Euractiv | 2 September 2022

Poland drafts law to ‘terminate’ controversial Energy Charter Treaty

By Frédéric Simon

Activists have drawn attention to a previously unnoticed draft law from the Polish government setting the country on course to withdraw from a 1990s treaty they say was designed to protect fossil fuels and needs to be abandoned in light of the climate crisis.

The draft law on the “termination of the of the Energy Charter Treaty” and its protocols was agreed by the Polish government on 10 August and sent to the country’s lower chamber, Sejm, by Prime Minister Mateusz Morawiecki on 25 August.

It says the charter’s investor-state dispute settlement (ISDS) clause constitutes “a threat to the autonomy of EU law and the principle of mutual trust between Member States” and should be terminated “to ensure legal certainty in the EU legal order”.

The filing, made over the summer holiday period and without an official announcement, has gone largely unnoticed until now.

The move came as a surprise to green activists who have been campaigning for years against the treaty, which stands accused of protecting fossil fuel investments and undermining the Paris Agreement on climate change.

“The Polish government has drawn the right conclusion from a failed attempt to reform the climate-wrecking Energy Charter Treaty. We urge other ECT contracting parties to do the same,” said Cornelia Maarfield, a Climate Action Network (CAN) Europe campaigner.

The Polish move comes after a deal to modernise the treaty was presented in June by the European Commission, which started negotiating a treaty reform on behalf of the 27 EU member states four years ago.

Signed in the early 1990s to shield oil and gas investments from political risk in the former USSR, the treaty has since been decried as “outdated” by the EU member states, which re-asserted the bloc’s “right to regulate” in conformity with the Paris climate goals.

But the Polish law says reform attempts have failed. Reform talks led by the European Commission “do not allow to expect changes to the Treaty’s” ISDS clause, according to an automated translation of the draft law.

And official declarations by EU countries that they will refrain from suing each other “most likely will not be considered sufficient by the arbitral tribunals,” it adds.

Moreover, “even in the event of an agreement on modernisation taking into account the expectations of the Republic of Poland, the process of ratifying changes to the EC Treaty would take a long time,” says the draft law.

According to campaigners, the best option is for EU countries to withdraw collectively.

“A coordinated withdrawal of as many countries as possible would best mitigate the risk of future arbitration claims. Signing off on the reform, however, would expand the treaty to new technologies and geographies, making it even more dangerous from a climate and financial perspective,” Maarfield said.

“Poland has now taken the logical step to leave the ECT. We call on other countries which have been critical, such as Spain, France, the Netherlands and Germany, to also reject the reform proposal and exit the treaty,” said Paul de Clerck from Friends of the Earth Europe.