Recommendation for a COUNCIL DECISION on the approval of the withdrawal of the European Atomic Energy Community from the Energy Charter Treaty
Date: 2023-07-07
Institutions: Directorate-General for Energy, European Commission
Subjects: climate change policy, energy cooperation, energy policy, international charter, investment policy, multilateral agreement, revision of an agreement, sustainable development, withdrawal from an agreement

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   EUROPEAN COMMISSION  Brussels, 7.7.2023  COM(2023) 446 final  Recommendation for a COUNCIL DECISION on the approval of the withdrawal of the European Atomic Energy Community from the Energy Charter Treaty  
 
EXPLANATORY MEMORANDUM 

1. 

SUBJECT MATTER OF THE PROPOSAL 

This  recommendation  concerns  the  decision  to  withdraw  Euratom  from  the  Energy  Charter 
Treaty, in accordance with Article 47 of that treaty. This recommendation is proposed at the 
same  time  as  the  Commission  proposal  to  withdraw  the  Union  from  the  Energy  Charter 
Treaty, in accordance with Article 47 of that treaty. 

2. 

• 

CONTEXT OF THE PROPOSAL 

The Energy Charter Treaty 

The Energy Charter Treaty (ECT) is a multilateral trade and investment agreement applicable 
to the energy sector that was signed in 1994 and entered into force in 1998. The ECT contains 
provisions on investment  protection, trade and transit in  energy materials and products,  and 
dispute  settlement  mechanisms.  The  ECT  also  sets  up  a  framework  for  international 
cooperation in the energy field between its 54 Contracting Parties. Euratom is a  Contracting 
Party  to  the  ECT1,  together  with  the  European  Union,  26  EU  Member  States  (as  of  8  May 
2023)2, as well as Japan, Switzerland, Turkey and most countries from the Western Balkans 
and the former USSR, with the exception of Russia3 and Belarus4. 

• 

Modernisation of the ECT: outcome of the process and state of play 

In  the  absence  of  any  substantial  update  of  the  ECT  since  the  1990s,  the  ECT  became 
increasingly  outdated.  It  also  became  one  of  the  most  litigated  investment  treaties  in  the 
world, with EU Member States being the principle target of claims by investors, most of them 
based in other EU countries. As a result, a modernisation process was initiated in November 
2018.  The  Energy  Charter  Conference  first  approved  a  list  of  topics  for  discussion,  chiefly 
concerning provisions related to investment protection. The EU then proposed the removal of 
such protection for investments in fossil fuels, in order to bring the ECT in line with the Paris 
Agreement.  

After  15  rounds  of  multilateral  negotiations  held  between  July  2019  and  June  2022,  an 
“agreement  in  principle”  to  close  negotiations  was  reached  at  the  extraordinary  Energy 
Charter Conference of 24 June 2022, held in Brussels.  

The  negotiated  outcome  is  considered  by  the  Commission  to  be  in  line  with  the  mandate 
received from the Council.  

The  revised  text  of  the  ECT  and  its  Annexes  underwent  a  legal  review  and  final  draft-
decisions  containing  the  revised  texts  and  modalities  for  their  entry  into  force  (together 
referred  to  as  “the  modernisation  package”)  were  shared  on  19  August  2022  with  all 
Contracting  Parties  –  including  the  EU,  Euratom,  and  all  EU  Member  States  that  are 
Contracting Parties to the ECT.  

1 
 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). 
2 
 All but Italy that unilaterally withdrew in 2015. France, Germany and Poland also initiated a procedure 
of  withdrawal  in  December  2022,  which  will  lead  to  their  effective  exit  of  the  Energy  Charter  Treaty  by 
December 2023. 
3 
Russian Federation. 
4 
and the provisional application of the ECT by Belarus. 

 The  extraordinary  Energy  Charter  Conference  of  24  June  2022  withdrew  the  observer  status  of  the 

 The extraordinary Energy Charter Conference of 24 June 2022 withdrew the observer status of Belarus 

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The  intention  at  the  time  was  to  list  the  “modernisation  package”  for  adoption  at  the  33rd 
meeting  of  the  Energy  Charter  Conference  on  22  November  2022.  To  that  end,  the 
Commission  presented  proposals  for  two  decisions  under  Article  218(9)  TFEU  and  Article 
101 of the Euratom Treaty with a view to establish the position to be adopted on EU and on 
Euratom’s behalf at the 33rd meeting of the Energy Charter Conference. At the same time, the 
Commission adopted a Communication highlighting the need to eliminate the risk of conflict 
between the Treaties and the ECT as interpreted by some arbitral tribunals, which have held 
that the ECT applies to intra-EU disputes. That interpretation, if confirmed by the courts of a 
third country, would de facto turn into a legal conflict because arbitration awards violating EU 
law  would  circulate  in  the  legal  orders  of  third  countries.    The  proposals  put  before  the 
Council  suggested  that  the  EU  and  Euratom  support  the  adoption  of  the  “modernisation 
package”  at  the  33rd  meeting  of  the  Energy  Charter  Conference.  However,  these  proposals 
were not adopted by the Council, due to the abstention of a blocking minority of four Member 
States  (Germany,  France,  Spain  and  the  Netherlands)  at  the  COREPER  meeting  of  18 
November  2022.  As  a  result,  the  “modernisation  package”  was  taken  off  the  agenda  of  the 
33rd meeting of the Energy Charter Conference and the modernisation of the Energy Charter 
Treaty was not adopted. In the meantime, the current, unmodernised Treaty continues to apply 
to the EU, Euratom, and all Member States that  are party to the ECT in  their relations with 
other  contracting  parties.  In  addition,  proceedings  to  obtain  and  enforce  awards  issued  by 
tribunals  purportedly  established  pursuant  to  Article  26  ECT  in  intra-EU  disputes  continue 
unabated. 

• 

Current situation and suggested way forward 

In the absence of EU and Euratom decisions, the EU and Euratom cannot take part in a vote 
on the adoption of the modernisation package at a meeting of the Energy Charter Conference. 
As  a  rule,  when  voting  at  an  ECT  Conference,  the  EU  and  Euratom  has  a  number  of  votes 
equal to the number of its member states which are Contracting Parties to the ECT. Without 
the participation of the EU and Euratom in such a vote, the voting quorum in the Conference 
is not met, and the modernisation package cannot be adopted. 

There is no qualified majority in the Council for an EU or Euratom decision allowing the EU 
and Euratom to take part in the vote at a meeting of the Energy Charter Conference on the by 
supporting the adoption of the modernisation package. 

In  addition,  notwithstanding  the  issue  of  the  adoption  of  the  modernisation  package  by  the 
Energy  Charter  Conference,  the  entry  into  force  or  provisional  application  of  a  modernised 
Treaty would require the consent of the European Parliament, which has clearly stated that it 
does not support the reform of the Treaty and calls on the EU and Member States to organise 
a coordinated withdrawal from the ECT5. 

Consequently, there is no legal and/or institutional avenue for the modernisation of the 
ECT to be adopted and produce its effects, a condition for the EU/Euratom  to remain 
party to the Treaty.  

Remaining  a  Contracting  Party  to  the  current,  unmodernised  ECT  is  not  an  option  for  the 
EU/Euratom or its Member States. The current,  unmodernised Treaty is  not in line with the 
EU’s investment policy and law and with the EU’s energy and climate goals. 

The provisions of the Treaty on investment protection, including the investor-to-State dispute 
settlement (ISDS) mechanisms are not in line with the EU approach to investment protection. 
In particular, the unmodernised ECT is incompatible with the principle of autonomy of Union 

5 
modernisation  

Resolution  of  the  European  Parliament  of  24  November  2022  on  the  Energy  Charter  Treaty 

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law,  as  it  does  not  include  some  of  the  safeguards  identified  by  the  Court  in  the  CETA 
opinion  in  order  to  conclude  that  the  arbitration  awards  would  not  have  the  “effect  of 
preventing  the  EU  institutions  from  operating  in  accordance  with  the  EU  constitutional 
framework”.6  

In addition, the protection granted to fossil fuels, under the conditions described above and for 
an unlimited period of time, does not fit with EU objectives as defined in the European Green 
Deal, the REPowerEU Plan, or the Climate Law – namely: to accelerate the shift away from 
fossil fuels and towards renewable energy, to achieve a greater energy independence, ensure 
the  EU’s  energy  security,  and,  not  least,  deliver  on  the  commitment  to  cut  emissions  by  at 
least 55% by 2030 and to reach climate neutrality by 2050. 

As a result, the withdrawal of the EU and Euratom from the ECT is the only available 
solution.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Nature and context of the proposal 

The Commission proposal concerns a Council decision approving the withdrawal of Euratom 
from the Energy Charter Treaty pursuant to Article 47.1 of that Treaty (concomitant with the 
parallel withdrawal of the EU).  

The adoption of such decision by the  Council, would enable the Commission to finalise the 
process  by  adopting  the  decision  on  the  conclusion  of  Euratom  withdrawal  and  by 
empowering the Member of the Commission to give written notification to the Depositary of 
the  Energy  Charter  Treaty  (i.e.  the  Republic  of  Portugal)  of  its  withdrawal  from  the  Treaty 
pursuant to Article 47.1 of the ECT. 

Pursuant  to  Article  47.2  of  the  ECT,  the  withdrawal  of  Euratom  shall  take  effect  upon  the 
expiry of one year after the date of the receipt of the notification by the Depositary, or on such 
later date as may be specified in the notification of withdrawal.  

Pursuant  to  Article  47.3  of  the  ECT,  the  provisions  of  the  ECT  shall  continue  to  apply  to 
investments  made  in  Euratom  by  investors  of  other  Contracting  Parties,  or  in  the  other 
Contracting Parties by investors of Euratom, for a period of 20 years as of the date of Euratom 
withdrawal  from  the  ECT.  Article  47  (3)  of  the  ECT  would  have  no  impact  on  intra-EU 
relations,  to  which  the  ECT  has  never,  does  not  and  will  never  apply,  including  its  Article 
47.3    However,  as  noted  in  the  Communication  referred  to  above,  there  is  a  risk  of  legal 
conflict  that  must  be  eliminated.  The  Commission  remains  of  the  view  that  the  appropriate 
response  is  to  adopt  an  instrument  that  is  a  ‘subsequent  agreement  between  the  parties 
regarding  the  interpretation  of  the  treaty  or  the  application  of  its  provisions’  within  the 
meaning of Article 31(3)(a) of the Vienna Convention on the Law of Treaties (VCLT), among 
the Member States, the Union and EURATOM . The Commission will therefore continue the 
negotiations of the text of such an agreement which, once they are completed, would be the 
subject of a proposal for the conclusion of the subsequent agreement on behalf of the Union 
and of EURATOM. The codification of the interpretation of the EU and its Member States in 
a separate treaty (something that is possible because of the bilateral nature of the obligations) 
is all the more pressing in the absence of the ECT modernisation that would have embedded 
in the text itself and via a “for greater certainty” clause, the understanding of all Contracting 
Parties that its Article 26 does not apply intra-EU.  

6 

Opinion 1/17, paras. 152-161.  

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• 

Legal basis  

Principles 

According to Article 101 of the Euratom Treaty, in particular the first and second paragraphs 
thereof,  “the  Community  may,  within  the  limits  of  its  powers  and  jurisdiction,  enter  into 
obligations  by  concluding  agreements  or  contracts  with  a  third  State,  an  international 
organization or a national of a third State. Such agreements or contracts shall be negotiated 
by the Commission in accordance with the Directives of the Council; they shall be concluded 
by the Commission with the approval of the Council, which shall act by a qualify majority”.  

Application to the present case 

Euratom joined the Energy Charter Treaty on the basis of Article 101 of the Euratom Treaty. 
A decision of Euratom to terminate and withdraw from an international agreement is a way to 
exercise the same power given by that article. For this reason, this decision is to be adopted on 
the  same  legal  basis,  and  following  the  same  procedure,  as  a  decision  to  conclude  that 
agreement on behalf of Euratom. Therefore, Euratom’s termination of, and withdrawal from, 
the  Energy  Charter  Treaty  requires  the  adoption  of  a  Council  decision  and  a  Commission 
Decision  on  the  conclusion  based  on  the  second  paragraph  of  Article  101  of  the  Euratom 
Treaty. 

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Recommendation for a 

COUNCIL DECISION 

on the approval of the withdrawal of the European Atomic Energy Community from the 
Energy Charter Treaty 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in 
particular Article 101, second paragraph, thereof, 

Having regard to the proposal from the European Commission,  

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

The Energy Charter Treaty (‘the Agreement’) was concluded by the European Atomic 
Energy  Community  by  Council  and  Commission  Decision  98/181/EC,  ECSC, 
Euratom7 and entered into force on 16 April 1998. 

In  the  absence  of  any  substantial  update  of  the  Agreement  since  the  1990s,  the 
Agreement became increasingly outdated.  

In  2019,  the  Contracting  Parties  to  the  Agreement  engaged  in  negotiations  aimed  at 
modernising the Agreement, in order to bring it into alignment with the principles of 
the  Paris  Agreement8,  the  requirements  of  sustainable  development  and  the  fight 
against climate change, as well as with modern standards of investment protection. 

The Contracting Parties  concluded the negotiations on  24 June 2022.  The negotiated 
outcome  was  meant  to  the  adopted  at  the  33rd  meeting  of  the  Energy  Charter 
Conference on 22 November 2022. 

Ahead  of  the  meeting  of  the  Conference,  the  Community  was  unable  to  find  a 
common position on the modernisation of the Agreement.   

In the absence of a  Community position, the adoption of the modernised  Agreement 
by  the  Energy  Charter  Conference  is  impossible.  The  current,  unmodernised 
Agreement continues  to  apply to  the Community, in  spite of the fact  that  it is  not  in 
line with the Union’s investment policy and law, including in particular the principle 
of autonomy of Union law, and with the Union’s energy and climate goals. 

(7)  With no alternative available,  the Community should  withdraw from  the Agreement. 
In  accordance  with  Article  101,  second  paragraph,  of  the  Treaty  establishing  the 
European Atomic Energy Community, the decision of the withdrawal is to be taken by 
the  Commission  subject  to  the  approval  of  the  Council.  It  is  therefore  necessary  to 
adopt  a  decision  on  the  approval  of  the  withdrawal  of  the  Community  from  the 
Agreement. 

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8 

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, p. 1). 
OJ L 282, 19.10.2016, p. 4. 

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HAS ADOPTED THIS DECISION:  

Article 1 

The withdrawal of the European Atomic Energy Community from the Energy Charter Treaty 
is approved. 

Done at Brussels, 

For the Council 
The President 

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