EU governments oppose the Energy Charter Treaty as Germany demands Uniper withdraw ISDS case against Netherlands

July 29, 2022Investigate Europe reports that key EU governments still want to leave the Energy Charter Treaty because its rules, known as Investor-State Dispute Settlement (ISDS) permit fossil fuel companies to sue governments for billions if they decide to phase out fossil fuel use as part of the EU’s climate pledges.

There have already been several such ISDS cases including German companies RWE and Uniper using the ECT to claim billions from the Dutch government.

In June the EU Parliament voted to leave the ECT but the EU Commission,  its trade negotiation arm, negotiated some changes that leave ISDS in place for 10 years.

Germany, France, Spain and the Netherlands are still pressing for the EU to leave the ECT because they believe the changes failed to align the ECT with the EU’s climate pledges.

The changed text includes a “sunset” clause safeguarding existing investments for 20 years after withdrawal. Italy left in 2016 but is still entangled in a suit with British oil and gas company Rockhopper over a offshore drilling ban in the Adriatic Sea.

Some critics and lawyers argue that EU members could ditch the ECT en masse and cancel this provision between themselves, as most disputes arise within the union.

The changed ECT text will face continuing opposition in a long ratification process by EU member governments.

Meanwhile, German government opposition to the ECT has been shown by the conditions of a decision to bail out the Uniper energy company which is suffering losses because of  gas price problems linked to Russia’s invasion of Ukraine, The deal is subject to Uniper withdrawing its ECT ISDS  case against the Netherlands.