Abandon the Controversial Energy Charter Treaty (ECT), Legislators Warned

Energy and legal experts are sounding the alarm, cautioning members of parliament against ratifying Kenya as a full member of the contentious Energy Charter Treaty (ECT). The treaty, they argue,
poses significant threats to climate justice legislation and policy implementation, favoring corporations in the fossil fuel industry over the interests of governments and citizens.

Initiated in March 2017 when the then-cabinet secretary for Energy and Petroleum, Charles Keter, signed Kenya as an ‘Interested Member,’ the country’s potential ascent to full membership status
awaits parliamentary approval. However, experts warn that such a move could undermine efforts to transition to clean energy sources and protect the environment.

During a recent public lecture titled “Demystifying the ECT,” hosted by ActionAid International Kenya (AAIK) in collaboration with Strathmore Law School (SLS), speakers and participants highlighted the urgent need for legislators to be fully informed about the implications of the ECT. They emphasized that joining the treaty could expose Kenya to exploitation by multinational corporations while exiting it could result in hefty penalties detrimental to the nation’s struggling economy.

Busia Senator Okiya Omutata speaking at the public lecture on April 4, 2024, at Strathmore University Law School.

“There is a crucial need for intense sensitization among lawmakers to ensure we make informed decisions for the good of our country. As parliamentarians, we must be vigilant in rejecting any contracts that would burden Kenyans with unfair and unacceptable costs associated with energy deals governed by international treaties. Many of these treaties are designed to exert pressure on governments and exploit citizens for the gain of a few. In hindsight, the decision to have Kenya join as an observer member in 2017 was a mistake from the outset.” Stated Okiya Omutata, Senator of Busia County.

Judith Muvara, a project associate from SEATINI Uganda, underscored the challenges associated with leaving the ECT, particularly the powerful “zombie” or “sunset” clause that grants legal protection to fossil fuel investments for two decades post-withdrawal. Critics argue that the ECT primarily serves the interests of multinational corporations in the oil and gas industry, prioritizing profit over environmental sustainability and public welfare.

Susan Otieno, Executive Director of ActionAid Kenya, raised concerns about the adverse environmental effects of fossil fuels and warned that endorsing Kenya as a full ECT member could hinder climate action efforts by allowing fossil fuel companies to challenge environmental protection policies.

ActionAid International Kenya Executive Director Susan Otieno speaking at the public lecture-demystifying ECT on April 4, 2024, at Strathmore Law School, Nairobi.

“I am deeply concerned about the adverse environmental effects of fossil fuels. Endorsing Kenya as a full ECT member could hinder climate action efforts by allowing fossil fuel companies to challenge environmental protection policies.” Stated Susan Otieno

Esther Kisembo, a panelist at the lecture, urged African governments to prioritize transparency, public participation, and environmental sustainability in international agreements. Several other speakers, including George Aluru, Dr. Francis Kariuki, Robert Mahenia, Hope Okuthe, and Rachel Chebukati, emphasized the importance of legislators understanding the ECT’s implications before making decisions. Senator Okiya Omutata of Busia County warned of potential penalties like the KSh5.7 billion awarded to Lake Turkana Wind Power in 2017 if Kenya were to ascend to full membership status.

African countries are advised to exercise caution in ratifying their status as full members of the ECT, given that claims against states by investors in various energy sectors account
for a significant portion of disputes at Investor-State Dispute Settlement (ISDS) tribunals. Moreover, with the withdrawal of the European Union from the ECT and the ongoing departure of many European countries, Kenyan lawmakers, alongside their counterparts in the East Africa Legislative Assembly (EALA) and other African nations, are urged to reconsider their involvement.

Moderator Kelvin Mbatia (L), with Robert Mahenia (2nd L), the deputy director legal services at EPRA, Esther Kisembo (2nd R) of ActionAid Uganda and Francis Kariuki (R), Lecturer, SLS on April 4, 2024, Nairobi.

About Investor-State Dispute Settlement (ISDS)
ISDS is an instrument for investors to lodge complaints against countries for investment dispute resolution. It is a dangerous tool used by corporations to pressure governments to yield to
their self-seeking asks. It is dangerous in a manner that the cases can be kept under wraps, extremely broad and vaguely defined ‘property rights,’ investors have the liberty to choose half of the
arbitrators, there is almost no possibility to appeal, compensation for future profits are common and decisions made can be enforced worldwide.

Through the ISDS, investors can demand and win huge compensation payments, and pressure governments to weaken or delay regulation in the public interest to their benefit. They can avoid prosecution by normal legal systems.

Between 1993 and 2022, there have been 569 terminated International Investment Agreements (IIA), and 106 of these are recorded in Africa. 56 of the 106 cases were registered between 2013 and 2018. Whereas Egypt has the lion’s share of 33 IIA withdrawals, Kenya has only vacated one.

Some of the ISDS hefty penalties recorded are:
•Romania sued for US$ 5.7 billion for refusing a permit for the largest open-pit gold mine in Europe.
•Pakistan was forced to pay a gold & copper mining company US$6 billion for a project the company had invested US$200 million.
•Nigeria sued over a gas processing facility with award reaching US$ 11 billion.

Author:  Mary Consolata Makokha, Communications Officer ActionAid Kenya. Edited by Ezra Kiriago ,Communications Coordinator ActionAid Kenya.

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