An Introduction to the Energy Charter Treaty – Vol. 20 No. 2

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Authors: Matthew T. Parish* and Charles B. Rosenberg**

Published: July 2010

United States



Global energy demand is forecasted to “quickly resume its upward trend” in the coming years. In fact, world primary energy demand is projected to increase by 1.5% per year between 2007 and 2030 – an overall increase of 40%. This steady growth in demand may translate into increased opportunities for foreign direct investment by U.S. investors.

Before investing abroad in the energy sector, however, U.S. investors and their counsel should be aware of the Energy Charter Treaty (“ECT” or “Charter”), a multilateral treaty that “establishes a legal framework in order to promote longterm cooperation in the energy field.” The primary objective of the ECT is to “strengthen the rule of law on energy issues, by creating a level playing field of rules to be observed by all participating governments, thereby mitigating risks associated with energy-related investment and trade.” In other words, the ECT encourages foreign direct investment in the energy sector by providing international law protections to such investments. To date, the Charter has been signed or acceded to by 51 states (the majority being from Europe and Eurasia), the European Community, and the European Atomic Energy Community.

This article is intended to introduce the ECT to U.S. investors and their counsel, who may be unaware of the Charter because the United States has not signed, ratified, or acceded to this treaty. Despite the fact that the United States is not an ECT member state, U.S. investors may still benefit from the Charter’s international law protections by investing in ECT member states through foreign subsidiaries and/or joint ventures organized under the laws of other ECT signatories. This article examines several of the most noteworthy aspects of the ECT.

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*Matthew T. Parish, based in Geneva, Switzerland, works in the international litigation and arbitration practice of Akin Gump Strauss Hauer & Feld, and is also a Visiting Fellow at the British Institute of International and Comparative Law in London. Dr. Parish practices dispute resolution involving public and private international law, with a particular focus on private international arbitration, investment treaty arbitrations, and inter-sovereign dispute resolution.
**Charles B. Rosenberg, based in Washington, D.C., works in the international trade practice of Hogan Lovells. Mr. Rosenberg concentrates on international trade matters, with a particular focus on international trade litigation.