Decision (EU) 2025/1904 on the approval by the Union of the Agreement on the interpretation and application of the Energy Charter Treaty

What it is

to adopt the Agreement on the interpretation and application of the Energy Charter Treaty between the European Union, the European Atomic Energy Community and their Member States. ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council. BACKGROUND: the Energy Charter Treaty (ECT) is a multilateral trade and investment agreement applicable to the energy sector that was signed in 1994 and entered into force in 1998. The European Union is a Contracting Party to the ECT, together with Euratom, 22 EU Member States (as of 19 June 2024), as well as Japan, Switzerland, Turkey and most countries from the Western Balkans and the former USSR, with the exception of Russia and Belarus. In Republic of Moldova v Komstroy, the CJEU held that Article 26(2)(c) ECT must be interpreted as not being applicable to disputes between a Member State and an investor of another Member State concerning an investment made by the latter in the first Member State. Arbitral tribunals nevertheless continue to accept jurisdiction and to hand down awards in intra-EU proceedings. According to the CJEU, any such arbitral award must be regarded as incompatible with EU law. The Committee on International Trade and the Committee on Industry, Research and Energy have jointly adopted the report by Anna CAVAZZINI (Greens/EFA, DE) and Borys BUDKA (EPP, PL) on the proposal for a decision of the European Parliament and of the Council on the adoption by the Union of the Agreement on the interpretation and application of the Energy Charter Treaty between the European Union, the European Atomic Energy Community and their Member States. The committees responsible recommended that the European Parliament adopt its position at first reading by taking over the Commission's proposal. The single provision of substance sets out the common understanding of the parties to the agreement in relation to the inapplicability of Article 26(2)(c) ECT intra-EU and the consequent absence of any legal basis for intra-EU arbitration proceedings as expressed in the inter se agreement. Under the Agreement, the Contracting Parties reaffirm, for the sake of clarity, their common understanding on the interpretation and application of the Energy Charter Treaty, according to which Article 26 of that Treaty cannot serve as a basis for arbitration proceedings, and that the sunset clause does not apply. The common understanding is based on the following elements of Union law: - the interpretation of the Court of Justice of the European Union that Article 26 of the Energy Charter Treaty does not apply, and should never have applied, as a basis for intra-EU arbitration proceedings; and - the primacy of European Union law, recalled in Declaration No 17 annexed to the Final Act of the Intergovernmental Conference which adopted the Treaty of Lisbon, as the rule of international law governing conflicts of standards in the mutual relations of Member States, from which it follows that, in any event, Article 26 of the Energy Charter Treaty does not apply and cannot apply as a basis for intra-EU arbitration procedures.

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