Energy regulation in international trade: Legal challenges in EU-Russia energy relations from an investment protection perspective

Abstract

The EU-Russia energy partnership is a highly strategic relationship that has profound implications for the international arena as far as energy security and stability are concerned. The Ukraine crisis and subsequent sanctions brought this realization to the fore, with the future of this partnership hanging in the balance. Bilateral relations have come under increasing pressure in recent years, following a series of trade disputes and supply disruptions, bringing Russia’s reliability as a trade partner into question. Tensions have been further exacerbated by Russia’s withdrawal from the ECT which has effectively rendered energy cooperation based on political dialogues and commitments that lack legally binding norms. With the unlikelihood of a revised Partnership and Cooperation Agreement following the EU’s suspension of all talks in response to Russia’s annexation of Crimea, the basis of legal ties between these two powers has been brought into question. However, with Europe heavily dependent on Russian energy resources, the EU has a vested interest in keeping Russia firmly entrenched in the global trading system. This Chapter will assess the role of international law in EU-Russia relations; in particular, whether the ECT and WTO provide an appropriate legal framework in the context of energy trade from an investment protection perspective.