EU protects sanctions against Russian and Belarussian investors under Energy Charter Treaty

The EU has decided, as a matter of caution, to explicitly deny the protections of the Energy Charter Treaty (ECT) to investments and investors from Russia and Belarus, in order to reinforce the application of EU sanctions against these countries. The EU and its Member States have levied a range of sanctions against Russia over its war of aggression against Ukraine, as well as against Belarus, in light of its role as an accomplice in Russia’s illegal invasion. These sanctions include prohibitions on transactions with Russian and Belarussian investors.

Neither Russia nor Belarus is a party to the ECT. However, investors from these countries could in theory seek to use corporations established in the territory of a country party to the ECT to allege that the EU or its Member States have violated the investment protection obligations of the ECT and hence bring investor-state dispute settlement proceedings. The denial of these protections to Russian and Belarussian investors ensures that such claims cannot be plausibly made.

Background

The ECT is a multilateral trade and investment agreement applicable to the energy sector. The ECT contains provisions on investment protection, trade and transit in energy materials and products, and dispute settlement mechanisms. The EU is currently a party to the ECT, together with Euratom and a number of Member States. While the EU is in the process of withdrawing from the ECT, it will be obliged to continue applying the ECT to existing investments for a period of twenty years.

The Commission proposed the denial of ECT protections to Russian and Belarussian investment on 27 March 2024, and the Council formally adopted the decision on 25 June 2024.

For more information

Council decision on the EU

Coucil decision on Euratom

EU solidarity with Ukraine

Commission proposal for withdrawal from the Energy Charter Treaty