(1)

The Energy Charter Treaty (the ‘Agreement’) was concluded by the Union by Council and Commission Decision 98/181/EC, ECSC, Euratom and entered into force on 16 April 1998.

(2)

Pursuant to Article 17(1) of the Agreement, each Contracting Party reserves the right to deny the advantages of Part III of the Agreement to a legal entity if citizens or nationals of a third State own or control such entity and if that entity has no substantial business activities in the area of the Contracting Party in which it is organised.

(3)

Pursuant to Article 17(2), point (b), of the Agreement, each Contracting Party reserves the right to deny the advantages of Part III of the Agreement to an investment, if the denying Contracting Party establishes that such investment is an investment of an investor of a third State with or as to which the denying Contracting Party adopts or maintains measures that prohibit transactions with investors of that State or that would be violated or circumvented if the benefits of Part III of the Agreement were accorded to investors of that State or to their investments.

(4)

The Union has progressively imposed restrictive measures against the Russian Federation, initially in response to the illegal annexation of Crimea and Sevastopol and the deliberate destabilisation of Ukraine. The Union expanded the restrictive measures in response to the recognition of the non-government controlled areas of the Donetsk and Luhansk ‘oblasts’ of Ukraine, and the ordering of Russian armed forces into those areas. In response to Russia’s war of aggression against Ukraine, the Union significantly expanded the restrictive measures.

(5)

In parallel, the restrictive measures introduced by the Union concerning the Republic of Belarus have been expanded in response to the country’s involvement in Russia’s war of aggression against Ukraine.

(6)

Neither the Russian Federation nor the Republic of Belarus is a Contracting Party to the Agreement. However, investors from those countries could attempt to use legal entities established in the territory of a Contracting Party to the Agreement to allege that the Union or its Member States have acted inconsistently with the investment protection obligations of the Agreement and hence bring investor-state dispute settlement proceedings against the Union or its Member States.

(7)

The Union’s actions and those of its Member States are consistent with the Agreement and other relevant agreements and, in any event, claims with respect to such measures are precluded pursuant to the applicable instruments and general international law. Notwithstanding this, it is appropriate to take complementary procedural steps to avoid investor-state dispute settlement proceedings by legal entities owned or controlled by citizens or nationals of the Russian Federation or the Republic of Belarus against the Union or its Member States under the Agreement.

(8)

Article 17 of the Agreement allows Contracting Parties to deny the advantages of the investment protection provisions of the Agreement to investors from non-Contracting Parties that seek to abuse the Agreement by bringing investment claims in the aforementioned situations (‘denial of advantages’).

(9)

It is appropriate to invoke Article 17(1) of the Agreement with regard to any legal entity that is owned or controlled by citizens or nationals of the Russian Federation or of the Republic of Belarus and that has no substantial business activities in the area of the Contracting Party in which it is organised. It is likewise appropriate to invoke Article 17(2), point (b), of the Agreement with regard to any investment within the meaning of the Agreement which is an investment of an investor of the Russian Federation or of the Republic of Belarus in the circumstances described in that provision.

(10)

The denial of advantages pursuant to Article 17 of the Agreement should be implemented by the Commission by circulating within the Energy Charter Conference the Declaration set out in the Annex to this Decision on behalf of the Union and all relevant Member States that are Contracting Parties to the Agreement or that are former Contracting Parties in whose territories the Agreement continues to apply, pursuant to Article 47(3) of the Agreement.

(11)

This Decision is without prejudice to the right of the Union, Euratom and all Member States to invoke Article 17 of the Agreement vis-à-vis an investor or an investment separately and at any appropriate moment,