Laurent Gouiffès
Article 27 of the Energy Charter Treaty: the role of
State–to–State dispute resolution
Ad hoc arbitration under ECT Article 27 and
potential relevance to investment disputes
Introduction
 Article 27 of the Energy Charter Treaty provides
for a State-to-State dispute resolution
mechanism
 It is the standard dispute resolution clause for the
whole ECT
 The surge in Investor-to-State arbitrations
 The role of article 27
 The role of State-to-State dispute resolution
Outline
1. State-to-State dispute resolution mechanism under
article 27 of the ECT
2. The use of State-to-State dispute resolution
mechanisms: past experience and parallels with
other treaties
3. Relevance of article 27 of the ECT in investment
disputes
1. State-to-State dispute resolution mechanism under
article 27 of the ECT
1.1 Definition and Scope of article 27 of the ECT
1.2 The mechanism for settling State-to-State disputes
under article 27 of the ECT
1.3 Application of article 27 and potential issues within
the European Union: a parallel with the Mox Plant
Case
1.1 Definition and Scope of article 27 of the ECT
 Applicable to all breaches of the ECT
 Contrast with article 26: breaches under part III only
 Exceptions
 Competition issues (art. 27(2) and art. 6)
 Environmental issues (art. 27(2) and art. 19)
 Some investment disputes (last sentence of article
10(1)) for states listed in Annex IA
 Matters under article 29 and article 5, subject to
express consent of the parties (art. 28)
1.2 The mechanism for settling State-to-State disputes
under article 27 of the ECT
 Diplomatic channels
 Ad hoc tribunal
 Applicable law
 Availability of awards to the public
1.3 Application of article 27 and potential issue within the
European Union: a parallel with the Mox Plant Case
 Only one known dispute under article 27 which
remained at diplomatic stage
 Potential ECT/ECJ jurisdiction conflict: a parallel
with the Mox Plant case
2. The use of State-to-State dispute resolution
mechanisms: past experience and parallel with other
treaties
2.1 Past experience
2.2 Parallel with other MITs
2.3. Parallel with some BITs
2.1 Past experience
 Before the 1960’s
 “Diplomatic protection” granted by states to their investors
 Great Britain v. Costa Rica (Tinoco Case, ICJ, 18 October
1923)
 Italy v.Venezuela (Martini Case, ICJ, 3 May 1930)
 After the 1960’s
 Development of BITs with Investor-to-State dispute resolution
mechanisms
 Decrease of use of State-to-State dispute resolution
mechanisms in investment disputes
2.2 Parallel with other MITs
 NAFTA
 Two dispute resolution mechanisms: Investor-to-State
mechanism (chapter 11), State-to-State mechanism (chapter
20)
 Use of those mechanisms
 ASEAN
 Two dispute resolution mechanisms: an Investor-to-State
mechanism (article 10 of the 1987 agreement) and a
belatedly introduced State-to-State dispute resolution
mechanism (article IX of the 1987 agreement as modified in
1996)
 Project for a multilateral agreement on investment
 Dispute settlement mechanism project very similar to article
27 mechanism
2.3. Parallel with some BITs
 The U.S. model BIT
 Article 37 on State-to-State dispute resolution
 Originality: State-to-State intervention within Investor-toState arbitration (article 28.2)
 The UK-France BIT on the Channel Tunnel
 Same dispute resolution mechanism for all type of conflicts
(article 19 of the Treaty of Canterbury)
 Supremacy of the States over the Investors
 The AUFSTA
 All dispute settlements at a State-to-State level (article 21)
 No Investor-to-State provision
3. Relevance of article 27 of the ECT in investment
disputes?
3.1 Articles 27 and 26 mutually exclusive regarding
investment disputes ?
3.2 From the investor’s point of view
3.3 From the state’s point of view
3.1 Articles 27 and 26 mutually exclusive regarding
investment disputes?
 Article 26 especially tailored for investments (part III)
 Article 27 is essentially meant to be used in all other
disputes regarding ECT
3.2 From the investor’s point of view
 When political pressure is more efficient
 Enforcement of the award
 State-to-State dispute resolution mechanisms as
safeguard of the awards rendered in Investor-toState Disputes
3.3 From the state’s point of view
 The Saluka investments B.V. v. the Czech Republic
case
 A state can start an arbitration against an Investor
only on a contractual basis
 Relevance of State-to-State arbitration
These are presentation slides only. The information within these slides does not
constitute definitive advice and should not be used as the basis for giving definitive
advice without checking the primary sources.
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