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Journal of Energy & Natural Resources Law Volume 19, 2001 - Issue 2
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Original Articles

Energy Charter Treaty: Implications for Australia

R J Stevenson LLB (Hons) (QUT), LLM (Environmental Resources Law) Student (QUT), Solicitor, Environmental Defenders Office (Qld) Inc. My thanks to Professor Douglas Fisher for his comments.
Pages 113-131 | Published online: 08 Jun 2015

  • Energy Business Community Report to the G-8 Energy Ministerial Meeting in Moscow, 31 March 1998 referred to in http://www.encharter.org/English/Secretariat/index.html, 7 June 2000.
  • D E Fisher, ‘The Meaning and Significance of Resource Security’ in A Gardner (ed), The Challenge of Resource Security: Law and Policy (The Federation Press, 1993), pp 42–43.
  • Id.
  • I Brownlie, Principles of Public International Law (5th edn, Clarendon Press, 1998), p 289.
  • P W Birnie and A E Boyle, International Law and the Environment (Oxford University Press, 1992), p 112.
  • F X Perrez, ‘The Relationship between ‘Permanent Sovereignty’ and the Obligation not to cause Transboundary Environmental Damage’ (1996) 26 Env Law 1187 at 1189.
  • Ibid at 1203.
  • Birnie and Boyle, op cit n 5, at 113.
  • Perrez, op cit n 6, at 1205.
  • See Brownlie, op cit n 4, at 542.
  • A Diaz, ‘Permanent Sovereignty over Natural Resources’ (1994) 24 EPL 157. Also see Birnie and Boyle, op cit n 5, at 113 and note the Programme of Action referred to in Perrez, op cit n 6, at 1191.
  • Id.
  • Id.
  • Id.
  • Id.
  • K J Vandevelde, ‘Sustainable Liberalism and the International Investment Regime’(1998) 19 Mich J Int'l L 373 at 384.
  • Birnie and Boyle, op cit n 5, at 113.
  • M Sornarajah, ‘Compensation for Nationalisation: The Provision in the European Energy Charter’ in T W Wälde (ed), The Energy Charter Treaty: An East-West Gateway for Investment & Trade (Kluwer Law International, 1996), p 402.
  • In relation to human rights instruments, see T Simpson and V Jackson, ‘Human Rights and the Environment’(1997) 14 EPLJ 268.
  • This legal rule was first laid down in the Trail Smelter Arbitration case, and has been followed by more recent judicial decisions and incorporated into international law instruments including Principle 21 of the Stockholm Declaration.
  • Diaz, op cit n 11, at 158–159.
  • Diaz, op cit n 11, at 159. Although there has been some debate about whether Principle 2 of the Rio Declaration shifts the balance in favour of exploitation or extends the duty to not cause transboundary pollution to national development policies, not just environmental policies. See Perrez, op cit n 6, at 1203–1204.
  • Birnie and Boyle, op cit n 5, at 112 onwards.
  • J W Salacuse, ‘The Energy Charter Treaty and Bilateral Investment Treaty Regimes’ in T W Wälde (ed), The Energy Charter Treaty: An East-West Gateway for Investment and Trade (Kluwer Law International, 1996), p 321.
  • Brownlie, op cit n 4, at 293.
  • Fisher, op cit n 2, at 44.
  • Commonwealth Aluminium Corporation Ltd v Attorney-General (Qld) [1976] QdR 231.
  • Cudgen Rutile (No 2) Ltd v Chalk [1975] AC 520.
  • P Cameron, ‘Creating a Legal Framework for Investment in the Commonwealth of Independent States Energy Sector: Lessons from the Energy Charter Experiment’ (1994) 1 Tulsa J Comp & Int'l L 233.
  • Id.
  • T W Wälde, ‘European Energy Charter Conference: Final Act, Energy Charter Treaty, Decisions and Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects—Introductory Note’ (1995) 34 ILM 361.
  • L Brazell, ‘The Energy Charter Treaty: Some Observations on its International Context and Internal Structure’ in T W Wälde (ed), The Energy Charter Treaty: An East-West Gateway for Investment and Trade (Kluwer Law International, 1996), p 226.
  • http://www.encharter.org/English/Secretariat/index.html, 7 June 2000.
  • Nor, under Article 46, can any reservations be made to the Treaty.
  • Brownlie, op cit n 4, at 611 referring to Article 18 of the Vienna Convention.
  • See Teoh v Minister of State for Immigration and Ethnic Affairs (1995) 183 CLR 273.
  • http://www.encharter.org/English/Secretariat/index.html, 7 June 2000.
  • Brazell, op cit n 32, at 235.
  • http://www.encharter.org/English/press/press/press-980428.html, 7 June 2000.
  • Brazell, op cit n 32, at 235.
  • http://www.encharter.org/English/press/press/press-991207.html, 7 June 2000.
  • Wälde, op cit n 31, at 367.
  • Wälde, op cit n 31, at 362.
  • Brazell, op cit n 32, at 236.
  • This would seem to be supported by Secretariat statements, see http://www.encharter.org/EngIish/Secretariat/index.html, 7 June 2000.
  • A list of examples of economic activities are included in the Understandings.
  • T W Wälde, ‘International Investment under the 1994 Energy Charter Treaty: Legal, Negotiating and Policy Implications for International Investors within Western and Commonwealth of Independent States/Eastern European Countries’ (1995) 29 Journal of World Trade 5 at 33.
  • Id.
  • J McDonald, ‘The Multilateral Agreement on Investment: Heyday or MAI-day for Ecologically Sustainable Development?’ (1998) 22 Melbourne University Law Review 617 at 624.
  • Or for some purposes, a ‘third’ state.
  • Eg in Australia's case, parts of the Timor Sea.
  • Wälde, op cit n 31, at 363.
  • P M Norton, ‘Back to the Future: Expropriation and the Energy Charter Treaty’ in T W Wälde (ed), The Energy Charter Treaty: An East-West Gateway for Investment and Trade (Kluwer Law International, 1996), p 370.
  • The Article 10 provisions are subject only to limited exceptions contained in Article 24.
  • This and other provisions were framed in an unenforceable manner to allow countries some scope for exclusion of undesirable investors and investments. Article 10(4) envisages a supplementary treaty in relation to this issue of making of investments.
  • The requirement for fair and equitable treatment and most constant protection and security are derived from US and UK bilateral investment treaty language.
  • See Wälde, op cit n 47, at 41.
  • Chairman's Statement at Adoption Session on 17 December 1994, http:www.encharter.org/English/FullText/Chairman.html, 18 June 2000.
  • Article 10(10).
  • Article 10(4) contemplates a supplementary treaty to provide for national and most favoured nation treatment in the making of investments as a firm treaty obligation. See Salacuse, op cit n 24, at 337.
  • A F M Maniruzzaman, ‘Expropriation of Alien roperty and the Principle of Non-Discrimination in International Law of Foreign Investment: An Overview’ (1998) 8 J Transnat'l L & Pol'y 57.
  • Id.
  • Ibid at 59.
  • Ibid at 65.
  • Ibid at 67. Canada and the United States have made a Declaration to the Treaty about how they will interpret what is a breach of the requirement to provide national or most favoured nation treatment which is declaratory of the general international law position regarding discrimination.
  • Ibid at 67.
  • Ibid at 69.
  • Ibid at 71.
  • Brownlie, op cit n 4, at 526.
  • See Manurizzaman, op cit n 60, at 71.
  • Referred to in Brownlie, op din 4, at 527–528.
  • Brownlie, op cit n 4, at 529. Professor Brownlie suggests it might be more useful to apply a test of reasonable care or due diligence which would allow for variations in wealth and educational standards between the various states of the world.
  • Manurizzaman, op cit n 60, at 72.
  • Manurizzaman, op cit n 60, at 72.
  • Manurizzaman, op cit n 60, at 72.
  • Manurizzaman, op cit n 60, at 72. See Anglo-Iranian Oil Co Case ICJ Rep 1952.
  • See Manurizzaman, op cit n 60, at 76.
  • See reference in Manurizzaman, op cit n 60, at 76.
  • Salacuse, op cit n 24, at 336.
  • T W Wälde, ‘International Investment under the 1994 Energy Charter Treaty’ in T W Wälde (ed), The Energy Charter Treaty: An East-West Gateway for Investment and Trade (Kluwer Law International, 1996), p 292.
  • Wälde, op cit n 47, at 41.
  • Wälde, op cit n 47, at 42.
  • Brownlie, op cit n 4, at 534–535.
  • Brownlie, op cit n 4, at 534.
  • P M Norton, op cit n 53, at 368.
  • Article 21(5)(b).
  • J M Wagner, ‘International Investment, Expropriation and Environmental Protection’ (1999) 29 Golden Gate U L Rev 465.
  • Id.
  • Ibid at 466.
  • Ibid at 517.
  • Ibid at 526.
  • Ibid at 525, eg Starrett Housing v Iran, 4 Iran-US CI Trib Rep at 23 ILM 1117.
  • Ibid at 526.
  • Ibid at 486. Wagner makes particular reference to claims filed in the Metalclad Case, Ethyl Corporation Case and the SD Myers Case.
  • Wälde, op cit n 79, at 301.
  • See Commonwealth v Tasmania (1983) 158 CLR 1, Newcrest Mining (IVA) Ltd v The Commonwealth (1997) 71 ALJR 1346 and The Commonwealth v WMC Resources Ltd (1998) 72 ALJR 280.
  • See Deane J in Commonwealth v Tasmania (1983) 158 CLR 1 at 283. His Honour went on to state (at 286–287) that an effective freeze on development would constitute an acquisition.
  • The Commonwealth v WMC Resources Ltd (1998) 72 ALJR 280.
  • Professor Fisher has questioned whether the refusal of the Commonwealth in the Murphyores Case (1976) 136 CLR 1 to grant an export approval for mineral sand might have amounted to a sterilisation of the property rights held by the plaintiff. It is possible that such a situation, were it to occur in the energy sector, could give rise to a claim of indirect expropriation. See D E Fisher, Environmental Law Text and Materials (Law Book Company Ltd, 1993), p 140.
  • Wagner, op cit n 86, at 467.
  • J McDonald, op cit n 49, at 633.
  • J Paulsson, ‘Arbitration without Privity’ in T W Wälde (ed), The Energy Charter Treaty: An East-West Gateway for Investment and Trade (Kluwer Law International, 1996), p 436.
  • Article 26(1).
  • K J Vandevelde, ‘Arbitration Provisions in the BITS and the Energy Charter Treaty’ in T W Wälde (ed), The Energy Charter Treaty: An East-West Gateway for Investment and Trade (Kluwer Law International, 1996), p 414.
  • Article 26(2).
  • Article 26(3)(b)(i).
  • Vandevelde, op cit n 103, at 415.
  • Article 26(4)(a)(i).
  • Article 26(4)(a)(ii).
  • Article 26(4)(b).
  • Article 26(4)(c).
  • Article 26(6).
  • Article 26(8).
  • Article 26(8).
  • Article 26(8).
  • Vandevelde, op cit n 103, at 419.
  • Paulsson, op cit n 101, at 439.
  • Vandevelde, op cit n 103, at 413.
  • Article 26(3).
  • Vandevelde, op cit n 103, at 414.
  • S Ganguly, ‘The Investor-State Dispute Mechanism (ISDM) and a Sovereign's Power to Protect Public Health’ (1999) 38 CJTL 121 at 122.
  • W Crane, ‘Corporations Swallowing Nations: The OECD and the Multilateral Agreement on Investment’ (1998) 9 Colo J Int'l Envt'l L & Pol'y 429 at 444.
  • L L Herman, ‘Sovereignty Revisited: Settlement of International Trade Disputes—Challenges to Sovereignty—A Canadian Perspective’ (1998) 24 Can-US LJ 121 at 126.
  • Paulsson, op cit n 101, at 436–437.
  • J McDonald, op cit n 49, at 641.

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