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In 2015, The Hague should see the birth of a new global Energy Charter

The Energy Charter, signed in 1991 in The Hague in the post-cold War period mainly to harmonise energy relations between Europe and the former Soviet Union, is on the point of being transformed into a global instrument. Secretary-General Urban Rusnak hopes that next year, again in The Hague, a second high-level meeting will establish a new International or Global Energy Charter, adapted to the globalised economy and suited to the needs of energy producers and consumers across the world. As an added bonus, the modernisation of the Energy Charter process should make it easier for governments and investors to settle disputes amicably, says Rusnak in an exclusive interview with Energy Post.

If the Energy Charter was ever in need of publicity, it certainly got that in July, when the Ad Hoc arbitration tribunal in The Hague ordered the Russian State to pay no less than $50 billion in damages to former shareholders of expropriated oil company Yukos. This ruling was based on the Energy Charter Treaty, which came out of the Energy Charter declaration and was agreed upon by some 50 countries in 1994, coming into force in 1998. Ironically, Russia signed the Treaty, but did not ratify it. However, it withdrew from the provisional application of the Treaty only in 2009, four years after the Yukos case was accepted by the arbitration tribunal, hence the arbitrators decided the Treaty did apply.

So was this sensational award good or bad publicity for the Treaty? Urban Rusnak, Secretary-General of the Energy Charter Secretariat since 1 January 2012, smiles. “It depends on your perspective”, he answers diplomatically. “From the viewpoint of an investor, it shows how strong an instrument the Treaty is to protect your investments. From a government’s perspective, it shows the limits of what a government can do when dealing with foreign investors.”

Won’t this make governments want to run from the Treaty then? “I hope they will see that in the long term it is good for the overall stability of the investment climate that such a Treaty is in place.”

For the complete article, please see energy post.