The ECT is already now the most widely used investment agreement in the world. Most disputes under the ECT are intra-EU, i.e., investors from one EU Member State start a dispute against another EU Member State. In September 2021, the European Court of Justice (ECJ) ruled that intra-EU disputes are contrary to EU law (Komstroy). Belgium’s request for an Opinion on the compatibility of the EU’s text proposal in the modernisation negotiations however was rejected by the ECJ for being premature (Opinion 1/20, rejected in June 2022). However, a case against the ECT was also filed before the European Court of Human Rights, arguing that urgency of the climate emergency did not longer allow for the exhaustion of local remedies.

In August 2022, UK oil and gas company Rockhopper obtained an award of EUR 190m plus interest against Italy for banning new oil and gas projects along the coastlines.

The general expectation is that in practice arbitration tribunals will continue to exercise jurisdiction even after the ECJ’s rulings. Yet recently, in an outlier case (Green Power v. Spain) an arbitration tribunal applied the ECJ’s decisions in Komstroy and Achmea, rejecting jurisdiction because EU law precluded Spain from making a valid offer to arbitrate under Article 26 ECT.

In June 2022, the 53 contracting parties of the ECT have, after two years of negotiations, come to an agreement in principle on the modernisation of the ECT. Equally in June, the Lower House of the Dutch Parliament passed a motion requesting the government to join Spain's call for an EU withdrawal from the ECT, which is legally possible but triggers the sunset clause protecting already made investments for another 20 years. As a consideration, the motion states that the Netherlands has already been sued twice under the ECT, namely by RWE and Uniper for allegedly 2.4 billion euros in response to the national law banning the burning of coal for electricity generation by 2030. Recently, however, Uniper has suspended its claim under pressure of the German government.

Many questions are on the table: Is the modernised ECT as envisaged in the agreement in principle compatible with EU law? Does it hinder the EU’s and national climate policy? Is withdrawal, modernisation and/or inter se modification the best way forward from the perspective of the pressing need to reform the energy sector?