Procedural Posture and Factual Background
This document is a Request for Arbitration dated April 16, 2015, filed by German entities BayWa R.E. Renewable Energy GmbH and BayWa R.E. Asset Holding GmbH (the "Claimants") against the Kingdom of Spain (the "Respondent"). The Claimants initiate proceedings before the International Centre for Settlement of Investment Disputes (ICSID) under the dispute resolution provisions of the Energy Charter Treaty (ECT) and the ICSID Convention.
The dispute arises from a series of legislative and regulatory measures enacted by Spain between 2012 and 2014 that fundamentally altered the legal framework for renewable energy. The Claimants allege they invested in two wind farms in Spain in reliance upon a stable and predictable incentive-based framework, known as the "Special Regime," which was designed to attract investment through a feed-in remuneration system. They contend that Spain's subsequent reforms dismantled this regime, thereby destroying the economic value of their investments.
Claimants' Allegations and Legal Basis
The Claimants detail a sequence of adverse measures, including the introduction of a 7% tax on electricity production revenues (Act 15/2012), the retroactive elimination of premiums under the feed-in system (Royal Decree-Law 2/2013), and the complete abrogation of the Special Regime. This was replaced by a new remuneration framework based on a "reasonable rate of return" on investment, which, for the Claimants' specific facilities, allegedly resulted in a specific remuneration value of zero.
The Claimants assert that these measures, individually and collectively, constitute breaches of Spain's obligations under Part III of the ECT. The primary claims are for violations of the fair and equitable treatment (FET) standard under Article 10(1) of the ECT, including the frustration of the Claimants' legitimate expectations of a stable regulatory environment. They also allege breaches of the obligation to provide constant protection and security, the prohibition on unreasonable or discriminatory impairment of their investment, and the umbrella clause. Furthermore, the Claimants argue that the measures amount to an indirect expropriation without prompt, adequate, and effective compensation, in contravention of Article 13 of the ECT.
Jurisdiction and Relief Sought
The Claimants establish the basis for ICSID jurisdiction under Article 26 of the ECT and Article 25 of the ICSID Convention, citing the existence of a legal dispute between a Contracting Party (Spain) and investors of another Contracting Party (Germany) arising directly out of an investment. They confirm compliance with the treaty's three-month cooling-off period prior to commencing arbitration.
The Claimants request the constitution of a three-member arbitral tribunal and seek relief including: (i) a declaration that Spain has violated its obligations under the ECT and international law; (ii) an order for full compensation for all injuries and losses suffered; (iii) an award of the entire costs of the arbitration; and (iv) pre- and post-award interest.