Procedural Posture

This document is the Decision on Annulment issued by an ICSID ad hoc Committee on June 11, 2025, in the arbitration between Sevilla Beheer B.V. and others (Claimants) and the Kingdom of Spain (Respondent). Spain sought to annul the underlying May 2023 arbitral award pursuant to Article 52(1)(b) of the ICSID Convention, alleging that the Tribunal manifestly exceeded its powers by asserting jurisdiction over an intra-EU dispute and by failing to apply European Union (EU) law to the merits.

Jurisdictional Objections and EU Law Primacy

Spain advanced ratione personae and ratione voluntatis objections, arguing that the Energy Charter Treaty (ECT) does not extend to intra-EU disputes due to the primacy of EU law and the binding jurisprudence of the Court of Justice of the European Union (CJEU), specifically the Achmea and Komstroy decisions. Spain contended that the Tribunal committed an egregious error by refusing to decline jurisdiction on these grounds. The Claimants maintained that the Tribunal correctly applied the ECT and that its jurisdictional findings were tenable and immune from annulment review.

Committee's Analysis on Jurisdiction

The Committee rejected Spain's jurisdictional challenges, finding no manifest excess of powers. It observed that the Tribunal properly exercised its compétence de la compétence in determining that the ECT, rather than EU law, governed its jurisdiction. The Committee noted that the Tribunal conducted a thorough treaty interpretation, concluding that the ECT lacked an implied disconnection clause and that the CJEU's rulings did not bind the Tribunal or invalidate the Contracting Parties' consent under ECT Article 26. The Committee held that the Tribunal's refusal to defer to EU law primacy was a legitimate exercise of its interpretative discretion, not an annullable excess of power.

Committee's Analysis on the Merits

Spain further argued that the Tribunal manifestly exceeded its powers by failing to apply EU State aid rules, which Spain claimed should have negated the investors' legitimate expectations under ECT Article 10(1). The Committee dismissed this ground, determining that Spain's argument effectively challenged the Tribunal's factual assessment of the regulatory framework and the investors' expectations. Because annulment review under Article 52(1)(b) is strictly limited to egregious misapplications of the proper law and does not permit a reassessment of the Tribunal's factual findings, the Committee found Spain's merits-based challenge fell outside the permissible scope of review.

Decision and Costs

In its dispositive section, the Committee unanimously rejected Spain's Application for Annulment in its entirety. Applying the "costs follow the event" principle, the Committee ordered Spain to bear all costs of the annulment proceedings, totaling USD 407,227.10, and to reimburse the Claimants for their legal fees and expenses in the amount of EUR 512,898.60. Consequently, the provisional stay of enforcement of the Award was automatically terminated.