EU publishes Decision on ‘Denial of Advantages’ to Russian/Belarus parties

The Council of the European Union has published, in the European Journal, a Decision ‘on the denial of advantages under Part III of the Energy Charter Treaty by the Union to any legal entity that is owned or controlled by citizens or nationals of the Russian Federation or of the Republic of Belarus and to any investment within the meaning of the Energy Charter Treaty which is an investment of an investor of the Russian Federation or of the Republic of Belarus.’

The move is intended to prevent attempts by Russian or Belarusian interests to make investment treaty-based claims for sanctions related harm.

The Energy Charter Treaty is, as the EU explains, ‘a multilateral framework for energy cooperation among the signatories…designed to promote energy security through the operation of more open and competitive energy markets while respecting the principles of sustainable development and sovereignty over energy resources.’

Part III of the Charter provides for certain member advantages related to Investment, Promotion, and Protection. Against the backdrop of sanctions imposed on Russia and Belarus, it says, ‘Investors from those countries could attempt to use legal entities established in the territory of a Contracting Party to the Agreement to allege that the Union or its Member States have acted inconsistently with the investment protection obligations of the Agreement and hence bring investor-state dispute settlement proceedings against the Union or its Member States.’

Thus, it says, it is ‘appropriate to invoke Article 17(1) of the Agreement with regard to any legal entity that is owned or controlled by citizens or nationals of the Russian Federation or of the Republic of Belarus and that has no substantial business activities in the area of the Contracting Party in which it is organised,’ and to ‘…invoke ‘Article 17(2), point (b), of the Agreement with regard to any investment within the meaning of the Agreement which is an investment of an investor of the Russian Federation or of the Republic of Belarus in the circumstances described in that provision.’

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202401852