Exiting the Energy Charter Treaty under the Law of Treaties
(2023) 34 King's Law Journal (forthcoming)
25 Pages Posted: 18 Apr 2023 Last revised: 23 Apr 2023
Date Written: March 30, 2023
Abstract
The Energy Charter Treaty was concluded in 1994 on the assumption that fossil fuels could continue to be used for the foreseeable future. This article examines how ECT contracting parties can now withdraw from this treaty for climate change reasons without being subject to its 'sunset' clause, which protects existing investments for 20 years. It evaluates several strategies, including amendment and inter se agreements, and withdrawal on the basis of a fundamental change of circumstances (rebus sic stantibus). That fundamental change is not climate change itself, which was foreseen in 1994. It is the fact that, as recently stated by the IPCC, fossil fuels now need urgently to be abandoned, resulting in significant stranded assets. This was then unforeseen and radically transforms the extent of the ECT’s obligation to continue to protect existing fossil fuel investments for another 20 years. The article finally considers the implications of such a withdrawal for remaining contracting parties under Article 70 VCLT.
Keywords: Energy Charter Treaty, sunset clause, law of treaties, fundamental change of circumstances, rebus sic stantibus, climate change, stranded assets, fossil fuels, inter se agreements
JEL Classification: K33
Suggested Citation: Suggested Citation