On 21 June 2022, the Guardian reported that an application had been filed at the European Court of Human Rights concerning membership in the Energy Charter Treaty of 1994 (ECT), which entered into force in 1998. The case was brought by five young people, aged between 17 and 31, who allege that the 12 respondent States’ membership of the ECT stymies climate action, thereby violating their rights under Articles 2 (right to life) and 8 (right to respect for private and family life) ECHR.
Reuters reports that the 12 respondent States in this case are Austria, Belgium, Cyprus, Denmark, France, Germany, Greece, Luxembourg, Netherlands, Sweden, Switzerland and Britain. In these States, corporate actors in the fossil fuel sector can bring legal action against the respective governments for losses of profits due to energy-related measures, thereby raising the costs of the green energy transition or making it illusory. The applicants argue that their Convention rights have been violated as a result.
In this regard, the IPCC pointed out in Chapter 14 of its 6th Assessment Report in 2022 that “bilateral and multilateral agreements, including the 1994 Energy Charter Treaty, include provisions for using a system of investor-state dispute settlement (ISDS) designed to protect the interests of investors in energy projects from national policies that could lead their assets to be stranded. Numerous scholars have pointed to ISDS being able to be used by fossil-fuel companies to block national legislation aimed at phasing out the use of their assets”. It also noted that “international investment agreements may lead to ‘regulatory chill’, which may lead to countries refraining from or delaying the adoption of mitigation policies, such as phasing out fossil fuels”.