Legal experts urge EU states to review investment treaties over climate concerns

A group of dozens of legal experts is urging EU member states to review investment treaties that, they say, can hinder climate action by allowing fossil-fuel companies to challenge government measures or threaten costly arbitration.

In a letter issued around the COP31 climate summit, the academics say the prospect of claims over lost profits can deter governments from introducing climate policies and leave taxpayers facing legal costs. EU member states have signed more than 1,400 bilateral investment treaties, according to ANP.

The experts call for provisions protecting fossil-fuel investments from legitimate climate measures to be amended or ended. They also want the European Commission to coordinate an EU-wide approach, member states to avoid new treaties protecting fossil-fuel investments, and greater transparency around investment agreements.

Their appeal follows earlier criticism of the Energy Charter Treaty, which energy companies used to bring claims against the Dutch government over the accelerated closure of coal-fired power stations. The Netherlands announced in 2022 that it would leave the treaty, citing its conflict with the Paris climate goals; the EU announced its withdrawal in 2024.