Trans-Adriatic Pipeline Project Agreements and Energy Charter Model Texts

Christina Vlachtsis M. & P. Bernitsas Law Offices Athens, Greece

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Introduction The Trans-Adriatic Pipeline Project (the “TAP” or the “TAP Project”) will commence in Greece at the Greek–Turkish border to transport gas from to Europe. The TAP offers a new route for the transport of gas from the Caspian region and is an investment of strategic importance that will enable both Greece and to become core transit countries for European Union (EU) energy security and diversity of supply objectives. 1 The TAP will connect to the Turkish Trans-Anatolian Pipeline (the TANAP), enabling the transport of gas from the Caspian region to Europe (the “Pipeline System”). 2 It is acknowledged that the development and interconnection of the TANAP to the TAP will enhance the security and availability of natural gas supply as a result of the diversification of routes and sources of supply of natural gas to the EU. 3 The pipeline is to be developed and operated by Trans-Adriatic Pipeline AG (“TAP AG” or the “Project Investor”), comprising BP (twenty per cent), SOCAR (twenty per cent), Statoil (twenty per cent), Fluxys (nineteen per cent), Enagás (sixteen per cent), and Axpo (five per cent). 4 ______

1 Whereas (B) Clauses in the TAP Host Government Agreement Greece and TAP Host Government Agreement Albania. 2 See http://www.tap-ag.com/assets/08.about_us/english/TAP_Corporate_ Brochure_ June per cent202015_EN_Updated.pdf, as well as in “TAP Integrated ESIA Greece, Section 1— Introduction”. 3 Law Number 4145/2013 on the Ratification of the Agreement among the Republic of Albania, Greece and the Italian Republic, Government Gazette A/89/18 April 2013, recital (4). 4 According to the parties to the TAP Host Government Agreement Greece, TAP AG is a corporation organized and existing under the laws of with a registered branch in Greece; see http://www.tap-ag.com/about-us/our-shareholders. 186 Comparative Law Yearbook of International Business

Project-specific agreements have been concluded to regulate the pipeline project. In particular, the Intergovernmental Agreement has been concluded between Greece, Albania, and Italy and ratified by Law Number 4145/2013 (the “TAP IGA”). 5 Two host government agree- ments were entered into with TAP AG, the Host Government Agreement of 26 June 2013 between Greece and TAP AG (the “TAP HGA Greece”)6 and the Host Government Agreement between Albania and TAP AG (the “TAP HGA Albania”). There is no host government agreement between TAP AG and Italy. According to the Energy Charter Secretariat’s preliminary comments on the Model Agreements, “cross border pipeline projects are subject to numerous specific legal requirements arising from international law and relevant supra-national and national legal systems”. It is clarified, how- ever, that “whether or not these Models will be used in full or in part and the extent to which the model texts can be adapted depends entirely upon the agreement of the parties”. Moreover, the Introductory Note to the Model Agreements empha- sizes that neither of them is meant to be exhaustive, but rather serve as a guideline to facilitate the efficient realization of cross-border pipeline systems for natural gas. 7 It also is noted that the two Models have been structured with the objective of achieving a reasonable balance among the obligations of a state wishing to attract essential and/or competitive investment and the rights of private investors prepared to invest. 8 In this article, the non-binding Model Agreements will be introduced by way of background, followed by an analytical comparison of their provisions to the final versions of the TAP IGA and TAP HGA Greece. The objective of this article will be to analyze the extent to which the TAP IGA and TAP HGA Greece have been influenced by the model texts and to highlight notable differences in approach between the two sets of agreements. This is important in order to determine whether the Model Agree- ments were successful in being utilized to negotiate and conclude the ______

5 Law Number 4145/2013 on the Ratification of the Agreement among the Republic of Albania, Greece and the Italian Republic, Government Gazette A/89/18 April 2013. 6 The host government agreement with Greece was ratified by Law Number 4217/2013, Government Gazette A/267/10 December 2013. 7 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraphs 20 and 29. 8 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 23. Christina Vlachtsis 187

TAP IGA and TAP HGA Greece. The article will conclude relating to the extent to which the Model Agreements in terms of the provisions and issues dealt within them satisfied their purpose of facilitating nego- tiations by providing a legal basis and effective guideline for the conclusion of the project-specific agreements as well as whether these agreements strike a reasonable balance between the obligations of the State and TAP AG in a similar manner as is provided for in the Model Agreements.

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Model Agreements

In General

The Energy Charter Conference has acknowledged the importance of model instruments in addressing the concerns of governments and industry regarding the need for a swift solution to realize cross-border energy projects, with the ultimate objective of securing investments in cross-border pipeline projects. 9 The Energy Charter’s second edition of the Host Government Agreement for Cross-Border Pipelines (the “Model HGA”) and Model Intergovernmental Agreement for Cross-Border Pipelines (the “Model IGA”) are non-binding. Their objective is to facilitate the realization of prospective cross-border pipeline systems for the transportation of petro- leum or natural gas 10 and, in the case of the TAP Project, natural gas. The Model IGA is a template for an agreement of an international nature between the states through whose territories the contemplated Pipeline System is to be constructed. 11 The TAP IGA deals mainly with horizontal issues that concern the pipeline infrastructure as a whole. It is, therefore, intended to facilitate the realization of the project within the territories of the states collectively. Matters covered by the Model IGA include cooperation, land rights, transport of petroleum or natural gas, title to or ownership of petroleum or natural gas in the Pipeline System,

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9 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 11. 10 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 29. 11 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 24. 188 Comparative Law Yearbook of International Business

non-interruption of project activities, environmental and safety standards, and taxes. 12 The Model HGA is a template for an agreement between those in whose territory the pipeline system is to be realized and the project investor(s). 13 The Model HGA deals mainly with vertical issues that concern the project activity within the territory of each State while it expands on some of the matters identified in the Model IGA. The Model HGA covers a number of issues, including governmental obligations, investor duties, environmental and other relevant standards, liability, termination, and issues relevant to the implementation of the project in each specific territory. 14 There are certain basic assumptions to bear in mind, notably that both the Model IGA and Model HGA are interdependent and designed to represent a single “package”,15 while the Model HGA is entered into in furtherance of the Intergovernmental Agreement. The IGA is a “treaty model” governed by public international law, while the entry into force of the Model HGA is conditional upon that of the Model IGA. 16 The two Models have been drafted with the objective of sustainably allocating risk and equitably distributing overall benefits between public and/or private parties engaged in the project, 17 and this is undoubtedly an important objective of the Model Agreements and necessary for the successful construction and operation of any crossborder pipeline pro- ject. In this regard, the Model HGA provides for the immediate grant of rights necessary to facilitate the carrying out of the Project,18 which is a provision which clearly places the Project Investor in a most favorable position although it should be considered whether this is feasible within the jurisdiction in question. The Model HGA includes certain appendices which form part of the Model IGA and Model HGA to be developed depending on the specific ______

12 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 25 in conjunction with certain of the main Articles under the Model IGA. 13 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 26. 14 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 27. 15 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 21. 16 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 21. 17 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 23. 18 Model HGA, Article 6, Evidence of Rights. Christina Vlachtsis 189

requirements of the project. 19 The appendices relate to construction planning, tax agreements, and code of practice, while the first appendix on construction planning is comprised of matters related to land rights and the decommissioning plan.

TAP IGA and Model IGA

Preamble and Definitions Unlike the Model IGA, the TAP IGA has a Preamble, while the defini- tions are attached as an Appendix. The Preamble recalls that the TAP IGA is adopted “in furtherance of the principles set forth in international trade and investment agreements applicable to each party, including the Energy Charter Treaty, the Community Treaties and the Energy Com- munity Treaty”.20 It “recognizes the important strategic and integral role that the TAP will fulfill in opening the and referring to the designation of the European Union’s Trans-European Networks — Energy program of the TAP as a southern corridor (natural gas route 3) pipeline”.21

Issues Covered Issues covered by the Model IGA are the relationship between the agreement and other international and domestic obligations, perfor- mance and observance of the agreement and other related agreements, co-operation, land rights, transport of natural gas, title to or ownership of natural gas in the pipeline system, non-interruption of project activities, environmental and safety standards, harmonization of technical standards, security, taxes, non-discrimination, isolation of any boundary or territorial disputes, state succession, force majeure , responsibility, dispute settlements, termination, and termination of host government agreement.

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19 Introductory Note to the Second Edition of the Intergovernmental and Host- Government Model Agreements of the Energy Charter Secretariat, Paragraph 28. 20 Law Number 4145/2013 on the Ratification of the Agreement among the Republic of Albania, Greece and the Italian Republic was published in Government Gazette A/89/18.04.2013, recital (1). 21 Law Number 4145/2013 on the Ratification of the Agreement among the Republic of Albania, Greece and the Italian Republic was published in Government Gazette A/89/18.04.2013, recital (5). 190 Comparative Law Yearbook of International Business

The TAP IGA is more restrictive in terms of content and number of Articles. The TAP IGA consists of fourteen Articles, while the Model IGA comprises twenty-one Articles. The TAP IGA in some areas merges two or more Articles that are treated separately under the Model IGA. For instance, Article 2 on project support and cooperation provides more generally that “the Parties will facilitate, enable and support the imple- mentation of the Project and to cooperate and coordinate with each other in that respect and shall provide stable, transparent and non- discriminatory conditions for the implementation and execution of the Project”. It also is provided that “the Parties agree that Transport shall be per- formed in accordance with the provisions of this Agreement and the applicable legislation under the Community Treaties and the Energy Community Treaty relating to the same, and without imposing any unreasonable delays, restrictions or charges”. This provision covers in less detail the provisions included in the Model IGA that devotes separate and full clauses to performance and observance of this and other related agreements, 22 cooperation, 23 transport of natural gas,24 non- discrimination, and national treatment. 25

Non-Interruption of Project Both the TAP IGA and Model IGA have a clause on non-interruption of the project. The clause in the TAP IGA is shorter, consisting of three paragraphs, while the Model IGA comprises five paragraphs. The three paragraphs included in the TAP IGA generally reflect those included in the Model IGA and provide that no party, except through a competent authority pursuant to the EU Regulation on Security of Gas Supply, may interrupt, curtail, or otherwise impede the flow of natural gas through the TAP. 26 It is provided that if any event occurs or any situation arises which gives reasonable grounds to believe that a threat exists, the party in ______

22 Model IGA, Article 4. 23 Model IGA, Article 5. 24 Article 7 of the Model IGA provides for “the transport of natural gas consistent with the principle of freedom of transit, and without distinction as to the origin, destination or ownership of such natural gas or discrimination as to pricing on the basis of such distinctions, and without imposing any unreasonable delays, restrictions or charges”. This reflects Article 7 of the International Energy Charter Consolidated Energy Charter Treaty on Transit. 25 Model IGA, Article 14. 26 TAP IGA, Clause 7(1). Christina Vlachtsis 191

respect of whose territory the relevant threat has arisen must use all lawful and reasonable endeavors to eliminate that threat. 27 Moreover, according to the same Article, the party in respect of whose territory an event occurs or situation arises which interrupts, cur- tails, or otherwise impedes any aspect of the project must immediately notify the other parties and the project investor and must use all lawful and reasonable endeavors to eliminate the event or situation and must promote restoration of the affected aspect of the project at the earliest opportunity. 28

Project Standards

The TAP IGA also combines certain Articles of the Model IGA. While the TAP IGA generally provides for consistent project standards, the Model IGA separately provides for environmental and safety standards and harmonization of technical standards. These two standards, among other standards, are included in the TAP IGA, which provides that “it is essential that a coordinated and uniform set of standards apply to the whole of the Project, including in relation to technical, safety, environmental, social, community and labor”,29 while special provision is made for an Implementation Commission consisting of two duly authorized representatives of each party that will be respon- sible for establishing coordinated and uniform standards. 30

Taxation The Model IGA has ten paragraphs dealing with taxes, while the TAP IGA only has one paragraph that partially reflects one of the paragraphs of the Model IGA. 31 In particular, it is provided that “for the determina- tion of the tax assessment basis of the Project Investor, the provisions of the national legislation shall apply based on the principles of the Organi- zation for Economic Cooperation and Development”. The Model IGA clarifies that “transfer pricing within a legal entity and/or between related entities (i.e., transfer of goods, services, royalties

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27 TAP IGA, Clause 7(2). 28 TAP IGA, Clause 7(3). 29 TAP IGA, Clause 8. 30 TAP IGA, Clauses 8 and 10. 31 Article 8, Paragraph 5, of the Model IGA has been incorporated to some extent in the TAP IGA under Article 9. 192 Comparative Law Yearbook of International Business

and license fees) shall apply”. The TAP IGA extends the OECD principles by providing that:

“For revenues and costs of the Project Investor, uniform and appropriate allocation keys consistent with the clauses of the double-taxation treaties relating to determination of business profits must be set out in legally binding advance pricing agree- ments made between the tax authorities of each of the parties among each other and with the tax authority of the Swiss Confed- eration (being the jurisdiction of enforcement of the Project Investor).”

The purpose of this clause is to avoid double taxation but also expands upon OECD principles by stating that allocation keys must be established in legally binding agreements, thereby mitigating the risk of dispute and lack of clarity. Furthermore, the “advance pricing shall have a duration of a minimum of 25 years and will not be capable of being amended or terminated without the consent of the Project Investor”. This provision provides for certainty and the legally binding nature of pricing arrangements over a long time period for the Project Investor.

Relationship with Treaties The TAP IGA has an Article on Relationship with Laws and Treaties which is adopted against the background of the Model IGA’s Article on Relationship between this Agreement and other International and Domestic Obligations. In particular, the TAP IGA provides that “no provision of this Agreement shall require: (a) the Greece or the Italian Republic to derogate from any mandatory requirement under the Com- munity Treaties; or (b) the Republic of Albania to derogate from any mandatory requirement under the Energy Community Treaty”. Additionally, “the Project Participants shall be regarded as ‘Investors’ for the purposes of Article 1(7) of the Energy Charter Treaty and the Project and all aspects of it, and any interest they may have under any agreement relating to the Project, shall be regarded as an ‘Investment’ into the Territory of the relevant party for the purposes of Article 1(6) of the Energy Charter Treaty”.

State Responsibility Both the TAP IGA and Model IGA include Articles on Responsibility which are broadly similar in content. According to the TAP IGA: “Any Christina Vlachtsis 193

failure of, or refusal by, a Party to fulfill or perform its obligations, take all actions and grant all rights and benefits as provided for by this Agreement shall constitute a breach of such Party’s obligations under this Agreement”. The responsibility of a party under this paragraph is provided to be in accordance with the general principles of international law and extends to the acts and omissions of any State Authority or State Entity. 32 State responsibility is a key element of international law and is effectively a range of legal consequences that arise as a result of a breach of an international obligation. In the event of a breach, there would be an obligation to either discontinue the internationally wrongful act, i.e., cessation, where the state discontinues the act and provides assurances and guarantees that the internationally wrongful act will not be repeated or, alternatively, an obligation to restore the situation to the status quo ante which may arise, i.e., reparation, which, according to the Permanent Court of International Justice in the 1928 Chorzów Factory case, must as far as possible “wipe out all the consequences of the illegal act” and re-establish the situation which in all probability would have existed if that act had not been committed.

Dispute Settlement There also is a limited dispute settlement clause in the TAP IGA, which simply provides that “disputes relating to the interpretation or imple- mentation of this Agreement shall be settled by diplomatic means”.33 This reflects only the first paragraph of the Model IGA according to which “the States shall endeavour initially to settle any disputes con- cerning the application or interpretation of this Agreement through diplomatic channels”.34 A number of diplomatic means have been created which would be relevant to this clause and should be interpreted against the background of Article 33 of the United Nations (UN) Charter that provides for a general obligation to settle disputes in a peaceful manner. In addition to negotiation, diplomatic means may include other measures which may require the involvement of a third party known as “good-offices”, where a third party facilitates negotiation among the parties or may propose a framework for reaching a settlement. Other

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32 TAP IGA, Clause 11. 33 TAP IGA, Clause 13. 34 Model IGA, Article 19(1). 194 Comparative Law Yearbook of International Business

diplomatic means include mediation, where a third-party mediator inter- acts among the parties with a view to enabling the parties to agree on certain aspects of the dispute and assist them in resolving their dispute. This may involve an element of fact-finding and/or inquiry in order to ascertain the facts that form the historical background to the dispute. Diplomatic means also may take the form of conciliation, where the involvement of a third-party individual or panel of individuals take a more proactive approach to resolving the dispute and make a recom- mendation which is, however, not binding on the parties. The TAP IGA differs from the Model IGA, which also describes in a number of paragraphs the procedure for referring a dispute to arbitra- tion in the event that a dispute is not settled within a certain period of time through diplomatic channels. Unlike the TAP IGA, the Model IGA sets out in detail the manner for submitting the matter for final and binding resolution to an arbitral tribunal, which is a major difference in that, with diplomatic means, the parties ultimately have the choice to decide whether to accept the solution proposed, while in the case of arbitration the decision reached by the arbitral tribunal is binding on the parties.

Authorizations The TAP IGA has a separate clause on Authorizations35 which is not included in the Model IGA. In particular, it provides that “Each Party recognizes the strategic importance to that Party of the Project and accordingly shall take all measures to facilitate the fulfillment of the Project in its territory, including the granting of all Authorizations required for the implementation of the Project and the conduct of the Project in accordance with the Laws of the relevant Party without unreasonable delays or restrictions”. This clause implies that action in the form of authorization, consent, concession, license, permit, or other form of approval will be necessary to be issued by the parties in connection with the Project. The Model IGA provides in a clause on Performance and Observance of this and other Related Agreements that “Each State shall fully support the implementation and execution of the Project Activities contemplated by the Agreement and shall ensure that its State Authority and/or State Entity take all actions necessary for such implementation and execution”. ______

35 TAP IGA, Clause 6. Christina Vlachtsis 195

It is prescribed that “to the extent permitted by applicable law, the Agreement shall evidence, without action on the part of any State, the granting of a right, approval or power to any State authority and/or State Entity, as may be necessary for any State Authority and/or State Entity to fulfill the relevant State’s commitments”. This far-reaching clause is not included in the TAP IGA, which clearly provides for the requirement of authorizations in order to implement the Project.

Host Government Agreements The TAP IGA has a clause on Host Government Agreements 36 pursuant to which “the Republic of Albania and Greece, being the Parties in whose Territories the majority of the Trans Adriatic Pipeline will be located . . . have each entered, or will enter, into a Host Government Agreement with the Project Investor”. The Model IGA has no specific clause on Host Government Agree- ments, although it provides in its Article on Performance and Observance of this and other Related Agreements that “subject to the other provisions hereof, each State undertakes to fulfill and perform each of its obligations under this Agreement, any Host Government Agreement to which it is a party and any Project Agreement to which it is a party from time to time”.37

Termination and Amendment The Model IGA provides that “this agreement shall terminate upon the latter of the termination of all Host Government Agreements [and Project Agreements]”,38 while it also includes a separate Article on Termination of Host Government Agreement 39 without, however, regulating amend- ments. The TAP IGA includes an Article which regulates amendments and termination which provides that “No Party shall amend, or otherwise seek to avoid or limit this Agreement without the prior written consent of each of the other Parties”, while any amendments are to be in writing and shall enter into force by way of ratification. 40 It is provided that “this Agreement shall remain in full force and effect until the date of completion of the decommissioning of the entire ______

36 TAP IGA, Clause 5. 37 Model IGA, Article 4(1). 38 Model IGA, Article 20. 39 Model IGA, Article 21. 40 TAP IGA, Clauses 12 and 14. 196 Comparative Law Yearbook of International Business

Trans Adriatic Pipeline” and that “no party may denounce or withdraw from this Agreement or suspend the performance of its obligations under this Agreement without the prior consent of each of the other Parties”.41

Ratification and Entry into Force The TAP IGA also has an Article on Entry into Force in accordance with which the Agreement “shall enter into force on the date that the respective national instruments of ratification have been exchanged by all the Parties”, being the effective date of the agreement, while upon ratification “each Party shall take the necessary legal measures to implement the provisions of this Agreement”.42 The Model IGA does not have a similar provision regarding ratification and entry into force.

Exclusions Due to the non-binding nature of the Model IGA, there are a number of clauses and provisions that have been excluded from the TAP IGA, some of which have been set out above, while other issues that are not included relate to the provision of land rights, 43 title to or ownership of natural gas in the Pipeline System, 44 security, 45 non-discrimination,46 and several final provisions in Part IV of the Model IGA relating to isolation of any boundary or territorial disputes, 47 state succession, 48 and force majeure .49 ______

41 TAP IGA, Clause 12. 42 TAP IGA, Clause 14. 43 Model IGA, Article 6, provides that “Each State undertakes to grant and maintain such Land Rights as may be reasonably necessary for the conduct of Project Activities under fair, transparent, legally enforceable and clear commercial terms and conditions . . .”. 44 Model IGA, Article 8, provides that “No State shall impose any requirement with respect to title to or ownership of Natural Gas in the Pipeline System or any part thereof, other than through a commercial shipping or transportation agreement to which it is a party”. 45 Model IGA., Article 12, provides that “each State shall use its best endeavors to ensure the security of Land Rights, the Pipeline System and all Persons within the Territory of that State involved in Project Activities and of all Natural Gas from time to time transported within its Territory through the Pipeline System”. 46 Model IGA, Article 14, requires treatment in relation to project activities to be no less favorable than national treatment and covers goods, works technology, and services, while there also are a number of specific paragraphs regarding taxes. 47 Model IGA, Article 15, provides that each State agrees that any boundary or territorial dispute will not affect its obligations under the Agreement. 48 Model IGA, Article 16. 49 Model IGA, Article 17. Christina Vlachtsis 197

TAP HGA Greece and Model HGA

Preamble According to the Preamble to the TAP HGA Greece, the agreement is entered into in furtherance of the TAP IGA for the purpose of implementing into Greek law the State’s obligation, agreements, and undertakings under or in connection with the TAP IGA. 50 It is provided that “the Parties acknowledge that the Project is of strategic importance as it will enable Greece to strengthen its position as a core transit country for the European Union’s energy security and diversity of supply objectives”, while it is stated that it will “bring potential supplies of Natural Gas to Greece; deliver fiscal revenues and other economic benefits to Greece by way of taxes, employment and growth; and provide a basis for cooperation between the Parties in relation to future energy projects”.51 Most importantly, the TAP HGA Greece clarifies that the “Project Investor shall, in Greece, have the right to implement the Project and construct, own and operate the Pipeline System and utilize the resulting capacity of the Pipeline System”52 with the State agreeing “to promote and protect investment in the Pipeline System and to safeguard the efficient, secure, stable and predictable development, ownership and operation of the Pipeline System within the Greek Territory”.53 The reference to “own” and “ownership” which are included in square brackets in the Model HGA have therefore been included in the TAP HGA Greece, while it is clarified that the Project Investor shall have the role of operator of the Pipeline System. Moreover, language in the Model HGA regarding the Host Government’s agreement to promote and protect the investment and to safeguard the efficient and secure development, ownership, and operation of the Pipeline System is preserved and slightly expanded upon in the TAP HGA Greece. The Model HGA also includes an Article on Transport of Natural Gas, 54 which is to some extent reflected in a sub-Article of the TAP HGA Greece,55 while it also has an Article on Evidence of Rights56

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50 TAP HGA Greece, Whereas Clause (G). 51 TAP HGA Greece, Whereas Clause (B). 52 TAP HGA Greece, Whereas Clause (C). 53 TAP HGA Greece, Whereas Clause (D). 54 Model HGA, Article 5, Transport of Natural Gas. 55 TAP HGA Greece, Clause 3.5, Relationship with the Energy Charter Treaty. 56 Model HGA, Evidence of Rights, Article 6. 198 Comparative Law Yearbook of International Business

whose objective is indirectly achieved in a sub-Article of the TAP HGA on Relationship with Greek Law. 57

Formalities More particularly, as regards the clause on Effective Date, the TAP HGA Greece provides for a number of additional formalities for the entry into force of the agreement compared to the Model HGA. In addition to rendering effectiveness of the agreement subject to it being executed by the parties, it is a requirement that both the TAP IGA and the TAP HGA Greece be ratified by the Greek Parliament and published in the Government Gazette .58 This requirement has been fulfilled in relation to both agreements. Additionally, the effectiveness of the Agreement is subject to State Aid Clearance being obtained which has been granted by the European Commission. 59

Relationship with Treaties, Agreements, and Laws The TAP HGA Greece also has a more extensive Article on Relation- ship with Treaties and Laws as compared to the Model HGA. It provides that the agreement is entered into in execution and implementation of the obligations of the State under the TAP IGA and the advance pricing agreement (APA), 60 in elaboration of the principles and undertakings set out in the TAP IGA and for the purposes of transposing into Greek law Greece’s obligations under these agreements. 61 Moreover, Greece provides a number of representations and war- ranties to confirm that it has completed all necessary legislative action to endow the TAP IGA as binding on the State under both inter-national and Greek law and will proceed in the same manner as regards the APA to render it binding on Greece and enforceable by the Project Investor

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57 TAP HGA Greece, Relationship with Greek Law, Clause 3.2. 58 TAP HGA Greece, Clause 2.1, Paragraphs (b) and (c). 59 TAP HGA Greece, Clause 2.1, Paragraph (d); European Commission Press Release, State Aid: Commission approves agreement between Greece and TAP, Brussels 3 March 2016. 60 The APA is entered into, or to be entered into, between the State and the Swiss Confederation on the allocation of income between the Project Investor and its permanent establishment in the State in accordance with Article 24 of the Double Tax Treaty between the Swiss Confederation and Greece (as per the definition in the TAP HGA Greece). 61 TAP HGA Greece, Clause 3.1(b). Christina Vlachtsis 199

under Greek law. 62 It is provided that Greece will facilitate the Project’s implementation under transparent and non-discriminatory conditions without imposing any unreasonable delays, restrictions, or charges. 63 This partially reflects a provision in the Model HGA which provides that “the Host Government shall take the necessary measures to facilitate the transport of natural gas in connection with the project … without … discrimination as to pricing on the basis of such distinctions, and without imposing any unreasonable delays, restrictions or charges”.64 The TAP HGA Greece more particularly provides that Greece will not, unless through a competent authority pursuant to EU Regulation 994/2010, on Security of Gas Supply, interrupt, curtail, delay, or otherwise impede the flow of natural gas through the Pipeline System. 65 With a similar objective, the Model HGA provides a contrario that the “Host Government agrees to permit … the transit of natural gas via the Pipeline System . . . consistent with the principle of freedom of transit … and without imposing any unreasonable delays, restrictions or charges”.66 The TAP HGA Greece also sets out the proceedings if any event occurs or situation arises which threatens or results in the interruption, curtailment, or otherwise impedes any aspect of the Project in the Greek territory with a view to eliminating threats, notifying the Project Investor where necessary, and restoring the situation at the earliest possible opportunity, as the case may be. 67

Interpretation and Scope of Agreement The first section of both agreements are entitled “Interpretation and Scope of the Agreement”, which incorporates an Article on Definitions and Interpretation, Effective Date and Duration (Model HGA) 68 / Effec- tive Date (TAP HGA Greece) 69 as well as an Article on Relationship to Other Agreements (Model HGA) 70 /Relationship with Treaties and Laws (TAP HGA Greece). 71 The TAP HGA Greece includes a stabilization clause which explic- itly provides that “no Greek law, other than the Constitution, principles ______

62 TAP HGA Greece, Clause 3.1(c), (i) and (ii). 63 TAP HGA Greece, Clause 3.1(c). 64 Model HGA, Article 5(1)(iv)(ii). 65 Model HGA, Article 5(1)(iv)(iii). 66 Mode