BOOKS. Journal of Energy & Natural Resources Law Vol 29 No

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1 508 BOOKS Energy Dispute Resolution: Investment Protection, Transit and the Energy Charter Treaty G Coop (ed) Huntington: JurisNet, 2011; i lxxxi pages and CD Rom. US$150 (hardback); ISBN The Energy Charter Treaty (ECT), which was signed in December 1994 and entered into force in April 1998, is generally considered, as witnessed by the growing number of cases being brought under its rules, a relatively successful, yet young, example of a sector-specific multilateral treaty with binding force. Furthermore, the ever-increasing political importance and economic value of the energy sector in the modern world economy makes the ECT a particularly sensitive legal tool of energy dispute resolution. It is therefore no surprise that the ECT has attracted a great deal of attention and that several publications have been specifically devoted to analysing it. 1 Energy Dispute Resolution: Investment Protection, Transit and the Energy Charter Treaty is a recent and most welcomed addition to this growing body of literature. Edited by Graham Coop with the assistance of Philippe Gurd Gross, the book compiles the papers presented during a conference hosted in October 2009 in Brussels by the Energy Charter Secretariat, in conjunction with a number of other national and international institutions and organisations. 2 The conference was dedicated to both investment protection and transit issues in the energy dispute resolution context. The topic of the conference, and consequently of the book, reflects not only the increasing number of arbitration cases decided under the ECT but also the emerging relevance of energy transit as a central legal and political issue, as clearly illustrated by the Russia Ukraine gas crises of January 2006 and January Indeed, as mentioned in A Mernier s introductory remarks (p xlv), investments in the energy sector can only produce revenue if the energy cycle conveys a 1 See T Roe, M Happold and J Dingemans, Settlement of Investment Disputes under the Energy Charter Treaty (Cambridge: Cambridge University Press, 2011); G Coop and C Ribeiro (eds), Investment Protection and the Energy Charter Treaty (Huntington: JurisNet, 2008); C Ribeiro (ed), Investment Arbitration and the Energy Charter Treaty (Huntington: JurisNet, 2006); M K Omalu, NAFTA and the Energy Charter Treaty (The Hague: Kluwer Law International, 2000); T Wälde (ed), The Energy Charter Treaty An East-West Gateway for Investment and Trade (Austin: Kluwer Law International, 1996). 2 Namely the Arbitration Institute of the Stockholm Chamber of Commerce; the British Institute of International and Comparative Law; the International Centre for Settlement of Investment Disputes (ICSID); the International Chamber of Commerce (ICC); and the Permanent Court of Arbitration.

2 Book Review 509 reliable stream of energy from the point of production to the point of final consumption. It is therefore important to protect not only investments as such, but also flows of energy in transit. The book, which follows the order of the sessions of the conference, presents, in addition to introductory remarks and opening comments by A Mernier, U Franke, J A Fry, M Kinnear, C M J Kröner and N Gallagher, 14 chapters divided into four parts plus a final section containing concluding remarks. A CD-Rom with five appendices is included in the book. The first part of the book, Chapters 1 to 5, is devoted to a review of ECT investment arbitrations exploring topical issues and recent developments. Chapter 1 by V Colaiuta discusses whether, in the context of an arbitration proceeding commenced on the basis of a bilateral or multilateral investment treaty, an investor s claim can be challenged on the ground that the acquisition of the investment was tainted by illegality or bad faith. Colaiuta comes to the conclusion that the determination of protection of investors claims can be affected by violations of domestic laws of the host state only when they amount to a violation of a public international law principle. Chapter 2, written by J C Hamilton, P Polášek and S T Tonova, discusses the Plama case 3 focusing, in particular, on jurisdiction and admissibility under the ECT, substantive protections and other procedural issues, such as document production, provisional measures and costs. In Chapter 3, D Herlilhy presents the main features of the Kardassopoulos case. 4 In this case an ICSID tribunal affirmed, despite Georgia s claims that its domestic law prohibited the provisional application of the ECT, its jurisdiction to decide whether or not Georgia had expropriated the claimant s interest in an exclusive concession to transport oil and gas via pipelines across Georgia. Chapter 4, by S Voitovich and D Grischenko, discusses the AMTO case. 5 This was the first arbitration where an ECT tribunal was asked to interpret the final part of Article 1, paragraph 6 of the ECT, which reads as follows: Investment refers to any investment associated with an Economic Activity in the Energy Sector.... The tribunal decided that [t]he drafters of the Energy Charter Treaty did not require an Investment to be an Economic Activity in the Energy Sector, but only to be associated with such an activity. 6 In Chapter 5, S Jagusch and J Sullivan provide, first, a summary of recent awards (including the Yukos case) 7 and, secondly, a presentation of the available information on ECT cases pending. 3 Plama Consortium Ltd v Republic of Bulgaria, Award of 27 August Ioannis Kardassopoulos v Georgia, Decision on jurisdiction of 6 July On 3 March 2010 the tribunal rendered an Award in favour of Mr Kardassopoulos. 5 AMTO v Ukraine, Award of 26 March Ibid, para Yukos Universal Limited (UK Isle of Man) v Russian Federation, Interim Award on Jurisdiction and Admissibility of 30 November 2009.

3 510 The second part of the book, Chapters 6 to 8, reviews the implications, also in the light of the Lisbon Treaty, of the ECT being a mixed agreement to which the European Union (EU) and its 27 Member States are parties, alongside 24 non-eu members. Chapter 6, by C Söderlund, looks at the possible conflict between EU law and the system created by the ECT. After examining the main features of the ECT and the innovations, also in terms of implications, introduced in the EU legal order by the Lisbon Treaty, the author comes to the conclusion that the EU should retain a system of investment protection maintained so far, ultimately offering adjudication by international arbitration. In Chapter 7, M Burgstaller looks at the legal implications for the EU and its Member States stemming from Article 26 of the ECT. Indeed, under that provision, an investor of a Contracting Party to the ECT may submit disputes against another Contracting Party to the ECT. However, given that both the EU and its Member States are Contracting Parties, it is of paramount importance to understand who will be the proper respondent for an investor from a third state. In this regard, the EU (at the time the European Communities) submitted in 1998 to the Secretariat of the Energy Charter a Statement in order to clarify who is the respondent for an investor from a third State. The Statement included the following observation: The Communities and the Member States will, if necessary, determine among them who is the respondent party to arbitration proceedings initiated by an Investor of another Contracting Party. In such case, upon the request of the Investor, the Communities and the Member States concerned will make such determination within a period of 30 days. 8 Burgstaller concludes that, even in the light of the changes introduced by the Lisbon Treaty in terms of shifting the allocation of competences between the EU and its Member States in the field of foreign direct investments towards the EU, the Statement provides for a reasonable solution that deserves to be retained in the future. In Chapter 8, R Happ and J A Bischoff ask if the EU enjoys a special and different status from other Contracting Parties to the ECT for the purposes of arbitral proceedings. The authors conclude that, in principle, the EU is treated like any other Contracting Party but point out that there are still some unsettled questions concerning the responsibility of the EU and its relation to potential liability of the Member States. The third part of the book focuses on the interpretation and application of Article 45, concerning the provisional application of the ECT. In addition to some introductory remarks written by J Crawford, this part contains three 8 Statement submitted by the European Communities to the Secretariat of the Energy Charter pursuant to Article 26(3)(b)(ii) of the Energy Charter Treaty, OJ L 69/115 (1998).

4 Book Review 511 substantive chapters. Chapter 9, by Y Banifatemi, provides a detailed overview of the negotiating history of Article 45 of the ECT, emphasising the principle of transparency and accountability as a central theme of the preparatory work of the provision. However, it should be noted that, in the Yukos case, the tribunal seemed to take a different view by affirming the distinction which must be made between what may have been said to be desirable during the negotiations and what, eventually, became legally required in the Treaty. 9 In Chapter 10, A Gramont and E Alban review the importance of the ECT s provisional application terms, with special attention to the case of Russia, which has announced its intention not to become a Contracting Party to the ECT, despite having signed it in It should be borne in mind that, despite this announcement made on 20 August 2009, Russia remains bound to apply the Energy Charter Treaty provisionally until 2029 with respect to investments made between 17 December 1994 and 19 October 2009, the date on which its announcement of 20 August 2009 came into effect. Chapter 11, by M Polkinghorne and L Gouiffès, analyses the application of Article 45 of the ECT from a domestic law perspective and also sets out a broader theoretical framework of the provisional application of treaties in general international law. The fourth part of the book, Chapters 12 to 14, explores the ECT provisions relating to energy transit. C Brown, author of Chapter 12, looks at the Russia Ukraine gas crisis of January 2009 and to the legal framework available at that time. Brown concludes by observing that current rules on energy transit, in particular Article 7, paragraphs 6 and 7 of the ECT, do not exclude a situation like the January 2009 crisis arising again. Chapter 13, due to P D Cameron, asks whether, on the basis of the 2009 crisis, some of the ECT s provisions on transit are redundant or not. Cameron reviews the argument for and against a change of these provisions, and calls for them to be amended in order to be effective and to promote fairness among the different categories of Member States, as the current provisions of Article 7 of the ECT fail in doing so. Chapter 14, written by K Hobér, provides, first, a useful overview of the influence exerted by Russia on gas transit in Europe. Secondly, it explains Russia s attitude towards dispute settlement in the energy sector. In the final section of the chapter, Hobér suggests an arbitration regime aimed at resolving future gas transit disputes in the European energy sector. A final contribution, by A Alexandrov, provides some further comments on: the provisional application of the ECT, denial of benefits under Article 17, paragraph 1 of the ECT, and the implications raised by the entry into force of the Lisbon Treaty. 9 Yukos Universal Limited (UK Isle of Man) v Russian Federation, note 7 above, para 282.

5 512 Energy Dispute Resolution: Investment Protection, Transit and the Energy Charter Treaty is certainly an interesting book providing a wealth of information and analysis on the ECT and the context in which it operates. That does not mean that the book is immune from some criticisms, mainly related to the choice to reproduce the contributions presented at the conference and limiting the needed editorial work. For instance, it is regrettable that only part of the contributions have been updated while the rest reflect the fact and the law as it was at the time of the conference in October This gives rise to some inconsistencies between some contributions and analysis in the same part of the book, as some of them relate to new case law or legal developments. Some overlaps between contributions are also quite evident and many cases are explained more than once. Also, the style and presentation of the papers are not always homogeneous. For example, some of the contributions, despite their length, have no list of contents at all or one limited to numbers, which is not helpful for readers. However, these very minor criticisms do not detract from Energy Dispute Resolution: Investment Protection, Transit and the Energy Charter Treaty being an extremely valuable book. It includes very informative contributions, interesting suggestions on future improvements of the ECT and insightful analysis of the relations between the EU and the ECT. Overall, this book adds considerably to the understanding of the ECT and will prove to be essential reading for all practitioners, in-house counsel, public officials, academics and advanced students and policy-makers and individuals and companies involved or interested in foreign investment in the field of energy. Riccardo Sciaudone Avvocato, Grimaldi e Associati, Brussels and Rome riccardo.sciaudone@grimaldieassociati.com