On 16 May 2018, an ICSID arbitral tribunal issued a final award on jurisdiction, merits and costs in favour of a Dutch investor against Spain.

The dispute arose out of the Respondent’s reforms on the renewable energy market, undertaken from 2012 to 2014. All these regulatory modifications occurred after years of the State’s encouraging of foreign investments into the renewable energy sector, pursuant the objectives of the Kyoto Protocol and of the Renewables Directive 2001 of the European Union. The pursuit of private investments commenced in 1997, where Spain set up two regulatory regimes – one for traditional generation plants and a special regime for the plants generating electricity from non-consumable renewable energy. The generators under that special regime benefited from a premium fixed by the State and from other financial incentives. In 2007, following the European Commission’s communication on energy policy, Spain enacted new legislation in the field. On this basis, the Claimant entered in a joint venture set-up in Spain and invested in three solar power plants in the host State, subject to the special regime. The reforms, starting in 2012, as alleged by the Claimant, affected these projects. In particular, the Respondent introduced a 7 per cent levy on production revenues and changed the remuneration regime for power generation. As a result, the Claimant filed a claim on the basis of the Energy Charter Treaty, alleging a violation of the fair and equitable treatment guarantee under Article 10(1).

The arbitral tribunal rejected the majority of the Respondent’s objections on the ratione personae, ratione materiae and ratione voluntatis jurisdiction of the tribunal, as well as the intra-EU objections raised by Spain. With the regard to the ratione personae objection, it considered that the Respondent failed to provide sufficient evidence for its allegation that the dispute was de facto between two States. Since the Claimant cannot be equated to a State and it complies with the incorporation test, the objection was dismissed. Then, as the Claimant’s investments satisfy the relevant definitions of the ECT and of the ICSID Convention, the ratione materiae objection was also rejected. Turning to the ratione voluntatis objections, the arbitral tribunal addressed the denial of benefits plea under Article 17(1) of the ECT and the carve-out provision allegedly applicable to the Respondent’s taxation regime under Article 21(1) of the ECT. Since the cumulative criteria enabling States to deny benefits are not satisfied, this objection was not accepted. In contrast, the arbitral tribunal declined its jurisdiction regarding the claims based on the 7 percent levy, in conformity with Article 21(1) of the ECT. As far as the intra-EU objections were concerned, the arbitral tribunal analyzed the positions of the parties, in general and specifically related to the Achmea judgement of the CJEU, as well as took into account the intervention of the European Commission in the form of amicus curiae submissions. It concluded that it cannot uphold the Respondent’s intra-EU jurisdictional objections. With the regard to the merits, the arbitral tribunal found that in view of special commitments given to the Claimant by the Respondent, Spain failed to guarantee legal stability. Therefore, the Claimant suffered from a violation of the fair and equitable treatment standard. As a result, the Respondent was ordered to pay to the Claimant 64.5 million euros as damages, plus pre-award and post-award interests. The parties were ordered to bear their own expenses, including costs of legal representation, and to assume equally the costs of arbitration.