Last week, Britain announced that it will be leaving the Energy Charter Treaty (ECT), a controversial international agreement that allows fossil fuel companies to sue governments over their climate policies (Reuters, Guardian). The announcement comes after failed attempts to align the treaty with Britain's net-zero emissions plans (Guardian). 

The 1998 ECT permits energy companies to sue governments over policies that jeopardize their investments (Reuters, Guardian). One of the treaty's components is its investor-state dispute settlement provisions, which enable investors to bring claims directly against states for alleged breaches of obligations under the treaty (Guardian). Graham Stuart, the British Minister for Energy Security and Net Zero, released a statement saying, “The Energy Charter Treaty is outdated and in urgent need of reform but talks have stalled and sensible renewal looks increasingly unlikely” (Reuters).

More than 54 countries are listed as signatories on the ECT website (Guardian). Last July, the European Commission urged European Union (EU) countries to jointly quit the treaty. Nine EU Member States have already left, including France, Germany, Spain, and the Netherlands (Reuters). In addition to external pressure, Britain’s departure from the treaty comes amidst ongoing lawsuits, including UK-listed Ascent’s $541 million ECT lawsuit against Slovenia, which was launched after Slovenia requested an environmental impact assessment before Ascent proceeded to develop an oil and gas field (Guardian). 

Despite these concerns, Britain has initiated the withdrawal process, which will take effect in one year, after which protections for new investments will be removed (Reuters). As Britain prepares to exit the treaty, the spotlight now turns to fostering more inclusive and environmentally conscious avenues for international investment and cooperation.