Considerations on COM(2024)143 -

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dossier COM(2024)143 - .
document COM(2024)143
date June 25, 2024
 
(1) The Energy Charter Treaty (‘the Agreement’) was concluded by Euratom by Council and Commission Decision 98/181/EC, ECSC, Euratom of 23 September 1997 on the conclusion, by the European Communities, of the Energy Charter Treaty and the Energy Charter Protocol on energy efficiency and related environmental aspects (OJ L 69, 9.3.1998, pp. 1-116) and entered into force on 16 April 1998.

(2) Pursuant to Article 17(1) of the Agreement, each Contracting Party reserves the right to deny the advantages of Part III of the Agreement to a legal entity if citizens or nationals of a third state own or control such entity and if that entity has no substantial business activities in the Area of the Contracting Party in which it is organised.

(3) Pursuant to point (b) of Article 17(2) of the Agreement, each Contracting Party reserves the right to deny the advantages of Part III of the Agreement to an Investment, if the denying Contracting Party establishes that such Investment is an Investment of an Investor of a third state with or as to which the denying Contracting Party adopts or maintains measures that (i) prohibit transactions with Investors of that state; or (ii) would be violated or circumvented if the benefits of Part III of the Agreement were accorded to Investors of that state or to their Investments.

(4) The Union has progressively imposed restrictive measures (sanctions) against the Russian Federation, initially in response to the illegal annexation of Crimea and Sevastopol and the deliberate destabilisation of Ukraine. The Union expanded the sanctions in response to the recognition of the non-government controlled areas of the Donetsk and Luhansk ‘oblasts’ of Ukraine, and the ordering of Russian armed forces into those areas. In response to Russia’s military aggression against Ukraine, the Union significantly expanded the sanctions.

(5) In parallel, the Union’s sanctions regime concerning the Republic of Belarus has been expanded in response to the country’s involvement in Russia’s aggression against Ukraine.

(6) Neither the Russian Federation nor the Republic of Belarus is a Contracting Party to the Agreement. However, investors from these countries could attempt using corporations established in the territory of a Contracting Party to the Agreement to allege that Euratom or its Member States have acted inconsistently with the investment protection obligations of the ECT and hence bring investor-state dispute settlement proceedings against Euratom or its Member States.

(7) Euratom’s actions and those of its Member States are consistent with the ECT and other relevant agreements and, in any event, claims with respect to such measures are precluded pursuant to the applicable instruments and general international law. Notwithstanding this, it is appropriate to take complementary procedural steps to avoid investor-state dispute settlement proceedings against Euratom or its Member States under the ECT.

(8) Article 17 of the Agreement allows Contracting Parties to deny the benefits of the investment protection provisions of the Agreement to investors from non-Contracting Parties that seek to abuse the Agreement by bringing investment claims in the aforementioned situations (“denial of benefits”).

(9) 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. It is likewise appropriate to invoke Article 17(2)(b) 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.

(10) The denial of benefits pursuant to Article 17 of the Agreement implies the partial suspension of the Agreement and should be implemented by the Commission by issuing the public Declaration in the Annex to this Decision on behalf of Euratom and all Member States that are Contracting Parties to the Agreement.