The Energy Charter Treaty contains a comprehensive and tailor-made system for settling disputes on matters covered by the Treaty. The two basic forms of binding dispute settlement are ad hoc arbitration for disputes between Contracting Parties on the interpretation or application of almost all aspects of the Treaty (except for competition and environmental issues), and investment arbitration for disputes between an investor and a Contracting Party. Nevertheless, the starting point for all these mechanisms is the desirability of an amicable agreement between the parties to any dispute.
Dispute settlement mechanisms available under the Energy Charter Treaty
Good Offices of the Energy Charter Secretariat: The Secretariat, as a trusted third party, can facilitate parties in a conflict to establish contact and to begin to explore ways to reach an amicable settlement. The Secretariat can also offer negotiation support. The good offices can be provided at any point in time and in relation to disputes between Contracting Parties, as well as between investors and Contracting Parties.
Disputes between investors and Contracting Parties: In the event of an alleged breach of the Treaty's investment provisions and if the dispute cannot be settled amicably within a period of three months, Article 26 allows investors to submit the dispute for its resolution to the courts or administrative tribunals of the Contracting Party to the dispute; in accordance with any applicable, previously agreed dispute settlement procedure; or to international arbitration or conciliation.
Disputes between parties to the Treaty:
- General: Article 27 provides for an arbitration procedure for disputes regarding the interpretation or application of the Treaty (except for competition and environmental issues).
- Transit disputes: Article 7.7 provides a specialised conciliation mechanism for transit disputes, allowing for a faster and less formal procedure. The conciliation rules were last amended in 2015 and a commentary was endorsed by the Conference in 2016.
- Trade disputes: Article 29 and Annex D include a mechanism (following closely the WTO model) for settling trade disputes between Energy Charter member countries, provided that at least one of them is not a WTO member. In 1999 the conference adopted the Rules of Procedure for Panel Proceedings.
- Competition disputes: Article 6 provides for bilateral non-binding consultation mechanism.
- Environmental disputes: Article 19 provides for disputes to be reviewed by the Charter Conference if no other appropriate international for a exists for the consideration of such disputes.