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MCC organized a Budapest Lecture as a side event of the international conference entitled The Energy Charter Treaty at a Crossroads and we were honored to host Fahira Brodlija, Adjunct Lecturer at the International University of Sarajevo. The discussion centered on the Energy Charter Treaty (ECT) and its evolving role in the complex interplay between energy policy, climate change, and international law.

The upcoming vote on modernizing the ECT is particularly significant as European nations grapple with the challenges of balancing short-term energy security and long-term sustainability. The outcome could determine whether member states continue investing in fossil fuels or prioritize greener, more sustainable energy policies. Fahira Brodlija highlighted the critical challenges posed by the energy transition, particularly focusing on the risks associated with the Investor-State Dispute Settlement (ISDS) system during this process.

Originally designed to facilitate energy investments, the ECT has faced criticism for being outdated and misaligned with modern climate change objectives. The EU, once a driving force behind the treaty, is now opposing the agreement because it believes that the ECT is an obstacle to states' adoption of greener energy regulations. And the European Court of Justice has ruled certain ECT institutions incompatible with European law.

Legal certainty and investor confidence remain crucial in energy investments, particularly as non-EU investors face higher costs and complexities. Although the ECT was designed to offer stability, its reform has been criticized as overly slow due to the requirement for unanimous approval by all member states.

Fahira Brodlija underscored the urgency of addressing climate change through cooperative and informed approaches. She advocated for greater engagement from investors to ensure a smooth transition toward sustainable energy. Additionally, she emphasized the need for clear mechanisms to reform or terminate treaties like the ECT without undermining investor confidence or breaching international law.