Spanish feed-in tariff cuts: foreign investors in Spanish solar PV plant lose the first arbitration case

The news came on Monday (25 January 2016) that an arbitral tribunal reached one of the first ruling in a case concerning the cuts to the renewable energy support schemes in Spain, more precisely the changes made in 2010 by the government to the Spanish feed-in tariff in favour of PV solar installations (RDL 14/2010).

The claims was raised against Spain by two foreign investors: the Dutch-based company Charanne B.V. and the Luxembourg-based company Construction Investments S.A.R.L, both stakeholders in a Spanish PV plant runned by the Spanish energy Company Isolux. The companies' claims for compensation were dismissed and the companies which must now pay EUR1.2 million in legal and administrative costs to the Spanish Kingdom.

This ruling is only the first one of a long series - around 20 cases pending - raised on the basis of the provisions on investment protection of the Energy Charter Treaty. In the present case, the Court concluded that the Spanish government did not breach any investors' legitimate expectations under international law (Energy Charter Treaty 1994). The main conclusion here was that the obligation to provide fair and equitable treatment to foreign investors does not prevent the state from amending its national support scheme for renewables. The argument of public interest was also raised in relation to electricity prices paid by final customers, but was rejected.

Reference: press release from the Spanish Ministry of Industry, Energy and Tourism, including final ruling (in Spanish)