62020CV0001(01)
OPINION 1/20 OF THE COURT (Fourth Chamber)
16 June 2022
(Opinion pursuant to Article 218(11) TFEU – Request for an Opinion – Draft modernised Energy Charter Treaty – Article 26 – Dispute settlement mechanism – Admissibility)
In Opinion 1/20,
REQUEST for an Opinion pursuant to Article 218(11) TFEU, made on 2 December 2020 by the Kingdom of Belgium,
The COURT (Fourth Chamber)
composed of C. Lycourgos, President of the Chamber, S. Rodin, J.‑C. Bonichot, L.S. Rossi (Rapporteur) and O. Spineanu-Matei, Judges,
Advocate General: M. Szpunar,
Registrar: A. Calot Escobar,
having regard to the written procedure,
after considering the observations submitted on behalf of:
–
the Belgian Government, by S. Baeyens, J.-C. Halleux, C. Pochet and M. Van Regemorter, acting as Agents,
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the Czech Government, by K. Najmanová, H. Pešková, M. Smolek and J. Vláčil, acting as Agents,
–
the German Government, by J. Möller and D. Klebs, acting as Agents,
–
the Greek Government, by K. Boskovits and G. Karipsiadis, acting as Agents,
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the Spanish Government, by S. Centeno Huerta, A. Gavela Llopis and J. Ruiz Sánchez, acting as Agents,
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the French Government, by A. Daniel and W. Zemamta, acting as Agents,
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the Croatian Government, by G. Vidović Mesarek, acting as Agent,
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the Italian Government, by G. Palmieri, acting as Agent, and P. Garofoli, avvocato dello Stato,
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the Lithuanian Government, by K. Dieninis and R. Dzikovič, acting as Agents,
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the Hungarian Government, by M.Z. Fehér and K. Szíjjártó, acting as Agents,
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the Netherlands Government, by M.K. Bulterman and J.M. Hoogveld, acting as Agents,
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the Polish Government, by B. Majczyna, acting as Agent,
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the Slovenian Government, by N. Pintar Gosenca, acting as Agent,
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the Slovak Government, by B. Ricziová, acting as Agent,
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the Council of the European Union, by B. Driessen and A. Lo Monaco, acting as Agents,
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the European Commission, by L. Armati, O. Beynet, F. Erlbacher, M. Kellerbauer, T. Maxian Rusche and R. Vidal Puig, acting as Agents,
after hearing the Advocate General,
gives the following
Opinion
1
The request for an Opinion submitted to the Court by the Kingdom of Belgium is worded as follows:
‘Is the draft modernised Energy Charter Treaty compatible with the Treaties, and in particular Article 19 TEU and Article 344 TFEU:
–
so far as concerns Article 26 of that agreement, if that article may be interpreted as allowing the intra-EU application of the dispute settlement mechanism?
–
in so far as, if Article 26 of that agreement were to be interpreted as allowing the intra-EU application of the dispute settlement mechanism, that agreement does not lay down a specific, express rule or an explicit disconnection clause, in particular in the definitions of investment and investor in Article 1 of the envisaged agreement, providing for the non-applicability of the general mechanism of Article 26 between the Member States?’
Legal context
2
The Energy Charter Treaty, signed in Lisbon on 17 December 1994 (OJ 1994 L 380, p. 24; ‘the ECT’), was approved on behalf of the European Communities 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 1998 L 69, p. 1). It consists of a preamble and eight parts, including Part I, entitled ‘Definitions and Purpose’, comprising Articles 1 and 2 of the Treaty, and Part V, entitled ‘Dispute Settlement’, comprising Articles 26 to 28 of the Treaty.
3
Article 1 of the ECT, entitled ‘Definitions’, defines, for the purposes of that treaty, a set of terms which include, in paragraphs 6 and 7 of that article, ‘investment’ and ‘investor’.
4
Article 26 of the ECT, entitled ‘Settlement of disputes between an Investor and a Contracting Party’, states:
‘(1)   Disputes between a Contracting Party and an Investor of another Contracting Party relating to an investment of the latter in the area of the former, which concern an alleged breach of an obligation of the former under Part III shall, if possible, be settled amicably.
(2)   If such disputes cannot be settled according to the provisions of paragraph 1 within a period of three months from the date on which either party to the dispute requested amicable settlement, the investor party to the dispute may choose to submit it for resolution:
(a)
to the courts or administrative tribunals of the Contracting Party to the dispute;
(b)
in accordance with any applicable, previously agreed dispute settlement procedure; or
ou
(c)
in accordance with the following paragraphs of this Article.
(3)   (a) Subject only to subparagraphs (b) and (c), each Contracting Party hereby gives its unconditional consent to the submission of a dispute to international arbitration or conciliation in accordance with the provisions of this Article.
…
(4)   In the event that an investor chooses to submit the dispute for resolution under subparagraph (2)(c), the investor shall further provide its consent in writing for the dispute to be submitted to:
(a)
(i)
The International Centre for Settlement of Investment Disputes, established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington, 18 March 1965 (hereinafter referred to as the “[ICSID] Convention”), if the Contracting Party of the Investor and the Contracting Party party to the dispute are both parties to the ICSID Convention; or
(ii)
The International Centre for Settlement of Investment Disputes, established pursuant to the Convention referred to in subparagraph (a)(i), under the rules governing the Additional Facility for the Administration of Proceedings by the Secretariat of the Centre (hereinafter referred to as the “Additional Facility Rules”), if the Contracting Party of the Investor or the Contracting Party party to the dispute, but not both, is a party to the ICSID Convention;
(b)
a sole arbitrator or ad hoc arbitration tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law (hereinafter referred to as “Uncitral”); or
(c)
an arbitral proceeding under the Arbitration Institute of the Stockholm Chamber of Commerce.
…’
5
Article 34 of the ECT, entitled ‘Energy Charter Conference’, provides, in paragraph 1 thereof:
‘The Contracting Parties shall meet periodically in the Energy Charter Conference (referred to herein as the “Charter Conference”) at which each Contracting Party shall be entitled to have one representative. Ordinary meetings shall be held at intervals determined by the Charter Conference.’
The envisaged agreement
6
Since the ECT had not been the subject of any major revision since 16 April 1998, the date of its entry into force, the Energy Charter Secretariat proposed that it be modernised. Following exchanges on this point, the Charter Conference adopted, on 27 November 2018, a list of various fields open to discussion to begin negotiations on modernisation (‘the list of areas open to negotiation’).
7
That list comprises the following areas:
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pre-investment;
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definition of ‘Charter’;
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definition of ‘economic activity in the energy sector’;
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definition of ‘investor’;
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definition of ‘investment’;
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right to regulate;
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definition of fair and equitable treatment;
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most-favoured-nation clause;
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clarification of ‘most constant protection and security’;
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definition of indirect expropriation;
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compensation for losses;
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umbrella clause;
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denial of benefits;
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transfers related to investments;
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frivolous claims;
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transparency;
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security for costs;
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valuation of damages;
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third-party funding;
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sustainable development and corporate social responsibility;
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definition of transit;
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access to infrastructure (including denial of access and available capacities);
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definition and principles of tariff setting;
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Regional Economic Integration Organisations (REIOs); and
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obsolete provisions.
8
On 6 November 2019, the Charter Conference created the group on modernisation and asked it to start negotiations on the modernisation of the ECT, with a view to rapidly concluding that process. That conference stated that the negotiations will take account of the list of areas open to negotiation and of the policy options suggested by the Contracting Parties.
9
The first full round of negotiations took place from 6 to 9 July 2020, the second from 8 to 11 September 2020 and the third from 3 to 6 November 2020.
10
On 15 July 2019, the Council of the European Union instructed the European Commission to open negotiations on the modernisation of the ECT and adopted the corresponding negotiating directives. In October 2019, the European Union proposed policy options for modernisation and then, in May 2020, submitted proposals for amendments to the ECT.
11
Among the policy options and amendments proposed by the European Union is a proposal to amend Article 26 of the ECT with the aim of reaffirming the European Union’s commitment to the structural reform of investor-State dispute settlement mechanisms at international level.
12
The Energy Charter Secretariat and several Contracting Parties have pointed out, however, that the agreement reached between the Contracting Parties for the modernisation of the ECT concerns only the list of areas open to negotiation. It was thus agreed that any area additional to those included in that list should be the subject of a consensus between the Contracting Parties.
13
During the second round of negotiations, the European Union submitted proposals for a reform of the investor-State dispute settlement mechanism as regards areas not included in that list. However, no consensus was reached to discuss those proposals.
14
The negotiations on REIOs, which come under the fields included in that list, were on the agenda of the third round of negotiations. During that round, the Republic of Kazakhstan proposed extending the non-application of certain provisions of the ECT between the members of an REIO and, to that end, amending Article 26 of the ECT by expressly providing that the provisions on the settlement of investment disputes do not apply between the members of an REIO.
15
However, the Commission did not have a mandate enabling it to support that proposal. The European Union did not request the inclusion of REIOs in the list of areas open to negotiation; the negotiating directives of the Council state that ‘the [European Union] does not support the amendment of the REIO provision in the ECT modernisation process’.
Procedure before the Court
16
On 2 December 2020, the Kingdom of Belgium submitted the present request for an Opinion.
17
On 8 October 2021, pursuant to Article 62(1) of the Rules of Procedure of the Court of Justice, the Judge-Rapporteur and the Advocate General asked the Kingdom of Belgium whether, in the light of the judgment of 2 September 2021, Republic of Moldova (C‑741/19, EU:C:2021:655), and in particular paragraphs 40 to 66 thereof, it wished to maintain its request for an Opinion.
18
By letter of 10 November 2021, the Kingdom of Belgium informed the Court of its intention to maintain its request.
Admissibility of the request for an Opinion
Arguments put forward by the Kingdom of Belgium
19
The Kingdom of Belgium states that its request for an Opinion concerns the compatibility with the Treaties of Article 26 of the ECT, as set out in the draft modernised ECT (‘Article 26 of the modernised ECT’), and of the dispute resolution mechanism for which it provides, if that mechanism were to be regarded as applicable to disputes between an investor from one Member State and another Member State (‘intra-EU disputes’) and of the concepts of ‘investment’ and ‘investor’ in the proposed amendment to Article 1 of the ECT.
20
In that regard, the Kingdom of Belgium states that, since there is currently no consensus on a possible amendment to Article 26 of the ECT, it assumes that Article 26 remains unchanged.
21
According to the Kingdom of Belgium, the present request for an Opinion is nevertheless admissible, in so far as it concerns an ‘agreement’, that is ‘envisaged’, and the application is not premature.
22
First of all, it submits that, since the draft modernised ECT is a binding undertaking entered into by entities subject to public international law, it constitutes an ‘agreement’ within the meaning of Article 218(11) TFEU. In particular, the fact that that draft is not formally a new treaty but constitutes an amendment to an earlier treaty does not mean that it is not an ‘agreement’. It follows from the case-law, in particular from Opinion 1/03 (New Lugano Convention), of 7 February 2006 (EU:C:2006:81), that the Court has already been faced with the revision of an existing treaty, without it leading to a review of the admissibility of the request for an Opinion on the new treaty whose conclusion was envisaged.
23
Next, the Kingdom of Belgium submits that the draft modernised ECT is an ‘envisaged’ agreement within the meaning of the case-law of the Court. In that regard, it submits that that draft has not yet been concluded, with the result that the preventive purpose of the procedure for obtaining an Opinion is observed. Moreover, the fact that the Council decision approving the opening of negotiations and the negotiating directives did not address the applicability to intra-EU disputes of the ECT in general and, more particularly, the dispute resolution mechanism provided for in Article 26 thereof, does not affect the admissibility of the present request for an Opinion. It follows from the case-law resulting, in particular, from the judgment of 5 November 2002, Commission v Denmark (C‑467/98, EU:C:2002:625, paragraph 39), that, when an agreement is renegotiated in its entirety, the parties confirm the commitments arising from the original treaty which are not part of the renegotiation or are subject only to marginal changes. Thus, the current renegotiations of the ECT refer to that treaty as a whole, and imply confirmation of Article 26 thereof. In any event, the present request for an Opinion also concerns the definitions of ‘investor’ and ‘investment’ in Article 1 of the ECT, which are expressly subject to amendment, in accordance with the list of areas open to negotiation.
24
Finally, the present request for an Opinion is not premature. In particular, both the content of the relevant provisions of the envisaged agreement and the context surrounding the negotiations for that agreement are sufficiently well known to enable the Court to give a useful answer to that request. First, the amendment proposed by the European Union and its Member States is sufficiently advanced as to support the finding that it contains no clarification concerning the applicability of Article 26 of the modernised ECT to intra-EU disputes. Secondly, in view of the progress made during the second round of negotiations, there is no consensus as to the introduction in the modernised ECT of all the proposals made by the European Union. Thirdly, even though, during the third round of negotiations, the Republic of Kazakhstan submitted a proposal seeking to clarify the legal relationships existing between the REIOs that are parties to the ECT and their members, in the light of that treaty, the Commission’s negotiating mandate does not allow it to discuss that proposal. In those circumstances, according to the Kingdom of Belgium, the modernised ECT will not contain any clarification as to the applicability of Article 26 thereof to intra-EU disputes, which could be interpreted as confirming the current situation.
Summary of the main observations submitted to the Court
25
All the Member States that participated in the written procedure, except Hungary, as well as the Commission, take the view that the present request for an Opinion is admissible. Some of those States, in particular the Czech Republic and the Republic of Slovenia, point out that a position taken by the Court is necessary in order to eliminate any ambiguity in the interpretation of Article 26 of the ECT. First of all, Member States are not unanimous in interpreting that article as not applying to intra-EU disputes. Next, most arbitration proceedings initiated on the basis of that article relate specifically to intra-EU disputes. Lastly, in those proceedings, arbitrators systematically refuse to find they have no jurisdiction, even after delivery of the judgment of 6 March 2018, Achmea (C‑284/16, EU:C:2018:158).
26
According to the Federal Republic of Germany, if it were sufficient, in order to find that a request for an Opinion is inadmissible, that it relates to a provision whose content has not been affected by the amending agreement, that would give rise, at the stage of the examination of the admissibility of such a request, to difficult questions of differentiation between the ‘old’ and the ‘new’ provisions of the agreement at issue.
27
The French Republic submits that the request for an Opinion cannot be held inadmissible on the ground that it relates to an agreement which has already been concluded. First, the Court is asked about the absence of a clause expressly excluding intra-EU disputes from the mechanism provided for in Article 26 of the modernised ECT. The absence of such a clause in that agreement could give rise to an infringement of EU law by other provisions of that agreement, which other provisions would not be contrary to EU law in the presence of that specific clause. Moreover, the present request for an Opinion concerns the renegotiation of an agreement taken as a whole, since the scope of renegotiation includes all the substantial parts of the ECT. It is also possible that the draft modernised ECT might ultimately take the form of a new full agreement replacing the ECT currently in force. The European Union is thus called upon to confirm its commitments in respect of the ECT as a whole, the draft modernised ECT thus constituting, in particular as regards its dispute settlement mechanism, an envisaged agreement and not a concluded agreement.
28
The Commission observes that it cannot be ruled out that the question of the applicability of the dispute settlement mechanism to intra-EU disputes may be raised in areas in respect of which negotiations have been opened and which are closely linked to the issues raised in the present request for an Opinion. Moreover, the conclusion of the modernised ECT without amending Article 26 of the ECT, or without establishing the interpretation to be given thereto by an instrument of public international law that is binding on arbitral tribunals, could be interpreted by arbitral tribunals as meaning that the European Union and the Member States confirm, in a new international agreement, the applicability of Article 26 of the modernised ECT to intra-EU disputes.
29
In that context, the Commission recalls that a request for an Opinion, the scope of which is relatively wide, may be guided by the legitimate objective of an institution or a Member State of ascertaining the extent of the respective competences of the European Union and the Member States before deciding to sign and conclude the envisaged agreement. The failure to amend Article 26 of the ECT could be interpreted as meaning that the Member States may incur international liability directly in an area which falls within the exclusive competence of the European Union. That would amount to infringing the obligation on the Member States to ensure, in their respective territories, the application of, and compliance with, EU law, by permitting the exercise of a national competence to take precedence over the competences of the European Union and the prerogatives of the Court under Article 19 TEU and Article 344 TFEU.
30
The Commission points out that the Court’s Opinion will have the effect of binding the institutions and the Member States in the pursuit of the negotiations of the modernised ECT, which is currently underway. Depending on the content of that Opinion, either the Court’s interpretation will have to be reflected in an agreement between the Member States and the European Union on the interpretation of Article 26 of the modernised ECT, or in a treaty between the Member States and the European Union amending Article 26 of the modernised ECT inter se, or the Council will have to, on an amended recommendation from the Commission, extend the scope of the negotiating mandate.
31
Hungary, on the other hand, submits that the present request for an Opinion is inadmissible. It observes that, in order for the Court to be able to rule on the compatibility of the provisions of an envisaged agreement with the Treaties, it must have sufficient information on the actual content of that agreement. In the present case, on the basis of the documents and information currently available and the state of progress of the negotiations, neither the full text nor the partial text of the draft modernised ECT is available and it is not possible to determine the outcome of the ongoing negotiations. First, negotiations are only at the initial stage, the Member State which submitted the present request for an Opinion having, moreover, annexed to it only the text of the ECT currently in force. Secondly, the list of areas open to negotiation is not exhaustive and can be supplemented. Thirdly, the observations on the policy options of the Contracting Parties are those made before the first official round of negotiations.
32
The Council also has doubts as to the admissibility of the present request for an Opinion on account, in particular, of the uncertainty as to the content of the envisaged agreement and the possible amendment of Article 26 of the ECT, the lack of consequences of any negative Opinion of the Court of Justice and the fact that the case-law arising from the judgment of 5 November 2002, Commission v Denmark (C‑467/98, EU:C:2002:625), is not relevant in the present case, since that case-law was developed in the context of an action for failure to fulfil obligations under Article 258 TFEU.
33
That being so, the Council does not dispute the relevance of the reasons given by the Kingdom of Belgium in support of the admissibility of the present request for an Opinion and takes the view that it cannot be ruled out that the negotiations will ultimately include Article 26 of the ECT. In such a case, the Council’s negotiating directives provide that the Commission is to ensure that the result is consistent with EU law.
Opinion of the Court
34
Under Article 218(11) TFEU, a Member State, the European Parliament, the Council or the Commission may obtain the Opinion of the Court as to whether an envisaged agreement is compatible with the Treaties.
35
It is settled case-law of the Court that that provision has the aim of forestalling complications which would result from legal disputes concerning the compatibility with the Treaties of international agreements that are binding upon the European Union. A possible decision of the Court, after the conclusion of an international agreement that is binding upon the European Union, to the effect that such an agreement is, by reason either of its content or of the procedure adopted for its conclusion, incompatible with the provisions of the Treaties would inevitably provoke serious difficulties, not only in the internal EU context, but also in that of international relations, and might give rise to adverse consequences for all interested parties, including third countries (Opinion 1/19 (Istanbul Convention) of 6 October 2021, EU:C:2021:832, paragraph 193 and the case-law cited).
36
It is true that the possibility of submitting a request for an Opinion under Article 218(11) TFEU does not require, as a precondition, a final agreement between the institutions concerned (Opinion 1/19 (Istanbul Convention) of 6 October 2021, EU:C:2021:832, paragraph 204 and the case-law cited).
37
It follows that a request for an Opinion may be submitted to the Court where the subject matter of the envisaged agreement is known, even though there are a number of alternatives still open and differences of opinion on the drafting of the texts concerned (Opinion 1/09 (Agreement creating a Unified Patent Litigation System) of 8 March 2011, EU:C:2011:123, paragraph 53).
38
That is particularly the case where the request for an Opinion relates only to the question whether the European Union has competence to conclude an envisaged agreement (see, to that effect, Opinion 2/94 (Accession of the Community to the ECHR) of 28 March 1996, EU:C:1996:140, paragraphs 13 to 18).
39
However, since the request for an Opinion concerns the question of the compatibility of that agreement with the Treaties, it is necessary for the Court to have sufficient information on the actual content of that agreement (Opinion 2/94 (Accession of the Community to the ECHR) of 28 March 1996, EU:C:1996:140, paragraph 19, and Opinion 2/13 (Accession of the European Union to the ECHR) of 18 December 2014, EU:C:2014:2454, paragraph 147).
40
First, the present request for an Opinion does not concern the competence of the European Union to conclude the modernised ECT, but the compatibility of the ECT, and in particular Article 26 thereof, with the Treaties.
41
Second, the Kingdom of Belgium itself acknowledges that, when the present request for an Opinion was submitted, there was no document setting out the text of the ECT, in its modernised version, or that of Article 26 thereof.
42
According to the Kingdom of Belgium, that fact should not affect the admissibility of that request for an Opinion since it was well known, at that stage of the negotiations, that no amendment of Article 26 was envisaged in the modernised version of the ECT. Negotiations on the modernisation of the ECT were opened only in the light of the list of areas open to negotiation, a list which does not include the dispute resolution mechanism provided for in that article.
43
The evidence submitted to the Court does not permit the inference that Article 26 of the ECT will not be subject to amendments at the end of those negotiations.
44
In the first place, although it is true that the Charter Conference identified a list of areas open to negotiation and that that list does not include the dispute resolution mechanism referred to in Article 26 of the ECT, the fact remains that, on the date on which the present request for an Opinion was submitted, the negotiations were at a very early stage and that the judgment of 2 September 2021, Republic of Moldova (C‑741/19, EU:C:2021:655) had not yet been delivered. It follows that a consensus could have, and might still, emerge, among the Contracting Parties, in favour of the inclusion in that list of the area to which that article applies. Consequently, the outcome of any negotiations concerning that area is not sufficiently foreseeable and it cannot be ruled out that Article 26 of the ECT may be amended.
45
In the second place, as the Kingdom of Belgium itself pointed out, negotiations were opened in the light of the definition of the concepts of ‘investment’ and ‘investor’, within the meaning of Article 1 of the ECT, such concepts affecting the scope of the dispute resolution mechanism provided for in Article 26 of the ECT. Not only has no amending text of Article 1 been adopted at this stage, but, in addition, the impact that any amendments to those concepts might have on that dispute resolution mechanism cannot be assessed in the absence of any element making it possible to ascertain, with a certain degree of precision, the rules governing that mechanism.
46
In the light of those uncertainties, the Court does not have sufficient information on the content and, more particularly, on the scope of Article 26 which will appear in the modernised ECT, even though that scope is the subject of the present request for an Opinion. The latter therefore appears to be premature.
47
Finally, it should be added that, as regards the considerations of expediency, referred to in paragraph 25 of this Opinion, which justify the Court taking a position on the question of the compatibility of Article 26 of the ECT with the Treaties, suffice it to state, first, that such considerations are unrelated to the purpose of the Opinion procedure referred to in paragraph 35 of this Opinion, since that provision is already in force. Second, and in any event, the Court has already ruled on that question. It is clear from the judgment of 2 September 2021, Republic of Moldova (C‑741/19, EU:C:2021:655), and in particular from paragraphs 40 to 66 thereof, that compliance with the principle of autonomy of EU law, enshrined in Article 344 TFEU, requires Article 26(2)(c) of the ECT to be interpreted as meaning that it is not applicable to disputes between a Member State and an investor of another Member State concerning an investment made by the latter in the first Member State.
48
It follows from all the foregoing considerations that the Court does not have sufficient information on the actual content of the envisaged agreement and that, therefore, the present request for an Opinion, on account of its premature nature, must be regarded as inadmissible.
Consequently, the Court (Fourth Chamber) gives the following Opinion:
The request for an Opinion introduced by the Kingdom of Belgium, on 2 December 2020, is inadmissible.
Lycourgos Rodin Bonichot
Rossi Spineanu-Matei
Luxembourg, 16 June 2022.
A. Calot Escobar C. Lycourgos
Registrar President of the Fourth Chamber