Exiting ECT is folly in so many respects that I don´t have time to list them in full. 1st of all, it is the only major international treaty on energy related issues - hence it is part of global governance architecture. Exiting it undermines the rules-based multilateral order. We exit a treaty when it does not suit our current views? Can we extend that to all other international treaties?
2nd: the green transition is gonna require massive amounts of private money into clean energy production and transport infrastructure. The modernised ECT would be a good platform to give security for the investors that their investment would be to some extent protected by the treaty. Some of that investment will be made in countries where you don´t have necessarily the full protection of the rule of law, so to speak. Maintaining the modernized treaty can help speed up the green transition. 3rd: even if you exit the ECT, there are multiple bilateral investment protection agreements through which you can sue EU MS. Even by MS companies. What is stopping them from relocating to, say, Switerland, for the benefit of suing?
I'd say a key piece of the puzzle here is the fact that a lot of ECT cases are within the EU (81% of the investments covered by the ECT are intra-EU to begin with), while ECT cases are a large proportion of investor-state cases that take place within the EU. I couldn't comment on the strength of the legal argument but the thinking goes that you can prevent post-withdrawal cases if EU Member States all withdraw and draw up an agreement among themselves not to enforce the sunset clause. There is apparently precedent in bilateral treaties for neutralising state-investor dispute mechanisms in this way and given the way the ECT mostly concerns the EU by itself more than EU/third party relations, it could notably cut the number of potential cases.
That would make a lot of sense! In this context the UK could really blow a hole in the approach, if it doesn’t both leave and agree something similar -- it would become a pretty useful staging post for legacy cases into the EU.
Exiting ECT is folly in so many respects that I don´t have time to list them in full. 1st of all, it is the only major international treaty on energy related issues - hence it is part of global governance architecture. Exiting it undermines the rules-based multilateral order. We exit a treaty when it does not suit our current views? Can we extend that to all other international treaties?
2nd: the green transition is gonna require massive amounts of private money into clean energy production and transport infrastructure. The modernised ECT would be a good platform to give security for the investors that their investment would be to some extent protected by the treaty. Some of that investment will be made in countries where you don´t have necessarily the full protection of the rule of law, so to speak. Maintaining the modernized treaty can help speed up the green transition. 3rd: even if you exit the ECT, there are multiple bilateral investment protection agreements through which you can sue EU MS. Even by MS companies. What is stopping them from relocating to, say, Switerland, for the benefit of suing?
I'd say a key piece of the puzzle here is the fact that a lot of ECT cases are within the EU (81% of the investments covered by the ECT are intra-EU to begin with), while ECT cases are a large proportion of investor-state cases that take place within the EU. I couldn't comment on the strength of the legal argument but the thinking goes that you can prevent post-withdrawal cases if EU Member States all withdraw and draw up an agreement among themselves not to enforce the sunset clause. There is apparently precedent in bilateral treaties for neutralising state-investor dispute mechanisms in this way and given the way the ECT mostly concerns the EU by itself more than EU/third party relations, it could notably cut the number of potential cases.
That would make a lot of sense! In this context the UK could really blow a hole in the approach, if it doesn’t both leave and agree something similar -- it would become a pretty useful staging post for legacy cases into the EU.
That's true, although the Lib Dems have said they're in favour of leaving and I expect Labour will get there too.