Latest round of talks on ECT modernization yields little progress on “modernization”; European officials call for removal of protection for fossil fuels and ISDS

Two rounds of the negotiations for the modernization of the ECT have been held over the past two months, from July 6 to 9 and September 8 to 11, 2020.

As we reported, negotiations began in December 2019, and several negotiation rounds were scheduled for 2020, which have been, to date, held by video conference.

Among the topics slated to be discussed during these rounds are investment protection and ISDS, with some ECT signatories, including the EU, pushing for a “modernization” of the treaty’s approach to ISDS.

The July round of negotiations focused on investment protection, including definitions of investor and investment and substantive provisions, while the September round included discussion on several issues related to dispute settlement, including frivolous claims, security for costs, third-party funding, transparency, and valuation for damages.

While a public statement from the ECT notes that “several delegations” are in favour of modernization of ISDS, the secretary-general of the ECT has reportedly admitted that reaching a consensus on this matter will be difficult, and several signatories, including Japan and Central Asian states dependent on fossil fuel revenues, are resistant to reform of ISDS in the ECT.

As a result, dozens of representatives from the European Parliament, as well as from national parliaments of member states, have signed a declaration calling for the removal of protections for fossil fuel investments and the “scrapping” or “reform” of ISDS provisions. Failure to do this, these representatives argue, should result in the EU’s withdrawal from the ECT by the end of 2020.

The next negotiation round will take place from November 3 to 6, 2020.