A Jersey-based oil-refining company is suing the EU, Germany and Denmark for at least €95m over a windfall tax introduced during the Ukraine war that it sees as a “pretext” for undermining fossil fuel firms, leaked documents show.
Klesch Group Holdings Limited is taking action under a controversial secret court system enabled by the energy charter treaty (ECT), an agreement officials fear will stymie climate action and divert hundreds of billions of euros into the coffers of fossil fuel investors.
The article is not very clear about what the energy charter treaty is - as far as I can tell, it is (among other things) designed to encourage international investment in the energy sector by providing foreign investors certain protections. In other words, countries that sign the treaty are guaranteeing that they won’t just take the money foreign investors put into their energy companies. The largest case involving the treaty has to do with Russian oil company Yukos, whose assets were seized by the Russian government. Here the firm filing the lawsuit is claiming that certain new taxes amount to the taking of (a portion of) its investments against the terms of the treaty.
(Everything I’m saying is very approximate. This is what I’ve gathered, not an expert opinion.)
The existence of such a treaty makes sense to me - there’s a long history of countries seizing the assets of energy companies owned by foreign investors and a country can be better off if it can bind itself not to do that.