Novenergia, an investment fund in Luxembourg, invested in eight photovoltaic plants in the Kingdom of Spain in 2007. It did so relying on the country’s explicit offer in its regulatory framework of a fixed long-term price for energy. However, subsequent regulations retroactively repealed this framework. Norvenergia initiated arbitration proceedings before the Stockholm Chamber of Commerce under the Energy Charter Treaty arguing that its legitimate expectations were violated as Spain gave no warning signs that it would abolish the entire regime. Spain argued that Novenergia was warned and had foreseen, or ought to have foreseen, the abolition of the regulatory regime.

The arguments invoked by Spain failed to convince the Arbitral Tribunal which concluded that Spain violated Article 10(1) of the ECT. It found that the Claimant had legitimate and reasonable expectations that there would not be any radical or fundamental changes to the regime as set out in the regulatory framework. It held that the implemented measures constituted a drastic, unexpected and substantial deprivation of the Claimant’s investment contrary to Spain’s obligation to provide Fair and Equitable Treatment to investors. On this basis, the Arbitral Tribunal sentenced the Kingdom of Spain to pay EUR 53.3 million in damages and EUR 2.6 million in arbitration costs.