On 15 June 2018, an arbitral tribunal awards investors, under the Energy Charter Treaty (“ECT”), 112 million euros as compensation for their claim relating to reforms undertaken in the renewable energy sector in Spain.

First, the arbitral tribunal rejects Respondents’ intra-European Union (“EU”) objections to its jurisdiction. It considers that Claimants are qualified as “investors of another Contracting Party” pursuant to article 26 of the ECT, even if the EU is also a member of the ECT. In particular, it emphasized on this issue that the EU’s consent to arbitration under the ECT did not supersede each sovereign EU member State’s consent. It also rejects the argument of the EU dispute resolution mechanism exclusivity, concluding that this matter had to be resolved between the EU and its member States. The tribunal accepts Respondent’s objection to jurisdiction, which was related to the tax levy on the value of the production of electricity.

On the merits, the arbitral tribunal finds that Respondent breached its obligation under the fair and equitable treatment standard set out in article 10(1) of the ECT which protects investors’ legitimate expectations. Specifically, it underlines the State’s obligations to afford fundamental stability of the legal regime relied upon by the investors when they decide to make long-term investments. In this case, Claimants had legitimate expectations that the legal framework relating to renewable energy plants would remain stable because Respondent represented, through its acts, incentives and regulations, that it would keep a stable and predictable regime.