China, Japan and South Korea are undergoing rapid and comprehensive transformations in developing the intelligent and sustainable use of energy and other natural resources. These changes are driven by new strategies towards energy security and climate change mitigation. Given that future China-Japan-South Korea energy cooperation will become even more important (because the focus of the international energy market shifts to Asia) it is imperative to make progress in this specific trilateral cooperation.
In this respect, regulatory progress must address the lack of comprehensive security architecture regarding regional cooperation and more efficient dispute resolution mechanisms to strengthen conflict prevention and resolve energy disputes in this region.
With the increasing need to increase energy governance, the Energy Charter Treaty (“ECT”), which entered in effect in April 1998 with 53 state signatories, could be a potential model for this trilateral cooperation. The purpose of ECT is to advocate freedom in energy transit, trade, investment, and efficiency. Firstly, the ECT can contribute a comprehensive understanding of protection to be provided regarding commercial activities on energy resources.
For the energy sector, a stable and predictable legal framework for trans-border trade is crucial to encourage and attract infrastructure investments. Secondly, after identifying the common energy security issues and addressing matters of common interests, ECT can serve as a feasible solution in long-term negotiation and consultation. Thirdly, ECT enhances many aspects of sustainable development through its investment protection provisions, by encouraging all the participants to pursue sustainable development at a global level. The trilateral cooperation with the ECT-based approach could adequately responds to the challenges of climate change.
With regard to the dispute resolution mechanism, investor-state arbitration is generally perceived as a useful tool to protect investment in the energy sector. However, it could be also a double-edged sword as the three governments are undertaking a series of legislative and policy reforms for the energy section, which could expose states more likely to be sued for possible violations.
In addition, investor-state arbitration has been considerably criticized in the last years and there are some attempts to reshape the investment dispute resolution system as demonstrated by the ongoing work of the Working Group III of the United Nations Commission on International Trade Law (UNCITRAL) which continues discussions on possible reform of investor–state dispute settlement (ISDS).
In the circumstances, the state to state mediation could be introduced under trilateral cooperation for potential disputes. By doing so, states can carefully calculate the strategic benefits in terms of when and where mediating, and whether to act as a mediator.
The energy security and climate change in East Asia-Trilateral Cooperation is moving towards a Sustainable Future and it is a major development for the world. The challenges are manifold, and some are still unknown. Regulatory progress will gradually unfold and pave the way for a global change which should ensure global sustainable development for all, but much remains to be done.
Energy Security And Climate Change in East Asia – Jointly Getting on Track for A More Sustainable Future, the 3rd Young Leader’s Forum http://www.kas.de/japan/en/events/77881/
The Energy Charter Treaty provides a multilateral framework for energy cooperation that is unique under international law, see https://energycharter.org/process/energy-charter-treaty-1994/energy-charter-treaty/
More information is available on the working group website. The working group will convene again in Vienna in late 2018. http://www.uncitral.org/uncitral/en/commission/working_groups/3Investor_State.html
See [ https://www.armomediation.com/menu ]. See also Chang-fa Lo, Julien Chaisse et al. ‘Concept Paper on the Creation of a Permanent “Asia-Pacific Regional Mediation Organization” for State-to-State (Economy-To-Economy) Disputes’ 321-336.