The Cooling-Off Period in the Energy Charter Treaty: Existing Problems and the Way Forward

Abstract

The purpose of "cooling-off periods" in investment treaties is to allow parties some time to amicably settle a dispute before it escalates to adversarial proceedings. While these provisions are seemingly innocuous, tribunals, courts and commentators disagree over whether they are essential jurisdictional conditions, procedural rules or admissibility criteria - a question which determines the fate of proceedings brought in violation of the period. This controversy extends to the cooling-off provisions contained in Articles 26(1) and (2) of the Energy Charter Treaty (ECT).

This paper looks at some of the disputations that have arisen pertaining to the ECT’s cooling-off provisions and analyzes the approaches posited in front of and adopted by arbitrators and courts seized of ECT disputes in relevant cases. It then evaluates the language and context of the ECT in order to explore what the appropriate character of the cooling-off provisions are, concluding that the appropriate interpretation is to hold Articles 26(1) and (2) as akin to contractual obligations, the breach of which would give rise to damages or costs orders.

Keywords: Energy Charter Treaty, ECT, Waiting Period, Cooling-Off Period, Cooling Off Period, Energy, Arbitration, Investment, Disputes, Treaty, Treaties

JEL Classification: K33, K10