treaty, investment treaties, price revisions under long-term
energy sale contracts, and maritime boundary delimitation. He has
appeared as counsel, advocate and expert before a wide range of
international courts and tribunals, including the International Court
of Justice, ICSID, the PCA and the ICC. Before joining Volterra
Fietta, Graham served for 7 years as General Counsel to the Energy
Charter Secretariat, a Brussels-based international organisation
responsible for the Energy Charter Treaty. As General Counsel,
Graham participated in intergovernmental negotiations on emergency
dispute resolution issues and energy transit. He also led the
development of the Model Agreements for Cross-Border Pipeline
Projects and for Cross-Border Electricity Projects. Grahams career
includes over 15 years in private practice. Prior to taking up his post
at the ECT, Graham was an international dispute resolution partner
in the energy department of the London office of a major
international law firm. He has also worked as in-house counsel at a
major European gas company and as head of the energy & natural
resources department of the Paris office of a major international firm.
xxi
Alexandre de Gramont is a Partner in the International Arbitration

Group of Weil, Gotshal & Manges LLP. He has been consistently
ranked among the leading international arbitration lawyers in the
United States in publications such as Chambers Global, Chambers USA,
Benchmark Litigation, The Best Lawyers in America, Washington, DCs Best
Lawyers, and The International Whos Who of Commercial Arbitration. Mr. de
Gramont has handled a wide variety of energy-related disputes, both in
the context of international commercial and investor-state arbitration.
In the latter category, he has represented both investors and states in
cases arising under bilateral investment treaties, multi-lateral
investment treaties (including the Energy Charter Treaty, NAFTA, and
CAFTA), investment agreements, and foreign investment laws. Mr.
de Gramont received his undergraduate degree from Wesleyan
University in 1986 and his law degree from New York University in
1990. His native language is English and he is fluent in French.
Elisabeth Eljuri is Head of Latin America for Norton Rose
Fulbright. She is a Senior Energy Practitioner and a member of the
international arbitration practice group globally. Elisabeth received
her law degree cum laude from UCAB, an LLM from Harvard Law
School and is admitted to practice in Venezuela and New York. For
years, Whos Who in Oil and Gas has selected Elisabeth as one of the
top 10 energy practitioners worldwide, stating that Eljuri is without
question one of the worlds leading oil and gas lawyers. . . . Eljuri has provided
assistance in high profile disputes and transactions for Fortune 500 energy clients
over the course of a fantastic career. Likewise, Chambers Global ranked
Elisabeth in Band 1 in Latin America and Star Individual for
Venezuela. Also, Whos Who in Commercial Arbitration ranks
Elisabeth as a leading arbitration lawyer. Elisabeth frequently acts as
co-counsel in international arbitrations, including ICC and ICSID
cases. She has also been retained as independent expert in several
international arbitrations or proceedings and spoken/published
extensively in the area of natural resource disputes. Elisabeth was
President worldwide of the AIPN, based in Texas. Elisabeth is also
Chair of the Americas Initiative of the Institute for Transnational
Arbitration (ITA).
xxii LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
Francesca Fraser is an Associate in the London office and a

member of the firms International Dispute Resolution practice
group. Her practice to date has focused on international arbitration
(including assisting in investor-state matters), with a particular focus
on the energy and constructions sectors. In addition to assisting in
representing clients in disputes, she is involved in the drafting of
arbitration clauses and assisting clients in nationality planning:, so as
to ensure favourable treaty coverage. She is admitted to practice as a
solicitor in England and Wales.
Mark W. Friedman is a Partner in Debevoise & Plimptons
International Disputes Resolution Group. Mr. Friedman has
represented clients in a wide variety of disputes, including those
concerning energy, mining, construction, shareholder relationships,
joint ventures, telecommunications, and investments. He has acted
as counsel or arbitrator in disputes under the rules of the LCIA, ICC,
AAA, ICDR, CPR, UNCITRAL and ICSID. Mr. Friedman has been
ranked as a leading individual by Chambers Global, Chambers UK,
Chambers USA, The International Whos Who of Commercial
Arbitration, The International Whos Who of Commercial Litigation,
PLC Which Lawyer? Yearbook, Legal Experts, and as one of the
inaugural 45 stars under 45 by the Global Arbitration Review.
Among other positions, he is a member of the Court of the London
Court of International Arbitration, a member of the editorial board
of Dispute Resolution International, and past Co-Chair of the
International Bar Associations Arbitration Committee, and
corapporteur of the International Law Associations Commercial
Arbitration Committee. Mr. Friedman received his B.A. summa cum
laude from the University of Massachusetts in 1988 and his J.D. from
Yale Law School in 1991.
David R. Haigh, Q.C. is a Senior Partner with the Calgary law firm
of Burnet Duckworth & Palmer LLP where he has practiced as a
commercial litigation counsel in the Canadian courts and as an
advocate and arbitrator in the field of international commercial
arbitration. He has served as an arbitrator on numerous international
xxiii
commercial arbitration and investor-state panels. He has, in addition,

acted as counsel on a wide variety of arbitration matters, including ad
hoc, institutional, private and investor-state disputes. David served
as the national chairman of the Canadian ICC Committee for 6 years
and as a director of the American Arbitration Association (AAA)
for 12 years. David has been a Fellow of the Chartered Institute of
Arbitrators for many years and is now a Chartered Arbitrator. He is
also a Fellow of the American College of Trial Lawyers and a
Founding Member of the Western Canada Commercial Arbitration
Society. David has been recognized as a panelist on the Energy
Arbitrators List published by the ICDR. David is also a panelist with
numerous well recognized international arbitration centres and has
conducted arbitrations in recent years among a large variety of
nationals and state entities. David has represented both claimants and
states in various investor state matters. Davids extensive experience
as a leading Canadian litigation counsel has prepared him for a widely
based arbitration practice. He has actively participated in disputes
involving, among other things: (1) oil and gas, energy related disputes
including exploration, production, marketing, storage and pricing
disputes and (2) numerous other contractual and corporate/
commercial disputes including such subject matters as coal and
potash mining, pharmaceuticals, telecommunications and intellectual
property. David is frequently referred to in publications as a leading
practitioner in this field.
Grant Hanessian is Global Co-Chair of Baker & McKenzies
International Arbitration Practice Group. He has extensive
experience as counsel and arbitrator in disputes concerning energy,
investment treaty, construction, commodities and other matters. Mr.
Hanessian is Vice Chairman of the Arbitration & ADR Committee of
the United States Council for International Business (USCIB), the
U.S. national committee of the International Chamber of Commerce
(ICC), and is a member the ICC Commission on Arbitration, the ICC
Task Force on International Arbitration with States and State
Entities, AAA-ICDR International Advisory Committee and its
Subcommittee on Revision of the ICDR Rules and the ICDR
xxiv LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
Advisory Committee on Brazil, New York State Bar Association Task

Force on International Arbitration, International Arbitration Club of
New York, and Club Espaol del Arbitraje, and a founding board
member of the New York International Arbitration Center. Mr.
Hanessian is editor of ICDR Awards and Commentaries (Juris Pub.
2012) and co-editor of Comparison of International Arbitration Rules
(American Bar Association Section of International Law,
forthcoming 2015), International Arbitration Checklists (Juris Pub., 2nd
ed., 2009), Gulf War Claims Reporter (ILI/Kluwer, 1998) and Baker
& McKenzies International Litigation & Arbitration Newsletter. Mr.
Hanessian is recommended by Chambers Global and USA Guides
(described as very experienced, hugely knowledgeable and
effective), Legal 500 (described as a great practitioner with a
strong commercial profile), PLC Which Lawyer, The International
Whos Who of Commercial Arbitration and Expert Guide to Leading
Practitioners in International Arbitration.
David E. Harrell, Jr. is a Partner in Locke Lord LLPs Houston
office and serves as Chair of the Firms International Arbitration
Practice Group, Chair of the Firms Business Litigation and Dispute
Resolution Practice Group, and is a member of the Firms Board of
Directors. David has resolved a broad array of domestic and
international commercial disputes in the energy, construction,
technology, and financial services sectors, including contract disputes,
untangling fiduciary and business disagreements, addressing trade
secret misappropriation and unfair competition claims and
prosecution and defense of fraud claims. His representation of
clients across five continents has involved disputes before a variety of
arbitral institutions, as well as ad hoc arbitrations. Named a Super
Lawyer in Business Litigation by Law & Politics each year since 2012,
he is a Fellow of the Chartered Institute of Arbitrators, a past Chair
of the Chartered Institutes Texas Chapter, and a former Chair of the
State Bar of Texas Business Law Section. He also serves as a Tutor
for the Chartered Institutes North American Branch.
xxv
Ben Holland is a Partner in the International Dispute Resolution

Practice Group at Squire Patton Boggs. He focuses on multijurisdictional, large scale dispute resolution for energy sector clients
around the world. His practice also focusses on disputes arising out
of fluctuations in the price of crude oil and the consequential impact
on the price of natural gas, LNG, coal and other commodities. Mr.
Holland was educated at the University of Oxford.
Doug Jones AO has graduated from the University of Queensland
with a combined Bachelor of Arts and Laws degree in 1974, followed
by a Master of Laws in 1977. Doug has held appointments to
professional bodies including: Past President of the Australian Centre
for International Commercial Arbitration (2008-2014) and Fellow,
Chartered Arbitrator, and Past President of the Chartered Institute of
Arbitrators, London (2011). He holds professorial appointments at
the Queen Mary University of London and University of Melbourne.
Doug is acknowledged as a leading arbitrator and is highly ranked in a
number of leading publications such as Chambers Asia-Pacific where
he has been recognised as a star individual in the Australian legal
community for three successive years. In 2013, Doug was recognised
as one of the most in-demand arbitrators and received a band one
ranking in the international arbitration category. He was also ranked
band one in the projects category and band two for dispute
resolution/arbitration in Australia. At the Global Arbitration Review
Awards 2013, Doug was joint runner-up in the category of the Best
Prepared and Most Responsive Arbitrator of the Year Award. Doug
is an Officer of the Order of Australia, and has received the award in
June 2012 in the Queens Birthday Honours List, for distinguished
service to the law as a leader in the areas of arbitration and alternative
dispute resolution.
Gordon E. Kaiser is an Independent Arbitrator and Mediator in
disputes involving energy contracts and energy projects including
construction, project finance, environment, interconnection and
regulatory issues. He served as Vice Chairman of the Ontario Energy
Board for six years. He has appeared before Courts and Regulators in
xxvi LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
six provinces as well as the Federal Court of Canada and the Supreme
Court of Canada. As Regulator and Arbitrator he has written over
100 decisions in domestic and international energy disputes. Gordon
has served as a sole Arbitrator, Chairman and Party Nominee in
arbitrations on power purchase agreements, gas supply contracts,
project finance, the construction of transmission lines and the
interconnection of solar and wind generation. Gordon is a panel
member at the London Court of International Arbitration, Energy
Arbitration Chambers in Calgary, the Canadian Transportation
Agency in Ottawa, the Chartered Institute of Arbitrators, London
England, the JAMS Global Engineering and Construction panel in
Washington, DC and the Independent Electricity System Operator in
Ontario. He has served as an Adjunct Professor at Queens
University, the University of Toronto and the Osgoode Hall Law
School. He is a Board Member at the Energy Bar Association,
Washington, DC, Co-Chair of the Canadian Energy Law Forum and
a Managing Editor of the Energy Regulation Quarterly. He was
named Energy Lawyer of the Year by the Energy Law Forum in 2011
and was recognized as one of Canadas leading arbitrators and
mediators by Chambers Global 2014.
Sophie J. Lamb is a Partner at Debevoise & Plimpton and Co-Chair
of the firms global energy disputes group. A recognized leader in the
field of international arbitration and public international law, Ms.
Lamb has acted as adviser and/or advocate in more than one
hundred international arbitrations in proceedings involving
investment agreements, long term supply relationships, concession
agreements, stabilization clauses, tax disputes, price re-openers, gas
pipeline and consortium issues, take or pay obligations,
hardship/fairness clauses, M&A, JOA, JSBA, joint venture disputes,
shareholder agreements, pre-emption rights, share purchase
agreements, warranty/indemnity claims and technology licensing
rights, among many others. Her diverse international case load has
included arbitrations in Europe, Asia and the U.S., many of which
have concerned assets or claims valued in excess of $1 billion, subject
to a wide variety of applicable law and international treaties. She has
xxvii
also appeared in the UK Supreme Court in addition to sitting as

arbitrator in energy disputes, including those involving states and
state entities.
Robert Reyes Landicho practices international litigation and
arbitration, and general commercial litigationoften involving nonU.S. parties. In particular, Robert assists in the representation of
clients in investor-State disputes before the International Centre for
the Settlement of Investment Disputes (ICSID) at the World Bank,
and under the rules of the United Nations Commission on
International Trade Law (UNCITRAL). He also assists in
representing clients in commercial arbitrations under the rules of the
International Chamber of Commerce (ICC), International Centre for
Dispute Resolution (ICDR), and London Court of International
Arbitration (LCIA). In addition, Robert represents foreign and U.S.
parties in state and federal courts. Robert received his Juris Doctor
from the University of California, Berkeley, School of Law.
Floriane Lavaud is a member of Debevoise & Plimptons
International Dispute Resolution Group in New York. Her practice
focuses on international investment and commercial arbitration and
enforcement-related litigation, in particular in the energy and mining
sectors. She is admitted to the New York and the Paris Bars, in
addition to being a Solicitor in England and Wales. Ms. Lavaud
represents clients in arbitrations conducted under the auspices of the
main arbitration institutions and in related court proceedings. She has
advised clients in a variety of jurisdictions on issues of civil and
common law, public international law, treaty and contract
interpretation, and maritime boundary. Her expertise also includes
the assessment of damages and the enforcement of arbitration
awards. Prior to joining Debevoise in 2007, Ms. Lavaud worked at
Total, the leading French oil and gas company, as a member of its
Exploration & Production legal division. From 2009 to 2011, she
clerked for the Honorable Douglas P. Woodlock of the United States
District Court in Boston. Ms. Lavaud received an LL.M. degree from
the University of Pennsylvania Law School in 2007 and an M.A. in
xxviii LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
Litigation and Arbitration from the University of Paris II PanthonAssas with honors in 2005. She is a native French speaker, is
proficient in Spanish and speaks basic Dutch.
Aimee-Jane Lee is an international Counsel at Debevoise &
Plimpton. Her practice focuses on investment treaty and complex
commercial arbitration and public international law and she is a
senior figure in Debevoises energy disputes group. Ms. Lee has
advised private clients and states across multiple jurisdictions (most
notably in Asia, Africa, Latin America and Eastern Europe) and a
number of industries, with particular expertise in energy. Inter alia,
she frequently advises on the international protection of investments
(notably under bilateral investment treaties, the Energy Charter
Treaty and investor-state contracts) and represents clients in
associated disputes, often involving multi-billion dollar claims. In
addition to her legal experience, Ms. Lee has passed all three levels of
the CFA (Chartered Financial Analyst) exams. She is therefore
particularly proficient in advising on disputes involving complex
financial analysis, business valuations, and financial instruments and
assisting clients with quantum-related aspects of their dispute.
James Lloyd Loftis heads Vinson & Elkins International Dispute
Resolution practice and focuses on the arbitration and litigation of
international commercial and investor-state disputes and matters
involving international law and treaties. His practice includes all
aspects of energy, infrastructure development and construction, and
disputes under investment laws and treaties, as well as boundary
disputes, cross-border technology disputes and sovereign debt. He is
a member of the ICC Commission on Arbitration, is listed in Global
Arbitration Review, is listed in Legal Media Groups (Euromoneys)
Expert Guide to Commercial Arbitration, and is ranked in international
arbitration in Chambers Global, Chambers UK, Chambers USA and Legal
500 UK. He is listed in The Best Lawyers in America for international
arbitration. Since 2009, James has been an adjunct professor at the
University of Texas School of Law where he teaches international
investment law and investor-state and international commercial
xxix
arbitration. In 2011, he was appointed as Chair of the Advisory

Board for the Global Center for Energy, International Arbitration
and Environmental Law at the University of Texas. James maintains
offices in London and in Houston, and is admitted in Texas, in the
Senior Courts of England and Wales, and in the Dubai International
Financial Centre Courts.
Joanne Luu is an Associate at Burnet, Duckworth & Palmer LLP in
Calgary. She has a broad commercial litigation practice, specializing in
international commercial arbitration and securities litigation. Notable
matters include assisting in the representation of a consortium of
energy companies in a state royalty dispute and acting as tribunal
secretary on an international commercial arbitration seated in
London. She was also on the legal team for the successful defence in
two high profile insider trading cases. Joanne is a believer that the
best part of practice is the continued pursuit of knowledge, and seeks
to contribute through the presentation and publication of papers.
Prior to joining BD&P, Joanne clerked at the Alberta Court of
Appeal. She also worked at the Canadian Department of Foreign
Affairs and International Trade in Ottawa, where she assisted with
both trade policy and negotiations and the development of market
plans for Japan and South Korea. Joanne graduated from the
University of Calgary, where she obtained her Juris Doctor and was a
member of the Philip C. Jessup International Law Moot Team. She is
also a proud graduate of the University of Lethbridge, where she
obtained her Bachelor of Arts and Science majoring in Biology and
Political Science.
Bernhard Maier is an Associate at Volterra Fietta. Bernhard advises
and represents sovereign States, international organisations and
corporate clients on a wide range of contentious and non-contentious
public international law and international dispute resolution issues,
including treaty interpretation, sovereign immunity and international
trade. He has represented claimant and respondent parties in a
number of investment disputes under different institutional rules,
including ICSID, UNCITRAL, ICC and AAA and has acted as
xxx LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
counsel and advocate in two ICSID annulment proceedings relating

to energy infrastructure investments. Bernhard also has experience in
commercial litigation and arbitration, including under ICC and AAA
rules. He has taught the law of foreign investment at University
College London and delivered practical training in public
international law to government lawyers of a State in the Middle East.
Further professional experience includes working in the international
dispute resolution group at the Berlin and New York offices of a
global law firm. He was also involved in high-level pipeline
negotiations between two Central Asian States at the Energy
Directorate of the European Commission in Brussels. Bernhard is a
member of the bar of New York. He holds an LLB from
Southampton University and an LLM (International Business Law)
with Distinction from University College London. He is fluent in
English, German and Spanish.
Gustavo Mata is a member of the international arbitration team at
the Caracas office of Norton Rose Fulbright and he is also a member
of the firms corporate practice. Mr. Mata joined Norton Rose
Fulbright following his graduation in 2011. Since joining the firm Mr.
Mata has devoted a large part of his practice to issues of international
investment law and arbitration, having acted as co-counsel to foreign
investors in more than a dozen ICSID and ICC proceedings
involving Venezuela. Mr. Mata also advises numerous clients in
cross-border transactions, mergers and acquisitions and international
financing operations. During his law studies at Universidad Catlica
Andrs Bello (UCAB), Mr. Mata received various awards and had a
very successful participation in the Phillip C. Jessup International
Moot Court Competition. Mr. Mata is currently pursuing a
Commercial Law LL.M at UCAB and coaches UCAB teams
participating in the Jessup Competition.
Jorge Mattamouros is an Associate in King & Spaldings Houston
office, and a member of the firms International Arbitration Practice
Group. Mr. Mattamouross practice focuses on representing clients in
commercial and investment arbitrations, advising companies and
xxxi
public authorities on matters concerning investment promotion and

protection, and acting in judicial proceedings in aid of arbitration.
Mr. Mattamouros handles or has handled disputes in Africa, Europe,
Latin America, and Asia in relation to the oil and gas, energy, mining,
infrastructure, and transportation sectors. Mr. Mattamouros advises
regularly on disputes relating to projects in or clients from
Lusophone jurisdictions. In addition to his work as counsel, Mr.
Mattamouros has served as arbitrator and as mediator, and has coauthored expert opinions. Prior to joining King & Spalding, Mr.
Mattamouros was a Lecturer at the Porto University Law School. Mr.
Mattamouros holds an LL.M. from Harvard Law School.
Gary McGowan serves as Arbitrator and Mediator in national and
international disputes, often complex, high-stakes matters. Before
becoming a neutral, McGowan was a business litigator, most notably
as a founding partner of Susman Godfrey in Houston. His credentials
include: Directory of Energy Arbitrators, Institute for Energy Law
(Dallas); Fellow, Chartered Institute of Arbitrators (London); Roster
of Arbitrators, Commercial, Large Case, and Oil & Gas Panels,
American; Arbitration Association; Panel of Arbitrators, International
Centre for Dispute Resolution (New York); Fellow, College of
Commercial Arbitrators;Fellow and Board Member, American
Academy of Civil Trial Mediators; Texas Panel of Distinguished
Neutrals, International Institute For Conflict; Prevention and
Dispute Resolution (CPR) (New York); CPRs Energy, Oil and
Gas Panel of Distinguished Neutrals; CPRs Insurance Coverage
Panel of Distinguished Neutrals; 20th Edition, The Best Lawyers in
America, 2014 Houston Mediation Lawyer of the Year; International
Whos Who of Commercial Mediation 2013 (London); Panel of
Arbitrators, Hong Kong International Arbitration Centre; 2012
Distinguished Counselor Award, Antitrust and Business Litigation
Section, State Bar of Texas; Associate Editor, Texas law Review
(1972-73), University of Texas School of Law 12 Ways To Achieve
Speed and Efficiency in Arbitration, Corporate Counsel (April 2013);
Sanctions in US and International Arbitrations: Old Law in Modern
Context, Kluwer Arbitration (October 2013).
xxxii LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
Michael McIwrath is Global Chief Litigation Counsel for GE Oil &

Gas and has been based at the companys offices in Florence, Italy
since 1999. His team is responsible for dispute resolution around the
world, and represents the company in mediation and arbitration
proceedings and supervises the conduct of court litigation. Michael is
co-author, with John Savage, of International Arbitration and Mediation:
A Practical Guide (Kluwer Law International 2010), as well as a
contributing editor to the Kluwer Arbitration Blog. He is the host
International Dispute Negotiation (http://www.cpradr.org), a podcast
featuring interviews with leading professionals from different
countries and cutting-edge topics in dispute resolution (and recipient
of the CEDR Award for Innovation in ADR). Michael is also a
member of the board of directors (and past chairman) of the
International Mediation Institute (IMI), a non-profit based in the
Netherlands that promotes quality, transparency, and ethics in
mediation.
Joaquim Tavares de Paiva Muniz is a Partner in Rio de Janeiro
and So Paulo of Trench, Rossi and Watanabe Advogados, associated
with Baker & McKenzie. His practice includes arbitration and dispute
resolution, mergers and acquisitions, corporate law and mining.
Graduated in 1996 from Universidade do Estado do Rio de Janeiro.
Master of Laws (LL.M.) at University of Chicago in 1999. Passed the
New York Bar exam. Member of the board of directors (conselho
seccional) of the Rio de Janeiro Bar (OAB/RJ) and chairman of the
Arbitration Commission of OAB/RJ. Member of the Arbitration
Commission of the Brazilian Bar. Coordinator of the Graduate
Course of Arbitration at the Escola Superior de Advocacia
ESA/RJ. Officer of the Brazilian Center of Mediation and
Arbitration (CBMA), the largest arbitration chamber of Rio de
Janeiro. Author of the books Arbitration Law of Brazil - Practice
and Procedure- Juris Publishing, Arbitragem Domstica e
Internacional (Domestic and International Arbitration) Forense e
Curso de Direito Arbitral (Arbitration Law Course) -CRV. Member
of CIArb. Member of the Dispute Board Foundation.
xxxiii
Sophie Nappert is a dual-qualified Lawyer in Canada and in the UK.

She is an Arbitrator in independent practice, based in Grays Inn,
London, specialising in international disputes, notably in energy,
infrastructure, natural resources and cross-border investment. Before
becoming a full-time arbitrator, she was Head of International
Arbitration at a global law firm. Sophie is trained and has practised in
both civil law and common law jurisdictions. She is the peernominated Moderator of OGEMID, the online discussion forum on
current issues of international investment law, economic law and
arbitration. She is ranked in Global Arbitration Reviews Top 30 List
of Female Arbitrators Worldwide and is listed in the International
Whos Who of Commercial Arbitration. Sophie is the author of a
Commentary on the 2010 UNCITRAL Arbitration Rules: A Practitioners
Guide (Juris, 2012). She is a regular speaker at conferences and
seminars on issues of international arbitration, international
investment law and dispute resolution. She is a guest lecturer at
Columbia Law School, Harvard Law School and McGill University
Faculty of Law. She has created the Nappert Prize in International
Arbitration, open to young scholars and practitioners worldwide, and
administered under the auspices of McGill University.
Kevin OGorman is a Partner at Fulbright & Jaworski LLP (Norton
Rose Fulbright). He represents clients in arbitration and litigation
cases involving energy, international, commercial, construction, and
investor-state disputes. In addition to his client representation work,
he regularly serves as arbitrator in domestic and international cases.
Kevin is Co-Chair of the Energy Arbitrators List Review Committee.
(http://www.energyarbitratorslist.com) He chaired the Disputes
Division and International Arbitration Committee of the American
Bar Associations Section of International Law, and served on its
Council. He has taught as an Adjunct Professor at the University of
Houston Law Center and was an elected member of the Council of
the State Bar of Texas Section of International Law. Kevin formerly
served as Senior Legal Secretary and Team Leader of the Claims
Resolution Tribunal for Dormant Accounts in Zurich, Switzerland,
which resolved claims against Swiss banks relating to Holocaust-era
xxxiv LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
dormant accounts. At the CRT, he supervised an international team

of lawyers and was a member of the Tribunals Policy Committee. He
is a Life Fellow of the American, Texas and Houston Bar
Foundations and serves on the board of the Houston International
Arbitration Club. Kevin received a J.D. with honors from the
University of Michigan Law School and clerked for U.S. District
Judge Howell Cobb of the Eastern District of Texas. He has received
the Chairs Special Recognition Award from the ABA Section of
International Law, and a Certificate of Appreciation from the U.S.
Department of State, among other professional honors. Kevin is a
member of the Texas and New York bars and is admitted to the roll
of solicitors in England and Wales.
Philippe Pinsolle is the Managing Partner of Quinn Emanuels Paris
office. He has acted as counsel in more than 200 international
arbitrations, with a particular focus on investor-state arbitrations and
commercial disputes involving the energy, power, oil & gas,
construction and defence industries. Philippe has served as arbitrator
in more than 40 cases, as well as expert witness on arbitration and
French law issues. Chambers Global reports that clients have
described him as an outstanding strategist with a great tactical
sense and adds that his pragmatic approach, great intellect and
technical prowess set him apart. Philippe has also been praised as
an oil and gas specialist. According to the GAR 100 Survey
Philippe Pinsolle is by many accounts a leader in his generation in
Parispossibly the leader. In 2014, Philippe Pinsolle was
recognized by Best Lawyers as a leading practitioner in Arbitration &
Mediation and International Arbitration and was awarded the French
Arbitration Counsel of the Year prize at the Benchmark and Expert
Guides Global Arbitration Awards. He is a graduate of ESSEC, Paris
II Panthon-Assas, and Oxford University (Hertford College).
Philippe is admitted to the Bar of England and Wales as a Barrister
and is a member of the Paris Bar.
Michael Polkinghorne is a dual-qualified Lawyer, resident in Paris
where he heads the White & Case offices arbitration group. He is an
xxxv
acknowledged name in arbitration, notably in the area of energy, and

has advised clients on projects in South East Asia, the Middle East,
Europe, the CIS and North Africa. Having served as counsel and
arbitrator in arbitrations conducted under most major institutional
and ad hoc rules, Michaels work concentrates on the areas of foreign
direct investment and acting for and against states. He is at present
advising buyers in several gas-price arbitrations. Michael is a member
of the Legal Advisory Task-force of the European Energy Charter
Secretariat which has recently prepared a new edition of their Model
Intergovernmental and Host Government Agreements for CrossBorder Pipelines. He is the author of the Paris Energy Series, a series
of occasional papers dealing with subjects germane to the energy
industry. He has also taught at the Paris Bar School and several
business schools. Michael is consistently ranked in the top tier of
energy practitioners in Paris. He is listed as a leading lawyer in Whos
Who Legal, Oil & Gas and named Energy Lawyer of the Year at
Euromoneys 2014 Global Commercial Arbitration Awards.
Jennifer L. Price, a Partner in King & Spaldings International
Arbitration and Litigation and Energy groups, has represented clients,
primarily in the energy and power sectors, for more than 25 years in
international arbitration and litigation of a wide range of complex
commercial and investment disputes. The majority of her cases
involve international oil and gas, power, or petrochemical matters,
including disputes involving Host Governments, state-owned energy
and power companies, production sharing agreement and JOA
disputes, and disputes with promoters and local representatives, in
both administered and ad hoc arbitration. She is recognized among
the Best Lawyers in America and the International Whos Who of Business
Lawyers/Global Arbitration Review in International Arbitration, as well
as the Worlds Leading Experts in Commercial Arbitration and Worlds
Leading Women in Business Law. She is also a member of the panel of
arbitrators for the Tribunal Arbitral du Sport/Court of Arbitration
for Sport.
xxxvi LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
Caroline Richard is a Senior Associate in Freshfields International

Arbitration Group based in Washington, DC. She represents
corporate clients in several international commercial and investorstate arbitrations, with a focus on energy and natural resources
disputes. Caroline successfully represented investors in investment
treaty arbitrations against Argentina (including Total and National
Grid) and Bolivia (including Rurelec plc) and is currently acting on
behalf of investors in several pending ICSID arbitrations against
Venezuela. Before moving to Washington D.C., Caroline was part of
the International Arbitration Group in Freshfields London and Paris
offices. Prior to joining Freshfields, she was a clerk for Justice
Deschamps at the Supreme Court of Canada. Caroline has masters
degrees in international law from both Harvard University and
Cambridge University, and has common law and civil law degrees
from the Universit de Montral. Caroline is an Adjunct Professor at
American Universitys Washington College of Law, where she coteaches a course on investment treaty arbitration. She is admitted to
the bars of Ontario, Canada, New York and Washington DC. She
speaks English, French and Spanish.
David W. Rivkin, Co-Chair of Debevoise & Plimptons
International Dispute Resolution Group and a litigation partner in
the New York and London offices, is President of the International
Bar Association. He has over 30 years experience in international
arbitration and litigation, a large portion of which has involved
energy disputes. Mr. Rivkin also represents companies in
transnational litigation in the US, including the enforcement of
arbitral awards and arbitration agreements. His recent successes
include winning US $2.3 billion on behalf of Occidental Petroleum
Company in a BIT arbitration against Ecuador (Global Arbitration
Review named this award The Most Important Published Decision of
2012, and the American Lawyer selected it as 2013 Global Dispute of
the YearInvestment Arbitration) and NAFTA arbitration for
ExxonMobil and Murphy Oil against Canada. Mr. Rivkin also won
(with Debevoise partner Chris Tahbaz), one of the largest ICC
arbitration awards ever, worth approximately US $750 million, in his
xxxvii
representation of Hyundai Heavy Industries. Mr. Rivkin is

consistently ranked worldwide as a top international dispute
resolution practitioner. In 2012, the American Lawyers Am Law
Litigation Daily named him one of two Global Lawyers of the Year.
In 2011, the National Law Journal named him one of the countrys
Most Influential Attorneys. He is identified as one of the top
fourteen international arbitration practitioners worldwide in Chambers
Global (2014). Chambers Latin America (2015) calls him one of the
leaders in the international arbitration movement.
Ann Ryan Robertson, International Partner in the Houston office of
the global firm of Locke Lord LLP, serves as an arbitrator and
advocate in both international and domestic arbitrations. Well-versed
in the intricacies of international arbitration, Ms. Robertson was named
to Global Arbitration Reviews Whos Who Legal: Arbitration 2015
after independent research with clients and peers identified her as
being among the worlds leading commercial arbitrators. In 2014, she
was named 2014 Lawyer of the Year, International Arbitration
Governmental (Houston) by The Best Lawyers in America. Ms. Robertson
is a member of the U.S. delegation to the NAFTA Advisory
Committee on Private Commercial Disputes, a Board Member of the
American Arbitration Association, a Trustee of the Chartered Institute
of Arbitrators and a past member of the International Chamber of
Commerce (ICC) Commission on Arbitration. She is a member of
both the American Arbitration Association and the International
Centre for Dispute Resolutions panel of neutrals. In addition, for over
a decade, Ms. Robertson has coached the University of Houston Law
Centers Willem C. Vis International Arbitration Moot team which
competes each year in Hong Kong.
Samantha J. Rowe is a member of Debevoise & Plimptons
International Dispute Resolution Group. Ms. Rowe is admitted to
the New York Bar and also holds a degree in English law. Her
practice focuses on international arbitration and litigation, and public
international law, with a particular focus on the mining and energy
sectors. She represents private clients and States in arbitrations
xxxviiiLEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
governed by various substantive laws and conducted under the rules

of the ICC, SIAC, LCIA, ICSID and UNCITRAL, and in court
proceedings in federal and state courts in the United States, including
the United States Supreme Court. Ms. Rowe speaks French and
Spanish, and basic Portuguese, and frequently handles contentious
matters involving these languages. She sits on the Board of Directors
of the New York International Arbitration Center (NYIAC). Ms.
Rowe received her B.A. (Hons.) with First Class Honors in English
Law and French Law from the University of Oxford, Wadham
College, a Certificat Suprieur de Droit Franais from the Universit
de Paris II Panthon-Assas, and an LL.M. in International Legal
Studies from New York University.
Yulia Selivanova is an Independent Consultant specialized in energy
and trade regulatory affairs. She advises governments, companies and
intergovernmental organizations on different aspects of energy
regulation and trade in energy. From 2005 to 2013 she worked in the
Energy Charter Secretariat where she was responsible for trade
issues. She advised the organization and its member states on
implementation of the trade provisions of the Energy Charter Treaty
and implication of WTO agreements for trade in energy. Before
joining the Energy Charter, Ms. Selivanova worked for four years for
an international law firm Baker & McKenzie in Geneva, focusing on
international trade and WTO issues. She also was a consultant in the
Rules Division of the WTO, where she conducted research on
subsidies, anti-dumping and safeguards for the WTO dispute
settlement panels. Ms. Selivanovas work in Russiain an
international law firm and international bank in Moscow
concentrated on legal support of activities of international companies
in Russia. Yulia Selivanova graduated from the International Law
Faculty of the Moscow Institute of International Relations
(MGIMO), with specialization in international trade law. She
obtained the Master of International Law and Economics
programme in the World Trade Institute in Bern (Switzerland) and in
2006 earned a Doctorate in Law from the University of Bern. Ms.
Selivanovas Doctorate thesis focused on energy dual pricing under
xxxix
WTO law in context of Russias accession to the WTO. Ms.

Selivanova publishes regularly on a range of trade and WTO issues,
in particular trade in energy. In 2011 she edited and published a book
Regulation of Energy in International Trade Law: WTO, NAFTA
and Energy Charter.
Murray Smith received his Bachelor of Science in 1973, his Bachelor
of Laws in 1976 and his Master of Laws, International Business Law,
at the London School of Economics in 1989. He was called to the
Bar of British Columbia in 1977 and the Bar of Yukon Territory
in1985. He qualified as an English Barrister in 1990. Currently
practising from Vancouver, British Columbia Mr. Smith has extensive
experience in commercial litigation and arbitration. He has acted as
arbitrator in international commercial arbitrations under AAA
(ICDR), ICC, BCICAC and UNCITRAL Rules and has served as
chairman, as party appointed arbitrator and as sole arbitrator. Mr.
Smiths arbitration work has focused on energy and natural resource
related disputes including the distribution of oil field production
profits, gas supply contracts for power generation facilities,
exploration concession agreements, LNG Sales Agreements and the
interpretation of commercial contracts generally. Mr. Smith has been
involved in international commercial arbitration legal education
programs in England, British Columbia, Yukon, the United States and
the Caribbean. Over more than 20 years he has served as the course
director for international training programs for experienced arbitrators
seeking the Fellowship qualification with the Chartered Institute of
Arbitrators. He was a founding member and was Chairman of the
North American Branch of the Chartered Institute of Arbitrators from
2005 to 2008. He collaborated with Martin Hunter and Allan Redfern
in writing the second edition of the leading text Law and Practice of
International Commercial Arbitration.
Mark Stadnyk is an International Arbitration Advisor at Fulbright &
Jaworski LLP (Norton Rose Fulbright). He represents clients in
international commercial and investor-state arbitration disputes
arising out of numerous industries across the world, including energy,
xl
mining, and construction. Mark writes and speaks on various

international legal matters. He has co-coached the Harvard Law
School Vis International Arbitration Moot team since 2011. Mark
also teaches arbitrator training courses for the Houston Maritime
Arbitrators Association. He is a qualified arbitrator with the Houston
Maritime Arbitrators Association. Mark received his law degrees
with high distinction from Oxford University (University College)
and Harvard Law School. Mark also studied French and European
law at the Universit de Paris II: Panthon-Assas. Mark is a member
of the New York Bar, and previously worked on international
arbitration matters in Paris. In addition to his legal interests, Mark is
an enthusiastic violinist who has performed at Carnegie Hall,
Viennas Musikverein, and the Edinburgh Fringe Festival.
Sven-Michael Volkmer is an Associate in the arbitration
department of White & Case LLP in Paris. His practice covers
investment and commercial arbitration with a focus on energy-related
disputes. He has represented and advised several major energy
companies in gas price reviews under long-term gas supply
agreements. He received an LLM in International Legal Studies from
New York University, an LLB in English and European Law from
Queen Mary College, University of London, and aCertificat Suprieur
de Droit Franais from Universit Paris II., Mr. Volkmer is a member
of the New York Bar and the Paris Bar.
George M. von Mehren is Chair of the International Dispute
Resolution Practice Group at Squire Patton Boggs. A gas and LNG
price review specialist, he has acted as lead counsel in numerous
disputes involving gas and LNG contracts. Mr. von Mehren has also
appeared as advocate and counsel in many additional major
international arbitrations involving hydrocarbon supply and pricing
issues, bilateral investment treaty claims, construction contract and
commercial disputes. Mr. von Mehren was educated at the University
of Cambridge and Harvard University, and has written regularly on
these topics.
This Chapter is from The Leading Practitioners' Guide to International Oil & Gas Arbitration.
(James M. Gaitis ed., JURIS). JurisNet, LLC 2015 www.arbitrationlaw.com
Chapter 9
A COMPARATIVE ANALYSIS OF THE ECT
AND BITS IN LIGHT OF EVOLVING EU
POLICY
Graham Coop and Bernhard Maier*
I. INTRODUCTION
With the entry into force of the Treaty on the Functioning of the
European Union, as amended by the Lisbon Treaty (the TFEU), in
2009, foreign direct investment became part of the exclusive
competence of the European Union (the EU). Five years later, the
EU has begun to exercise its newly allocated power. For example,
the European Commission has recently negotiated a 512-page
comprehensive trade and investment agreement with Canada,
threatened that it would pursue every appropriate legal avenue to
stall enforcement proceedings in an intra-EU bilateral investment
treaty (BIT) dispute and asserted that the Energy Charter Treaty
(the ECT) does not create obligations among EU Member States
inter se.
These actions have generated considerable controversy. This
flows in part from the different approaches taken by the international
and the European lawyer respectively as regards the natures of
international and European law. Whereas the European Court of
Justice (the Court of Justice, the Court or the ECJ) and the
European Commission maintain that European law constitutes a
* Graham Coop is a Partner at Volterra Fietta, and previously served as
General Counsel to the Energy Charter Secretariat. Bernhard Maier is an Associate
at Volterra Fietta. The authors gratefully acknowledge the assistance and insights
provided by Marie Germa and Maria Fogdestam-Agius, Associates at Volterra
Fietta.
367
368 LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION
separate legal order, public international lawyers insist that European

law remains a subsystem of international law.
Inherent in the conclusion of bilateral and multilateral investment
agreements (and investor-State dispute resolution in particular) is a
certain scepticism towards other States political, regulatory and legal
framework. By contrast, the European Union is a highly integrated
international supranational organisation1 based on democracy,
equality and the rule of law, intended to offer its citizens an area of
freedom, security and justice without internal borders.2
Initially, the conflict appeared to be between the proponents of
BITs (and investor-State arbitration), on the one hand, and the
European institutions, on the other. Today, the debate has become
increasingly multidimensional. Not only is the EU encroaching upon
Member States ability to conclude investment agreements and to
engage in arbitrations thereunder, but the investment arbitration
system as a whole has become subject to increasing public criticism.
Opponents of investment arbitration claim that international
investment agreements grant special privileges to multinational
companies, limit governments scope to legislate in the public
interest, and are inherently undemocratic and should therefore be
done away with.
The state of flux resulting from these conflicting
multidimensional considerations has the potential to affect the
practical application of the provisions of intra-EU and extra-EU
BITs, as well as the ECT, in disputes involving oil and gas. States
and investors alike remain unsure whether these frameworks remain
applicable in their present form and how to manage this uncertainty
in practice.
1 Reinisch, The EU on the Investment PathQuo Vadis Europe? The
Future of EU BITs and other Investment Agreements (2013) 12 Santa Clara
Journal of International Law 111, p. 152.
2 Second preambular paragraph of Protocol No 19 (on the Schengen acquis
integrated into the Framework of the European Union) to the consolidated version
of Treaty on the Functioning of the European Union, entered into force on
1 December 2009, Official Journal of the European Union of 26 October 2012, OJ
[2012] C 326/290.
A COMPARATIVE ANALYSIS OF THE ECT AND BITS
369
The debate has already given rise to a plethora of expert

commentary on point.3 Building upon previous commentary,
supranational regulation and judicial decisions, this chapter will
attempt to provide some practical guidance. It will present a
snapshot of recent developments in the light of the European
Unions newly acquired competence with a particular focus on
extra-EU BITs and the ECT.4 It will then address the potential
impact of those developments on existing Eurocentric investment
treaty frameworks with a particular focus on intra-EU BITs and the
ECT and attempt to make predictions as to the future prospects of
such agreements.
3 See, for example, Reinisch, The EU on the Investment PathQuo Vadis

Europe? The Future of EU BITs and other Investment Agreements (2013) 12
Santa Clara Journal of International Law 111; Burgstaller, European Law and
Investment Treaties (2009) 26 Journal of International Arbitration 181; Wehland,
Intra-EU Investment Agreements and Arbitration: Is European Community Law
An Obstacle (2009) 58 International and Comparative Law Quarterly 297; Bermann,
Navigating EU Law and the Law of International Arbitration (2012) 28
Arbitration International 397; Burgstaller Investor-State Arbitration in EU
International Investment Agreements with Third States, (2012) 39 Legal Issues of
Economic Integration 207; Dimopoulos, The Validity and Applicability of
International Investment Agreements between EU Member States under EU and
International Law (2011) 48 Common Market Law Review 63; Clodfelter, The
Future Direction of Investment Agreements in the European Union (2014) 12
Santa Clara Journal of International Law 159; Coop, Energy Charter Treaty and the
European Union: Is Conflict Inevitable? (2009) 27 Journal of Energy and Natural
Resources Law 404; Kleinheisterkamp, Investment Protection and EU Law: The
Intra- and Extra-EU Dimension of the Energy Charter Treaty (2012) 15 Journal of
International Economic Law 85.
4 Intuitively, it might appear logical to begin the present discussion with an
analysis of the intra-EU BIT landscape, followed by an evaluation of the situation
pertaining to extra-EU BITs. However, the majority of the European
Commissions efforts to date have focused on extra-EU BITs. With a view to
providing the reader with the most detailed background possible at the outset, this
chapter will begin by investigating extra-EU BITs.
II. A BRIEF OVERVIEW OF INTERNATIONAL

INVESTMENT AGREEMENTS IN THE EU
CONTEXT
BITs have a long history. The first BIT, concluded between
Germany and Pakistan in 1959, is still in force. As of the end of 2013,
around 2,902 BITs and some 334 other investment agreements had
been concluded worldwide, with new BITs continuing to be negotiated
regularly.5
The typical BIT seeks to protect investments made by nationals
of either contracting party within the territory of the other
contracting party (the host State) against non-commercial risks arising
out of actions taken by the government of the host State. Modern
BITs normally contain guarantees of stable, equitable, favourable and
transparent conditions for investments, fair and equitable treatment
and constant protection and security, as well as guarantees against
discriminatory treatment, expropriation or equivalent measures. Some
BITs also contain umbrella clauses guaranteeing performance by host
governments of their contractual obligations to covered investors.
Significantly, many BITs guarantee covered investors (unconditionally
or conditionally) freedom of transfers in relation to their investments,
including transfers of the initial capital, returns, contractual payments,
proceeds of sale of investments and compensation arising out of
disputes. Importantly, modern BITs generally provide for direct
recourse by covered investors against the government of the host
State by way of investor-State international arbitration.
Following the fall of the Berlin Wall and the increasing openness
of the economies of most Eastern European States, many BITs were
concluded in the early 1990s between the 15 pre-2004 EU Member
States, on one hand, and Eastern European States, on the other.
Eight Eastern European States (together with Cyprus and Malta)
acceded to the European Union on 1 May 2004; two more acceded
5 UNCTAD, World Investment Report 2014: Investing in the SDGs: An
Action Plan, p. 114, available at http://unctad.org/en/PublicationsLibrary/wir
2014_en.pdf.
371
on 1 January 2007 and one more in 2013. As a result, nearly 200

intra-EU BITs now exist within the context of todays European
Union. In addition, many EU Member States have negotiated, and
continue to negotiate, BITs with third States (extra-EU BITs, i.e.,
BITs between an EU Member State on one hand, and a non-EU
Member State on the other). As of June 2014, the 28 EU Member
States are currently parties to 1,356 extra-EU BITs, of which 1,160
are in force.6
The ECT, with 51 Member States plus the European Union and
Euratom, was signed on 17 December 1994 and entered into force
on 16 April 1998.7 Originating from a proposal by then Dutch Prime
Minister Ruud Lubbers, the ECTalthough it potentially has a
worldwide vocationwas intended to foster energy exchanges in the
Eurasian context, particularly between the developed economies of
Western Europe and Japan and the emerging economies of the
former Commonwealth of Independent States (CIS).
The ECT covers trade, transit, investment protection and energy
efficiency and related environmental aspects, in relation to energy
materials and products. Its investment protection chapter also
contains an investor-State dispute resolution clause. Competence in
relation to the ECTs substantive provisions is divided between the
EU and its Member States.8 The ECT is, therefore, a mixed
6 Investor-State Dispute Settlement: An Information Note on the United
States and the European Union (June 2014) UNCTAD Report, p. 3 available at
http://unctad.org/en/PublicationsLibrary/webdiaepcb2014d4_en.pdf.
7 The 51 ECT Member States include the 28 EU Member States, the former
CIS except Russia, most other European States, Afghanistan, Australia, Japan,
Mongolia and Turkey. A complete list of these States, together with observers, is
available at www.encharter.org. The ECT was signed in 1994, and approved in
1998, by the three then-existing European Communities: the European Coal and
Steel Community (the ECSC), the European Community (EC) and Euratom.
Subsequently, the ECSC expired on 23 July 2002, leaving the European
Community and Euratom as contracting parties to the ECT. Through the Lisbon
Treaty, the European Union replaced the EC.
8 Agreements that pertain to areas falling within the EUs exclusive competence
as well as areas falling within the Member States residual competence (i.e., areas
where competence has not been conferred on the EU) are termed mixed agreements.
agreement to which the EU and its 28 Member States are parties,

alongside the 23 non-EU ECT Member States. Furthermore, the
ECT is an extra-EU multilateral investment treaty (MIT) as well as
an intra-EU MIT.
III. EXTRA-EU BITS
A. An Overview of Recent Political Developments
With the ratification of the Lisbon Treaty on 1 December 2009,
the European Unions exclusive competence under the Common
Commercial Policy was extended to the conclusion of tariff and
trade agreements relating to trade in goods and services, and the
commercial aspects of intellectual property, foreign direct
investment.9 In particular, this mandate includes contributing to
the progressive abolition of restrictions on international trade and
on foreign direct investment, and the lowering of customs and other
barriers.10 Importantly, it also extends to investment agreements
between Member States inter se, investment agreements between
Member States and third States, and multilateral agreements such as
the ECT. Five years after the ratification of the TFEU, the EU and
its Member States are yet to define the precise scope of the EUs
competence.11 A number of recent developments have shed light on
how the EU intends to exercise its powers under the Lisbon Treaty.
TFEU, Article 207(1).
TFEU, Article 206. Even though the wording of Article 207 explicitly limits
the EUs exclusive competence to foreign direct investment, it would appear that
the European Commission considers that its competence extends to indirect or
portfolio investment (such investment is for instance included in the recently
negotiated EU-Canada free trade agreement, a treaty which the Commission has
claimed falls within its exclusive competence). Even under EU law, a distinction is
made between direct and portfolio investment; this distinction would arguably bear
upon the scope of the Commissions powers under Article 207, see Case C-171/08
Commission v. Portugal 2010 ECR I-06817, para. 49; see also Eeckhout, EU External
Relations Law (2011) (Oxford University Press), p. 64.
11 See, for example, Dolzer, The European Approach to BITs (2009) 24
ICSID ReviewForeign Investment Law Journal 368; and Burgstaller, Investor-State
9
10
373
The following section will summarise recent EU developments

and briefly set out the European Unions initiatives in light of its
newly acquired competence with a particular focus on investment
agreements between Member States and third States.
i.
The European Commission
In July 2010, the European Commission, the EUs executive

body, published a communication setting out the basic parameters of
an EU investment policy (the 2010 Commission Communication).12
Notably, this communication recognised that a one-size-fits-all
model for investment agreements with 3rd countries would
necessarily be neither feasible nor desirable.13
The 2010 Commission Communication highlighted that the EU
should pave the way for investors by liberalising investment flows. It
contained a list of criteria for the selection of future partner countries
to ensure a level playing field of a high quality to all EU investors.14
These standards include the political, institutional and economic
climate of [EU] partner countries and more precisely the
Arbitration in EU International Investment Agreements with Third States (2012)

39 Legal Issues of Economic Integration 207, p. 217.
12 European Commission, Communication from the Commission to the
Council, the European Parliament, the European Economic and Social Committee
and the Committee of the Regions: Towards a comprehensive European
international investment policy (7 July 2010), available at http://trade.ec.europa.
eu/doclib/docs/2011/may/tradoc_147884.pdf.
international investment policy (7 July 2010), p. 6, available at http://trade.ec.
europa.eu/doclib/docs/2011/may/tradoc_147884.pdf.
robustness of investor protection through either host country or

international arbitration.15
The communication emphasised that investor-State dispute
resolution constituted a key part of the inheritance that the Union
receives from Member State BITs.16 It noted that such a dispute
settlement provision guarantees that in the event of a problem with a
government, an investor can bring its claim directly to binding
international arbitration.17 It brings with it a level of certainty and
stability that makes a host State economy more attractive to foreign
investors. The Commission finally suggested that the Union should
build on Member State practices to arrive at state-of-the-art investor
state dispute settlement mechanisms.18
At the same time, the European Commission issued a draft
grandfathering regulation (the Grandfathering Regulation) which
addressed transitional aspects of the management of the new EU
competence on investment and authorise[d] the continued
existence of all investment agreements currently in force between

international investment policy (7 July 2010), p. 9, available at http://trade.ec.e
uropa.eu/doclib/docs/2011/may/tradoc_147884.pdf.
375
Member States and third countries.19 It recognised that bilateral

investment agreements remain binding on the Member States under
public international law but noted that they will be progressively
replaced by agreements of the Union relating to the same subject
matter.20 In particular, the draft proposed that the Commission
should be able to withdraw the authorisation [to continue to apply an
existing extra-EU BIT] if [it] conflicts with the law of the Union.21
The Grandfathering Regulation was adopted by the Parliament
and Council on 12 December 2012, albeit with significantly watereddown screening powers in the European Commission in relation to
existing and future investment agreements.22 However, the final
Grandfathering Regulation still requires Member States to obtain
European Commission, Proposal for a Regulation of the European
Parliament and of the Council establishing transitional arrangements for bilateral
investment agreements between Member States and third countries (7 July 2010),
pp. 2 and 3, available at http://trade.ec.europa.eu/doclib/docs/2010/july/
tradoc_146308.pdf; Article 2(1) TFEU provides that [w]hen the treaties confer on
the Union exclusive competence in a specific area, only the Union may legislate and
adopt legally binding acts, the Member States being able to do so themselves only if
so empowered by the Union or for the implementation of Union acts.
Accordingly, the Grandfathering Regulation empowers Member States to maintain
their existing extra-EU BITs under certain conditions, whilst keeping the European
Commission informed as to any change in the status quo.
20 Regulation (EU) No 1219/2012 of the European Parliament and of the
Council of 12 December 2012 establishing transitional arrangements for bilateral
investment agreements between Member States and third countries (20 December
2012) OJ [2012] 351/40, preambular para. 5, available at http://eur-lex.europa.eu/
legal-content/EN/TXT/PDF/?uri=CELEX:32012R1219&from=EN.
21 European Commission, Proposal for a Regulation of the European
Parliament and of the Council establishing transitional arrangements for bilateral
investment agreements between Member States and third countries (7 July 2010),
p. 8, available at http://trade.ec.europa.eu/doclib/docs/2010/july/tradoc_146308.pdf.
2012) OJ [2012] L 351/40, available at http://eur-lex.europa.eu/legal-content/
EN/TXT/PDF/?uri=CELEX:32012R1219&from=EN. For a comparison
between the draft and final regulations see, for example, Reinisch, The EU on the
Investment PathQuo Vadis Europe? The Future of EU BITs and other
Investment Agreements (2013) 12 Santa Clara Journal of International Law 111, p. 121.
19
authorisation from the Commission to open formal negotiations

with a third country to amend or conclude a BIT.23 It also provides
that Member States shall keep the Commission informed of the
progress and results of the negotiations to amend or to conclude a
BIT in case the Commission would like to participate in the
negotiations.24 It expressly excludes intra-EU BITs from its scope.25
ii. The European Council
In October 2010, the European Council, the EUs political body,
submitted its comments on the 2010 Commission Communication.
The Council called upon the EU to take a pragmatic and realistic
approach by ensuring a legal framework that empowers Member
States to negotiate and conclude bilateral investment agreements with
third parties when there is no EU investment agreement envisaged in
the near future with them.26
Importantly, the European Council called for the continued
applicability of existing intra-EU BITs. It also emphasised the need
2012) OJ [2012] L 351/40, Article 9, available at http://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:32012R1219&from=EN. See also Articles
11 and 13(c).
2012) OJ [2012] L 351/40, Article 10, available at http://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:32012R1219&from=EN.
2012) OJ [2012] L 351/40, preambular paras. 1 through 5, available at http://eur-lex.
europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32012R1219&from=EN.
26 Council of the European Union, Conclusions on a comprehensive
European international investment policy, 3041st Foreign Affairs Council meeting,
Luxembourg 25 October 2010, p. 2, available at http://www.consilium.europa.
eu/uedocs/cms_data/docs/pressdata/EN/foraff/117328.pdf.
377
to protect current bilateral investment agreements between Member

States and third parties since they represent the main source of
protection and legal security for the European investor abroad.27
The Council also called for the inclusion of an effective
investor-to-state dispute settlement mechanism in the EU investment
agreements.28 Reflecting a somewhat cautious stance, the Council
invited the Commission to carry out a detailed study on the relevant
issues concerning international arbitration systems, including . . . the
legal and political feasibility of EU membership in international
arbitration institutions as well as the question of liability arising from
arbitration procedures.29
The European Council is composed of the Heads of State or
Government of the Member States, together with its President and
the President of the European Commission.30 Given the divergent
views of the Member States on precisely how much power to cede to
the Commission, the Councils compromising stance is not
Council of the European Union, Conclusions on a comprehensive
eu/uedocs/cms_data/docs/pressdata/EN/foraff/117328.pdf. It is important to
note at this point that the European Union could not accede to the ICSID
Convention in its present form. According to Article 67 of the ICSID Convention,
the Convention is only open for signature on behalf of States members of the
Bank. Pursuant to Article 66 of the ICSID Convention, any amendment to the
Convention must be ratified, accepted or approved by all contracting States. In
practice such an amendment is therefore very unlikely. See Burgstaller, European
Law and Investment Treaties (2009) 26 Journal of International Arbitration 181, pp.
215 to 216.
30 European Council official website, available at http://www.europeancouncil.europa.eu.
27
surprising. While the Council is in principle in favour of maintaining

present intra-EU BITs in force, the outcome of the Commissions
study will certainly play a key role in swaying the Council in one way
or another.
iii. The European Parliament
Initially, the European Parliament regarded investment arbitration
with suspicion. In a report on a motion for a resolution on
international investment policy, the European Parliament expressed
scepticism towards investor-State arbitration in its present form. In
its report, the European Parliament noted that while it is generally
acknowledged that inward investment improves host countries
competitiveness . . . , outward investment may exacerbate adjustment
costs for low-skilled workers.31 The European Parliament also:
Criticised shell companies and so-called treaty/forum
shopping32 and noted that portfolio investments should be
excluded from future European investment agreements;33
Draft Report dated 20 December 2010, Committee on International Trade

under Rapporteur Kader Arif, preambular para. C of the Motion for a European
Parliament Resolution on the future European international investment policy
(2010/2203), available at http://www.europarl.europa.eu/sides/getDoc.do?pub
Ref=-//EP//NONSGML+COMPARL+PE-454.567+01+DOC+WORD+V0//
EN&language=EN.
32 Draft Report dated 20 December 2010, Committee on International Trade
under Rapporteur Kader Arif, preambular para. E and p. 11 of the Motion for a
European Parliament Resolution on the future European international investment
policy (2010/2203), available at http://www.europarl.europa.eu/sides/get
Doc.do?pubRef=-//EP//NONSGML+COMPARL+PE-454.567+01+DOC+WO
RD+V0//EN&language=EN.
under Rapporteur Kader Arif, Article 5 of the Motion for a European Parliament
Resolution on the future European international investment policy (2010/2203),
available at http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP// NON
SGML+COMPARL+PE-454.567+01+DOC+WORD+V0//EN&language=EN.
31
379
Questioned the possibility of bringing claims against a host

State for indirect expropriation as a result of that States
exercise of its regulatory powers;34
Called for a stricter definition of a foreign investor entitled
to the protections of a BIT as, in its view, broad definitions
have led to abusive practices, which should not be
permitted;35 and
Suggested looking to the USA and Canada which have
adapted their model BITs in order to restrict the breadth of
interpretation by the arbitration [sic] and ensure better
protection of their public intervention domain.36
By the time the European Parliament passed the resolution on 6
April 2011, its approach was significantly more nuanced, albeit still
sceptical. Whilst the European Parliament called for changes [to] be
34 According to the European Parliament, whereas after the first dispute

settlement cases of the 1990s a number of problems became clear, particularly
concerning the possibility of conflict between private interests and the regulatory
tasks of public authorities, for example in cases where the adoption of legislation
led to a state being condemned by international arbitrators for indirect
expropriation, Draft Report dated 20 December 2010, Committee on
International Trade under Rapporteur Kader Arif, preambular para. G of the
Motion for a European Parliament Resolution on the future European
international investment policy (2010/2203), available at http://www.europarl.
europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE454.567+01+DOC+WORD+V0//EN&language=EN.
under Rapporteur Kader Arif, Article 7 of the Motion for a European Parliament
Resolution on the future European international investment policy (2010/2203),
available at http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NON
SGML+COMPARL+PE-454.567+01+DOC+WORD+V0//EN&language=EN.
under Rapporteur Kader Arif, preambular para. H of the Motion for a European
Parliament Resolution on the future European international investment policy
(2010/2203), available at http://www.europarl.europa.eu/sides/getDoc.do?
pubRef=-//EP//NONSGML+COMPARL+PE-454.567+01+DOC+WORD+
V0//EN&language=EN.
made to the present dispute settlement regime,37 it also emphasised

the need to balance a European investment policy which meets the
expectations of investors and beneficiary states with the EUs
broader economic interests and external policy objectives.38
Notably, the European Parliament in its final resolution:
Resiled from its initial suspicious (if not frankly mercantilist)
position in relation to investment flows; instead, it noted that
adjustment assistance for low-skilled workers may be
necessary in the case of outward investment;39
Retained reference to shell companies and so-called treaty
shopping but added that any European company should be
able to rely on future EU investment agreements or free trade
agreements (FTAs) with investment chapters;40 and
Instead of expressing an opinion on the breadth of existing
Member State BITs, called upon the European Commission to
investigate whether a broad definition of foreign investor
may have led to abusive practices and to provide a clear
definition of the investments to be protected.41
European Parliament resolution of 6 April 2011 on the future European
International Investment Policy (2010/2203 (INI)), Article 31, available at
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA
+P7-TA-2011-0141+0+DOC+XML+V0//EN.
38 European Parliament resolution of 6 April 2011 on the future European
International Investment Policy (2010/2203 (INI)), Article 1, available at
+P7-TA-2011-0141+0+DOC+XML+V0//EN.
International Investment Policy (2010/2203 (INI)), preambular para. C, available at
+P7-TA-2011-0141+0+DOC+XML+V0//EN.
International Investment Policy (2010/2203 (INI)), preambular para. E, available at
+P7-TA-2011-0141+0+DOC+XML+V0//EN.
International Investment Policy (2010/2203 (INI)), Articles 11 and 14, available at
37
381
In relation to a host States right to regulate, the European

Parliament expressed deep concern regarding the level of discretion
of international arbitrators to make a broad interpretation of investor
protection clauses, thereby leading to the ruling out of legitimate
public regulations.42 It called on the European Commission to
include in all future agreements specific clauses laying down the right
of parties to the agreement to regulate.43
Under the Lisbon Treaty, the European Parliaments consent is
required for the conclusion of future investment treaties by the EU.44
Accordingly, the Parliaments sceptical position on activities in
relation to investment treaty arbitrations in the European context
must be closely monitored by practitioners.
iv. Negotiations with third States
Acting on the basis of its newly conferred competence, the
European Commission is presently negotiating free trade agreements
containing investment chapters with the United States, Canada, India
and Singapore. According to the European Councils 2011
negotiating mandate, legal protection and certainty for European
investors abroad should go hand in hand with the right of the EU
+P7-TA-2011-0141+0+DOC+XML+V0//EN.
International Investment Policy (2010/2203), Article 24, available at http://www.
europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-20110141+0+DOC+XML+V0//EN.
International Investment Policy (2010/2203), Article 25, available at http://www.
europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA +P7-TA-20110141+0+DOC+XML+V0//EN.
44 Colin Brown noted that [t]he increase in importance of the Parliament is one
of the most obvious manifestations of the changes brought about by the Treaty of
Lisbon. . . . [T]he Parliament has sought to establish a more general institutional
balance, which ensures that a full respect for its prerogatives can be established, in
Brown, Changes in the Common Commercial Policy of the European Union After
the Entry into Force of the Treaty of Lisbon: A Practitioners Perspective (2013)
European Yearbook of International Economic Law 163, pp. 164 to 165.
and the Member States to adopt and enforce, in accordance with

their respective competences, measures necessary to pursue legitimate
public policy objectives such as social, environmental, security, public
health and safety in a non-discriminatory manner.45
Until very recently, investor-State arbitration provisions would
have been an unquestionable element of a free trade agreement, even
one seeking to strike the balance between the considerations set out
above.46 However, recent negotiations between the European
Commission and the United States regarding a transatlantic free trade
agreement (TTIP) have stalled over increasingly vocal European
public criticism of the proposed inclusion of an investor-State
arbitration clause in the investment chapter.47 Opponents of investorState dispute resolution argue that the mechanism grants special
privileges to multinationals, limits governments scope to legislate in
the public interest and is fundamentally undemocratic.48 Similar
views were echoed in a consultation on investment protection and
investor-State dispute settlement in the TTIP agreement published by
the European Commission in January 2015.49
Council Negotiating Directives (Canada, India and Singapore), 15 September
2011, available at http://www.bilaterals.org/spip.php?article20272&lang=en.
46 See, for example, the Association Agreement between the EU and Chile
which entered into force in 2003 and provided for the establishment of an
arbitration panel in Article 129, albeit limited to disputes pertaining to the
Agreements financial services provisions, OJ [2002] L 352/3, available at
http://www.esf.be/new/wp-content/uploads/2009/09/eu-chile-association-agree
ment-2002.pdf. Similarly, the Free Trade Agreement between the EU and Korea,
which entered into force on 1 July 2011, provides for the establishment of an
arbitration panel to hear financial services disputes in Article 7.45, OJ [2011] L
127/6, available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=
OJ:L:2011:127:FULL&from=EN.
47 EU sets out framework for handling cases (29 August 2014) Global Arbitration
Review, available at http://globalarbitrationreview.com/news/article/ 32929/.
48 Perry, EU commissioner defends investment protection (30 June 2014)
Global Arbitration Review, available at http://globalarbitrationreview.com/news/
article/32767/eu-commissioner-defends-investment-protection/.
49 European Commission, Online public consultation on investment
protection and investor-to-state dispute settlement (ISDS) in the Transatlantic
Trade and Investment Partnership Agreement (13 January 2015), p. 14, available
at http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153044.pdf.
45
383
The negotiations on the investment chapter of the TTIP are

suspended at the time of writing. They are expected to resume once
EU Member States are satisfied that the new proposals by the
Commission can guarantee that the jurisdiction of courts in EU
Member States will not be limited by special regimes for investor-tostate disputes. 50
In a similar vein, the German government has expressed
concerns about the inclusion of investor-State dispute settlement
mechanisms in the Comprehensive Economic and Trade Agreement
(CETA) between the EU and Canada, a draft text of which51 was
published on 26 September 2014 following five years of negotiations.
Germanys Minister of Economy Sigmar Gabriel announced that he
would reject the Canada deal if the investor-state dispute settlement
elements remain.52 The draft text suggests that the Council of the
European Union and . . . the European Parliament are responsible
for ratification of the agreement.53 As at December 2014, it remains
unclear whether the Member States, the EU or both are responsible
for ratifying the CETA.54
The European Commission on the other hand has claimed that
all official communications it had received from Germany were
positive, and that the adoption of the CETA would boost bilateral
50 European Commission, Report on the online public consultation on
investment protection and investor-to-state dispute settlement (ISDS) in the
Transatlantic Trade and Investment Partnership Agreement (13 January 2015), p. 1,
available at http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_ 153045.pdf.
51 Draft text of the CETA published on 26 September 2014, available at
http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf.
52 EU and Canada set out trade agreement (26 September 2014), BBC News,
available at http://www.bbc.co.uk/news/business-29375747.
53 Cover page of the consolidated text of the Comprehensive Economic and
Trade Agreement between the European Union and Canada published on 26
September 2014, available at http://trade.ec.europa.eu/doclib/docs/2014/
september/tradoc_152806.pdf.
54 Whether or not the CETA falls within the exclusive competence of the EU
or is a mixed agreement (competence shared between EU and its Member States) is
yet to be determined. Should the latter be the case, ratification by the national
parliaments of the EU Member States would be required in addition to ratification
of the text by the European Parliament and European Council.
trade by 23% (or 26 billion).55 While the text must still undergo a
legal review and translation, it is unlikely that the content of the
CETA will be modified before being presented to the European and
Canadian parliaments for ratification.56
These developments highlight an increasing tension between EU
Member States and EU institutions as to who ultimately bears
responsibility for negotiating investment agreements in the European
context. Meanwhile, the public debate remains focused on the
challenges posed by entrusting private arbitration tribunals with
decision-making power over measures adopted by sovereign States.
In an attempt to allay critics concerns, the European
Commission has since proposed a closed list of basic rights under
the fair and equitable treatment standard and a clarification that
legitimate public policy measures cannot qualify as an indirect
expropriation.57 Other suggestions tabled by the EU Commission
include more transparency as well as a permanent appellate
mechanism to ensure consistency in arbitral decisions.58
v. Allocation of financial responsibility and duty to cooperate
with the European Commission
On 28 August 2014, the European Parliament and Council
adopted a regulation establishing a framework for managing financial
responsibility linked to investor-State dispute settlement tribunals
established under BITs to which the EU and its Member States are
Official data of the EU-Canada trade relations European Commission, available at
http://ec.europa.eu/trade/policy/countries-and-regions/countries/canada/.
56 The CanadaEU trade deal: signed, not sealed (28 September 2014) The
Economist, available at http://www.economist.com/blogs/americasview/2014/09/
canada-eu-trade-deal.
Global Arbitration Review, available at http://globalarbitrationreview.com/news/
article/32767/eu-commissioner-defends-investment-protection/.
Global Arbitration Review, available at http://globalarbitrationreview.com/
news/article/32767/eu-commissioner-defends-investment-protection/.
55
385
parties (the Financial Responsibility Regulation).59 According to

this instrument, the EU will in principle be responsible for
defending any claims alleging a violation of rules included in an
agreement . . . irrespective of whether the treatment at issue was
afforded by the EU itself or by a Member State.60
However, the financial responsibility flowing from an award will
be allocated between the EU and the responsible Member State.61
Where the EU is directly responsible for the treatment afforded or
the Member State conduct was mandated by EU law, the EU would
be required to pay an adverse award from its budget.62 By contrast, if
a measure were taken by a Member State on its own initiative, that
Member State itself would be liable to satisfy an award rendered
against it and would be responsible for the conduct of the defence.63
Council of 23 July 2014 establishing a framework for managing financial
responsibility linked to investor-to-state dispute settlement tribunals established by
international agreements to which the European Union is party (28 August 2014)
OJ [2014] L 257/121, available at http://eur-lex.europa.eu/legal-content/EN/
TXT/PDF/?uri=uriserv:OJ.L_.2014.257.01.0121.01.ENG.
OJ [2014] L 257/121, preambular para. 3, available at http://eur-lex.europa.
eu/legal-content/EN/TXT/PDF/?uri=uriserv:OJ.L_.2014.257.01.0121.01.ENG.
OJ [2014] L 257/121, preambular para. 5, available at http://eur-lex.europa.
OJ [2014] L 257/121, Article 3(1)(a) and (c), available at http://eur-lex.europa.
Notably, the Financial Responsibility Regulation imposes on

Member States a broad obligation to cooperate with the European
Commission in conducting their defence of arbitration proceedings.
For example, Article 10 obliges Member States to keep the
Commission informed of all significant procedural steps and allow
its representatives to form part of the delegation representing the
Member State.64
The mechanism envisaged by the Financial Responsibility
Regulation represents a significant transfer in responsibilities as well
as competence, financial and otherwise, away from the Member
States to the European Commission. It will be interesting to see how
the mechanism operates in practice.
In contrast to bilateral investment agreements and as mentioned
above, the ECT is a mixed agreement to which the EU and
Euratom, their 28 Member States and 23 third States are parties.
The ECT already contains a mechanism for allocating responsibility
(which was adopted upon accession by the EU (then European
Communities) in the mid-90s). As part of its accession, the EUs
predecessors acknowledged that they could be internationally
responsible for the fulfilment of their obligations under the ECT
and that they and the Member State concerned would determine
among themselves the identity of the proper respondent within 30
days of a request to do so.65
OJ [2014] L 257/121, Articles 3(1)(b), 5 and 9, available at http://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=uriserv:OJ.L_.2014.257.01.0121.
01.ENG.
OJ [2014] L 257/121, Article 10 and preambular para. 16, available at http://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=uriserv:OJ.L_.2014.257.01.0121.
01.ENG.
65 At the time of deposit of their instrument of approval of the ECT, the
European Communities submitted a statement pursuant to Article 26(3)(b)(ii) of
387
B. Jurisprudence on BITs and Repercussions for the ECT
As set out above, the Grandfathering Regulation permits Member

States to maintain their existing extra-EU BITs and also, under
certain conditions, to enter into new BITs with third States until an
agreement between the EU and the relevant third State is concluded.
The Grandfathering Regulation requires Member States to notify the
European Commission of their intention to sign a new agreement.
Such an agreement may not undermine imminent or ongoing EU
investment treaty negotiations or conflict with the obligations under
EU law.66 Even prior to the entry into force of the Grandfathering
Regulation, the Court of Justice had been tasked with assessing the
validity of a number of BITs between Member States and third
States.
i.
Infringement proceedings against Austria, Sweden, Finland

and Denmark
In 2006, the European Commission initiated infringement

proceedings against Austria, Sweden, Finland and Denmark in
relation to BITs which each of these Member States had concluded
with third States prior to its accession to the European Union.67 The
the ECT. In relevant part, this statement reads: The European Communities and
their Member States have both concluded the Energy Charter Treaty and are thus
internationally responsible for the fulfilment of the obligations contained therein, in
accordance with their respective competences. The Communities and the Member
States will, if necessary, determine among them who is the respondent party to
arbitration proceedings initiated by an Investor of another Contracting Party. In
such case, upon the request of the Investor, the Communities and the Member
States concerned will make such determination within a period of 30 days.
66 Grandfathering Regulation, Articles 8, 9 and 11.
67 Pursuant to Article 258 TFEU (former Article 226 of the EC Treaty), which
provides: If the Commission considers that a Member State has failed to fulfil an
obligation under this Treaty, it shall deliver a reasoned opinion on the matter after
giving the State concerned the opportunity to submit its observations. If the State
concerned does not comply with the opinion within the period laid down by the
Commission, the latter may bring the matter before the Court of Justice.
proceedings against Austria, Sweden and Finland resulted in

judgments in which the Court of Justice ruled that the three Member
States had failed to comply with their obligations pursuant to
(current) Article 351 TFEU (ex-Article 307 of the Treaty establishing
the European Community (EC Treaty)).68
According to Article 351 TFEU, States acceding to the European
Union are entitled to maintain agreements which they have
concluded with third States prior to their accession unless these
agreements are incompatible with the EU treaty framework.69 The
Commissions case was based on a clause contained in each of the
relevant BITs under which each party guaranteed to investors of the
other party the free transfer, in freely convertible currency, of
payments connected with an investment.
As the freedom of movement of capital (both between EU
Member States and to and from third States) is an underlying
principle of the European Union, such clauses in extra-EU BITs
would seem not to give rise to any obvious difficulty.70 However,
under the EC Treaty there are exceptions to the principle of free
68 Cases C-205/06, Commission v. Austria, 2009 ECR I-01301; C-249/06,
Commission v. Sweden, 2009 ECR I-01335; C-118/07, Commission v. Finland, 2009 ECR
I-10889. The infringement proceedings against Denmark were withdrawn following
Denmarks notification that it would terminate the BIT in question.
69 Article 351 TFEU (former Article 307 of the EC Treaty) provides: The
rights and obligations arising from agreements concluded before 1 January 1958 or,
for acceding States, before the date of their accession, between one or more
Member States on the one hand, and one or more third countries on the other, shall
not be affected by the provisions of the Treaties. To the extent that such agreements are not
compatible with the Treaties, the Member State or States concerned shall take all
appropriate steps to eliminate the incompatibilities established. Member States shall, where
necessary, assist each other to this end and shall, where appropriate, adopt a
common attitude. In applying the agreements referred to in the first paragraph,
Member States shall take into account the fact that the advantages accorded under
the Treaties by each Member State form an integral part of the establishment of the
Union and are thereby inseparably linked with the creation of common institutions,
the conferring of powers upon them and the granting of the same advantages by all
the other Member States (emphasis added).
70 See Article 63 TFEU (former Article 56 of the EC Treaty).
389
movement of capital.71 These include, inter alia, temporary measures

to deal with exceptional capital movements which cause or threaten
to cause difficulties in relation to the economic and monetary union,
and capital and payments sanctions against specific third States
pursuant to the European Unions common foreign and security
policy.
The BITs in question made no provision for these exceptions.
They therefore caused a hypothetical conflict between the obligations
of Austria, Sweden and Finland pursuant to their BITs and their
obligations under EU law. According to the Commission, this
hypothetical conflict, even if it had never arisen in practice, created
an obligation for Austria, Sweden and Finland to eliminate the
incompatibility by renegotiatingor, if necessary, terminatingthe
relevant BITs.
The Court of Justice found that an incompatibility indeed existed
between the relevant BITs and the EC Treaty. As Austria, Sweden
and Finland had not yet taken steps to eliminate this incompatibility,
the Court of Justice ruled that the three Member States were in
breach of their obligations pursuant to Article 351 TFEU. The effect
of the Courts decisions was that the three Member States were
obliged, under EU law, to renegotiate the impugned BITs in order to
bring them into conformity with EU law; or, if this proved
impossible with respect to a given BIT, to terminate the relevant BIT
in accordance with its terms. As far as the authors are aware, Austria,
Sweden and Finland have not, to this day, taken steps to renegotiate
or modify the BITs which the ECJ had deemed to be incompatible
with EU law.
As these three cases demonstrate, the Commission had an
unfettered discretion even prior to the Grandfathering Regulation to
bring before the Court of Justice alleged failures by Member States to
fulfil their obligations pursuant to the EC Treaty. The judgments in
these cases were based on specific BIT provisions which, the Court
of Justice held, were incompatible with obligations under specific EC
See Articles 64(2), 66 and 75 TFEU (former Articles 57(2), 59 and 60(1) of
the EC Treaty).
71
Treaty provisions (those in relation to the free transfer of capital).

The cases provide for a good illustration of the Court of Justices
position if a BIT provision is directly incompatible, even if only
hypothetically, with a provision of the EU treaty framework.
The Grandfathering Regulation sanctions existing BITs between
Member States and third States and clarifies that Member States are
free to continue negotiating such BITs in the future. However, in
doing so, Member States must exercise prudence and negotiate the
inclusion of EU law compliant provisions (such as exceptions to the
principle of freedom of movement of capital) so as to allow for the
exercise by the European Union of its powers under the EU treaty
framework.
Whilst the ECT also contains unqualified free capital transfer
provisions, the analysis of this argument with respect to the ECT is
different.72 The hypothetical conflict which was the basis for the
Court of Justices judgments in the Sweden, Finland and Austria
cases cannot, it is submitted, occur with respect to the ECT. It will
be recalled that this hypothetical conflict was between an
unconditional freedom of transfer provision in the impugned BITs
and a potential exercise by the European Union of its powers under
the EC Treaty to limit transfers. The BITs were held to be
incompatible on the basis that, were the European Union to exercise
its EC Treaty powers with respect to one or more of the relevant
States,73 it would be difficult or impossible for the Member States to
cooperate because such cooperation would lead to a breach of the
relevant extra-EU BIT(s).
As the EU is a party to the ECT, it has renounced its discretion
to exercise its powers in such a way as to lead to a violation of ECT
obligations, including in relation to the free transfer obligations
72 For a contrary view, see Kleinheisterkamp, Investment Protection and EU Law:

The Intra- and Extra-EU Dimension of the Energy Charter Treaty (2012) 15 Journal of
International Economic Law 85, pp. 103 to 104.
73 Which was a matter within the discretion of the European Union.
391
contained in Article 14 of the ECT.74 On the contrary, under the

ECT the European Union is required vis--vis third States to exercise
its powers under EU law, as far as possible, in order to avoid
violating its ECT obligations.75
ii. Substantive protection provisions
Another relevant issue is the interplay between substantive
protection provisions in extra-EU BITs and EU law. This issue was
addressed in the Commission v. Slovakia case.76 That case concerned an
EU directive which obliged Member States to guarantee nondiscriminatory access to their electricity network infrastructure.77
Prior to its accession to the EU, Slovakia had contractually promised
a Swiss company certain preferential access rights to its electricity
grid. In the 1990s, Slovakia had also concluded a BIT with
Switzerland.78 That BIT guaranteed investors from either State fair
74 Article 14 of the ECT provides that Each Contracting Party shall with
respect to Investments in its Area of Investors of any other Contracting Party
guarantee the freedom of transfer into and out of its Area . . . .
75 This follows from settled case law of the ECJ, see e.g. Case C-366/10, Air
Transport Association of America, 2011 ECR I-13755, para. 101, with further
references to other cases, as well as to Article 3(5) TFEU; see also Article 216(2)
TFEU, making explicit that the EU is bound by any international agreement to
which it becomes party; and see the Opinion of Advocate General Kokott, Case C366/10, Air Transport Association of America, 2011 ECR I-13755, para. 108,
emphasising that the EU is bound by international agreements applicable to it.
This is obviously consistent with the general principle of pacta sunt servanda that
applies to subjects of international law. As a matter of EU law, the obligation to
respect international law also requires that EU law must be interpreted and limited
in scope in light of relevant rules of international law; see on this Case C-402/05 P,
Kadi and Al Barakaat International Foundation v. Council and Commission, 2008 ECR I06351, para. 291.
76 Case C-264/09, Commission v. Slovakia, 2011 ECR I-08065.
77 Article 20 of Directive 2003/54/EC of 26 June 2003.
78 Agreement between the Czech and Slovak Federal Republic and the Swiss
Confederation on the promotion and reciprocal protection of investments, entered
into force 7 August 1991.
and equitable treatment, contained an expropriation provision and

provided for investor-State arbitration in case of a dispute.
The European Commission initiated infringement proceedings
against Slovakia before the Court of Justice claiming that Slovakia
had failed to fulfil its obligations under EU Directive 2003/54/EC
(Articles 9(e) and 20(i) of which call for non-discriminatory access to
an EU Member States electricity grid).
Slovakia sought to defend its non-compliance by arguing that its
obligations under the BIT and the ECT precluded it from renouncing
the priority access right it had granted to the Swiss investor. In
particular, Slovakia argued that reneging on its contractual
commitment would violate the provisions of the BIT and therefore
render it liable to pay compensation to the Swiss investor. Slovakia
also relied on the so-called subordination clause which provides that
EU law may not derogate from international obligations arising from
agreements which Member States concluded before their accession to
the EU.79
Advocate General Jskinen provided a preliminary opinion to
the Court of Justice.80 According to the Advocate General, the
priority access granted to the Swiss investor constituted that
investors only return on its investment and therefore fell within
the meaning of an investment of the BIT. Forcing Slovakia to
revoke this priority access would deprive the Swiss investor of its
only return and would therefore violate the expropriation clause of
Articles 351(1) and (2) TFEU (former Articles 307(1) and (2) of the EC
Treaty) provide that [t]he rights and obligations arising from agreements concluded before 1
January 1958 or, for acceding States, before the date of their accession, between one or more
Member States on the one hand, and one or more third countries on the other, shall
not be affected by the provisions of this Treaty. To the extent that such agreements are not
compatible with this Treaty, the Member State or States concerned shall take all
appropriate steps to eliminate the incompatibilities established. Member States shall, where
necessary, assist each other to this end and shall, where appropriate, adopt a
common attitude (emphasis added).
80 Opinion of Advocate General Jskinen, Case C-264/09, Commission v.
Slovakia, 2011 ECR I-08065.
79
393
the BIT.81 Commenting on the effect of the subordination clause on

Slovakias obligations, the Advocate General concluded that if
Slovakia has obligations pursuant to the [Slovakia-Switzerland BIT] . .
. which cannot be fulfilled if Slovakia applies [the Directive] . . . then
Slovakia has a defence under [Article 351(1) TFEU], and the
discriminatory treatment is thereby justified.82
Interestingly, Advocate General Jskinen dismissed Slovakias
defence that the priority access amounted to an obligation arising out
of the ECT. Even though the Advocate General agreed that the EU
legislation in question should be interpreted in accordance with the
EUs obligations under the ECT, he found that the detailed
provisions of the EU directive could not be overridden by the more
general provisions of the ECT.83 He added that in his view the EUs
obligations under the ECT are satisfied by the protection afforded to
investors by way of EU law more generally.84 He did not substantiate
his opinion on this point.85
Opinion of Advocate General Jskinen, Case C-264/09, Commission v.
Slovakia, 2011 ECR I-08065, para. 101.
Slovakia, 2011 ECR I-08065, paras. 60 and 61.
85 The Court in its judgment did not address Slovakias obligations under the
ECT. It did not justify this omission other than to note that Slovakias defence is
based on both the ECT and the BIT and that since the BIT relates directly to
investment protection, it is appropriate to consider the Slovak Republics defence
based on that agreement. (Case C-264/09, Commission v. Slovakia, 2011 ECR I-08065,
para. 30). As set out above, the Advocate General appears to have assumed that EU
law was to be applied as lex specialis, whereas the ECT constituted a general rule of law
that therefore had lost its immediate relevance in the EU context. Although there is
no confirmation that the Court would agree with this reasoning, it is interesting to
recall in this context the position of the Commission that intra-EU BITs have been
replaced by provisions of EU law. As will be argued towards the end of this chapter,
there is an intra-EU dimension to the ECT. It is thus entirely possible that the
Commission, and perhaps also the ECJ, would adopt the same stance in relation to
the ECT, in its capacity as an intra-EU MIT, as that adopted in relation to intra-EU
BITs. An example of this reasoning is the recent Commission intervention in the
81
The Court of Justice agreed with the Advocate Generals

assessment of the relationship of the BIT and EU law in light of the
subordination clause.86 According to the Court, terminating the
Swiss investors priority right would have deprived it of its entire
return for its investment and would therefore have amounted to an
expropriation under the BIT.87 As Slovakia was bound by
international obligations under the BIT, any discrimination arising
from the Swiss investors priority right was justified even if it violated
the EU directive on third-party access.88
The Court of Justice did not address the incompatibility of the
EU directive with the fair and equitable treatment principle, possibly
owing to its unfamiliarity and uneasiness with the standard.89 It
emphasised that it was not for it to interpret the provisions of the
BIT other than for the purpose of determining whether it imposed
an obligation on Slovakia that would excuse the latters noncompliance with an EU directive.90
This case is relevant to the present debate for several reasons.
First, investments in the energy industry are more capital-intensive and
involve significantly longer lead times and payback periods than those
made in other sectors. Stability and predictability are indispensable.
Although the Courts findings are limited to the specific facts of this
case, it is reassuring that the provisions of the BIT were permitted to
prevail even when in direct conflict with EU law.91
U.S. Steel case; see the amicus curiae brief filed 15 May 2014 by the European
Commission in U.S. Steel Global Holdings I B.V. (The Netherlands) v. The Slovak Republic,
PCA Case No. 2013-6, available at http://www.iareporter.com/downloads/
20141027.
86 Case C-264/09, Commission v. Slovakia, 2011 ECR I-08065, para. 32.
87 Case C-264/09, Commission v. Slovakia, 2011 ECR I-08065, paras. 35 and 48.
88 Case C-264/09, Commission v. Slovakia, 2011 ECR I-08065, paras. 32, 48 and 51.
89 Dimopoulos, The Compatibility of Future EU Investment Agreements
with EU Law (2012) 39 Legal Issues of Economic Integration 447, p. 462.
90 Case C-264/09, Commission v. Slovakia, 2011 ECR I-08065, para. 40.
91 However, the Court of Justice also confirmed its previous case law by
stating by way of obiter that if a Member State encounters difficulties which make
adjustment of an agreement impossible, an obligation to denounce that agreement
cannot be excluded, Case C-264/09, Commission v. Slovakia, 2011 E.C.R. I-08065,
395
In relation to the ECT, the Advocate Generals unsubstantiated

blanket statement calls into question the applicability of the ECT as
between EU Member States. Since Slovakia prevailed with its argument
relating to the BIT, the Court did not address the ECT argument in
what appears to have been an exercise of judicial economy.
As far as the authors are aware, the ECT has only been
considered by EU courts in two other cases, both before the General
Court.92 In the Dunamenti and Tisza cases, the issue was whether the
European Commission had been correct in categorising as State aid a
framework of power purchase agreements concluded between the
claimants and Hungary. Challenging the Commissions decision, the
applicants (both power plant operators) invoked the principles of
legal certainty and protection of legitimate expectations under EU
law, in combination with Article 10 ECT (providing for the
protection of investments in the energy sector). The General Court,
however, found that the ECT did not constitute a precise,
unconditional and consistent assurance which could have given rise
to a legitimate expectation that the power purchase agreements
would be considered compatible with EU rules on State aid.93
Neither of these cases addresses clearly the question of whether the
ECT can still be applied as between Member States. It does,
however, seem to provide some support for the idea that EU law is
para. 44. See further on this Klabbers, Treaty Conflict and the European Union (2009)
(Cambridge University Press), p. 118, with further reference to Koutrakos, EU
International Relations Law (2006) (Hart Publishing), p. 304 (both making the point
that the purpose of Article 351 TFEU is not so much to protect prior treaties as it
is to require Member States to find a way of accommodating their international
law obligations within the [EU] legal order).
92 This court is a constituent court of the Court of Justice, tasked with hearing
actions against the institutions of the European Union by individuals and Member
States. Prior to the entry into force of the TFEU it was known as the Court of
First Instance.
93 See Case T-179/09, Dunamenti Erm Zrt. v. Commission, Judgment of 30
April 2014, not yet published in the reports of cases and appealed to the ECJ, para.
102; and Case T-468/08, Tisza Ermkft v. Commission, Judgment of 30 April 2014
(unreported at time of writing), para. 323.
perceived in the EU legal order as more detailed and thus superior

to the ECT framework.
IV. INTRA-EU BITS
A. Introduction
Since the accession of 10 States to the European Union in 2004,
two in 2007 and one more in 2013, there are now almost 200 BITs in
force between EU Member States.94 Intra-EU BITs and EU law
cover many of the same matters, such as transfer of capital, property
rights and national treatment.95 In practice, clashes between those
two legal norms are therefore almost inevitable, in particular where
EU law mandates behaviour on the part of a Member State which
simultaneously breaches the provisions of an intra-EU BIT.
Imagine for example a hypothetical scenario in which a Dutch
energy company has made a large investment in a non-EU Member
State (State B). The return on this investment is guaranteed by
State B pursuant to a long-term contractual commitment. This
commitment is protected by a BIT between the Netherlands and
State B. State B then accedes to the EU. Pursuant to EU State aid
rules (intended to prevent the distortion of competition in the EU
Internal Market), the contractual commitment constitutes illegal State
aid. State B (now an EU Member State) is urged by the European
Commission to cease performing under the contract, an action which
would breach the provisions of the BIT. Which norm prevails? Will
the BIT trump EU law? Or will the new EU Member State be forced
to breach its obligations under the BIT so as to adhere to EU law? If
94 Investor-State Dispute Settlement: An Information Note on the United
States and the European Union (June 2014) UNCTAD Report, p. 3 available at
http://unctad.org/en/PublicationsLibrary/webdiaepcb2014d4_en.pdf.
95 For a comprehensive analysis of the overlap between the qualified rights
afforded to investors under the EU framework and the largely unqualified rights
granted to investors under the existing intra-EU BIT network, see Kleinheisterkamp,
Investment Protection and EU Law: The Intra- and Extra-EU Dimension of the
Energy Charter Treaty, (2012) 15(1) Journal of International Economic Law 85, p. 96.
397
the latter, will the State be obligedor even permittedto

compensate the investor?
B. Are Intra-EU BITs Incompatible with EU Law?
As early as 1962, the Court of Justice in the Commission v. Italy
case was tasked with addressing the relationship between EU law and
intra-EU agreements. According to the Court, in matters governed
by the EEC Treaty [now TFEU], that Treaty takes precedence over
agreements concluded between Member States before its entry into
force.96 Similarly, in the Commission v. Austria case, the Court of
Justice confirmed that it is settled case law [that] whilst [Article 351
TFEU] allows Member States to honour obligations owed to nonmember States under international agreements preceding the Treaty,
it does not authorise them to exercise rights under such agreements
in intra-Community relations.97
Clashes between EU law and investment treaty norms are
becoming more frequent in practice. According to the European
Commission, intra-EU BITs are incompatible with the EU legal
order. The Commission is therefore urging Member States to
terminate their intra-EU BITs98 and at the same time (and as will be
96 Case 10/61, Commission v. Government of the Italian Republic, 1962 ECR 1, p. 9;
see also Case C-546/07, Commission v. Federal Republic of Germany, 2010 ECR I-439,
para. 44. See, in relation to the primacy of EU law over international treaties
between Member States in domestic court proceedings Case C-235/87, Annunziata
Matteucci v. Communaut franaise of Belgium and Commissariat gnral aux relations
internationales (Foreign Relations Department) of the Communaut franaise of Belgium, 1988
ECR 5606, para. 22.
97 Case C-147/03, Commission v. Austria 2005 ECR 1-5969, para. 58, referring to
Case C-473/93, Commission v. Luxembourg 1996 ECR I-3207, para. 40.
98 In its written amicus curiae observations published in the Eureko v. Slovakia
case, the Commission expressed its concerns regarding the compatibility of intraEU BITs with mandatory provisions of EU law as well as with the EUs judicial
system. It noted that intra-EU BITs amount to an anomaly within the EU
internal market and that they eventually will have to be terminated, Eureko B.V.
v. The Slovak Republic, PCA Case No. 2008-13, Interim Award on Jurisdiction, 26
October 2010, paras. 177 and 182.
further discussed below) taking steps to prevent the enforcement of

arbitral awards rendered under such instruments.
In a 2006 note, the European Commission observed that most
of the provisions of [intra-EU] BITs have been replaced by
provisions of Community law. It stated that even though their
legal character after accession is not entirely clear, it appeared that
most of [the] content [of intra-EU BITs] is superseded by
Community law upon accession of the respective Member State.99
The European Commission also cautioned that if intra-EU BITs
were not terminated, investors could try to practice forum shopping
by submitting claims to BIT arbitration instead ofor additionally
tonational courts. The Commission warned that in practice [t]his
could lead to arbitration taking place without relevant questions of
EC law being submitted to the ECJ, with unequal treatment of
investors among Member States as a possible outcome.100
Terminating intra-EU BITs would, however, deprive intraEuropean investors of access to international arbitration, a
mechanism arguably integral to the promotion and protection of
energy investments in Europe. It is for this reason, among others,
that a number of Member States do not agree with the European
Commissions assessment. In their opinion, intra-EU BITs are
compatible with EU law and should remain in force.
Following the Commissions 2006 communication, Member
States were invited to review the need for intra-EU BITs and inform
European Commission, Internal Market and Services DG, The Free
Movement of Capital, Note for the Economic and Financial Committee (2006)
pp. 26 to 27. These statements were reproduced in the Eastern Sugar decision, see
Eastern Sugar B.V. v. Czech Republic, UNCITRAL, SCC No 088/2004, Partial Award
dated 27 March 2007, para. 126. As noted above, this argument essentially rests on
the principles of lex posterior and perhaps also lex specialis and shares some similarity
with the treatment by Advocate General Jskinen of the ECT in the Commission v.
Slovakia case. This will be further addressed in the conclusion to this chapter.
100 European Commission, Internal Market and Services DG, The Free
Movement of Capital, Note for the Economic and Financial Committee (2006)
pp. 26 to 27. This quote was reproduced in the Eastern Sugar decision, see Eastern
Sugar B.V. v. Czech Republic, UNCITRAL, SCC No 088/2004, Partial Award dated
27 March 2007, para. 126.
99
399
the Commission about any actions taken so that progress can be

reviewed by the Economic and Financial Committee.101 This
invitation resulted in many Member States making it known that they
did not share the Commissions concern regarding arbitration risks
and discriminatory treatment of investors and that a clear majority
of Member States preferred to maintain the existing agreements.102
As noted above, the Member States view on this point was also
expressed by the European Council in its comments on the 2010
Commission Communication.
Despite the prevalent view among Member States that intra-EU
BITs are compatible with EU law, a number of Member States have
subsequently announced their intention to terminate their intra-EU
BITs. These include the Czech Republic,103 Denmark,104 Slovenia, Italy
and Malta.105 Even if Member States terminate their intra-EU BITs, it
must be borne in mind that the majority of BITs contain so-called
sunset clauses. These provisions ensure that even after the termination
of a BIT, its provisions continue to cover existing investments for a
certain period of time, generally between 10 and 15 years.
Economic and Financial Committee of the European Union, Annual EFC

Report to the Commission and the Council on the Movement of Capital and the
Freedom of Payments (15 November 2006) p. 7.
102 Vis-Dunbar, EU Member States reject the call to terminate intra-EU
bilateral investment treaties (10 February 2009) Investment Treaty News, available at
http://www.iisd.org/itn/2009/02/10/eu-member-states-reject-the-call-to-terminateintra-eu-bilateral-investment-treaties/.
103 Peterson, Czech Republic pursues shake-up of its bilateral investment
treaties (21 November 2005) Investment Treaty News, available at http://www.iisd.
org/pdf/2005/investment_investsd_nov21_2005.pdf.
104 Denmark and Czech Republic working to terminate investment treaty; not
all EU member-states agree with the Czech view that intra-EU treaties are
unnecessary (17 July 2009) Investment Arbitration Reporter, available at http://www.
iareporter.com/downloads/20100328.
105 Italy, Slovenia and Malta concur with Czech Republic on lack of necessity
for intra-EU BITs; Italy-Czech treaty has been terminated (6 August 2009) Investment
Arbitration Reporter, available at http://www.iareporter.com/downloads/ 20100413.
101
C. Outlining the Contours of the Debate

As set out above, opinion as to whether intra-EU BITs remain
valid even though much of their content overlaps with EU law is
divided. Arguments are nuanced, ranging from the invalidity of intraEU BITs as a whole to precedence of EU law over certain
incompatible provisions of certain treaties.
According to one commentator, the invalidity of intra-EU BITs
can be deduced from a provision in the Lisbon Treaty which in
limited circumstances (i.e., where integration exceeds that of the EU
level) grants precedence over EU law to the norms contained in the
Treaty establishing the Benelux Economic Union.106 A contrario,
therefore (so the argument runs), because the EU treaty framework
nowhere regulates the relationship of intra-EU BITs with EU law,
the latter must take precedence in case of conflict. It will be noted
that this argument is essentially based on a European, as opposed to
an international, legal analysis.
Another argument for precedence of EU law over intra-EU BITs
in their entirety relies on Article 30(3) of the Vienna Convention on
the Law of Treaties (the VCLT). According to that provision, an
earlier treaty between the same parties applies only to the extent that
its provisions are compatible with those of a later treaty relating to
the same subject matter. In practice much will depend on whether a
court or tribunal concludes, having regard to their overlapping but
not identical content, that intra-EU BITs and EU law can be
classified as successive treaties relating to the same subject matter.107
Hindelang, Circumventing Primacy of EU Law and the CJEUs Judicial
Monopoly by Resorting to Dispute Resolution Mechanisms Provided for in Interse Treaties: The Case of Intra-EU Investment Arbitration (2012) 39 Legal Issues of
Economic Integration 179, pp. 189 to 190.
107 In its written submissions to the Eureko tribunal, the European
Commission argued that in the Eastern Sugar case, the tribunal had made a mistake
in holding that the BIT and EC Treaty did not cover the same subject matter
because it did not inquire correctly into the standards of sameness under Article
30 of the VCLT. It noted that the tribunal had simply assumed that the two
treaties would have to relate to the same precise subject matter. In Eureko, the
Commission proposed a broader threshold of compatibility and suggested that the
106
401
In relation to the compatibility of individual provisions, a key

question is whether investor-State arbitration provisions contained in
intra-EU BITs are compatible with the exclusive jurisdiction of the
Court of Justice. Investor-State disputes under BITs are generally
referred to ad hoc or institutional tribunals constituted for a specific
case or series of cases pertaining to similar facts. By contrast, in
matters involving EU law the Court of Justice is the sole exclusive
arbiter.108 It is therefore arguable that a tribunal constituted under an
intra-EU BIT or the ECT would violate the exclusive jurisdiction of
the Court of Justice in interpreting EU law norms that are relevant to
the dispute between the parties.109
The Court of Justice will always judge the validity and
applicability of intra-EU treaties exclusively by reference to EU
law.110 By contrast, investment tribunals will determine the validity
two treaties need only be of similar or comparable degree of generality so that
their parallel operation could lead to incompatible results, Eureko B.V. v. The
Slovak Republic, PCA Case No. 2008-13, Interim Award on Jurisdiction, 26 October
2010, para. 191. The tribunal rejected the Commissions argument on this point.
108 Article 344 TFEU (former Article 292 of the EC Treaty): Member States
undertake not to submit a dispute concerning the interpretation or application of
the Treaties to any method of settlement other than those provided for therein.
Lavranos notes that the ECJ not only fortified the primacy of European law in the
legal order of the Member States but at the same time placed itself at the apex of
the pyramid of all courts within the EU by reserving for itself the role of being the
final, ultimate authoritative institution for the interpretation and application of all
European law, see Lavranos, Designing an International Investor-to-State
Arbitration System After Opinion 1/09 (2013) European Yearbook of International
Economic Law 199, p. 206.
109 See e.g. Case C459/03, Commission v. Ireland 2006 ECR I-04635, paras. 121
and 154; see also Lavranos, New Developments in the Interaction between
International Investment Law and EU Law (2010) 9 Law and Practice of International
Courts and Tribunals 409, at pp. 410 to 411, 423 and 432 to 433; see also Lavranos,
The MOX Plant and IJzeren Rhine disputes: Which Court is the Supreme
Arbiter? (2006) Leiden Journal of International Law 223.
110 Case 10/61, Commission v. Government of the Italian Republic, 1962 ECR 1, p.
10; Case C-235/87, Annunziata Matteucci v. Communaut franaise of Belgium and
Commissariat gnral aux relations internationales (Foreign Relations Department) of the
Communaut franaise of Belgium, 1988 ECR 5606, para. 22.
and applicability of intra-EU BITs by reference to international law,

such as the principles enshrined in the VCLT.111 This route has in
the past led investment tribunals constituted under the ECT or intraEU BITs to assume jurisdiction and declare that in their view intraEU BITs remain in force until their formal termination.112 This
conclusion has since been accepted by commentators to be in
conformity with international law.113
D. Investment Arbitration Tribunals Have Consistently Found that IntraEU Bits Are Not Incompatible with EU Law
As mentioned above, arbitral tribunals have consistently assumed
jurisdiction in relation to intra-EU BIT disputes, affirming that under
international law intra-EU BITs remain in force until their formal
termination. By contrast, the EU Commission is of the view that
intra-EU BITs have been superseded by the constitutive EU treaty
framework. This stance has also been adopted by a number of
respondent States (though not all) in intra-EU BIT arbitrations. In a
111 See, for example Eastern Sugar B.V. v. Czech Republic, UNCITRAL, SCC No
088/2004, Partial Award dated 27 March 2007, para. 156. According to this
tribunal, the effect of the Czech Republics accession to the European Union, a
regional multilateral treaty, on the [intra-EU] BIT must be judged according to the
law of Nations, and in particular the Vienna Convention on the Law of Treaties
dated 1969.
112 See, for example the discussion below and in particular Eastern Sugar B.V. v.
Czech Republic, UNCITRAL, SCC No 088/2004, paras. 142 to 143, 156 to 158 and the
confidential Binder v. Czech Republic Award on Jurisdiction of 6 June 2007 in which a
tribunal constituted under the Arbitration Rules of the United Nations Commission
on International Trade Law (UNCITRAL) found that there was no conflict
between the Germany-Czech Republic BIT and EU law, see Peterson Detailed
surface of jurisdiction holdings in Binder v. Czech Republic; ad-hoc tribunal saw no
conflict between BITs and EU law, (28 February 2009) Investment Arbitration Reporter.
113 See, for example, Burgstaller, European Law and Investment Treaties
(2009) 26 Journal of International Arbitration 181, pp. 190 to 196, 208 and 213; also
Wehland, Intra-EU Investment Agreements and Arbitration: Is European
Community Law an Obstacle? (2009) 58 International and Comparative Law Quarterly
297, pp. 309 to 319 and Sderlund, Intra-EU BIT Investment Protection and the
EC Treaty (2007) 24 Journal of International Arbitration 455, pp. 459 to 464.
403
series of recent cases, the EU Commission has taken active steps to

prevent the enforcement of awards rendered under intra-EU BITs in
which the tribunal had rejected this argument.
i.
Eastern Sugar v. Czech Republic
In the Eastern Sugar arbitration, a claim was brought by a Dutch

investor following changes in the Czech Republics regulation of the
sugar market, which the Czech Republic argued were required in
order to enable its accession to the EU.
The Czech Republic contested the jurisdiction of the arbitral
tribunal, claiming that the BIT is not applicable beyond the Czech
Republics EU accession, that is, beyond May 1, 2004.114 According
to the Czech Republic, the BIT and the EU rules are competing
legal frameworks addressing the same subject-matter (i.e. the faculty
of a party to invest assets on the territory of another state, and to
freely dispose of the revenues).115
The Eastern Sugar tribunal rejected the Czech Republics argument
that EU law automatically superseded the BIT as a result of the
Czech Republics accession to the EU.116 The tribunal noted that
while there are common protections afforded to investors under EU
law and the Netherlands-Czech Republic BIT, there were additional
protections in the BIT, so that both treaties could not be considered
to cover identical subject matters for the purposes of Article 59(1) of
the VCLT, in particular the guarantee provided by the right to
international arbitration.117 The tribunal ultimately found in favour of
Eastern Sugar B.V. v. The Czech Republic, SCC Case No. 088/2004, Partial
Award, 27 March 2007, para. 97.
115 Eastern Sugar B.V. v. The Czech Republic, SCC Case No. 088/2004, Partial
Award, 27 March 2007, para. 101.
Award, 27 March 2007, paras. 104 and 172.
Award, 27 March 2007, paras. 159 to 166, and in particular para. 165: [f]rom the
point of view of the promotion and protection of investments, the arbitration clause is
in practice the most essential provision of Bilateral Investment Treaties and this provides the
best guarantee that the investment will be protected against potential undue
114
the investor at the merits stage, holding that the Czech Republic had
breached its obligation to afford Dutch investors fair and equitable
treatment.
ii. Eureko v. Slovakia
In the Eureko case, an arbitral tribunal formed pursuant to the
Netherlands-Slovak Republic BIT assumed jurisdiction over a claim
brought by a Dutch health insurer pertaining to legislative changes
made by Slovakia in relation to its private health insurance regulation.
Slovakia contested jurisdiction on the same basis as the Czech
Republic in the Eastern Sugar arbitration. According to Slovakia, the
EC Treaty governed the same subject matter as the BIT and
therefore the BIT should be considered terminated in accordance
with the VCLT. Slovakia claimed that the Court of Justice was
therefore vested with exclusive jurisdiction over Eurekos claims.118
The European Commission submitted an amicus curiae brief in
which it argued that EU Member States resorting to arbitration
pursuant to an intra-EU BIT are in breach of their obligation under
EU law to submit disputes to an EU court.119 Importantly for the
purposes of the present debate, the European Commission
recognised that there was no incompatibility between the Lisbon
Treaty and the BIT in its entirety120 but rather that there was an
incompatibility of certain provisions within the meaning of Article
30(3) of the [VCLT].121
In particular, the Commission took the view that the investorState arbitral mechanism of the BIT raised fundamental questions
regarding compatibility with EU law. According to the Commission,
infringements by the host state, adding: EU law does not provide such a guarantee
(emphasis added).
118 Eureko B.V. v. The Slovak Republic, PCA Case No. 2008-13, Interim Award
on Jurisdiction, 26 October 2010, para. 19.
120 Within the meaning of Article 59(1)(b) of the VCLT.
405
the investor-State provisions in the BIT conflict with EU law on

the exclusive competence of EU courts for claims which involve
EU law, even for claims where EU law would only partially be
affected.122
As in Eastern Sugar, the arbitral tribunal rejected Slovakias
argument that the BIT in its entirety had been superseded by
Slovakias accession to the European Union. The tribunal found that
the protections afforded pursuant to the BIT and EU law were
substantially different, so that EU law could not supersede the BIT in
its entirety in accordance with Article 59(1) of the VCLT.123
The tribunal also dismissed Slovakias claim (and the European
Commissions intervention) that the investor-State arbitration
provision in the BIT was incompatible with EU law and that the
tribunal was therefore deprived of jurisdiction. The tribunal
observed that there is no rule of EU law that prohibits investorState arbitration and that the Court of Justice itself in the past has
articulated guidance as to how questions of EU law should be
handled in the course of arbitrations.124
Finally, the tribunal dismissed Slovakias objections that it lacked
jurisdiction because EU law prevails over both national law and
international treaties and because the Court of Justice has an
interpretative monopoly over EU law. The tribunal did recognise
that EU law, and German law as the lex loci arbitri, might have a
bearing on the scope of the rights and obligations under the BIT, but
found that this did not prevent the tribunal from assuming
jurisdiction.125
Eureko B.V. v. The Slovak Republic, PCA Case No. 2008-13, Interim Award
on Jurisdiction, 26 October 2010, paras. 244 to 267.
on Jurisdiction, 26 October 2010, para. 279. Slovakia initially contested the arbitral
tribunals partial award before the German Federal Supreme Court
(Bundesgerichtshof). Before the German Federal Supreme Court could render a
judgment, the arbitral tribunal rendered a final award in Eurekos favour. The
122
In its award on the merits, the tribunal found Slovakia to be in

breach of a number of the substantive protection provisions of the
BIT and ordered Slovakia to pay Eureko 22.1m plus interest.126
Slovakia lodged an appeal against the final award with the Frankfurt
Court of Appeals, arguing that the tribunal lacked jurisdiction
because the BIT had been superseded by EU law.
The Frankfurt Court of Appeals dismissed Slovakias
application. According to the German court, the investor-State
arbitration clause contained in the BIT did not violate EU law. The
court also dismissed Slovakias argument in relation to the exclusive
jurisdiction of the Court of Justice; in the courts view this
interpretative monopoly extended only to State-to-State and not to
investor-State disputes. Furthermore, the German court opined
that decisions rendered pursuant to a BIT are not per se
incompatible with the EU legal order because they can be
challenged at the national court level.127
Slovakia is likely to appeal this decision to the German Federal
Supreme Court. That court will then in principle be obliged to refer
the matter to the Court of Justice, which will provide muchanticipated guidance on the question of whether and to what extent
intra-EU BIT arbitration clauses are still operative.
iii. Micula v. Romania
Recent developments illustrate the European Commissions
increasingly tough stance on intra-EU BITs. In December 2013, an
ICSID tribunal constituted under the Sweden-Romania BIT found
German Federal Supreme Court therefore made a preliminary ruling that the appeal
was no longer admissible and that Slovakia would need to apply to have the final
award set aside; see Preliminary Ruling of the Federal Supreme Court, III ZB
37/12, 19 September 2013 as well as the final decision dismissing the appeal to
have the interim award set aside, 30 April 2014.
126 Eureko B.V. v. The Slovak Republic, PCA Case No. 2008-13, Award, 7
December 2012, para. 352.
127 Decision by the Frankfurt Court of Appeals (Oberlandesgericht) of 18 December 2014,
Az. 26 Sch 3/13.
407
Romania liable for having breached the BITs fair and equitable
treatment standard by withdrawing economic incentives that had been
promised to Swedish investors prior to Romanias EU accession.128
According to the Micula tribunal, Romania had violated the claimants
legitimate expectations and had failed to act transparently in its
dealings with the Swedish investors.129
In its defence, Romania had claimed that it was mandated to
withdraw these incentives as a precondition of its accession to the
EU in 2007. It argued that the BIT should be interpreted in the light
of its obligations under EU law.130 In the arbitral proceedings, the
European Commission filed an amicus curiae brief in which it argued
that payment under an award in favour of the claimants would
amount to illegal State aid under EU law and that any such award
would therefore be unenforceable in the EU.131
In May 2014, the European Commissions Directorate-General
for Competition issued an injunction to prevent Romania from
honouring the US$250 million award. According to the European
Commissions spokesman for competition, the commission has
ordered Romania to refrain from paying the ICSID arbitration award
until the commission has taken a final decision on whether paying the
128 Ioan Micula, Viorel Micula and others v. Romania (ICSID Case No. ARB/05/
20), paras. 687 and 872.
20), paras. 864 and 869 to 872.
20), para. 289.
131 Perry, EU blocks ICSID payout (8 August 2014) Global Arbitration Review,
available at http://globalarbitrationreview.com/news/article/32881/eu-blocks-icsidpayout/. As will be discussed below, in the amicus curiae brief filed by the
Commission in the US Steel v. Romania UNCITRAL arbitration, the Commission
threatened that it will pursue every appropriate legal avenue, including the
submission of amicus curiae observations to the national courts entrusted with the
task of recognising and enforcing the arbitral awards rendered in violation of the
Unions State aid control rules, Amicus curiae brief filed 15 May 2014 by the
European Commission in U.S. Steel Global Holdings I B.V. (The Netherlands) v. The
Slovak Republic, PCA Case No. 2013-6, para. 46.
award is compatible with EU state aid rules. The commissions

assessment is currently ongoing.132
This recent intervention on the part of the European
Commission highlights the increasing tension between EU law and
investor-State arbitration under intra-EU BITs. The Commissions
intervention is particularly remarkable in the light of Article 54 of the
ICSID Convention which mandates that [e]ach Contracting State
shall recognize an award rendered pursuant to this Convention as
binding and enforce the pecuniary obligations imposed by that award
within its territories as if it were a final judgment of a court in that
State. Both Romania and Sweden are Contracting States to the
ICSID Convention. At the time of writing, the outcome of the
Commissions assessment is eagerly anticipated by practitioners and
States alike.
In July 2014, the European Commission applied for leave to
participate as amicus in six parallel investment treaty arbitrations under
the UNCITRAL Rules.133 In these cases, the EU-based claimants are
seeking compensation from the Czech Republic for its alleged
withdrawal of financial incentives in the solar power sector that had
been granted to the investors prior to the Czech Republics EU
accession. It is understood that as in Micula, the European
Commission considers that the financial incentives agreed upon by
the Czech Republic constitute illegal State aid under EU law
following the Czech Republics accession to the EU.
132 Perry, EU blocks ICSID payout (8 August 2014) Global Arbitration Review,
available at http://globalarbitrationreview.com/news/article/32881/eu-blocks-icsidpayout/.
133 Antaris and other v. Czech Republic, Natland Investment Group and others v. Czech
Republic, I.C.W. Europe Investments Ltd v. Czech Republic, Voltaic Network GmbH v.
Czech Republic, Photovoltaik Knopf Betriebs-GmbH v. Czech Republic and WA InvestmentsEuropa Nova Limited v. Czech Republic; see Peterson, Brussels latest intervention
casts shadow over investment treaty arbitrations brought by jilted solar energy
investors (8 September 2014) Investment Arbitration Reporter.
409
iv. US Steel v. Slovakia

The US Steel v. Slovakia case concerned facts similar to those of
Micula v. Romania. Slovakia had granted a Dutch investor certain
financial incentives which it then gradually revoked following
Slovakias accession to the European Union. The claimant brought
arbitration proceedings against Slovakia under the 1991 BIT between
the Netherlands and the Czech and Slovak Federal Republic, arguing
that the withdrawal of incentives amounted to a breach of the fair
and equitable treatment standard. On 23 June 2014, the claimant
announced that the parties had agreed to discontinue the case. It
later transpired that the European Commission had filed a lengthy
amicus brief in the proceedings in which it set out its case as to why
the tribunal should decline jurisdiction.134
According to the Commission, the BIT provisions on which the
investor sought to rely had been superseded by the EU legal
framework and could therefore not be relied upon by the claimant.
The Commission also noted that, in its view, [b]ilateral investment
treaties between Member States discriminate against investors from
Member States that are not party to those bilateral treaties.135 The
Commission criticised the findings of the tribunals in Eureko, Eastern
Sugar and Electrabel136 and emphasised its view that the Court of
Justice is the appropriate dispute resolution forum for questions
involving the application of EU law.137 Finally, it threatened that it
will pursue every appropriate legal avenue, including the submission
134Amicus
curiae brief filed 15 May 2014 by the European Commission in U.S.

Steel Global Holdings I B.V. (The Netherlands) v. The Slovak Republic, PCA Case No.
2013-6, available at http://www.iareporter.com/downloads/20141027.
135Amicus curiae brief filed 15 May 2014 by the European Commission in U.S.
2013-6, heading 3.2.2.2, page 11.
136 Amicus curiae brief filed 15 May 2014 by the European Commission in U.S.
2013-6, section 3.3, paras. 40 to 47.
2013-6, para. 27.
of amicus curiae observations to the national courts entrusted with the

task of recognising and enforcing the arbitral awards rendered in
violation of the Unions State aid control rules.138
E. Conclusion
The above discussion highlights the stark contrast between the
respective reasonings of arbitral tribunals and of the European
Commission in relation to the continued applicability of intra-EU
BITs. Whilst the Eureko, Eastern Sugar, Electrabel and Micula tribunals
found that intra-EU BITs are not incompatible with EU law per se,
the European Commission considers the key protection provisions in
intra-EU BITs as superseded by the new legal order of the
founding treaties of the European Union.139 The Commissions
interventions in Micula and US Steel demonstrate the increasing
willingness of the EUs institutions to attempt to enforce what they
consider the primacy of EU law over intra-EU BITs.
V. THE ENERGY CHARTER TREATY
A. Introduction
As noted above, the ECT is a mixed agreement to which the EU,
its 28 Member States, and 23 third States are parties. It covers trade,
transit, investment protection, and energy efficiency and related
environmental aspects, in relation to energy materials and products.
Importantly, its investment protection chapter offers investors the
opportunity to bring claims against contracting host States to
international arbitration.140
2013-6, para. 46.
2013-6, para. 48.
140 Article 26(4) of the ECT allows investors to choose whether to institute
proceedings under the ICSID Convention, the UNCITRAL Arbitration Rules or
before the Arbitration Institute of the Stockholm Chamber of Commerce.
411
The legal basis on which the EU became a party to the ECT in

addition to the EU Member States is set out, with respect to the
signature of the ECT, in Council Decision 94/998/EC, and with
respect to the approval of the ECT by the EU (the equivalent to
ratification by a Member State), in Council and Commission Decision
98/181/EC, ECSC, Euratom.141 These decisions established that
certain matters covered by the ECT involve the competence of the
EU, while others involve mixed competence or the competence of
the EU Member States.
As mentioned above, in relation to investment protection, the
ECT is: (a) an intra-EU MIT as among the 28 EU Member States; (b)
an extra-EU MIT as among the 28 EU Member States and the 23
other ECT Member States; and (c) a MIT wholly external to the
European Union as among the 23 non-EU ECT Member States.
In addition, the EU is a contracting party to the ECT. This means
that, in addition to the obligations in relation to trade, transit, and
energy efficiency and related environmental aspects referred to above,
the EU has assumed investment protection obligations under the ECT.
At the time of deposit of their instrument approval of the ECT, the
EU submitted a statement recognising shared responsibility between it
and its Member States. This statement provided for a mechanism by
which, upon the request of the investor, the EU and the Member
States concerned will make a determination as to responsibility (joint
or several) within a period of 30 days. By virtue of the Financial
Responsibility Regulation a similar mechanism has now been adopted
in relation to Eurocentric investment disputes more broadly.
B. The ECT as an Intra-EU MIT
i.
The ECT as an intra-EU MIT is not per se incompatible with

EU law
As the discussion of the cases above has shown, for the time
being intra-EU BITs continue in force until terminated by their
141
OJ [1994] L 380/1-2.
parties (and even if terminated, continue to produce effects for a

number of years post-termination). The prevalent view among
investment tribunals remains (albeit contradicted by the European
Commissions increasingly adamant stance) that the application of
intra-EU BITs is not incompatible per se with EU membership.
The same logic must apply to the ECT, in its capacity as an intraEU MIT among the 28 EU Member States.142 As will be shown
below, this view has been accepted by numerous arbitral tribunals.
ii. AES Summit v. Hungary
For example, in the AES Summit v. Hungary decision, an ICSID
tribunal constituted under the ECT had to address the tension
between EU law and the provisions of the ECT in its capacity as an
intra-EU MIT. In particular, the tribunal in that case was tasked with
deciding whether the termination by Hungary of long-term electricity
power purchase agreements with a UK investor amounted to a
breach of the ECT.143 Hungary claimed that it should not be found
liable as its course of conduct was mandated by EU State aid rules.
Whilst the claim against Hungary was ultimately dismissed on
grounds that did not require the tribunal to consider EU law,144 its
By contrast, Professor Kleinheisterkamp in 2012 noted that [g]iven the
Commissions strong determination to eliminate the parallelism of standards and
recourses for investments inside the Internal Market, it can be expected that also
the intra-EU dimension of the ECT will be eventually targeted by the Commission
and may disappear if member states cooperate or are forced to cooperate by the
ECJ, Kleinheisterkamp, Investment Protection and EU Law: The Intra- and
Extra-EU Dimension of the Energy Charter Treaty (2012) 15 Journal of International
Economic Law 85, p. 108. See, for the Commissions view, the amicus curiae brief filed
on 15 May 2014 by the European Commission in U.S. Steel Global Holdings I B.V.
(The Netherlands) v. The Slovak Republic, PCA Case No. 2013-6, available at
http://www.iareporter.com/downloads/20141027.
143 Article 10(1) ECT: no Contracting Party shall in any way impair by
unreasonable or discriminatory measure the[] management, maintenance, use,
enjoyment or disposal [of investments made by investors of other Contracting
Parties].
144 AES Summit Generation Limited and AES-Tisza Erm Kft v. The Republic of
Hungary, Award, 23 September 2010, ICSID Case No. ARB/07/22, paras. 10.3.15-19.
142
413
findings on the relationship between EU law and the provisions of

the ECT are nonetheless noteworthy.
According to the AES Summit tribunal, the applicable law which
it was bound to apply was the ECT as well as applicable rules and
principles of international law.145 It explained that the EUs
competition law regime would be considered by the tribunal as fact,
while always taking into account that a state may not invoke its
domestic law as an excuse for alleged breaches of its international
obligations.146 Importantly, the tribunal conceded that EU law
could in principle be taken into account when determining the
rationality, reasonableness, arbitrariness and transparency of
Hungarys behaviour.147
A finding that Hungary had violated the ECT would have raised
interesting questions. For example, certain provisions of EU
competition law are directly applicable in Member States.
Accordingly, national courts may be under an obligation to refuse
recognition and enforcement of an award rendered by a tribunal on
the basis that such an award contradicts EU competition law.148 Had
the tribunal in the AES Summit decision found Hungary in violation
of the substantive protection provisions of the ECT, the Hungarian
courts could conceivably have refused recognition and enforcement
Hungary, Award, 23 September 2010, ICSID Case No. ARB/07/22, para. 7.6.4.
Hungary, Award, 23 September 2010, ICSID Case No. ARB/07/22, para 7.6.6.
Hungary, Award, 23 September 2010, ICSID Case No. ARB/07/22, para 7.6.9.
148 Case C-126/97, EcoSwiss China Time Ltd v. Benetton International NV, 1999
ECR I-3055, paras. 35 to 41. The EUs competition rules are part of the public
order which national courts must take into account when they review the legality of
arbitral awards under the public policy exception recognized by the 1958 New York
Convention, in force in all EU Member States: Delgado Casteleiro, The
European Community and the Energy Charter Treatys Dispute Settlement
Mechanism, European University Institute, p. 20. See also Kleinheisterkamp,
Investment Protection and EU Law: The Intra- and Extra- EU Dimension of the
Energy Charter Treaty (2012) 15 Journal of International Economic Law 85, p. 92.
of the award on the ground that such recognition and enforcement

would be contrary to EU law.149
iii. Electrabel v. Hungary
In Electrabel v. Hungary, an ICSID tribunal was tasked with
determining whether the termination by Hungary of a long-term
power purchasing agreement constituted an expropriation and a
violation of the substantive protection provisions of the ECT.
Hungary had terminated the agreement following a decision by the
European Commission that payments made under the agreement
amounted to unlawful State aid under EU law.
The European Commission submitted an amicus curiae brief
contesting the tribunals jurisdiction and submitting its views on the
merits of the claim. According to the Commission, the European
Union and not Hungary was the appropriate respondent.150
Furthermore, the Commission claimed that Electrabel had chosen
the incorrect forum because the proper avenue for the EU
investor is to seek protection for this claim before Community
courts.151
The tribunal dismissed the Commissions arguments on
jurisdiction in their entirety. First, the tribunal found that there
exists no relevant inconsistency between EU law, the ECT and the
ICSID Convention in the present case, as regards both the merits of
See Electrabel S.A (Belgium) v. Republic of Hungary (2012) ICSID Case No.
ARB/07/19, Decision on Jurisdiction, Applicable Law and Liability, 30 November
2012, para. 5.16.
150 Electrabel S.A (Belgium) v. Republic of Hungary (2012) ICSID Case No. ARB/
07/19, Decision on Jurisdiction, Applicable Law and Liability, 30 November 2012,
paras. 5.20 (cited para. 61).
07/19 Decision on Jurisdiction, Applicable Law and Liability, 30 November 2012,
5.20 (cited paras. 61 to 67). It is interesting that the European Commission noted
that Electrabel should have resorted to the determination procedure established
upon the accession of the EU pursuant to Article 26(3)(b)(ii) ECT and that such a
step would have identified the EU as the correct respondent, paras. 5.20-48.
149
415
the Parties dispute and the Tribunals jurisdiction.152 Second, it

emphasised that contrary to the Commissions submission, Electrabel
had brought its case against Hungary and not in fact against the
Community.153 Furthermore, by referring to Article 26 of the
ICSID Convention,154 the tribunal dismissed the Commissions
argument that the Court of Justice was the proper avenue for this
dispute.155 The tribunal provided a well-reasoned and lengthy
discussion as to why, in its opinion, an arbitral decision involving
questions of EU law does not violate the interpretative monopoly of
the Court of Justice.156
Having assumed jurisdiction, the tribunal then rejected
Electrabels claims on the merits. According to the tribunal, since
Member States have ceded certain powers to the EU, Hungary could
not be liable for actions that it was mandated to take pursuant to EU
law. In particular, the tribunal noted that it would be absurd if
Hungary could be liable under the ECT for doing precisely that
which it was ordered to do by a supranational authority whose
decisions the ECT itself recognises as legally binding on Hungary.157
The Tribunal attributed significant weight to the fact that Hungary
was legally obliged to implement the [decision] of the European
Electrabel S.A (Belgium) v. Republic of Hungary (2012) ICSID Case No. ARB/
para. 5.32.
para. 5.33.
154 Article 26 of the ICSID Convention provides for ICSID arbitration to the
exclusion of any other remedy.
para. 5.37.
see, in particular, paras. 4.146-4.156.
para. 6.72.
152
Commission pursuant to (current) Article 4(3) TEU.158 The

tribunal, applying (current) Article 351 TFEU in the light of Article
30(3) of the VCLT, noted, by way of obiter, that EU law would
prevail over the ECT in case of any material inconsistency.159
The Electrabel decision is interesting for several reasons. First, the
sharp divergence of views between the European Commission and a
distinguished investor-State arbitral tribunal on the relationship
between investor-State arbitration and EU law is remarkable. On the
other hand, it is reassuring that the tribunals findings on the
compatibility of the ECT framework with EU law are consistent with
the conclusions of previous tribunals.160 Furthermore, the tribunals
finding that Hungary could not be held liable under the ECT for
complying with EU law demonstrates that arbitral tribunals are
capable of striking a balance between protecting investor interests
and giving effect to the EU treaty framework.
iv. Conclusion on the ECT as an intra-EU MIT
As stated above, the EU is itself a party to the ECT. Treaties
made by the EU with third States are binding upon the institutions
of the Union and on its Member States.161 It is settled case law that
para. 6.73; see also para. 4.169 and footnote 27. Article 4(3) TEU stipulates that:
The Member States shall take any appropriate measure, general or particular, to
ensure fulfilment of the obligations arising out of the Treaties or resulting from the
acts of the institutions of the Union. The Member States shall facilitate the
achievement of the Union's tasks and refrain from any measure which could
jeopardise the attainment of the Unions objectives.
para. 4.191; see also paras. 4.187 and 4.189.
paras. 4.182, 4.183 and 4.191.
161 Article 216(2) TFEU.
417
the provisions of such agreements form an integral part of the

Community legal order.162
Nonetheless, it is understood that the European Commission has
in a recent amicus intervention argued that the ECT cannot provide a
basis for arbitration of intra-EU disputes because the treaty should be
read as not applying between the various EU member states [inter
se].163 According to the Commission, the ECT does not create
obligations between the member states of the EU, but only between
the Union and its member states on one hand and each of the other
non-EU contracting parties to the ECT on the other.164 The stance
of the EU Commission appears to ignore the findings of investment
tribunals, as well as the more nuanced solution devised by the
Electrabel tribunal, namely to accept the continued application of the
ECT among the Member States inter se insofar as its provisions do
not conflict with EU law.165
If the position taken by the Commission that despite the
absence of a disconnection clause the ECT cannot produce legal
effects as among EU Member States were correct, then it would
follow logically that no intra-EU BIT could produce legal effects at
all or, in other words, that all intra-EU BITs would be ipso facto
invalid, without needing to be terminated by their Member State
parties. If this were the case, it would be difficult to understand why
the Commission has led a sustained campaign in recent years (with
mixed success) to persuade EU Member States to terminate their
intra-EU BITs.
162 Case C13/00, Commission v. Ireland, 2002 ECR I2943, paras. 14 to 17 and
19 to 21; Case C239/03, Commission v. France, 2004 ECR I9325, paras. 25 to 26;
and Case C459/03, Commission v. Ireland, 2006 ECR I-04635, paras. 14 to 15.
163 Peterson, Brussels latest intervention casts shadow over investment treaty
arbitrations brought by jilted solar energy investors (8 September 2014) Investment
Arbitration Reporter (emphasis omitted).
164 Ibid.
para. 4.187.
But there are additional strong reasons why, even supposing

intra-EU BITs to be invalid as a matter of EU law, the ECT is in a
special position. The ECT has at least two distinguishing features:
(1) all 28 EU Member States are contracting parties to the ECT, and
(2) the EU is also a contracting party to the ECT.
There is no fundamental reason why the EU and its 28 EU
Member States could not negotiate and agree among themselves a
general MIT, applying the investment protection standards set out in
the ECT to the entire economy. Such a treaty could apply as part of
the corpus of EU law. The ECT is in fact (among other things) such
a treaty, applying specifically to the energy sector.
One of the criticisms most frequently levelled at intra-EU BITs is
that they guarantee a higher level of protection to investors based
within the territory of their State parties than that enjoyed by
investors from other EU Member States. In other words, they
allegedly discriminate as among EU countries. Given that all EU
Member States are parties to the ECT, this criticism cannot be
levelled at the ECT.
In any event, in teleological or purposive terms, the objective of
ensuring equal protection to all EU investors will not be advanced by
blocking intra-EU investment protection. Large, global investors will
simply reroute their intra-EU investment via non-EU ECT Member
States, such as Switzerland, where they hold substantial subsidiaries.
Smaller companies wishing to invest across EU borders will be
unable to do this in an economically viable fashion. If they create
special purpose vehicles, these risk being denied protection pursuant
to the ECTs denial of benefits provision contained in Article 17.
Thus, as so often happens in practice, a no doubt well-intended
initiative will have significant unintended consequences.
C. The ECT as an Extra-EU MIT
What of the status of the ECT as an extra-EU MIT? It seems
clear that the ECT, in this capacity also, is binding on the EU and its
Member States pursuant to Article 216(2) TFEU. As explained in
419
section III.B, above,166 the ECT is not open to attack by the

Commission on the basis on which the extra-EU BITs of Austria,
Sweden and Finland were condemned by the Court of Justice.
Furthermore, as Professor Christian Tietje noted in 2009, in the
case of mixed agreements, the EU Member States among
themselves proceed as subjects of public international law.
According to Professor Tietje, it must thus be assumed that with
regard to their inter se relationship the Member States enter into
public international law relations.167
On the other hand, an argument could be made that the ECT
provisions are inapplicable in inter se relations between EU Member
States to the extent that an incompatibility with EU law exists.168
Consider for example the qualifications to the fundamental freedoms
of the EU Internal Market. In the EU Internal Market, Member
States have reserved the right to suspend fundamental freedoms such
as the free movement of goods, workers and capital in exceptional
circumstances and where necessary to safeguard national interests.169
This means that in certain situations an investor from one Member
State could receive less favourable treatment than an investor from
another Member State.
By contrast, most BITs concluded by EU Member States contain
unqualified most-favoured-nation and national treatment provisions.
Article 10 of the ECT requires host States to afford investors from
another contracting party national and most-favoured-nation
treatment. Only in exceptional circumstances may State parties to the
ECT derogate from the obligations contained in the ECT to protect
essential interests. For example, Article 24(3) of the ECT stipulates
that no contracting party is prevented from taking any measure which
See, in particular, section III.B.i, above.
Tietje, The Applicability of the Energy Charter Treaty in ICSID
Arbitration of EU Nationals vs. EU Member States (2009) 6(1) Transnational
Dispute Management 2, pp. 9 to 10 (footnote omitted).
168 Dimopoulos, The Validity and Applicability of International Investment
Agreements between EU Member States under EU and International Law (2011)
48 Common Market Law Review 63, pp. 76 to 77.
169 Articles 36, 45(2) and 65(b) TFEU.
166
167
it considers necessary for the protection of its essential security

interests, relating to non-proliferation policies and for the
maintenance of public order. Measures necessary to protect human,
animal or plant life or health are also recognised as overriding the
ECTs investment chapter.170 This threshold is significantly higher
than that provided for in the EU treaty framework. It is conceivable
that these diverging standards could clash in practice.
Furthermore, according to one commentator, it could hardly
be acceptable for the Commission in terms of consistency to leave
the ECT untouched while obliging member states to bring their
extra-EU BITs in line with EU law . . . and to terminate their intraEU BITs.171 On the other hand, an argument can be made that as
a mixed agreement to which the EU, its 28 Member States and 23
third States are parties, the ECT occupies an entirely different
position to that of a typical intra- or extra-EU BIT. The ECT
forms an integral part of the EU legal order, both as an intra- and as
an extra-EU MIT. It is arguable that only a decision by the EU and
its 28 Member States to withdraw from the ECT pursuant to Article
47(1) could change this.172 In any event, even if a non-EU ECT
Member State or the EU itself were to withdraw from the ECT,
Article 47(3) provides for a 20-year grace period during which the
ECTs investment protection obligations and investor-State
arbitration provisions continue to apply to the relevant Contracting
Party. As the ECT forms part of the EU acquis communautaire, an
EU Member State could only withdraw from the ECT if the EU
itself were also to withdraw.
Article 24(2)(b)(i) ECT.

Kleinheisterkamp, The Next 10 Year ECT Investment Arbitration: A
Vision for the FutureFrom a European Law Perspective (2011) 7 LSE Law,
Society and Economy Working Papers, p. 16.
172 Article 47(1) ECT provides that [a]t any time after five years from the date
on which this Treaty has entered into force for a Contracting Party, that
Contracting Party may give written notification to the Depository of its withdrawal
from the Treaty.
170
171
421
VI. CONCLUSION
As mentioned in the introduction of this chapter, there is a
fundamental difference between the international and the European
lawyers perception of the respective natures and roles of
international and European law. For the European Court of Justice
and the European Commission, the EC Treaty has created its own
legal system173 which constitutes a new legal order of international
law.174 From a public international law viewpoint, on the other
hand, European law remains a subsystem of international law, albeit a
highly developed international legal order.175
There are a number of ongoing developments of which actors in
the oil and gas industry, in particular, should be aware. The EUs
newly acquired competence over foreign direct investment means in
practice that negotiations of extra-EU investment treaties (such as the
CETA and the TTIP) will now be conducted mainly by the EU
institutions, with limited scope for participation by the Member
States. Questions remain as to whether the European Parliament or
Member State parliaments will be responsible for the ratification of
such agreements and whether or not these future agreements will
include investor-State dispute resolution provisions.
The Grandfathering Regulation has clarified that, until the EU
concludes extra-EU BITs on behalf of its Member States, the
Member States may retain their pre-existing BITs with non-EU
Member States. They may also negotiate and sign new BITs insofar
as the relevant Member State complies with its notification
obligations and the proposed agreement does not undermine EU
treaty negotiations or violate EU law.
The 2014 Financial Responsibility Regulation also provides
much-anticipated guidance on how responsibility should be allocated
Case 6/64, Costa v. ENEL, 1964 ECR 585, p. 593.
Case 26/62, Van Gend en Loos v. Nederlandse Administratie derBelastingen, 1963
ECR 2, p. 12.
175 See, for example, de Witte, The European Union as an International Legal
Experiment, in The Worlds of European Constitutionalism, eds. de Brca and Weiler
(2012) (Cambridge University Press), p. 19.
173
174
between the EU and respondent Member States. However, it

remains to be seen how this regulation will be applied in practice.
The status of the ECT as an extra-EU MIT remains, for the time
being, unchallenged.
At the same time, there is an emerging conflict between EU law
on the one hand, and intra-EU BITs and the ECT (in its capacity as
an intra-EU MIT) on the other, owing to the overlapping subject
matters of these frameworks. Arbitral tribunals in the past have read
intra-EU BITs as compatible with the EU law framework. By
contrast, the European Commission appears adamant that the
provisions of intra-EU BITs have been superseded by the new legal
order established under the EU treaty framework and therefore
cannot be relied upon by investors to enforce their rights. The
Commissions recent amicus interventions raise questions as to the
continued applicability of intra-EU BITs.
The debate on intra-EU BITs in this regard is highly relevant to
the ECT, as that treaty also operates as an intra-EU MIT. From the
discussion above, it can be seen that some of the same arguments are
made with regard to the ECT as have been made with regard to
BITs, most conspicuously that EU law has substantively replaced the
ECT and thus provides a lex posterior and a lex specialis as between EU
Member States. Whilst the ECT retains a role in relation to third
States, it is possible that the Court of Justice will eventually rule that
the ECT cannot be applied in intra-EU relations. Yet investment
tribunals appear disinclined to accept such a position, at least to the
extent that there is no apparent substantive conflict between EU law
and the ECT.
The practical conclusion from all this is that the choice of
jurisdictional basis, forum and tribunal can be crucial. Very similar
disputes may have very different outcomes depending on whether
they are heard before an investor-State tribunal within the EU, a
similar tribunal outside the EU, or a Member State or European
court. Equally, when nominating an arbitrator, it is vital that parties
carefully assess that individuals perspective on the relationship
between public international and European law. Above all, where
issues of EU law are likely to be relevant, investors who wish to
423
benefit from the ECTs investment chapter would be well-advised to

structure their investments in such a way that they will be in a
position to invoke the ECT as an extra-EU MIT, rather than as an
intra-EU MIT. Investors can, for example, route their investments
via a subsidiary incorporated in a non-EU jurisdiction (though they
should be mindful of the constraints posed by the ECTs Article 17
on denial of advantages to mailbox companies). By structuring their
investments in this way, investors will be able to ensure that the
ECTs substantive protection provisions and its international
arbitration mechanism remain available, regardless of where and
before whom the dispute is ultimately heard.

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THE LEADING

Questions About This Publication

ABOUT THE EDITOR .............................................................

ABOUT THE CONTRIBUTORS ..........................................

The Changing Landscape of International Oil & Gas

TREATY-BASED ISSUES IN INTERNATIONAL

Resource Nationalism, Expropriation and Risk Mitigation

Regulatory Change In Oil & Gas Arbitration:

The Relevance of Stabilisation Clauses In Oil & Gas

LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

Fair and Equitable Treatment Issues In Oil & Gas

Determining Compensation for Expropriation

THE ENERGY CHARTER TREATY

The Energy Charter Treaty and Related Jurisprudence

Denial of Benefits Under Article 17 of the

A Comparative Analysis of the ECT and BITs in Light

Russias Policy on International Investment

COMMERCIAL ISSUES IN INTERNATIONAL

Arbitration of Oil & Gas Disputes in Brazil

Price Re-Openers In Long-Term Gas Supply Agreements

Beyond Price Reviews: Adjudicating Claims of Financial

Complexity and Commercial Disputes in Production

International Arbitration of LNG Disputes

Arbitration and Joint Operating Agreements:

International Arbitration of Oilfield Services Disputes

LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

Corruption And International Energy

PROCESS AND PROCEDURE IN INTERNATIONAL

Provisional Remedies and Interim Relief in

Examining Expert Witnesses In International

Drafting Dispute Resolution Provisions for

Useful Post-Dispute Agreements for International

Selecting Arbitrators for Commercial Oil & Gas

Serving as the Chairperson in International Commercial

Resources on Resources: Publications and Databases

Mediating International Oil & Gas Disputes

LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

their investments or in the home jurisdictions of their counterparties.

LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

to the viability and fairness of arbitral processes is identified and

~ABOUT THE EDITOR~

LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

Texas and Puerto Rico. He served respectively as an Editor and then

~ABOUT THE CONTRIBUTORS~

xviii LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

Ecuador and Repsol v Argentina. He is currently acting in investor-state

ABOUT THE CONTRIBUTORS

John P. Bowman is a Partner with King & Spalding LLP in

LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

clients in the energy, petrochemical, and construction industries.

ABOUT THE CONTRIBUTORS

Alexandre de Gramont is a Partner in the International Arbitration

xxii LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

Francesca Fraser is an Associate in the London office and a

ABOUT THE CONTRIBUTORS

commercial arbitration and investor-state panels. He has, in addition,

xxiv LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

Advisory Committee on Brazil, New York State Bar Association Task

ABOUT THE CONTRIBUTORS

Ben Holland is a Partner in the International Dispute Resolution

xxvi LEADING PRACTITIONERS GUIDE TO OIL & GAS ARBITRATION

ABOUT THE CONTRIBUTORS

also appeared in the UK Supreme Court in addition to sitting as