This Decision is addressed to the Commission.
Done at Brussels,
For the Council
The President
(1) Italy was a Contracting Party but withdrew in 2015. Officially, the Italian government explained its decision with cutting the costs of its membership in international organisations due to budget restrictions.
(2) The Russian Federation signed the ECT, but took the formal decision not to ratify it.
(3) Judgment of the Court of Justice of 7 October 2014, Germany v Council, C-399/12, ECLI:EU:C:2014:2258, paragraphs 61to 64.
1.1 The term sustainable developmens is generally considered to have been coined in the 1987 brundlandt report, where sustainable development was identified as development that meets the need of the present without compromising the ability of future generations to meet their own needs ( UNCED, 1987). However, sands points out that kernels of the Notion of sustainable development can be found in international relations way beofre that. As an example he offers the 1893 Pacific Fur Seals Arbitration where the United States asserted a right to ensure the legitimate and proper use of seals and to protect them for the benefit of mankind from wanton destruction ( Sands, 2003 : 253 ).
Since then the term sustainable development has been used in a multitude of international treaties and documents, usually of an environmental law nature. Examples of such treaties or legal documents are : the OECD Guidelines for Multinational Enterprises, the United Nations Framework Convention on Climate Change ( UNFCCC ) ( Article 3 ) and the Kyoto Protocol ( Article 2 ( 1) (a) and 10. The Consolidated Version of the Treaty on the Europen Union and on the multitude of provision referring explicity to the promotion of the principle of sustainable development.
In particular Article 11 CTFEU specifically states that environmental protection requirements must be integrated into the definition and impelementation of the Union policies and activities in particular with a view to promoting sustainable development. However, the mere inclusion of the term sustainable development in a variety of treaties does not get us any closer to understanding what exactly its function and importance are. In order to achieve this, one has to examine what are the main elements of which sustainable development consists.
The definition of sustainable development as outlined in the Brundlant Report, i.e. that development that meets the needs of the present without compromising the ability of future generations to meet their own needs is characterised by the juxtaposition and balancing of two opposing nations of needs and that of limits.
The question of the legal nature of sustainable development, i.e whether it is a principle of international law is an important one If it is a principle of international law it is binding on States and they have to abide by it, otherwise they will bear international responsibility for its violation.
Judge Weeramantry in his Dissentin Opinion in the Gabcikovo-Nagymaros case held that:
The concept of sustainable development is thus a principle accepted not merely by the developing countries, but one which rests on a basis of worldwide acceptance.. The principle of sustainable development is thus a part of modern international law by reason not only of its inescapable legoical necessity, but also by reason of its wide general acceptance by global community.
The Notion of sustainable development, a term coined in the 1987 Brundlandt Report, can be traced even in arbitral decision of the lare nineteenth century and has since found its way, as such or through one of its constitutive elements/manifestations in a great number of treaties.
Sustainable development can be considered to consist of the following four elements:
Other elements have also been proposed such as the right to development, procedural elements such as cooperation between states, EIA public participation in environmental decision-makin, and Access to information.
The legal status of sustainable development may be a controversial issue, but even if one considers it not to be customary international law that does not subtract from its normative effect. Sustainable development can be considered as a meta-principle, which colours the understanding, interpretation and application of a number of other principles connected to it.
In November 2003 specialists from different disciplines met in Mexico City to debate issues related to energy reforms at an international conference sponsored jointly by the National Autonomous University of Mexico (UNAM),[1] the University of Grenoble and the French Ministry of Foreign Affairs, including professors, researchers, students, civil servants, businessmen, regulators and consultants. Speakers were from Brazil, Uruguay, Venezuela, Argentina, Colombia, France, Great Britain, Switzerland, Algeria and Mexico.
The conference objective was to debate reforms in the electricity, oil and gas industries from a historical and institutional perspective. Multiple factors have changed the organisation of the energy industries, but not always in the ways foreseen or expected. The conference did not consider privatisation and foreign-investor participation as the only alternative to State monopoly in its evaluation of the inadequacies and defects of industrial organisation. Nor did it advocate a come-back to the integrated public monopoly, considered as a viable solution. As Jean-Marie Martín-Amouroux stated in his inaugural address: 'Our analysis has lacked insight because it underestimated the failures, real or potential, of public enterprises sheltered from competition and subordinated to powerful social forces'. Starting with this premise and with an eye toward the future, participants adopted a balanced approach in discussing conditions that would allow new organisational structures to contribute to efficient economic development, social equity and environmental protection. The experience of countries around the world, as well as comparisons of different Latin American countries, provided perspective for observing the effectiveness of reforms in the institutional environment of energy industries, in the context of the economic development of each country. Presentation and discussion were organised around the following topics and questions:
In both Latin America and developed countries these questions are of current significance and give rise to important conceptual and analytical works. In recent years a thorough understanding of regulatory reform has been the object of numerous research, encompassing the various institutional frameworks of reform and the various agenciesin charge of its implementation and the supervision of the sector. Among other things, these works show that decentralisation and the new institutions created by reforms have established new challenges, such as the necessity for greater coordination of information and decisions - an issue central to contemporary development theory. Globalisation, Foreign Investment, Markets and Regional Integration Beyond its historical-institutional perspective, the conference examined the results of reforms from the perspective of globalisation and from that of individual countries' institutional constants and restrictions. Some of the presentations sought a precise analysis of how the latter factor has influenced new institutions and organisational structures. The conference's setting in a country that until now has not completely followed the precepts of international institutions and think tanks on energy-industry reform, and the French example in the organisation of energy industries, put the search for new solutions in a different perspective. Could any other way than reform based on privatisation and liberalisation lead to the same end such as higher productivity and efficient development of production capacities? Neo-liberal globalisation has categorically altered the conditions of economic development, the role played by the energy industries relative to development, and the relationship between exploitation of natural resources and property rights. The conference placed itself squarely within this reality in order to explore the manner in which globalisation has affected the energy industry and conditioned its restructuring.The impact can be studied in terms of the integration of individual countries and their energy industries into the process of transnationalisation and globalisation of production and finance, with specific regional implications. In the case of Mexico these processes and implications are profoundly linked to its growing integration with the economy of the United States, and have had effects both direct and indirect on the structure and organisation of the energy industry, the geographical location of electricity generation, and the territorial characteristics of private investment in this sector.In this context the analysis of trans-frontier gas and electric connections and the installation of new electric plants on the border are of particular interest. In the case of natural gas development, the impulse toward greater integration of markets raises questions about the convergence and harmonisation of regulatory systems in the North American free-trade zone and in other integration zones. In the Cono Sur, which has tended toward a greater integration of the energy industries especially with respect to natural gas, various deficiencies and inefficiencies have developed in the coordination of energy policy, in institutional relationships, and in regulatory convergence. As a result of the insufficient governance structure characterising the integration process, proposals have surged for a Mercosur 'Secretariat of Energy' and for reconsidering the roles of the State and the private sector. New rules of access to natural resources have also developed through globalisation, accompanied by new legal bodies and treaties that facilitate investment, and these have implications for investment in the energy sector. The main result is to favour foreign investment and to provide legal and economic security for it: respect for contractual obligations, especially on the part of the State; repatriation of profits in convertible currency; introduction of international arbitration, etc. In the face of these realities it is necessary to reestablish the link between natural resources, whose exploitation is claimed to be ever more free and open to private interests on the one hand, and the economic development of the producing/exporting countries on the other. The conference confronted this issue, particularly with respect to Venezuela, but also with a view to generalising vis-à-vis other producing countries.It also took up the problem of the sustainability of energy resources, emphasising their strategic and exhaustible character within the framework of geopolitics and the global petroleum economy. In this context it was suggested that future imbalance between supply and demand on the global oil market might be resolved through a conflicting redistribution of the ownership of known reserves.
The nature of reform in different countries is influenced simultaneously by structural and institutional factors and, equally, by the manner in which macroeconomic, international and industry-specific constraints are handled. The importance of the institutional approach was recognised in the conference and utilised to evaluate the solutions that have been implemented or proposed in Latin America. In effect, 'institutions matter', as much for understanding why certain models generated in developed countries have not, in a simple transplant to other countries, had the expected results, as for developing proposals which are more adaptable to local conditions and trajectories. In his inaugural address, Dominique Finon presented the lessons of the institutionalist approach in order to understand the role of the institutional environment in the implementation of reforms, with particular attention to the electric and oil industries.
These lessons emcompassed the four following points:
In the case of oil and gas producing countries which seek to attract foreign investment, the institutional approach is focused on legal, regulatory and financial conditions which makes possible reliable contractual agreements that permit new forms of access to the exploration and production of resources. Institutional contributions also highlight the flaws and insufficiencies of procedures or timing in the specific experiences of privatisation, as in the case of Russia. In this case it is interesting to observe the results and contradictions of the transposition of formal market institutions with the practices inherited from the planned economy.
When analysing reforms that do not involve the privatisation of public oil companies but the expansion of exploration and production activities, a careful analysis of conditions mentioned above is required so that neither national interests nor those of the public company are compromised. But basic questions, such as those raised by Juan Carlos Boué,must be examined before a decision to open industries to foreign capital is taken, and before modifying the institutional, legal, and financial framework of the oil industry. For Boué, one of the principal points to consider is that a private oil industry cannot provide public revenue on the same scale as a state-run industry. For Mexico this is a strong argument for the continuation of the current system. But the possibility of foreign investment cannot be evaluated only from the point of view of internal processes; it is necessary to take into account prevailing international tendencies and their implications, as much in terms of institutional as economic and technological considerations.In the Mexican case in particular, the principles, strategies, and manifestations of United States' policies must be taken into account. Although the oil production of Latin America will never replace that of the Middle East, the United States has a strategic interest in diversifying its own supply. This explains the importance it attaches to full access to oil through international oil companies and the establishment of an institutional environment favourable to its interests.
While producing countries have liberalised access to their resources and privatised their oil companies, some have argued against this approach for economic, institutional, and also symbolic reasons. The conference discussed the advantages of sharing rents between oil- producing countries and international oil companies which bring capital and technological resources in order to extract a larger revenue on the one hand, versus the advantage of the State monopoly such as it exists in Mexico on the other. The question was raised in relation to the competing demands for incentives for public companies to be efficient and of governments' abilities to reinvest revenues in the development of reserves and production capacities. It appears clear that where there is potential for large government interference, privatisation alone is not a guarantee of efficiency. Concerning technological development, for example, it can also create obstacles for the coordination of research and development, as is the case of Brazil, where a partial privatisation of the oil industry took place recently. This last point is of particular relevance for Mexico, in order for it to be able to anticipate a national oil company's behaviour when exposed to competition, even in a strategic field as important as the exploration and exploitation of oil and gas. This is indeed the case with Petrobras, a public company that, since 1995, has had good results within a new institutional and regulatory context. For Petrobras, which is a technological leader in deep-water exploration, the challenge was to continue to develop technologically despite liberalisation and the end of its monopoly in exploration, production, refining and transport of crude, derivatives and gas. The slowing down that this institutional change has had on industry innovation in Brazil has to be considered in the assessment of reform.The relevance of this analysis to Mexico is evident, as are other cases in which market competition has been introduced and public monopolies seemed initially inferior to the private and competitive industrial organisation. In Mexico there have also been institutional changes, although of a more limited scope, such as the modification of the relationship between the Mexican Petroleum Institute and Pemex in R&D activities, within a new framework and certain incentives to innovate.
While certain Latin American countries, in contrast with countries in other regions like Asia, have been particularly sympathetic to extreme market solutions in energy industries, a new consensus seems to emerge now for 'reforming the reforms'. This consensus considers that markets are more efficient only to the extent governments maintain them in harmony with the public interest. For the electric and gas industries, the first restructurings have been characterised by market liberalisation, vertical de-integration of companies and privatisation. The key question of financing infrastructure developments has subjected Latin American countries to the recommendations of international organisations for the purpose of building credibility and confidence among private and foreign investors. Not all of these countries have proceeded in the same manner or developed the same types of organisational structures. Characteristically there is a coincidence between the existence of important oil revenues and the maintenance of public electric companies, due to the link between social compromises in the different energy industries as in Mexico and Venezuela.
Technological change, which in Northern countries has played a key role in opening institutional options through different forms of liberalisation with the help of innovation in lower-scale and less capital intensive technologies and ITs, has had an equal influence upon energy industry restructuring in Southern countries. Conversely, the specific characteristics of energy sector institutions in a country play a major role in the development of technological opportunities such as 'distributed production', which is one of the solutions to answer to the growing need for power. This is a lesson we learn when comparing the experiences of Mexico and Argentina. In relation to other Latin American countries, organisational changes in the energy industries of Mexico have not been particularly profound, due mainly to historical and institutional factors. Nevertheless, there has been some evolution. In the electric industry, for example, the integrated monopoly has evolved towards the 'single buyer' model,and reforms presently proposed by the government would go even further. In this sense comparative analyses with other countries are interesting, both to evaluate past reforms and propose improvements to them.In the case of Mexico, Jacinto Viqueira Landa proposes to install a more decentralised organisation that permits greater flexibility for confronting new problems affecting the electric industry in order to improve efficiency and environmental protection.A comparison between the French and the Mexican experiences demonstrates that institutional weakness in Mexico would present the principal challenge to reforms of the French type (preservation of the public operator's dominant position, vertical integration, third-party access to a clearly unbundled network, regulatory guarantee both of the public-service missions and of the effectiveness of competition on the industrial market-segment). To an equal extent, performances of reform are seen through the adequate development of production capacity, beside the price decrease.Liberalised markets have not demonstrated this adequate development, particularly in Brazil. In such cases it is necessary to put aside the principles of competition in order that investment may occur within an environment of imperfect competition and dominant operators able to influence market prices. Furthermore, private electric companies have tended to turn their backs on techniques with high-risk investment since they are very capital intensive or technologically innovative, even when they would be the most suitable to use the natural resources and technological capacities of the country (this is the case with large hydraulic plants). Finally, discussions on reforms focused on three questions that appeared to remain open:
The presentations which dealt with the gas industry in the North or South of Latin America, showed that this objective confronts numerous obstacles, partly due to the slowness of regional economic integration. So it is with respect to the electric industries of the Cono Sur.
The development of the energy sector in Latin America was defined and oriented for decades by the central role of the State. With changes that have occurred, especially in the last decade, the State has still not found its new role. In countries like Brazil, the role of State enterprises in the construction of energy infrastructure and development of resources, centered around petroleum and electricity, was very important and stable until 1990.With the market- oriented reforms of the 1990s, the energy industries were restructured and private capital acquired the central role. The State has to invent its regulatory role in order to orient the market forces and insure social equity. The challenge for the State is now more one of coordination than of direct intervention, but questions remains about its regulatory role: what should be the efficient shape of the government's intervention in economies which are increasingly liberalised and integrated in the global economy?Liberalisation and globalisation tend to restrict the role of the State precisely when the challenges of economic development are aggravated by geopolitical and ecological dangers. A coherent political governance is required on a national and international level. Some presentations focused on the new functions of the State in its discussion of energy-related issues in their specific national contexts. Excepting the case of Mexico in which the government is still deemed to engage in entrepreneurial activities, the regulatory function now consists in correcting the immediate flaws of a competitive framework. Emphasis is put on the administrative capacities needed to stabilise this model, and on the role of crisis in adjusting and correcting the administrative capacity and regulatory function of the State, as the answer to the Brazilian electric crisis of 2002 shows. In countries that still maintain public energy companies, efficient management of public companies will only be possible if changes occur in their relationship with the State. It was not possible to include all countries in the conference programme. Of special importance are the study of the experiences of the 'small economies', for example the Central American and Caribbean countries. In order to fulfill this gap to some extent, we include a paper by Ma. José Paz Antolín: "Impacts of the Reform Process and the Internationalization of the Electricity Sector in Central America: a Study of the Guatemalan case" (Impactos del proceso de reformas y la internacionalización del sector eléctrico en Centro América: estudio del caso guatemalteco).
Contrary to what has been widely believed throughout the last decade, radical privatisation and deregulation are not necessarily the most effective ways to put an end to inefficient management and underinvestment. The time has come to reform the reforms and to find solutions which better fit national situations, the weak institutional environment of markets and the necessity to invest a lot of money in infrastructures. Competition must be brought in gradually, sometimes by keeping a moderate form such as the single buyer model in the electric industry. Companies should not be split automatically, the property should not be privatised in its majority if the adaptation of the organisation and its supervision can favour productive efficiency. Priority must be given to the realisation of investment at the appropriate time to serve growing needs. In the oil and gas industry, the middle line has also to be sought to allow the efficient exploitation of resources with the presence of foreign and private firms which can afford capital, technology and place some competitive pressures on the national public companies. Here also the pendulum is stabilising in a position which considers that States have also an important place in ruling and participating in the production and commercialisation of hydrocarbons. Developing countries may be well advised not to attempt to leapfrog to radical privatisation and market models if they wish to avoid large problems of undercapacity and uncontrolled rent absorption by private companies in the different energy industries. A third way, a gradual reform path, is emerging by trial and error, and which also remains a necessity for correcting the limits of the former public model.
In businesses, partnerships and investment transactions, many do not anticipate future litigation. However, when a dispute does indeed arise, there are many options to resolve it. If the thought of going to court and endure the trial ordeal displeases you,arbitrationmay be preferable, if parties to the dispute would all agree.
Arbitration is essentially a paid private trial, in other words, a method to resolve disputes without going to court. Parties will submit the dispute to athird partyneutral arbitrator rather than the courts. Unlike a court bench or jury trial, the presentation may consist of just documents, though most often, both sides will still have attorneys to make oral arguments. However, before you decide to resolve your claim through arbitration, read the following to understand the advantages and disadvantages.