Procedural Posture and Parties' Submissions

This document is the Decision of the ad hoc Committee on the Kingdom of Spain's application to annul the arbitral award rendered on 31 May 2019 in ICSID Case No. ARB/15/15. Spain sought annulment under Article 52(1) of the ICSID Convention on two primary grounds: (i) manifest excess of powers by the arbitral tribunal, and (ii) failure to state reasons.

Spain argued that the Tribunal manifestly exceeded its powers by improperly asserting jurisdiction over an intra-EU dispute under the Energy Charter Treaty (ECT), contrary to the primacy of EU law as established in the CJEU's Achmea and Komstroy judgments. Spain further contended the Tribunal exceeded its powers by wrongly dismissing its denial of benefits objection and by arbitrarily quantifying damages. On the second ground, Spain alleged a failure to state reasons concerning the applicability of EU law, the denial of benefits, the findings on liability, and the calculation of damages. The Claimant, 9REN Holding S.à.r.l., countered that Spain's application was a disguised appeal on the merits and that the Tribunal's findings were well-reasoned and fell within its jurisdictional mandate and margin of appreciation.

The Committee's Analysis of Annulment Grounds

The Committee systematically analyzed and dismissed each of Spain's grounds for annulment, underscoring the high threshold for annulment and the prohibition against reviewing the merits of an award.

On the alleged manifest excess of powers regarding jurisdiction, the Committee found that the Tribunal's approach was tenable. It distinguished between the addressees of the EU law primacy rule (EU bodies and national courts) and the ECT primacy rule (international arbitral tribunals). The Committee determined that the Tribunal, constituted under the ECT and ICSID Convention, was not a body created by EU Member States and therefore correctly derived its jurisdiction from the plain text of the ECT, which contains no carve-out for intra-EU disputes. The Tribunal's reliance on established ECT jurisprudence was deemed a permissible exercise of its adjudicative function, not a manifest error.

Regarding the quantum of damages, the Committee held that the Tribunal did not decide ex aequo et bono but rather exercised its permissible 'margin of appreciation' in assessing complex evidence. The Committee found that the Tribunal's 20% reduction to the claimed damages was based on explicitly stated factors, and a review of the precise calculation would constitute an impermissible re-examination of the merits.

On the alleged failure to state reasons, the Committee concluded that the Tribunal had provided a sufficient basis for its conclusions on all challenged points. It found the Tribunal had extensively reasoned its position on the applicability of law, had adequately addressed the denial of benefits objection, and had provided a comprehensible, albeit concise, rationale for its findings on both liability and the quantum of damages, thereby meeting the minimum standard required by Article 52(1)(e).

Decision and Costs

The Committee unanimously decided to dismiss Spain's application for annulment in its entirety. Consequently, the stay of enforcement of the Award was terminated. The Committee ordered Spain to bear all costs of the annulment proceedings, including the Committee's fees and ICSID's administrative expenses. Furthermore, Spain was ordered to reimburse the Claimant for 75% of its legal fees, amounting to USD 1,131,803.62, with interest to accrue if not paid within sixty days.