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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 .
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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 • State-to-State dispute resolution mechanism under article 27 of the ECT • The use of State-to-State dispute resolution mechanisms: past experience and parallels with other treaties • 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 Plantcase
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-to-State 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-to-State 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
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