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LAW OFFICES

WILLIAMS & CONNOLLY LLP®

July 9, 2024

Via Electronic Case Filing

Mark J. Langer
Clerk, U.S. Court of Appeals for the District of Columbia Circuit
E. Barrett Prettyman U.S. Courthouse
333 Constitution Avenue NW, Room 5205
Washington, DC 20001

Dear Mr. Langer:

Under Rule 28(j), I advise the Court of a formal agreement reached by 26 EU member states, the EU, and the European Atomic Energy Community (EURATOM) on June 26, 2024, along with an accompanying declaration. I also attach a European Commission press release summarizing these developments and the EU’s withdrawal from the Energy Charter Treaty. Claimants’ home countries—the Netherlands and Luxembourg—are among the parties who have initialed the agreement and signed the accompanying declaration. The agreement and declaration “reaffirm, for greater certainty,” the parties’ “common understanding on the interpretation and application of the Energy Charter Treaty”: “[T]hat Treaty cannot and never could serve as a legal basis for intra-EU arbitration proceedings.” Agreement 13; Decl. 7. The declaration has immediate legal effect; the agreement will now be submitted for formal ratification or approval. Press Release 1.

These binding agreements make unmistakable that the arbitration proceedings here are “manifestly inadmissible due to lack of consent to submit to arbitration.” Agreement 10; Decl. 5. Contrary to claimants’ assertion that Spain’s interpretation is novel or “evolving,” Next-Era/9REN Br. 52; Blasket Br. 37-38, it is “the consistent position of the European Union, EURATOM, and their Member States” that “Article 26 of the Energy Charter Treaty could not in the past, and cannot now or in the future serve as a legal basis” for intra-EU arbitration. Agreement 8, 10; accord Decl. 4-5. These agreements “reiterate, expressly and unambiguously,” that long-standing view. Agreement 10; Decl. 5. The Energy Charter Treaty is “an instrument of the European Union’s external energy policy” that was never intended to unsettle the foundational primacy of the EU legal order. Agreement 7; Decl. 3 (emphasis added).

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July 9, 2024
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Under Supreme Court precedent, those views are entitled to “considerable weight” in interpreting the Energy Charter Treaty. NextEra/9REN Spain Br. 45; Blasket Spain Br. 49. Treaties must be read “in a manner consistent with the shared expectations of the contracting parties.” Lozano v. Montoya Alvarez, 572 U.S. 1, 12 (2014) (citation and emphasis omitted).

Sincerely,

/s/ Sarah M. Harris

Sarah M. Harris

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CERTIFICATE OF SERVICE

I, Sarah M. Harris, counsel for the Kingdom of Spain and a member of the Bar of this Court, certify that, on July 9, 2024, a copy of the foregoing letter was filed with the Clerk and served on the parties through the Court’s electronic filing system. I further certify that all parties required to be served have been served.

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AGREEMENT

ON THE INTERPRETATION AND APPLICATION OF THE
ENERGY CHARTER TREATY

BETWEEN THE EUROPEAN UNION, THE EUROPEAN ATOMIC
ENERGY COMMUNITY AND THEIR MEMBER STATES

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THE PARTIES WHO ARE SIGNATORIES TO THIS AGREEMENT,

THE KINGDOM OF BELGIUM,

THE REPUBLIC OF BULGARIA,

THE CZECH REPUBLIC,

THE KINGDOM OF DENMARK,

THE FEDERAL REPUBLIC OF GERMANY,

THE REPUBLIC OF ESTONIA,

IRELAND,

THE HELLENIC REPUBLIC,

THE KINGDOM OF SPAIN,

THE FRENCH REPUBLIC,

THE REPUBLIC OF CROATIA,

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THE ITALIAN REPUBLIC,

THE REPUBLIC OF CYPRUS,

THE REPUBLIC OF LATVIA,

THE REPUBLIC OF LITHUANIA,

THE GRAND DUCHY OF LUXEMBOURG,

THE REPUBLIC OF MALTA,

THE KINGDOM OF THE NETHERLANDS,

THE REPUBLIC OF AUSTRIA,

THE REPUBLIC OF POLAND,

THE PORTUGUESE REPUBLIC,

ROMANIA,

THE REPUBLIC OF SLOVENIA,

THE SLOVAK REPUBLIC,

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THE REPUBLIC OF FINLAND,

THE KINGDOM OF SWEDEN,

THE EUROPEAN UNION and

THE EUROPEAN ATOMIC ENERGY COMMUNITY

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HAVING in mind the Energy Charter Treaty, signed at Lisbon on 17 December 1994 (OJ 1994 L 380, p. 24) and approved on behalf of the European Communities by Council and Commission Decision 98/181/EC, ECSC, Euratom of 23 September 1997 (OJ 1998 L 69, p. 1), as it may be amended from time to time ('Energy Charter Treaty'),

HAVING in mind the rules of customary international law as codified in the Vienna Convention on the Law of Treaties (VCLT),

CONSIDERING that the members of a Regional Economic Integration Organisation within the meaning of Article 1(3) of the Energy Charter Treaty hereby express a common understanding on the interpretation and application of a treaty in their inter se relations,

RECALLING that withdrawal from the Energy Charter Treaty does not affect the status as a member of the Regional Economic Integration Organisation of the Party who is signatory to this Agreement (Contracting Party) that withdrew, nor does it preclude an interest in expressing a common understanding on the interpretation and application of that Treaty for as long as it may be held to produce legal effects in relation to that member and in particular in respect of Article 47(3) of the Energy Charter Treaty,

HAVING in mind the Treaty on European Union (TEU), the Treaty on the Functioning of the European Union (TFEU), the Treaty establishing the European Atomic Energy Community (EURATOM) and general principles of European Union and EURATOM law,

CONSIDERING that the references to the European Union in this Agreement are to be understood also as references to its predecessor, the European Economic Community and, subsequently, the European Community, until the latter was superseded by the European Union,

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RECALLING that, in line with the case-law of the Permanent Court of International Justice (Question of Jaworzina (Polish- Czechoslovakian Frontier), Advisory Opinion, [1923] PCIJ Series B No. 8, 37) and the International Court of Justice (Reservations on the Convention on the Prevention and Punishment of the Crime of Genocide, Advisory Opinion, [1951] I.C.J. Reports, 15, 20), the right of giving an authoritative interpretation of a legal rule belongs to the parties to an international agreement in relation to that agreement,

RECALLING that the Member States of the European Union have assigned that right of giving authoritative interpretation of Union and EURATOM law to the Court of Justice of the European Union (CJEU), as explained by the CJEU in its judgment of 30 May 2006, in Commission v Ireland (Mox Plant), C-459/03 (EU:C:2006:345, paragraphs 129 to 137), where it held that the exclusive competence to interpret and apply Union and EURATOM law extends to the interpretation and application of international agreements to which the European Union, EURATOM and the Member States are parties, in the relationship between two Member States or the European Union or EURATOM and a Member State,

RECALLING that according to Article 344 TFEU and Article 193 EURATOM, Member States of the European Union are not entitled to submit a dispute concerning the interpretation or application of the TEU, the TFEU and EURATOM to any method of settlement other than those provided for therein,

RECALLING that in its judgment of 6 March 2018, in Achmea, C-284/16 (EU:C:2018:158), the CJEU held that Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member

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State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept,

RECALLING the consistently reiterated position of the European Union that the Energy Charter Treaty was not meant to apply in intra-EU relations and that it was not, and could not have been, the intention of the European Union, EURATOM and their Member States, that the Energy Charter Treaty would create any obligations among them since it was negotiated as an instrument of the European Union's external energy policy with the view to establish a framework for energy cooperation with third countries whereas, by contrast, the Union's internal energy policy consists of an elaborate system of rules designed to create an internal market in the field of energy which exclusively regulate the relations between the Member States,

RECALLING that in its judgment of 2 September 2021, in Komstroy, C-741/19 (EU:C:2021:655, paragraph 66) (the Komstroy judgment) confirmed in its Opinion 1/20 (EU:C:2022:485, paragraph 47), the CJEU held that Article 26(2)(c) of the Energy Charter Treaty 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 former Member State,

RECALLING that, as an interpretation by the competent court and reflecting a general principle of public international law, the interpretation of the Energy Charter Treaty in the Komstroy judgment applies as of the approval of the Energy Charter Treaty by the European Union, EURATOM and their Member States,

CONSIDERING that Articles 267 and 344 TFEU must be interpreted as precluding an interpretation of Article 26 of the Energy Charter Treaty that allows for disputes between, on the one hand, an investor of one Member State of the European Union and, on the other hand, another

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Member State of the European Union, the European Union or EURATOM to be resolved before an arbitral tribunal (intra-EU arbitration proceedings), and

CONSIDERING, in any event, that, where disputes cannot be settled amicably, a party may as always choose to submit in accordance with national law disputes between a Contracting Party and an investor of another Contracting Party for resolution to the competent courts or administrative tribunals, as guaranteed by general principles of law and respect for fundamental rights, enshrined inter alia in the Charter of Fundamental Rights of the European Union,

SHARING the common understanding expressed in this Agreement between the European Union, EURATOM and their Member States that, as a result, a clause such as Article 26 of the Energy Charter Treaty could not in the past, and cannot now or in the future serve as legal basis for arbitration proceedings initiated by an investor from one Member State concerning investments in another Member State,

REITERATING Declaration No 17, annexed to the Final Act of the Intergovernmental Conference which adopted the Treaty of Lisbon, which recalls that the Treaties and the law adopted by the Union on the basis of the Treaties have primacy over the law of the Member States, and that the principle of primacy constitutes a conflict rule in their mutual relations,

RECALLING, consequently, that, in order to resolve any conflict of norms, an international agreement concluded by the Member States of the European Union under international law may apply in intra-EU relations only to the extent that its provisions are compatible with the EU Treaties,

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CONSIDERING that, as a result of the non-applicability of Article 26 of the Energy Charter Treaty as a legal basis for intra-EU arbitration proceedings, also Article 47(3) of the Energy Charter Treaty cannot extend, and was not intended to extend, to such proceedings,

CONSIDERING that, as a result of the non-applicability of Article 26 of the Energy Charter Treaty as a legal basis for intra-EU arbitration proceedings, where intra-EU arbitration proceedings are pending, the parties to this Agreement that are concerned by those proceedings, whether as respondent or as home State of an investor, should cooperate with one another in order to ensure that the existence of this Agreement is brought to the attention of the arbitral tribunal in question, allowing the appropriate conclusion as to absence of jurisdiction of the tribunal to be drawn,

CONSIDERING, in addition, that no new intra-EU arbitration proceedings should be registered, and

AGREEING that where Notice of Arbitration is nevertheless delivered the Contracting Parties that are concerned by those proceedings, whether as respondent or as home State of an investor, should cooperate with one another in order to ensure that the existence of this Agreement is brought to the attention of the arbitral tribunal in question, allowing the appropriate conclusion to be drawn that Article 26 of the Energy Charter Treaty cannot serve as a legal basis for such proceedings,

CONSIDERING, nevertheless, that settlements and arbitral awards in intra-EU investment arbitration cases that can no longer be annulled or set aside and were voluntarily complied with or definitively enforced should not be challenged,

REGRETTING that arbitral awards have already been rendered, continue to be rendered and could still be rendered in a manner contrary to the rules of the European Union and EURATOM,

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including as expressed in the interpretations of the CJEU, by arbitral tribunals in intra-EU arbitration proceedings initiated with reference to Article 26 of the Energy Charter Treaty,

also REGRETTING that such arbitral awards are the subject of enforcement proceedings, including in third countries, that in pending intra-EU arbitration proceedings purportedly based on Article 26 of the Energy Charter Treaty arbitral tribunals do not decline competence and jurisdiction, and that arbitration institutions continue to register new arbitration proceedings and do not reject them as manifestly inadmissible due to lack of consent to submit to arbitration,

CONSIDERING, therefore, that it is necessary to reiterate, expressly and unambiguously, the consistent position of the European Union, EURATOM and their Member States by means of an agreement reaffirming their common understanding on the interpretation and application of the Energy Charter Treaty, as interpreted by the CJEU, to the extent that it concerns intra-EU arbitration proceedings,

CONSIDERING that, in accordance with the judgment of the International Court of Justice of 5 February 1970, Barcelona Traction, Light and Power Company Limited (Belgium v. Spain) (ICJ Reports 1970, p. 3, paragraphs 33 and 35) and as explained by the CJEU in the Komstroy judgment, certain provisions of the Energy Charter Treaty are intended to govern bilateral relations,

CONSIDERING therefore that this agreement only concerns the bilateral relationships between the European Union, EURATOM and their Member States, respectively, and, by extension, the investors from those Contracting Parties to the Energy Charter Treaty, and that as a result, this agreement affects only parties that are governed by the rules of the European Union and EURATOM as a Regional Economic Integration Organisation within the meaning of Article 1(3) of the Energy Charter Treaty and does not affect the enjoyment by the other parties to the Energy Charter Treaty of their rights under that Treaty or the performance of their obligations,

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RECALLING that the European Union and EURATOM and their Member States have informed the other contracting parties to the Energy Charter Treaty of their intention to conclude this agreement on the interpretation and application of the Energy Charter Treaty,

CONSIDERING that, in that manner and in line with their legal obligations under EU and EURATOM law, but without prejudice to their right to make such claims as they consider appropriate in relation to costs incurred by them as respondents in relation to intra-EU arbitration proceedings, the European Union, EURATOM and their Member States thereby ensure full and effective compliance with the Komstroy judgment, the unenforceability of existing awards, the obligation of arbitration tribunals to immediately terminate any pending intra-EU arbitration proceedings, and the obligation for arbitration institutions not to register any future intra EU arbitration proceedings, in line with their respective powers under Article 36(3) ICSID Convention and Article 12 SCC Arbitration rules, and for arbitration tribunals to declare that any intra-EU arbitration proceedings lack a legal basis,

UNDERSTANDING that this Agreement covers investor-State arbitration proceedings involving the European Union, EURATOM or their Member States as parties in intra-EU disputes based on Article 26 of the Energy Charter Treaty under any arbitration convention or set of rules, including the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) and the ICSID arbitration rules, the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) arbitration rules, the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules and ad hoc arbitration,

BEARING in mind that the provisions of this Agreement are without prejudice to the possibility for the European Commission or any Member State to bring an action before the CJEU based on Articles 258, 259 and 260 TFEU,

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HAVE AGREED AS FOLLOWS:

SECTION 1

COMMON UNDERSTANDING ON THE NON-APPLICABILITY OF ARTICLE 26 OF THE ENERGY CHARTER TREATY AS A BASIS FOR INTRA-EU ARBITRATION PROCEEDINGS

ARTICLE 1

Definitions

For the purposes of this Agreement, the following definitions shall apply:

(1) "Energy Charter Treaty" means the Energy Charter Treaty, signed at Lisbon on 17 December 1994 (OJ 1994 L 380, p. 24;) and approved on behalf of the European Communities by Council and Commission Decision 98/181/EC, ECSC, Euratom of 23 September 1997 (OJ 1998 L 69, p. 1), as it may be amended from time to time;

(2) "intra-EU relations" means relations between Member States of the European Union and EURATOM or between a Member State, on the one hand, and the European Union or EURATOM, on the other hand;

(3) "intra-EU arbitration proceedings" means any proceedings before an arbitral tribunal initiated with reference to Article 26 of the Energy Charter Treaty to resolve a dispute between, on the

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one hand, an investor of one Member State of the European Union and, on the other hand, another Member State of the European Union, the European Union, or EURATOM;

ARTICLE 2

Common understanding of the European Union, EURATOM and their Member States on the interpretation and continued non-applicability of Article 26 of the Energy Charter Treaty and the lack of legal basis for intra-EU arbitration proceedings

1. The Contracting Parties hereby reaffirm, for greater certainty, that they share a common understanding on the interpretation and application of the Energy Charter Treaty, according to which Article 26 of that Treaty cannot and never could serve as a legal basis for intra-EU arbitration proceedings.

The common understanding expressed in the first subparagraph is based on the following elements of Union law:

(a) the interpretation of the Court of Justice of the European Union pursuant to which Article 26 of the Energy Charter Treaty does not apply, and should never have been applied, as a basis for intra-EU arbitration proceedings; and

(b) 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 a rule of international law governing conflict of norms in their mutual relations with the result that in any event Article 26 of the Energy Charter Treaty does not and could not apply as a basis for intra-EU arbitration proceedings.

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2. The Contracting Parties reaffirm, for greater certainty, that they share the common understanding that, as a result of the absence of legal basis for intra-EU arbitration proceedings pursuant to Article 26 of the Energy Charter Treaty, Article 47, paragraph 3, of the Energy Charter Treaty cannot extend, and could not have been extended, to such proceedings. Accordingly, in that respect, Article 47, paragraph 3, of the Energy Charter Treaty cannot have produced any legal effects in intra-EU relations when a Member State withdrew from the Energy Charter Treaty prior to this agreement, nor will it produce any legal effects in intra-EU relations if a Contracting Party withdraws from the Energy Charter Treaty subsequently.

3. For greater certainty, the Contracting Parties are in agreement that in accordance with the common understanding expressed in paragraphs 1 and 2, and without prejudice thereto, Article 26 of the Energy Charter Treaty does not apply as a basis for intra-EU arbitration proceedings and that, in that respect, Article 47, paragraph 3, of the Energy Charter Treaty will not produce legal effects in intra-EU relations.

4. Paragraphs 1 to 3 are without prejudice to the interpretation and application of other provisions of the Energy Charter Treaty to the extent they concern intra-EU relations.

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SECTION 2

FINAL PROVISIONS

ARTICLE 3

Depositary

1. The Secretary-General of the Council of the European Union shall act as Depositary of this Agreement.

2. The Secretary-General of the Council of the European Union shall notify the Contracting Parties of:

(a) the deposit of any instrument of ratification, acceptance or approval in accordance with Article 5;

(b) the date of entry into force of this Agreement in accordance with Article 6, paragraph 1;

(c) the date of entry into force of this Agreement for each Contracting Party in accordance with Article 6, paragraph 2.

3. The Secretary General of the Council of the European Union shall publish the Agreement in the Official Journal of the European Union and notify the Depository of the Energy Charter Treaty, as well as the Energy Charter Secretariat, of its adoption and entry into force. The

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Depository of this Agreement shall be invited to notify the Agreement to the other contracting parties to the Energy Charter Treaty.

4. This Agreement shall be registered by the Depositary with the United Nations Secretariat, in accordance with Article 102 of the Charter of the United Nations, following its entry into force.

ARTICLE 4

Reservations

No reservations shall be made to this Agreement.

ARTICLE 5

Ratification, approval or acceptance

This Agreement shall be subject to ratification, approval or acceptance.

The Contracting Parties shall deposit their instruments of ratification, approval or acceptance with the Depositary.

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ARTICLE 6

Entry into force

1. This Agreement shall enter into force 30 calendar days after the date on which the Depositary receives the second instrument of ratification, approval or acceptance.

2. For each Contracting Party which ratifies, accepts or approves it after its entry into force in accordance with paragraph 1, this Agreement shall enter into force 30 calendar days after the date of deposit by such Contracting Party of its instrument of ratification, approval or acceptance.

ARTICLE 7

Authentic texts

This Agreement, drawn up in a single original in the Bulgarian, Croatian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages, the text in each of these languages being equally authentic, shall be deposited in the archives of the Depositary.

Done at Brussels on .................................

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DECLARATION ON THE LEGAL CONSEQUENCES OF THE JUDGMENT OF THE COURT OF JUSTICE IN KOMSTROY AND COMMON UNDERSTANDING ON THE NON-APPLICABILITY OF ARTICLE 26 OF THE ENERGY CHARTER TREATY AS A BASIS FOR INTRA-EU ARBITRATION PROCEEDINGS

MADE BY THE REPRESENTATIVES OF THE GOVERNMENTS OF THE MEMBER STATES AND OF THE EUROPEAN UNION ON 26 JUNE 2024

HAVING in mind the Energy Charter Treaty, signed at Lisbon on 17 December 1994 (OJ 1994 L 380, p. 24) and approved on behalf of the European Communities by Council and Commission Decision 98/181/EC, ECSC, Euratom of 23 September 1997 (OJ 1998 L 69, p. 1), as it may be amended from time to time (‘Energy Charter Treaty’),

HAVING in mind the rules of customary international law as codified in the Vienna Convention on the Law of Treaties (VCLT),

CONSIDERING that the members of a Regional Economic Integration Organisation within the meaning of Article 1(3) of the Energy Charter Treaty hereby express a common understanding on the interpretation and application of a treaty in their inter se relations,

RECALLING that withdrawal from the Energy Charter Treaty does not affect the status as a member of the Regional Economic Integration Organisation of the Party who is signatory to this Declaration that withdrew, nor does it preclude an interest in expressing a common understanding on the interpretation and application of that Treaty for as long as it may be held to produce legal effects in relation to that member and in particular in respect of Article 47(3) of the Energy Charter Treaty,

HAVING in mind the Treaty on European Union (TEU), the Treaty on the Functioning of the European Union (TFEU), the Treaty establishing the European Atomic Energy Community (EURATOM) and general principles of European Union and EURATOM law,

CONSIDERING that the references to the European Union in this Declaration are to be understood also as references to its predecessor, the European Economic Community and, subsequently, the European Community, until the latter was superseded by the European Union,

RECALLING that, in line with the case-law of the Permanent Court of International Justice (Question of Jaworzina (Polish- Czechoslovakian Frontier), Advisory Opinion, [1923] PCIJ Series B No. 8,

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37) and the International Court of Justice (Reservations on the Convention on the Prevention and Punishment of the Crime of Genocide, Advisory Opinion, [1951] I.C.J. Reports, 15, 20), the right of giving an authoritative interpretation of a legal rule belongs to the parties to an international agreement in relation to that agreement,

RECALLING that the Member States of the European Union have assigned that right of giving authoritative interpretation of Union and EURATOM law to the Court of Justice of the European Union (CJEU), as explained by the CJEU in its judgment of 30 May 2006, in Commission v Ireland (Mox Plant), C-459/03 (EU:C:2006:345, paragraphs 129 to 137), where it held that the exclusive competence to interpret and apply Union and EURATOM law extends to the interpretation and application of international agreements to which the European Union, EURATOM and the Member States are parties, in the relationship between two Member States or the European Union or EURATOM and a Member State,

RECALLING that according to Article 344 TFEU and Article 193 EURATOM, Member States of the European Union are not entitled to submit a dispute concerning the interpretation or application of the TEU, the TFEU and EURATOM to any method of settlement other than those provided for therein,

RECALLING that in its judgment of 6 March 2018, in Achmea, C-284/16 (EU:C:2018:158), the CJEU held that Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept,

RECALLING the consistently reiterated position of the European Union that the Energy Charter Treaty was not meant to apply in intra-EU relations and that it was not, and could not have been, the intention of the European Union, EURATOM and their Member States, that the Energy Charter Treaty would create any obligations among them since it was negotiated as an instrument of the European Union's external energy policy with the view to establish a framework for energy cooperation with third countries whereas, by contrast, the Union's internal energy policy consists of an elaborate system of rules designed to create an internal market in the field of energy which exclusively regulate the relations between the Member States,

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RECALLING that in its judgment of 2 September 2021, in Komstroy, C-741/19 (EU:C:2021:655, paragraph 66) (the Komstroy judgment) confirmed in its Opinion 1/20 (EU:C:2022:485, paragraph 47), the CJEU held that Article 26(2)(c) of the Energy Charter Treaty 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 former Member State,

RECALLING that, as an interpretation by the competent court and reflecting a general principle of public international law, the interpretation of the Energy Charter Treaty in the Komstroy judgment applies as of the approval of the Energy Charter Treaty by the European Union, EURATOM and their Member States,

CONSIDERING that Articles 267 and 344 TFEU must be interpreted as precluding an interpretation of Article 26 of the Energy Charter Treaty that allows for disputes between, on the one hand, an investor of one Member State of the European Union and, on the other hand, another Member State of the European Union, the European Union or EURATOM to be resolved before an arbitral tribunal ('intra-EU arbitration proceedings'), and

CONSIDERING, in any event, that, where disputes cannot be settled amicably, a party may as always choose to submit in accordance with national law disputes between a Member State (or, as the case may be, the European Union or the EURATOM) and an investor of another Member State for resolution to the competent courts or administrative tribunals, as guaranteed by general principles of law and respect for fundamental rights, enshrined inter alia in the Charter of Fundamental Rights of the European Union,

SHARING the common understanding expressed in this Declaration that, as a result, a clause such as Article 26 of the Energy Charter Treaty could not in the past, and cannot now or in the future serve as legal basis for arbitration proceedings initiated by an investor from one Member State concerning investments in another Member State,

REITERATING Declaration No 17, annexed to the Final Act of the Intergovernmental Conference which adopted the Treaty of Lisbon, which recalls that the Treaties and the law adopted by the Union on the basis of the Treaties have primacy over the law of the Member States, and that the principle of primacy constitutes a conflict rule in their mutual relations,

RECALLING, consequently, that, in order to resolve any conflict of norms, an international agreement concluded by the Member States of the European Union under international law may apply in intra-EU relations only to the extent that its provisions are compatible with the EU Treaties,

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CONSIDERING that, as a result of the non-applicability of Article 26 of the Energy Charter Treaty as a legal basis for intra-EU arbitration proceedings, also Article 47(3) of the Energy Charter Treaty cannot extend, and was not intended to extend, to such proceedings,

CONSIDERING that, as a result of the non-applicability of Article 26 of the Energy Charter Treaty as a legal basis for intra-EU arbitration proceedings, where intra-EU arbitration proceedings are pending, the signatories to this Declaration that are concerned by those proceedings, whether as respondent or as home State of an investor, should cooperate with one another in order to ensure that the existence of this Declaration is brought to the attention of the arbitral tribunal in question, allowing the appropriate conclusion as to absence of jurisdiction of the tribunal to be drawn,

CONSIDERING, in addition, that no new intra-EU arbitration proceedings should be registered, and

AGREEING that where a notice of arbitration is nevertheless delivered the signatories that are concerned by those proceedings, whether as respondent or as home State of an investor, should cooperate with one another in order to ensure that the existence of this Declaration is brought to the attention of the arbitral tribunal in question, allowing the appropriate conclusion to be drawn that Article 26 of the Energy Charter Treaty cannot serve as a legal basis for such proceedings,

CONSIDERING, nevertheless, that settlements and arbitral awards in intra-EU investment arbitration cases that can no longer be annulled or set aside and were voluntarily complied with or definitively enforced should not be challenged,

REGRETTING that arbitral awards have already been rendered, continue to be rendered and could still be rendered in a manner contrary to the rules of the European Union and EURATOM, including as expressed in the interpretations of the CJEU, by arbitral tribunals in intra-EU arbitration proceedings initiated with reference to Article 26 of the Energy Charter Treaty,

also REGRETTING that such arbitral awards are the subject of enforcement proceedings, including in third countries, that in pending intra-EU arbitration proceedings purportedly based on Article 26 of the Energy Charter Treaty arbitral tribunals do not decline competence and jurisdiction, and that arbitration institutions continue to register new arbitration proceedings and do not reject them as manifestly inadmissible due to lack of consent to submit to arbitration,

CONSIDERING, therefore, that it is necessary to reiterate, expressly and unambiguously, the consistent position of the European Union and its Member States by means of an instrument

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reaffirming their common understanding on the interpretation and application of the Energy Charter Treaty, as interpreted by the CJEU, to the extent that it concerns intra-EU arbitration proceedings,

CONSIDERING that, in accordance with the judgment of the International Court of Justice of 5 February 1970, Barcelona Traction, Light and Power Company Limited (Belgium v. Spain) (ICJ Reports 1970, p. 3, paragraphs 33 and 35) and as explained by the CJEU in the Komstroy judgment, certain provisions of the Energy Charter Treaty are intended to govern bilateral relations,

CONSIDERING therefore that any such instrument only concerns the bilateral relationships between the European Union, EURATOM and their Member States, respectively, and, by extension, the investors from those Contracting Parties to the Energy Charter Treaty, and that as a result, this Declaration affects only parties that are governed by the rules of the European Union as a Regional Economic Integration Organisation within the meaning of Article 1(3) of the Energy Charter Treaty and does not affect the enjoyment by the other parties to the Energy Charter Treaty of their rights under that Treaty or the performance of their obligations,

RECALLING that the European Union and EURATOM and their Member States have informed the other contracting parties to the Energy Charter Treaty of their intention to conclude an agreement on the interpretation and application of the Energy Charter Treaty,

CONSIDERING that, in that manner and in line with their legal obligations under EU and EURATOM law, but without prejudice to their right to make such claims as they consider appropriate in relation to costs incurred by them as respondents in relation to intra-EU arbitration proceedings, the European Union, EURATOM and their Member States thereby ensure full and effective compliance with the Komstroy judgment, the unenforceability of existing awards, the obligation of arbitration tribunals to immediately terminate any pending intra-EU arbitration proceedings, and the obligation for arbitration institutions not to register any future intra EU arbitration proceedings, in line with their respective powers under Article 36(3) ICSID Convention and Article 12 SCC Arbitration rules, and for arbitration tribunals to declare that any intra-EU arbitration proceedings lack a legal basis,

UNDERSTANDING that this Declaration covers investor-State arbitration proceedings involving the European Union or its Member States as parties in intra-EU disputes based on Article 26 of the Energy Charter Treaty under any arbitration convention or set of rules, including the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) and the ICSID arbitration rules, the Arbitration Institute of the Stockholm Chamber of

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Commerce (SCC) arbitration rules, the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules and ad hoc arbitration,

CONSIDERING that, further to this Declaration, its signatories intend to formalise their common understanding by means of a plurilateral treaty among themselves, the text of which has been negotiated and initialled by the signatories to this Declaration as an indication that the text is stable, and to make best efforts to deposit in due course their instruments of ratification, approval or acceptance of that treaty,

BEARING in mind that the provisions of this Declaration are without prejudice to the possibility for the European Commission or any Member State to bring an action before the CJEU based on Articles 258, 259 and 260 TFEU,

TAKING INTO ACCOUNT THE FOREGOING, THE EUROPEAN UNION AND ITS MEMBER STATES (‘THE SIGNATORIES’)

DECLARE THAT THEY SHARE THE FOLLOWING COMMON UNDERSTANDING ON THE NON-APPLICABILITY OF ARTICLE 26 OF THE ENERGY CHARTER TREATY AS A BASIS FOR INTRA-EU ARBITRATION PROCEEDINGS:

1. The signatories hereby reaffirm, for greater certainty, that they share a common understanding on the interpretation and application of the Energy Charter Treaty, according to which Article 26 of that Treaty cannot and never could serve as a legal basis for intra-EU arbitration proceedings.

That common understanding is based on the following elements of Union law:

i. the interpretation of the Court of Justice of the European Union pursuant to which Article 26 of the Energy Charter Treaty does not apply, and should never have been applied, as a basis for intra-EU arbitration proceedings; and

ii. 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

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Lisbon, as a rule of international law governing conflict of norms in their mutual relations with the result that in any event Article 26 of the Energy Charter Treaty does not and could not apply as a basis for intra-EU arbitration proceedings.

2. The signatories reaffirm, for greater certainty, that they share the common understanding that, as a result of the absence of legal basis for intra-EU arbitration proceedings pursuant to Article 26 of the Energy Charter Treaty, Article 47(3) of the Energy Charter Treaty cannot extend, and could not have been extended, to such proceedings. Accordingly, in that respect, Article 47(3) of the Energy Charter Treaty cannot have produced any legal effects in intra-EU relations when a signatory withdrew from the Energy Charter Treaty prior to this Declaration, nor will it produce any legal effects in intra-EU relations if a signatory withdraws from the Energy Charter Treaty subsequently.

3. For greater certainty, the signatories declare that in accordance with the common understanding expressed in paragraphs 1 and 2, and without prejudice thereto, Article 26 of the Energy Charter Treaty does not apply as a basis for intra-EU arbitration proceedings and that, in that respect, Article 47(3) of the Energy Charter Treaty will not produce legal effects in intra-EU relations.

4. Paragraphs 1 to 3 are without prejudice to the interpretation and application of other provisions of the Energy Charter Treaty to the extent they concern intra-EU relations.

Done at Brussels in a single original in the Bulgarian, Croatian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages

on 26 June 2024.

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Европейски съюз

Unión Europea

Evropská unie

Den Europæiske Union

Europäische Union

Euroopa Liit

Ευρωπαϊκή Ένωση

European Union

Union européenne

An tAontas Eorpach

Europska unija

Unione europea

Eiropas Savienība

Europos Sąjunga

Európai Unió

I-Unjoni Ewropea

Europese Unie

Unia Europejska

União Europeia

Uniunea Europeană

Európska únia

Evropska unija

Euroopan unioni

Europeiska unionen

Signature

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European Commission - Press release

EU notifies exit from Energy Charter Treaty and puts an end to intra-EU arbitration proceedings

Brussels, 28 June 2024

The EU has taken the final step to exit the Energy Charter Treaty (ECT), a multilateral trade and investment agreement applicable to the energy sector, which is not compatible with the EU's climate and energy goals under the European Green Deal and the Paris Agreement.

Two written notifications have been sent by the Council and Commission to the Government of Portugal, which is the official depositary of the Treaty, notifying respectively the withdrawal of the European Union and Euratom. The withdrawals will take effect in one year. These notifications follow the agreement between EU Energy Ministers last month on the Commission's proposals to pursue the withdrawal and Treaty modernisation in parallel.

This week, the Union and its Member States have also reached a formal agreement to put an end to the continuation of intra-EU arbitration proceedings under the ECT that are contrary to Union law. More specifically, the agreement is aimed at clarifying, for the benefit of courts and arbitral tribunals, that the arbitration clause provided in the ECT does not apply - and never has - in the relations between an EU investor and an EU country.

The agreement follows the Komstroy judgment, in which the Court of Justice held that the arbitration clause of the ECT must be interpreted as not applicable to disputes between a Member State and an investor from another Member State concerning an investment made by the latter in the first Member State. In other words, under Union law, within that framework, arbitration awards are invalid and as such unenforceable anywhere in the Union.

This judgment binds all Member States and their domestic courts. However, the clear case law of the Union courts has not always been respected by arbitral tribunals, which have continued to accept jurisdiction and hand down awards in intra-EU proceedings. The Member States, the EU and Euratom therefore decided to negotiate an agreement under public international law to settle this matter. The agreement clarifies, for the benefit of courts and arbitral tribunals, that the arbitration clause provided in the ECT does not apply in the relations between an EU investor and an EU Member State.

The Member States and the Union further agreed to accompany the closing of negotiations on the agreement with a Declaration on the legal consequences of the Komstroy judgment. That Declaration was signed on 26 June. The Declaration is effective as of its signature and will be later published in the Official Journal of the European Union. The inter se agreement is now subject to internal procedures leading to its signature and entry into force. For the Union and Euratom, the Commission is preparing the necessary proposals to authorise signature and adoption of the agreement.

Both texts reflect the case law of the Court of Justice of the European Union and are entirely in line with the established position of the Union as expressed on numerous occasions including in open court in third country jurisdictions. The Energy Charter Treaty Secretariat has been informed of this agreement.

Background

The Energy Charter Treaty 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 that Treaty, together with Euratom, 22 EU Member States (as of 26 June 2024), as well as Japan, Switzerland, Turkey and most countries from the Western Balkans and the former Union of Soviet Socialist Republics, with the exception of Russia and Belarus. In terms of the EU Member States, Italy unilaterally withdrew in 2015. France, Germany, Poland and Luxembourg have already exited the ECT. Slovenia, Portugal and Spain have also initiated a procedure of withdrawal.

The Commission has negotiated a modernisation of the ECT on behalf of the EU to bring it in line with the Union's climate and energy goals, and its investment protection framework. However, due to a lack of majority support from the Member States, the EU has not yet voted for the modernisation of the ECT. The Commission has subsequently proposed for the EU, Euratom and the Member States to

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withdraw from the unmodernised Treaty in exchange for the protection of fossil fuel investments. Under the Belgian Presidency of the EU, last month an agreement was found with Member States to proceed with the withdrawal and the modernisation process in parallel.

At the same time, the Commission has been engaged with the Member States for years to clarify the legal context for disputes under the ECT. In October 2022, the Commission sent a Communication to the Council, the European Parliament and the Member States setting out its intention to open negotiations on an agreement between the Union, Euratom and the Member States in relation to the interpretation of the Energy Charter Treaty that would include, in particular, a confirmation that the Energy Charter Treaty does not apply intra-EU and therefore, it cannot serve as a basis for arbitration proceedings.

The Union joined the Energy Charter Treaty with partner countries around the world as part of its external energy policy. The offer to arbitrate disputes contained in that Treaty was never intended to supplant the system of judicial protection set up under the EU Treaties. In its Komstroy judgment, the CJEU recognised that this was the only proper way to interpret the Energy Charter Treaty.

For More Information

Energy Charter Treaty

IP/24/3513

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