It Takes Two to Tango: The Compatibility Between ECT Article 26 and EU Law – In the Light of Achmea and Opinion 1/17

The compatibility of the investor-State dispute settlement (ISDS) mechanism in Article 26 of the Energy Chart Treaty (ECT) with EU law has been a topic of intense discussion within the EU for a number of years. This discussion has gained traction in the light of the CJEU’s judgement in Case C-284/16 Achmea, where the Court declared that ISDS mechanism in the Bilateral Investment Treaty (BIT) between the Netherlands and Slovakia was incompatible with EU law. The critics argue that the same reasoning applies to Article 26 ECT. Less than a year after Achmea, the CJEU released Opinion 1/17 regarding the compatibility between the ISDS mechanism of CETA with EU law. In the opinion, the CJEU declared the ISDS mechanism of CETA compatible with EU law, despite its similarities with the ISDS mechanism in Achmea. This thesis examines the CJEU’s findings in Achmea and Opinion 1/17, in order to assess their implications the ECT. It is identified that the judgement in Achmea probably entails that intra-EU application of Article 26 ECT is incompatible with the autonomy of EU law. For extra-EU application, however, it is more difficult to assess. Furthermore, while Opinion 1/17 opens the door to compatibility between EU law and ISDS mechanisms that consider EU law, the considerations are probably not applicable to the ECT. Additionally, a clash of norms is identified. From an EU perspective, the incompatibility between Article 26 ECT and the autonomy of EU law should lead to the non-applicability of Article 26 ECT in intra-EU disputes. From an ECT and public international law perspective, ECT tribunals can probably validly uphold their jurisdiction and deliver Awards, even in intra-EU disputes. In the end EU law will probably triumph the EU’s and the Member States’ international obligations under the ECT. It is argued that that this would lead to undesirable consequences both for the respect for international law as well as the respect for the EU as a global actor.