The Komstroy declarations and the inter se treaty on intra-EU investment arbitration under the ECT: entering unchartered legal territory?

Abstract

The EU and its Member States have taken steps to eliminate intra-EU investment arbitration and the applicability of the sunset clause in intra-EU relations under the Energy Charter Treaty (ECT) through a declaration and a treaty. However, it is uncertain whether either the declaration or the treaty will have the intended effect. The declaration cannot be qualified as an authentic interpretation under Article 31(3)(a) VCLT, although it is of a different nature than the 2019 Achmea declarations. It could potentially qualify as an inter se agreement under Article 41 VCLT. The envisaged treaty certainly constitutes an inter se agreement. However, it is doubtful whether either the declaration or the inter se treaty meet the substantive requirements of Article 41(1) VCLT. Although neither Article 16 ECT nor Article 46 ECT explicitly prohibit inter se agreements, arbitral tribunals may find that the removal of intra-EU arbitration and the sunset clause are incompatible with the effective execution of the object and purpose of the ECT as a whole under Article 41(1)(b)(ii) VCLT. However, the inter se removal of Articles 2, 16 and 46 ECT would mitigate this argument. In addition, the notification requirement of Article 41(2) VCLT must be respected.

Keywords: Achmea, amendment, authentic interpretation, Energy Charter Treaty, inter se, Komstroy, modernization, modification, object and purpose, sunset clause, survival clause