EXPERT ANALYSIS: The Future of the Green Investment Regime Under The ECT


These damages may result from the party’s violation of any comprehensive investment protections outlined in the ECT, such as the prohibition of uncompensated expropriation and the guarantee of fair and equitable treatment. This is commonly understood to necessitate a stable and predictable legal framework, respect for an investor’s legitimate expectations, and the avoidance of discriminatory or arbitrary treatment.

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Notably, Spain has been a target of over 50 claims under the ECT since 2011. These claims arose due to changes in its incentive scheme for renewable energy investments, and investors have successfully claimed over $1.2 billion in damages from the state.

The EU’s Role and Concerns

Despite being an ECT signatory, the EU has persistently argued against applying the ECT to intra-EU disputes—disagreements between an EU member state and an investor from another member state. Their argument rests on the premise that EU law should take precedence over the ECT. However, this position has faced almost unanimous rejection by international investment tribunals.

Modernizing the ECT: Going Green

While the controversy surrounding the ECT primarily revolves around renewable energy, it has also stirred debate about its perceived protection of fossil fuel investments. In response, on June 24, 2022, a provisional agreement aimed to reform the ECT by recognizing the “urgent need to effectively combat climate change.”