On 24 August 2022, Italy was ordered by an international arbitral tribunal established under the Energy Charter Treaty (ECT) to pay EUR 240 million to the English gas and oil company, Rockhopper. The reason for awarding damages to Rockhopper was Italy’s decision to prohibit further drilling for oil and gas within the range of 12 nautical miles of its coast. The ECT to which 53 parties are signatories – including the EU and its Member States, except Italy – has become a weapon in the hands of fossil companies that seriously hampers fighting the climate crisis. The EU and its Member States should withdraw from this toxic treaty as soon as possible.
The ECT was signed in 1994 and entered into force in 1998. It aimed to incentivise and protect Foreign Direct Investments (FDIs) in the energy sector, in particular from Western European countries into fossil rich countries in the East. In many respects, the ECT is an unusual and anachronistic investment treaty that would not meet current standards of protecting the right to regulate, in particular in order to meet other legal obligations, including obligations to reduce emissions.