On 8 December 2023, France ceased to be a party to the Energy Charter Treaty (“ECT”), an international investment agreement specific to the energy sector.
As a reminder, France notified its withdrawal from the ECT on 7 December 2022. This withdrawal was motivated by two criticisms:
- On the one hand, the ECT hinders the transition to a low-carbon economy, by allowing investors to contest the trade policies of States seeking to achieve this transition, via the investor-State party dispute settlement mechanism (Article 26 of the ECT).
- On the other hand, the Achmea and Komstroy decisions of the Court of Justice of the European Union held that the ECT, and its dispute settlement mechanism in particular, was incompatible with EU law.
France’s withdrawal follows that of Italy (in 2016) and comes shortly before the withdrawals of Germany (on 20 December 2023) and Poland (on 29 December 2023). It marks the failure of the process to modernise the EC Treaty, which the EU has been engaged in since 2017. The European Commission has since called on the EU Member States to withdraw from the ECT in a coordinated manner.
However, the ECT includes a sunset clause under which the provisions of the ECT will continue to apply to investments made in the host countries for a period of 20 years from the date on which the withdrawal takes effect (Article 47(3) of the ECT). Investors could therefore still bring arbitration proceedings based on the ECT for the time being.
