At the Crossfire between Energy Charter Treaty Commitments and EU Prohibitions

In renewable energy arbitrations under the Energy Charter Treaty, EU Member States invoke obligations under EU law as a jurisdictional or substantive defence. The paradigmatic substantive argument is that EU law mandates the withdrawal of illegal State aid in reliance on which an investor entered that market. In this context, the relationship between the fair and equitable principle under Article 10 ECT and the principle of legitimate expectations emerging from the case law of the ECJ will be clarified. It will further be assessed whether these two principles do or should coincide. This article examines the possible methodologies for addressing these tensions both in arbitral tribunals and in reviewing EU courts, and assesses whether the current developments taking place at EU level are capable of solving or at least mitigating them. A different investment dispute resolution forum will be proposed, which might be better coordinated with the EU legal and judicial structure.