08/02/2016

First investor-state arbitration award in the Spanish renewables cases handed down in favour of Spain

CHARANNE B.V. & CONSTRUCTION INVESTMENTS S.A.R.L VS THE KINGDOM OF SPAIN

Monica Feria-Tinta looks at the first renewable energy award arising from the Spanish energy reforms, issued last 21 January by an arbitral tribunal with seat in Madrid. 

A tribunal in an investor-state arbitration under the Stockholm Chamber of Commerce rules issued an award on 21 January 2016, in the first of a series of cases arising from reforms Spain made in the renewable energy sector. The tribunal presided over by Alexis Mourre, found that regulatory measures modifying the feed-in tariff regime for the photovoltaic sector in Spain did not amount to an indirect expropriation and did not violate the investors’ legitimate expectations. 

The claim, brought by investors from Netherlands and Luxembourg (Charanne B.V. and Construction Investments S.A.R.L respectively) under the Energy Charter Treaty (“ECT”), alleged that regulatory reforms implemented by Spain to the tariff regime applied to electricity generation systems based on photovoltaic solar energy in 2010 (i) had amounted to an expropriation (in violation of Article 13 of the ECT) (ii) violated fair and equitable treatment to the detriment of the claimants, contrary to article 10 (1) of the ECT, and (iii) that by failing to provide effective means under Spanish domestic law for the assertion of their claims and the enforcement of their rights with regard to their investments, Spain had incurred further, in violation of Article 10 (12) of the ECT. The original regime included incentives and grants to investors in the area of renewable energy which were subsequently modified. The claimants argued that “after having attracted their investment in the photovoltaic sector” Spain had “illegally modif[ied] the special regime that regulates that industry” causing them damages.

 

Read the full article here.