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Ending International Investment Agreements: Russia's Withdrawal from Participation in the Energy Charter Treaty

  • Tania Voon (a1) and Andrew D. Mitchell (a2)
Extract

When states withdraw from bilateral investment treaties or denounce multilateral treaties related to foreign investment, a range of intersecting questions arise in domestic and international law. Recent developments have demonstrated potential incongruities between domestic and international approaches to investment protection, including as regards the effectiveness of withdrawal and the implications for existing investments. This essay reflects on international and domestic disputes involving the withdrawal of the Russian Federation from participation in the Energy Charter Treaty (ECT) to highlight these interactions. These issues have become particularly pertinent today because more than 1,500 international investment agreements (IIAs) are nearing expiry of their initial term, providing an opportunity for termination. Moreover, some states have begun to terminate or denounce investment treaties, while many more are engaging in a process of renegotiation and reform. The Russian case study also highlights the potentially far-reaching effects of a state simply signing a treaty, even many years after the state has expressed its decision to withdraw from it, and notwithstanding tensions with the domestic legal framework.

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This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
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1 See The Energy Charter Treaty, International Energy Charter.

2 See UN Conference on Trade and Development, International Investment Policymaking in Transition: Challenges and Opportunities of Treaty Renewal (UNCTAD IIA Issues Note No.4, June 2013).

3 See, e.g., Tania Voon & Andrew D. Mitchell, Denunciation, Termination and Survival: The Interplay of Treaty Law and International Investment Law, 31 ICSID Rev. 413 (2016). See also Tania Voon et al., Parting Ways: The Impact of Mutual Termination of Investment Treaties on Investor Rights, 29 ICSID Rev. 451 (2014).

4 See Chester Brown, The End of the Affair?, 17 J. World Inv. Trade 126, 127–128 (2016).

5 See Oao Neftyanaya Kompaniya v. Russia, App. No. 14902/04 (Eur. Ct. H.R. 2011).

6 See, e.g., Douglas Thomson, Rocket Funds Released in Yukos Battle, Glob. Arb. Rev. (June 27, 2017). See also Cour d'appel [CA] [regional court of appeal] Paris, cviii, June 27, 2017, 16/01314 (Fr.).

8 See, e.g., RosInvestCo U.K. v. Russia, SCC Arbitration V (079/2005), Final Award (Sept. 12, 2010); Russia v. RosInvestCo U.K., Hovrätt [Court of Appeals], Case No. T 10060-10 (Sept. 5, 2013) (Swed.) (setting aside the RosInvestCo award); Renta 4 v. Russia, SCC Arbitration V (024/2007), Award on Preliminary Objections (Mar. 20, 2009); Russia v. GBI SICAV, Hovrätt [Court of Appeals], Case No. T 9128-14 (Jan. 18, 2016) (Swed.) (declaring that the Renta 4 investment treaty tribunal lacked jurisdiction).

9 Hulley Enterprises Limited (Cyprus) v. Russia, Case No. AA 226, Final Award (Perm. Ct. Arb., Jul. 18, 2014); Hulley Enterprises Limited (Cyprus) v. Russia, Case No. AA 226, Interim Award on Jurisdiction and Admissibility (Perm. Ct. Arb., Nov. 30, 2009).

10 Yukos Universal Limited (Isle of Man) v. Russia, Case No. AA 227, Final Award (Perm. Ct. Arb., Jul. 18, 2014); Yukos Universal Limited (Isle of Man) v. Russia, Case No. AA 227, Interim Award on Jurisdiction and Admissibility (Perm. Ct. Arb., Nov. 30, 2009) [hereinafter Yukos Universal Limited, Interim Award].

11 Veteran Petroleum Limited (Cyprus) v. Russia, Case No. AA 228, Final Award (Perm. Ct. Arb., Jul. 18, 2014); Veteran Petroleum Limited (Cyprus) v. Russia, Case No. AA 228, Interim Award on Jurisdiction and Admissibility (Perm. Ct. Arb., Nov. 30, 2009).

12 See UN Conference on Trade and Development, Recent Trends in IIAs and ISDS (UNCTAD IIA Issues Note No.1 Feb. 2015).

13 See generally, e.g., Brown, supra note 4.

14 See also Vienna Convention on the Law of Treaties art. 25, May 22, 1969, 1155 UNTS 331.

15 See Russian Federation, International Energy Charter.

16 Energy Charter Treaty art. 26(3)(b), art. 26(2)(a), art. 26(2)(b) and annex ID, Dec. 17, 1994, 2080 UNTS 95.

17 See, e.g., Yukos Universal Limited, Interim Award, supra note 10, at paras. 338, 339.

18 Id. at para. 244.

19 Id. at para. 247.

20 Id. at para. 246.

21 Id. at para. 293.

22 Id. at paras. 262, 284, 290. See similarly Ioannis Kardassopoulos v. Georgia, ICSID Case No. ARB/05/18, Decision on Jurisdiction, para. 228 (Jul. 6, 2007).

23 Yukos Universal Limited, Interim Award, supra 10, at para. 248(c).

24 Id. at paras. 292, 301, 311.

25 Id. at paras. 305, 308. See similarly Kardassopoulos, supra note 22, at paras. 210, 211.

26 Yukos Universal Limited, Interim Award, supra note 10, at para. 313.

27 Id. at para. 315.

28 Id. at paras. 329, 330.

29 Id. at para. 343.

30 Id. at para. 338.

31 Id. at para. 345.

32 Id. at para. 346.

33 Id. at para. 370.

34 Id. at para. 374.

35 Id. at para. 380.

36 Id. at paras. 381–83.

37 Douglas Thomson & Alison Ross, Second-Wave Yukos Case Withdrawn “Out of the Blue”, Glob. Arb. Rev. (Oct. 3, 2016).

39 Russia v. Veteran Petroleum Limited, Case No C/09/477162/HA ZA 15-2, (Hague District Court, April 20, 2016).

41 Veteran Petroleum, supra note 39, at para. 5.12.

42 Id. at para. 5.13.

43 Id. at para. 5.19.

44 Id. at para. 5.33.

45 Id. at para. 5.34.

46 Id. at para. 5.48.

47 Id. at para. 5.41.

48 Id. at para. 5.65.

49 Id. at paras. 5.87, 5.91, 5.93.

50 Id. at para. 5.95.

51 Bundesgericht [BGer] [Federal Supreme Court] July 20, 2017, Russia v. Yukos Capital Sàrl para. 3.3 (Switz.).

52 Hepburn, supra note 38.

53 Fenghua Li, The Yukos Cases and the Provisional Application of the Energy Charter Treaty, 6 Camb. Int'l L.J. 75, 84–85 (2017).

54 See, e.g., disputes mentioned in id. at note 69.

55 For example, several IIAs involving Europe or European countries.

56 Gerhard Hafner, The “Provisional Application” of the Energy Charter Treaty, in International Investment Law for the 21st Century 593, 597, 601 (Christina Binder et al eds., 2009).

57 See, e.g., Joel Dahlquist, Russia Sets Out New Guidelines for Contents of Future Investment Treaties, Inv. Arb. Rep. (Oct. 26, 2016).

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