INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
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CERTIFICATE
9REN HOLDING S.À.R.L
v.
KINGDOM OF SPAIN
(ICSID CASE NO. ARB/15/15)
ANNULMENT PROCEEDING
I hereby certify that the attached document is a true copy of the English version of the ad hoc Committee’s Decision on Annulment dated 17 November 2022.
Signature
Meg Kinnear
Secretary-General
Washington, D.C., 17 November 2022
INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
In the annulment proceeding between
9REN Holding S.à.r.l
and
Kingdom of Spain
(ICSID Case No. ARB/15/15)
Members of the ad hoc Committee
Prof. Dr. Dário Moura Vicente, President of the ad hoc Committee
Prof. Dr. Nicolas Molfessis, Member of the ad hoc Committee
Dr. Fernando Piérola-Castro, Member of the ad hoc Committee
Secretary of the ad hoc Committee
Ms. Anna Toubiana
Date of dispatch to the Parties: 17 November 2022
[Page i]
[Page iii]
| 9REN | 9REN Holding S.à.r.l. |
| Achmea | Judgment of the CJEU (Grand Chamber) of 6 March 2018, Slowakische Republik v. Achmea BV, case C 284/16, ECLI:EU:C:2018:158, CL-180 |
| Applicant | Kingdom of Spain |
| Award | Award rendered on 31 May 2019 in ICSID Case No. ARB/15/15 |
| Tribunal | Arbitral Tribunal that rendered the 9REN Award |
| AfA | Spain’s Application for Annulment dated 3 April 2020 |
| BIT | Bilateral Investment Treaty |
| C- | Claimant’s Exhibit |
| CL- | Claimant’s Legal Authority |
| C-MoA | Counter-Memorial on Annulment dated 9 February 2021 |
| Claimant | 9REN Holding S.à.r.l. |
| Committee | Ad hoc Committee appointed to decide on the request for annulment of the 9REN Award |
| CcS | Claimant’s Closing Statement |
| CJEU | Court of Justice of the European Union |
| CoS | Claimant’s Opening Statement |
| EC | European Commission |
| ECT | Energy Charter Treaty |
| EU | European Union |
| FET | Fair and Equitable Treatment |
| ICSID | International Centre for Settlement of Investment Disputes |
| ICSID Convention | Convention on the Settlement of Investment Disputes between States and Nationals of Other States dated 18 March 1965 |
| ICSID Arbitration Rules | ICSID Rules of Procedure for Arbitration Proceedings |
| Komstroy | Judgment of the CJEU (Grand Chamber) of 2 September 2021, République de Moldavie v. Komstroy LLC, case C 741/19, ECLI:EU:C:2021:655, C-319 |
| MoA | Respondent’s Memorial on Annulment dated 30 October 2020 |
| NDP | Non-Disputing Party |
| R- | Respondent’s Exhibit |
| RcS | Respondent’s Closing Statement |
| RD 661/2007 | Royal Decree 661/2007, of 25 May 2007, which regulates the activity of electricity production under the special regime |
[Page iv]
| REIO | Regional Economic Integration Organization |
| RejoA | Claimant’s Rejoinder on Annulment dated 27 July 2021 |
| Respondent | Kingdom of Spain |
| RL- | Respondent’s Legal Authority |
| RoA | Respondent’s Reply on Annulment dated 4 May 2021 |
| RoS | Respondent’s Opening Statement |
| Spain | The Kingdom of Spain |
| TEU | Treaty on European Union dated 7 February 1992 |
| TFEU | Treaty on the Functioning of the European Union dated 25 March 1957 |
| EU Treaties | Treaty on European Union and Treaty on the Functioning of the European Union |
| TVPEE | Tax on the Value of the Production of Electrical Energy |
| VCLT | Vienna Convention on the Law of Treaties, dated 23 May 1969 |
[Page 1]
1. These proceedings concern a request for the annulment of the Award rendered on 31 May 2019 (hereinafter the “Award”) by the Arbitral Tribunal composed of The Honorable Ian Binnie, C.C., K.C., acting as President, and Messrs. David R. Haigh, K.C., and V.V. Veeder, Q.C., acting as Co-Arbitrators (hereinafter the “Tribunal”).
2. That Award decided a dispute submitted to the International Centre for Settlement of Investment Disputes (hereinafter “ICSID"), based on the Energy Charter Treaty (hereinafter “ECT”) and the ICSID Convention, which opposed 9REN Holding S.à.r.l. (hereinafter “9REN” or “Claimant") and the Kingdom of Spain (hereinafter “Spain,” "Respondent” or “Applicant”) (ICSID Case No. ARB/15/15).
3. The dispute concerns compensation sought by 9REN from Spain, pursuant to the ECT, for losses allegedly arising from investments made in the renewable energies sector and the alleged breach by Spain of its obligations under the ECT with respect to those investments.
4. In its Award, the Tribunal granted the following relief:
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5. The Parties were represented in these proceedings as follows:
| For 9REN: | For Spain: |
| Mr. Kenneth R. Fleuriet Ms. Héloïse Hervé King & Spalding 48 bis Rue de Monceau 75008 Paris France |
Ms. María del Socorro Garrido Moreno Ms. María Andrés Moreno Mr. Javier Castro López Ms. Gabriela Cerdeiras Megías Mr. Pablo Elena Abad Mr. Antolín Fernández Antuña Ms. Lorena Fatás Pérez Ms. Patricia Froehlingsdorf Nicolás Mr. José Manuel Gutiérrez Delgado Ms. Ines Guzman Gutierrez Ms. Lourdes Martínez de Victoria Gómez Ms. Amparo Monterrey Sánchez Ms. Elena Oñoro Sainz Ms. Amaia Rivas Kortázar Ms. María José Ruiz Sánchez Mr. Francisco Javier Torres Gella Mr. Alberto Torró Molés Abogacía General del Estado Departamento de Arbitrajes Internacionales c/ Marqués de la Ensenada, 14-16, 2ª planta 28004, Madrid Spain |
| Mr. Reginald R. Smith Mr. Kevin D. Mohr King & Spalding 1100 Louisiana St., Suite 4000 Houston, TX 77002 U.S.A. |
|
| Mr. Christopher S. Smith Ms. Rikki Stern King & Spalding LLP 1180 Peachtree St. NE, Suite 1600 Atlanta, GA 30309 U.S.A. |
6. On 3 April 2020, ICSID received an Application for Annulment of the Award from Spain (hereinafter “AfA”). The AfA was filed pursuant to Article 52(5) of the ICSID Convention and Rule 50 of the ICSID Rules of Procedure for Arbitration Proceedings (hereinafter the “ICSID Arbitration Rules”). In its AfA, Spain requested that the enforcement of the Award be stayed provisionally pursuant to Article 52(5) of the ICSID Convention.
7. On 7 April 2020, the Secretary-General registered the AfA pursuant to ICSID Arbitration Rule 50(2). She also informed the Parties that, pursuant to Article 52(3) of the ICSID Convention, the Chairman of the Administrative Council of ICSID would proceed with the
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appointment of an ad hoc committee. Finally, the Secretary-General confirmed the provisional stay of enforcement of the Award pursuant to ICSID Arbitration Rule 54(2).
8. On 6 May 2020, the Secretary-General informed the Parties of her intention to propose to the Chairman of the ICSID Administrative Council the appointment to the ad hoc Committee of Dr. Karim Hafez, a national of Egypt, as President of the ad hoc Committee, Prof. Dr. Dário Moura Vicente, a national of Portugal, and Prof. Dr. Nicolas Molfessis, a national of France. The Parties were asked to submit any observations by 13 May 2020.
9. By letter dated 12 May 2020, the Applicant sought additional clarifications from Dr. Hafez. The Applicant's letter was transmitted to Dr. Hafez on the same date.
10. On 14 May 2020, 9REN confirmed it had no observations in relation to the proposed candidates for the ad hoc Committee.
11. On 20 May 2020, the Parties were informed of Dr. Hafez's response to Spain's request for additional clarifications dated 12 May 2020.
12. On 22 May 2020, Spain confirmed it had no further observations on the proposed candidates for the ad hoc Committee.
13. On 28 May 2020, the Secretary-General notified the Parties that the Chairman of the ICSID Administrative Council would proceed to appoint Dr. Karim Hafez, Prof. Dr. Nicolas Molfessis and Prof. Dr. Dário Moura Vicente. The ad hoc Committee (hereinafter the “Committee”) was constituted on 8 June 2020 and the annulment proceeding was deemed to have begun as of that date pursuant to Arbitration Rules 6, 52(2), and 53. On the same date, the Secretary-General informed the Parties that Ms. Anna Toubiana, ICSID Legal Counsel, would serve as Secretary of the Committee.
14. On 20 July 2020, the Committee held a First Session by video conference. An audio recording of the session was distributed to the Members of the Committee as well as to the Parties. Participating in the session were:
Members of the ad hoc Committee
Dr. Karim Hafez, President of the ad hoc Committee
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Prof. Dr. Nicolas Molfessis, Member of the ad hoc Committee
Prof. Dr. Dário Moura Vicente, Member of the ad hoc Committee
ICSID Secretariat
Ms. Anna Toubiana, Secretary of the ad hoc Committee
Participating on behalf of 9REN Holding S.à.r.l
Mr. Kenneth Fleuriet, King & Spalding LLP
Ms. Amy Frey, King & Spalding LLP
Ms. Inés Vazquez García, Gómez-Acebo & Pombo
Participating on behalf of the Kingdom of Spain
Mr. Pablo Elena Abad, Abogacía General del Estado – Ministry of Justice
Mr. Alberto Torró Molés, Abogacía General del Estado – Ministry of Justice
Ms. Gabriela Cerdeiras Megías, Abogacía General del Estado – Ministry of Justice
15. During the First Session, the Committee and the Parties considered (i) the draft procedural order circulated by the Secretary of the Committee on 1 July 2020 and (ii) the Parties' comments and respective positions on the draft procedural order submitted on 13 July 2020.
16. Among other items on the agenda, the Parties confirmed the proper constitution of the Committee and the timetable for the proceeding.
17. On 20 July 2020, Spain filed a request to continue the stay of enforcement of the Award.
18. On 23 July 2020, the Committee issued Procedural Order No. 1 governing the procedural matters of the annulment proceeding, including the further schedule of written and oral pleadings.
19. On 3 August 2020, 9REN filed observations on Spain's request to continue the stay of enforcement of the Award.
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20. On 13 August 2020, Spain filed a response to 9REN's observations of 3 August 2020.
21. On 24 August 2020, 9REN filed further observations on Spain's response of 13 August 2020.
22. On 30 October 2020, Spain filed a Memorial on Annulment (hereinafter “MoA”), together with Exhibits R-0359 and R-0360, Legal Authorities RL-0144 through RL-0173, and an Expert Report by Prof. Steffen Hindelang (hereinafter “Hindelang Report 1").
23. On 20 January 2021, the European Commission (hereinafter “EC”) submitted with the ICSID Secretariat an Application for Leave to Intervene as a Non-Disputing Party pursuant to ICSID Arbitration Rule 37(2).
24. On 1 February 2021, the Secretary-General informed the Parties that Ms. Anna Toubiana would be taking maternity leave and therefore would be replaced by Mr. Francisco Grob as Secretary of the Committee.
25. On 5 February 2021, both Parties filed Observations on the Non-Disputing Party's Application.
26. On 9 February 2021, 9REN filed a Counter-Memorial on Annulment (hereinafter “C-MoA”), together with Exhibits C-1, C-92, C-242 through C-246, C-249, C-279, C-281 through C-307, Legal Authorities CL-6, CL-20, CL-71, CL-79, CL-80, CL-95, CL-99, CL-101, CL-102, CL-109, CL-110, CL-113 through CL-115, CL-129, CL-131, CL-158, CL-162, CL-166 through CL-168, CL-173, CL-177, CL-180, CL-192 through CL-198, CL-201, CL-203, CL-213, CL-216, CL-219 through CL-332, and an Expert Report by Prof. Piet Eeckhout (hereinafter “Eeckhout Report 1").
27. On 4 May 2021, Spain filed a Reply on Annulment (hereinafter “RoA”), together with Exhibits R-0361 through R-0377, Legal Authorities RL-0175 through RL-0197, and the Second Expert Report by Prof. Steffen Hindelang (hereinafter “Hindelang Report 2").
28. On 27 July 2021, 9REN filed a Rejoinder on Annulment (hereinafter “RejoA”), together with Exhibits C-308 through C-318, Legal Authorities CL-333 through CL-353, and the Second Expert Report by Prof. Piet Eeckhout (hereinafter “Eeckhout Report 2”).
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29. On 30 August 2021, Ms. Toubiana resumed her work as Secretary of the Committee.
30. Ensuing Committee member Karim Hafez's resignation, on 14 September 2021, ICSID notified the Parties of the Committee's vacancy and suspended the proceeding pursuant to ICSID Arbitration Rule 10(2).
31. On 15 October 2021, the Committee was reconstituted. The new Committee was composed of Prof. Dr. Dário Moura Vicente (Portuguese), now President of the Committee, Prof. Dr. Nicolas Molfessis (French), and Dr. N. Fernando Piérola-Castro (Peruvian/Swiss). Following the reconstitution of the Committee, the proceeding resumed pursuant to ICSID Arbitration Rules 12 and 53.
32. On 19 November 2021, the Committee issued a Decision on the Continuation of the Stay of Enforcement of the Award. The Committee decided that the stay of enforcement of the Award should be continued and reserved the issue of costs on this request to the Committee's final decision on the AfA.
33. On the same day, the Committee issued a Decision on the European Commission's Application to file a written submission pursuant to ICSID Arbitration Rule 37(2), granting in part the EC's application.
34. On 9 December 2021, the EC filed a written submission pursuant to ICSID Arbitration Rule 37(2).
35. On 7 February 2022, the Committee held a pre-hearing organizational meeting with the Parties by video conference.
36. On 23 February 2022, the Committee issued Procedural Order No. 4 regarding the organization of the hearing.
37. The Hearing took place in Paris, France, from 9-11 March 2022. The following persons attended the Hearing:
Members of the ad hoc Committee
Prof. Dr. Dário Moura Vicente, President of the ad hoc Committee
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Prof. Dr. Nicolas Molfessis, Member of the ad hoc Committee
Dr. N. Fernando Piérola-Castro, Member of the ad hoc Committee
ICSID Secretariat
Ms. Anna Toubiana, Secretary of the ad hoc Committee
Participating on behalf of 9REN Holding S.à.r.l
Mr. Kenneth Fleuriet, King & Spalding LLP
Ms. Amy Frey, King & Spalding LLP
Ms. Violeta Valicenti, King & Spalding LLP
Expert appointed by 9REN
Prof. Piet Eeckhout
Participating on behalf of the Kingdom of Spain
Ms. Lorena Fatás, Abogacía General del Estado – Ministry of Justice
Ms. Lourdes Martínez de Victoria, Abogacía General del Estado – Ministry of Justice
Ms. Amparo Monterrey Sánchez, Abogacía General del Estado – Ministry of Justice
Expert appointed by the Kingdom of Spain
Prof. Steffen Hindelang
Court Reporters
Ms. Anne-Marie Stallard, English Court Reporter
Ms. Elizabeth Cicoria, Spanish Court Reporter
Interpreters
Ms. Amalia Thaler, English-Spanish Interpreter
Ms. Roxana Dazin, English-Spanish Interpreter
[Page 8]
38. On 25 April 2022, Spain filed a request for leave to introduce two new legal authorities into the record. On 2 May 2022, 9REN submitted its comments on Spain's request and sought leave to introduce three new legal authorities into the record.
39. The Committee decided both requests on 4 May 2022, and invited the Parties to present simultaneous written submissions on the five new authorities by 20 May 2022, which they did.
40. On 20 June 2022, 9REN requested the Committee that two decisions rendered on 10 June 2022 by other annulment committees be accepted into the case record, and that the Committee take judicial note of their contents, without the need for further submissions from the Parties.
41. On the same date, Spain also requested that Opinion 1/20 on the compatibility with the EU Treaties of Article 26 of the draft modernised ECT, issued by the Court of Justice of the EU (hereinafter “CJEU”) on 16 June 2022, be introduced into the record without further submissions from the Parties. On 21 June 2022, Spain submitted an additional request to introduce into the record the arbitral award rendered in case SCC-2016/135, Green Power K/S and SCE Solar Don Benito v. Kingdom of Spain.
42. On 21 June 2022, the Committee accepted the abovementioned requests. However, considering the stage of the proceedings in which these were made, the Committee decided not to allow additional Parties' submissions on any of the new authorities that were thus incorporated into the case record.
43. The Parties filed their submissions on costs on 22 June 2022.
44. The proceeding was closed on 4 November 2022.
45. Spain requests the annulment of the 9REN Award on two grounds, which are summarily described in the following sections:
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46. Spain submits that the 9REN Tribunal manifestly exceeded its powers by:
47. According to Spain, the Tribunal wrongfully ruled that it had jurisdiction over an intra-EU dispute and, in doing so, grossly ignored EU law. In fact, in Spain's view:
¹ Respondent's Application for Annulment (hereinafter “AfA”), ¶¶ 34-36.
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48. In support of these arguments, Spain submits that in its Judgment of 6 March 2018, in Slowakische Republik v. Achmea BV, (hereinafter “Achmea”)², the CJEU adopted the view that Articles 267 and 344 of the TFEU prohibit EU Member States from submitting disputes requiring the interpretation or application of EU law by dispute resolution mechanisms outside the EU's judicial system.³
49. That ruling states inter alia the following:
“Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States, such as Article 8 of the BIT, under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept."⁴
50. An arbitral tribunal, Spain submits, is not part of the EU judicial system, nor can it be described as a court “of a Member State” that can refer a question to the CJEU for a preliminary ruling. However, disputes before investment protection arbitral tribunals may affect the application or interpretation of EU law and should therefore be subject to the EU judicial system.
51. Through an arbitration clause, EU Member States agree to deviate from the jurisdiction of their own courts and therefore from the EU judicial review system, so that there is no guarantee that disputes submitted to arbitration will be resolved in a way that ensures the full effectiveness of EU law.⁵ Accordingly, pursuant to the Achmea judgment, which was issued before the 9REN Award, Article 26 of the ECT does not cover intra-EU disputes.⁶
² Judgment of the CJEU (Grand Chamber) of 6 March 2018, Slowakische Republik v. Achmea BV, case C-284/16, ECLI:EU:C:2018:158, CL-180 (hereinafter, “Achmea”).
³ Respondent's Memorial on Annulment (hereinafter “MoA”), ¶ 77.
⁴ Achmea, ¶ 60.
⁵ MoA, ¶ 82.
⁶ Id., ¶ 85.
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52. The Achmea judgment is, in Spain's view, directly applicable to the case at hand, as the Tribunal was called upon to apply EU law, and the Award is not subject to review by the EU judicial system.⁷
53. Spain requests that the present Committee corrects the determination of the applicable law by the Tribunal. In line with the CJEU's holdings in Achmea, provisions such as Article 26(6) of the ECT cannot be applied between Member States of the Union, as is the case here.⁸
54. This view is supported, Spain alleges, by the EC's Communication COM (2018) 547/2, according to which all investor-state arbitration clauses in intra-EU BITs are inapplicable and any arbitration tribunal established on the basis of such clauses lacks jurisdiction due to the absence of a valid arbitration agreement.⁹
55. This understanding of Achmea was, according to Spain,¹⁰ confirmed by the ruling of the CJEU in République de Moldavie v Komstroy LLC (hereinafter “Komstroy”), in which the Court held that:
“Article 26(2)(c) ECT must be interpreted as not being applicable to disputes between a Member State and an investor of another Member State concerning an investment made by the latter in the first Member State.”¹¹
56. This view has been reiterated by the Court in its Opinion 1/20, issued on 16 June 2022, which affirms that:
“It is clear from the judgment of 2 September 2021, Republic of Moldova (C-741/19, EU:C:2021:655), and in particular from paragraphs 40 to 66 thereof, that compliance with the principle of autonomy of EU law, enshrined in Article 344 TFEU, requires
⁷ Ibid.
⁸ Id., ¶ 88.
⁹ Id., ¶ 90.
¹⁰ Respondent's Opening Statement, slides 27 ff. (hereinafter “RoS").
¹¹ Judgment of the CJEU (Grand Chamber) of 2 September 2021, République de Moldavie v Komstroy LLC, case C-741/19, ECLI:EU:C:2021:655 (hereinafter “Komstroy") ¶ 66, C-319.
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Article 26(2)(c) of the ECT to be interpreted as meaning that it is not applicable to disputes between a Member State and an investor of another Member State concerning an investment made by the latter in the first Member State.”¹²
57. Moreover, in Spain's view, the Paris Court of Appeal rulings of 19 April 2022, introduced into the record on 20 May 2022,¹³ which annulled two intra-EU BIT arbitral awards on the basis of the said case-law of the CJEU, “confirm the explanation provided for by the Kingdom of Spain about how EU Law, and in particular EU judicial system, works, as well as the binding effect on EU Member States and EU citizens of the settled case law of the CJEU."¹⁴
58. The award rendered on 16 June 2022 in Green Power K/S and SCE Solar Don Benito v. Kingdom of Spain, which Spain introduced into the record on 21 June 2022, followed, in essence, the CJEU's stance on arbitral tribunals' jurisdiction to decide disputes between investors from an EU Member State and another Member State.¹⁵ In fact, the tribunal concluded in that award that it “does not have jurisdiction to hear the claims brought by the Claimants.” To this effect, the tribunal posited, inter alia, that: (i) “Swedish law, which is applicable through the operation of Section 48 SAA, recognizes the primacy of EU law"; and that (ii) being “[s]eated in an EU Member State, it likewise cannot apply the consent to arbitrate by the Respondent and affirm its jurisdiction.”¹⁶
59. Spain submits that a tribunal manifestly exceeds its powers under Article 52(1)(b) of the ICSID Convention when it lacks jurisdiction or rules beyond the terms of its jurisdiction.¹⁷
¹² Opinion 1/20 of the Court (Fourth Chamber), 16 June 2022, RL-0212, ¶ 47.
¹³ Paris Court of Appeal, Ruling of 19 April 2022, Strabag et al. v République de Pologne, No. 48/2022, RL-210; Paris Court of Appeal, Ruling of 19 April 2022, Slot et al. v République de Pologne, No. 49/2022, RL-0211.
¹⁴ Respondent's submission of 20 May 2022, ¶ 30.
¹⁵ See Green Power K/S and SCE Solar Don Benito v. Kingdom of Spain, SCC-2016/135 Award of 16 June 2022, ¶¶ 468 ff, RL-0213 (hereinafter “Green Power").
¹⁶ Green Power, ¶ 475.
¹⁷ MoA, ¶ 94.
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There is also excess of powers where a tribunal manifestly fails to determine the applicable law or where it manifestly fails to interpret the law applicable to the dispute.¹⁸
60. The 9REN Tribunal concluded that EU law was not applicable, which, according to Spain, constitutes an excess of jurisdiction by not applying the corresponding law, and then made a partial, and erroneous application of that law.¹⁹ The Tribunal therefore manifestly exceeded its powers by declaring its jurisdiction over an intra-EU dispute.²⁰
61. In sum, Spain's position is that there is an excess of powers because:
62. Such excess of powers is manifest because the standard of evidence submitted before the Tribunal was beyond any reasonable doubt. In fact, according to Spain:
¹⁸ Id., ¶ 95.
¹⁹ Id., ¶ 106.
²⁰ Id., ¶ 83.
²¹ RoS slides 42-57.
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63. In Spain's view, 9REN cannot be considered as an investor protected by the ECT. This is so because the requirements for the “denial of benefits” objection under Article 17 of the ECT are met in the instant case.²²
64. Indeed, 9REN is owned or controlled by nationals of a third country, the United States of America,²³ and does not undertake any business at its artificially designated Luxembourg address; it is merely a “letterbox company.”²⁴
65. By recognizing 9REN the quality of an investor protected by the ECT, the Tribunal also exceeded its jurisdiction: it resolved a dispute beyond what is authorized by the Treaty. The Award should therefore be annulled for this reason.²⁵
66. Spain moreover contends that the Tribunal exceeded its powers by awarding the Claimant compensation that: (i) is inconsistent with the Tribunal's conclusions regarding the Spanish State's regulatory power; and (ii) compensates 9REN for damages in a completely arbitrary manner and contrary to the Tribunal's own conclusions.²⁶ This is allegedly the case of the Tribunal's rulings contained in paragraphs 416 and 417 of the Award.
67. The Tribunal was, Spain submits, obliged to resolve the dispute in accordance with the evidence presented by the Parties. However, the Award was “completely negligent" in making use of the "tools” provided by the Parties and improperly renounced to achieve a degree of precision that was easily attainable.²⁷
²² Respondent's Reply on Annulment (hereinafter “RoA”), ¶ 137.
²³ Id., ¶ 142.
²⁴ Id., ¶ 146.
²⁵ MoA, ¶ 119.
²⁶ Id., ¶ 120.
²⁷ Id., ¶ 128.
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68. The Tribunal's findings on liability should, according to Spain, reflect a reduction of at least 33% of the claimed damages before discount for regulatory risk was applied, as explained in its Request for Rectification.²⁸
69. Applying the liability findings in the switches included in the Excel EO-127 model would reduce the damages for the Solaica plants from EUR 51.2 to 34.5 million, and this would occur even without taking into account (i) the impact of regulatory risk, which was not specified in the Award, and (ii) the corresponding changes to the calculations made by FTI for the Spanish plants. Even before implementing these two changes, the impact of EUR 16.7 million (difference between EUR 51.2 million and 34.5 million) is significantly higher (a 20% difference) than the EUR 10.44 million included in paragraph 416 of the Award, which leads to damages of EUR 41.76 million.²⁹
70. The reduction of the Award by only EUR 10.44 million leaves serious doubts as to whether the Tribunal has actually excluded from the damages awarded the amount arising from the 7% tax damage claim and which is outside its jurisdiction as stated by the Tribunal.³⁰
71. Thus, the Award, by determining damages in a random and arbitrary manner, departs from the ECT mandate.³¹
72. Spain moreover suggests that the Tribunal has thereby acted ex aequo et bono without agreement of the parties to do so, as required by the ICSID Convention, which can also constitute a manifest excess of powers.³²
²⁸ RoS, slide 167.
²⁹ RoA, ¶ 187.
³⁰ Id., ¶ 200.
³¹ Id., ¶ 204.
³² MoA, ¶ 135, citing the Updated Background Paper on Annulment for the Administrative Council of ICSID, May 5, 2016, RL-0125.
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73. Additionally, Spain contends that in order to decide the scope of investors' rights and analyse the true legitimate expectations of the Claimant, it was crucial to apply EU law to the merits.³³ In Spain's view, by failing to do so, the Tribunal also manifestly exceeded its powers.³⁴
74. Spain considers that the 9REN Award should moreover be annulled because it failed to comply with its essential obligation to state reasons in relation to four issues crucial to the legitimacy of the Award:
75. Spain holds that it is impossible to understand what, according to the Tribunal, is the applicable law or the extent to which it took into consideration EU law.³⁶ In fact, "in a matter of four paragraphs” the Tribunal declared that EU law is not applicable while it also declared that it would apply EU law.³⁷ According to Spain, the expression of contradictory reasoning is equivalent, for the purposes of the ground for annulment it invokes, to a failure to state reasons.³⁸
³³ Respondent's Closing Statement, slides 29 ff. (hereinafter “RcS").
³⁴ Id., slide 33.
³⁵ RoA, ¶ 221.
³⁶ AfA, ¶ 38.
³⁷ MoA, ¶ 150.
³⁸ Id., ¶ 151.
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76. Specifically, Spain alleges that it “requested the application of EU law as International Law in accordance with article 26(6) ECT to decide all the issues in dispute,”³⁹ but the Award contradicted itself in its reasoning in paragraphs 168 and 172. The Award should therefore be annulled.⁴⁰
77. The Award should moreover be annulled for failure to state reasons in matters of EU law, as it omits reasoning on key issues (such as the interpretation of Article 26(1) ECT and the Achmea judgment, which prevents the reader from following its reasoning), and it gives contradictory reasons that cancel each other out in relation to the application of EU law.⁴¹
78. In the underlying arbitration, the Parties disputed the consequences of the EU's qualification as a Regional Economic Integration Organisation (hereinafter, “REIO”) in Articles 1(3) and 1(10) ECT. According to Spain, the EU is a REIO for the purposes of its consideration as a “Contracting Party" and an investment “Area.” Therefore, Spain maintained in the underlying arbitration that the ECT was not applicable to intra-EU disputes, since a single contracting party and a single investment area were at stake.⁴²
79. However, these arguments were not addressed by the Tribunal in its Award.⁴³ This should therefore be annulled due to failure to state reasons.⁴⁴
80. The Tribunal's failure to state reasons is, according to Spain, even more obvious regarding its denial of benefits objection. The Award devotes “one single paragraph, with absolutely no reasoning,” to dismiss this objection.⁴⁵ The Award thus fails to give sufficient reasons
³⁹ RoS, slide 81.
⁴⁰ Id., slide 91.
⁴¹ Id., ¶ 282.
⁴² RoA, ¶ 258.
⁴³ RoS, slide 74.
⁴⁴ RcS, slide 49.
⁴⁵ AfA, ¶ 39.
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and explanations in a matter that was crucial for the arbitration. This lack of reasoning is constitutive of annulment of the Award.⁴⁶
81. In this respect, Spain notes that: (i) 9REN is a legal entity incorporated in the territory of an ECT Contracting Party other than the one against which the dispute is raised; (ii) this legal entity is controlled or owned by citizens or nationals of a third country; and (iii) this legal entity must “not conduct major business activities in the territory of the Contracting Party in which it is established.:”⁴⁷
82. In light of the above, Spain maintains that the Tribunal manifestly exceeded itself by granting 9REN protection under Part III of the ECT that had been denied to it by Spain. The invocation of that clause by Spain has not been out of time.⁴⁸
83. Spain submits that the Award lacks a statement of reasons in setting out its conclusions on liability. It is not possible, Spain argues, to follow the reasoning of the Award when it concludes that Spain has breached Article 10(1) of the ECT, in fixing the date of the investment, and in assessing the measures in dispute.⁴⁹
84. The Tribunal stated that Article 44(3) of RD 661/2007 was a specific undertaking from Spain to the Claimant. Then, the Tribunal determined that this commitment had created legitimate expectations of stability. There is, however, no reasoning to be found in the Award explaining how the Tribunal reaches these conclusions.⁵⁰
85. In fact, Spain argues that at no point in the Award: (i) is the fair and equitable treatment (hereinafter “FET”) standard defined; (ii) does the Tribunal provide its understanding of
⁴⁶ MoA, ¶ 160.
⁴⁷ RoS, slide 134.
⁴⁸ RoS, slide 137; RcS, slide 73.
⁴⁹ RoA, ¶ 293.
⁵⁰ AfA, ¶ 40.
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the concept of legitimate expectations or its relation to the FET standard;⁵¹ or (iii) is the standard of stability defined or explained in the context of the FET standard.⁵² However, the determination of this standard was fundamental, as it allows Spain to know the criterion and the test to which the challenged measures are subject.⁵³ Thus, the Award does not meet the minimum reasoning requirements and should be annulled.⁵⁴
86. In the Award, the Tribunal concluded that Spain made a “petrification commitment” to the Claimant. However, according to Spain, the Award responds, in a “haphazard and unmotivated manner,” to arguments made by Spain in this respect. This approach is allegedly irregular and suggests that the Tribunal has reversed the burden of proof.⁵⁵
87. Moreover, at no point did the Tribunal analyse the precise effect of each of the contested measures. This gap in reasoning is also impermissible in Spain's view.⁵⁶
88. Additionally, Spain argues that: (i) the Award fails to specify to what Spain committed by means of Article 44(3) of RD 661/2007;⁵⁷ (ii) in letter (d) of paragraph 264, the Award incurs an unacceptable distortion of reality;⁵⁸ (iii) Spain cannot know how the Tribunal, by reading the Royal Decree referred to, concluded that Spain's commitment to the investor was to petrify the tariff.⁵⁹
89. In sum, according to Spain, the Tribunal:
⁵¹ Id., ¶ 41.
⁵² Id., ¶ 41.
⁵³ RoA, ¶ 336.
⁵⁴ MoA, ¶ 162.
⁵⁵ Id., ¶ 165.
⁵⁶ RoA, ¶ 330.
⁵⁷ RoS, slide 103.
⁵⁸ Id., slide 105.
⁵⁹ Id., slide 106.
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90. This conduct should lead the Committee to annul the Award for failure to state reasons.⁶¹
91. According to Spain, it is impossible to understand how the Tribunal reached a 20% reduction of the Claimant's original claim.⁶² The Award thus lacks the minimum reasoning in its conclusions regarding the quantification of damages.⁶³ The percentage set by the Tribunal is, furthermore, inconsistent with the evidence before it.⁶⁴ The Tribunal should at best have made a reduction in damages of at least 33%.⁶⁵
92. The Tribunal chose to calculate damages on the basis of the amount claimed by the Claimant and to make two types of adjustments thereafter:
93. This paragraph of the Award, Spain argues, speaks for itself. Not “a single motive or reason" that justifies the 20% reduction is specified. No single reference to the expert
⁶⁰ RcS, slide 68.
⁶¹ Id., slide 69.
⁶² AfA, ¶ 47.
⁶³ MoA, ¶ 201.
⁶⁴ Id., ¶ 203.
⁶⁵ Id., ¶ 212.
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evidence or to the previous conclusions of the Tribunal is to be found in this alleged estimate.⁶⁶
94. In Spain's view, this Committee faces the same situation as the Committee in Tidewater v. Venezuela, where annulment was granted for failure to state reasons. In that case, the committee concluded that "one part of the Award, where a genuinely contradictory reasoning on the amount of compensation cancels out another reasoning with respect to the same compensation, must be annulled.”⁶⁷
95. Of the reduction of damages in the amount of EUR 10.44 million: (i) EUR 7.5 million correspond to the useful life reduction; (ii) 7% TVPEE (Act 15/12) were outside the jurisdiction of the Tribunal;⁶⁸ and (iii) approximately EUR 1 million corresponds to the Formiñena plant. Claimant has not been able to prove that the extra EUR 3 million reduction covers the effect of the findings on jurisdiction and damages.⁶⁹
96. Based on the foregoing, Spain requests that the Committee:
⁶⁶ RoA, ¶ 369.
⁶⁷ RoS, slide 157, citing Tidewater Investment SRL and Tidewater Caribe, C.A. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5, Decision on Annulment, ¶ 196 RL-0127 (hereinafter “Tidewater").
⁶⁸ 9REN Award, ¶¶ 189-208.
⁶⁹ RcS, slide 82.
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97. According to 9REN, Spain's arguments evidence a “fundamental misunderstanding” of the applicable legal standards and the limits of the Committee's jurisdiction. The claims that Spain raises with respect to the Award reflect Spain's mere disagreement with the Tribunal's conclusions that did not comport with Spain's position in the underlying arbitration. Spain seeks to reargue those positions in these proceedings and have the Committee assess the validity of the Tribunal's factual and legal findings anew.⁷¹
98. 9REN submits that none of the findings from the Tribunal amount to an excess of power, but even if they did, that excess could not be “manifest” because every other tribunal that has considered the same issues has reached conclusions that are consistent with those of the 9REN Tribunal.⁷²
99. The Committee should, moreover, not consider any evidence on jurisdiction or liability that post-dates the original Tribunal's declaration of closure of proceedings, which occurred on 21 December 2018.⁷³
100. In any event, the Cube,⁷⁴ SolEs,⁷⁵ and NextEra⁷⁶ committees' decisions submitted in May
⁷⁰ RoA, ¶ 404.
⁷¹ Respondent's Counter-Memorial on Annulment, ¶ 2 (hereinafter “C-MoA”).
⁷² Id., ¶ 6.
⁷³ Id., ¶ 102.
⁷⁴ Cube Infrastructure Fund SICAV and others v. Kingdom of Spain, ICSID Case No. ARB/15/20, Decision on Annulment, 28 March 2022, CL-371 (hereinafter “Cube").
⁷⁵ SolEs Badajoz GmbH v. Kingdom of Spain, ICSID Case No. ARB/15/38, Decision on Annulment, 16 March 2022, CL-373 (hereinafter "SolEs").
⁷⁶ NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. v. Kingdom of Spain, ICSID Case No. ARB/14/11, Decision on Annulment, March 18, 2022, CL-372 (hereinafter “NextEra").
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2022 confirm, from 9REN's point of view, that “the limited scope of annulment proceedings, are further support that the 9REN Tribunal made no annullable error.” Furthermore, 9REN submits, “[n]one of these arbitral awards was annulled despite arguments by Spain very similar to these proceedings related to the intra-EU objection, denial of benefits, liability, and quantum."⁷⁷
101. Although 9REN rejects that the Tribunal erred, it submits that the errors alleged by Spain come nowhere near the level required to demonstrate a “manifest excess of power."⁷⁸
102. 9REN moreover notes that: (i) not a single “intra-EU” ECT tribunal has concluded that EU law is relevant in the manner Spain suggests; and (ii) several dozen tribunals have concluded that it is not;⁷⁹ (iii) there is no “manifest” excess of power when the underlying issue is “susceptible of argument ‘one way or the other.”⁸⁰
103. According to 9REN, the plain meaning of Article 26(3) of the ECT is that each and every Contracting Party to the ECT, i.e., including each and every EU Member State (including Spain), as well as the EU itself, gave their “unconditional consent” to investor-state dispute resolution in accordance with the terms of that provision.⁸¹ The ECT contains no exception, express or implied, for intra-EU disputes.
104. The Tribunal applied the general rules of treaty interpretation from the Vienna Convention on the Law of Treaties (hereinafter “VCLT”) and concluded that the plain terms of the ECT had to be upheld. The Tribunal also observed that, under Spain's interpretation, the same terms of the ECT would result in a different application depending on the Contracting
⁷⁷ Claimant's Submission on Five New Legal Authorities, 20 May 2022, ¶ 21.
⁷⁸ C-MoA, ¶ 114.
⁷⁹ Id., ¶ 122.
⁸⁰ Claimant's Opening Statement (hereinafter “CoS"), slide 43.
⁸¹ C-MoA, ¶ 136.
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Parties concerned, and that there was simply no support in the ECT for this type of differentiated interpretation.⁸²
105. In 9REN's view, the Tribunal correctly interpreted the ECT provisions and found no such exception for "intra-EU” arbitration. This is the same conclusion that at least 27 other ECT tribunals have reached; namely, that the plain terms of the ECT do not contain an exception to the dispute resolution provision for “intra-EU" disputes.⁸³
106. Achmea explicitly does not extend to cases concerning multilateral treaties to which the EU is a party, including the ECT.⁸⁴ Achmea was therefore, 9REN submits, irrelevant to the Tribunal's jurisdiction. Komstroy is also irrelevant to the Tribunal's jurisdiction and to the Committee's analysis, and in any event has no impact upon Spain's obligations under the ECT.⁸⁵
107. In fact, 9REN argues, CJEU decisions, such as Achmea and Komstroy, have no automatic effect on international treaties. For example, EU Member States understood that they needed to take action to terminate their intra-EU BITs after Achmea. The EU and its Member States will need to address any lack of compatibility between EU law and the ECT by amending the ECT or withdrawing from the Treaty. Until they do so (and until the ECT's “sunset period” expires in the case of withdrawal), their obligations under the ECT remain fully intact.⁸⁶
108. Pursuant to Article 26(6) of the ECT, “[a] tribunal established under paragraph (4) shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law.” EU law is not part of “international law applicable to the underlying arbitration under Article 26 of the ECT.”⁸⁷ As the Tribunal explained, the
⁸² Id., ¶ 137.
⁸³ Id., ¶ 141.
⁸⁴ Id., ¶ 145.
⁸⁵ CoS, slides 49-50.
⁸⁶ Id., slide 70.
⁸⁷ C-MoA, ¶ 155.
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language in Article 26(6) “refers to public international law, not regional law such as EU Law as interpreted by the CJEU.”⁸⁸
109. For 9REN, Spain's position on the supposed “autonomy” and “primacy” of EU law is nonsensical. Those terms are used in EU law to express the notion that EU law “trumps” the domestic law of EU Member States. They do not mean that EU law “trumps” public international law.⁸⁹ The principle of “primacy” of EU law therefore does not amount to a conflict rule under international law.⁹⁰
110. Article 16 of the ECT is, according to 9REN, a “firewall” that no EU responding State nor the EC has ever been able to convince any ECT tribunal to ignore. While nearly all ECT tribunals have found there is no conflict between the ECT and EU law to begin with, none has found that the ECT would not in fact “trump” EU law if there were a conflict in light of Article 16. There is no scenario in which “intra-EU” arbitration will be impermissible under the ECT because the ECT will always “trump" any contrary EU law on the subject.⁹¹
111. The Tribunal therefore rightly concluded, according to 9REN, that EU law could not be considered as part of “rules and principles of international law” under Article 26(6) of the ECT and thus did not form part of the governing law of the ECT.⁹²
112. In sum, 9REN submits, Spain has failed to demonstrate that the Tribunal committed an “excess of power,” much less a “manifest excess of power,” and even less a “manifest excess of power" worthy of the extreme sanction of annulment.⁹³
113. 9REN moreover notes that Spain's attempt to deny the ECT's benefits retroactively has been consistently rejected by ECT tribunals. The Isolux tribunal, for example, rejected Spain's identical argument, noting that “the denial of benefits clause can never function
⁸⁸ Id., ¶ 155.
⁸⁹ C-MoA, ¶ 175.
⁹⁰ Id., ¶ 180.
⁹¹ Id., ¶ 182.
⁹² Id., ¶ 187.
⁹³ Id., ¶ 198.
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retroactively" and therefore “the notification of such denial must be prior to the commencement of the dispute."⁹⁴ Similarly, the NextEra v. Spain tribunal also rejected Spain's objection noting that it had “failed to exercise its right to deny benefits under Article 17(1) in a timely fashion.”⁹⁵ In fact, at least ten ECT tribunals have decided this issue in the same manner, leading to a jurisprudence constante on this subject.⁹⁶
114. The Tribunal rightly explained that the business activity of a holding company was "typically preoccupied with paperwork, board meetings, bank accounts and cheque books," which is precisely the evidence that 9REN submitted in the arbitration.⁹⁷
115. 9REN accordingly rejects that the Tribunal has manifestly exceeded its powers in respect of Spain's denial of benefits objection. 9REN additionally notes in this regard that:
“The NextEra committee, which considered nearly identical arguments from Spain on this objection, found that the NextEra tribunal's reasoning was 'tenable' as a matter of law and could not be said to be a ‘non-application'‘or a misapplication' of law. It noted that the tribunal's conclusion was in line with ‘various' other decisions, and thus no error, let alone a 'manifest' error, could have been said to have occurred.”⁹⁸
116. 9REN submits that the view that tribunals enjoy broad discretion in estimating the quantum of damages is so well settled that it also forms a jurisprudence constante.⁹⁹
117. The gist of Spain's argument is that the tribunal manifestly exceeded its powers by rejecting the specific valuations advanced by the Parties' experts and fashioning its own
⁹⁴ Isolux Infrastructure Netherlands, B.V. v. Kingdom of Spain, SCC V2013/153, Award of 12 July 2016, ¶ 715, CL-110.
⁹⁵ Claimant's Rejoinder on Annulment, ¶ 153 (hereinafter “RejoA").
⁹⁶ Id., ¶ 154.
⁹⁷ Id., ¶ 156.
⁹⁸ Claimant's Submission on Five New Legal Authorities, 20 May 2022, ¶ 4.
⁹⁹ C-MoA, ¶ 211.
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estimate of 9REN's losses based on its evaluation of all of the evidence before it and its "margin of appreciation.”¹⁰⁰
118. Spain's disapproval of the outcome is no more a basis for annulment than it was for rectification, and it is not a demonstration of the Tribunal having committed an excess of power. The Committee should therefore reject Spain's application for annulment in this respect.¹⁰¹
119. Even if true, according to 9REN, the alleged errors that Spain identifies in the Tribunal's calculations would not provide a basis for annulment.¹⁰² In fact, the Tribunal acted within its discretion to approach the quantum issues in this case. The assessment of damages is not only inherently imprecise, but parties and their experts often present different quantum valuations. Under such circumstances, tribunals must have broad discretion to assess quantum based on their own judgment, which should not be confused with a decision ex aequo et bono.¹⁰³
120. In sum, the Tribunal considered the arguments by both Parties and their experts and found their arguments wanting. Instead, the Tribunal arrived at a figure with which it was comfortable based on the circumstances of the case. Spain's arguments invite the Committee to re-evaluate the Tribunal's judgment, but that is not part of the mission entrusted to the Committee under the ICSID Convention, Article 52.¹⁰⁴
121. The same conclusion was arrived at by the annulment committees in the NextEra, Soles, and Cube cases, in which they “found that Spain's attacks on each tribunal's liability
¹⁰⁰ Id., ¶ 215.
¹⁰¹ Id., ¶ 220.
¹⁰² RejoA, ¶ 164.
¹⁰³ Id., ¶ 181.
¹⁰⁴ Id., ¶ 182.
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conclusions focused on the content of those conclusions, which is plainly outside the scope of annulment."¹⁰⁵
122. In any event, the Tribunal's finding of fact was, 9REN contends, supported by ample evidence, namely: (i) a testimony from Mr. Francesco Giuliani; (ii) documentary evidence of 9REN's Luxembourg-based employees (C-242); (iii) salary slips (e.g., C-243); (iv) office lease (C-244); and (v) board meeting minutes (C-246, C-249).¹⁰⁶
123. Spain's arguments on quantum are, in sum, outside the scope of annulment.¹⁰⁷
124. 9REN submits that a failure to state reasons only occurs within the meaning of Article 52(1)(e) when:
125. The standard under Article 52(1)(e) is a “minimum requirement.” It merely requires that an “informed reader [...] understand how the tribunal reached its conclusions” or a “reasonable reader [be able] to understand the award.”¹¹⁰
126. The question for the Committee is thus simply whether the Tribunal included any reasons - either explicitly or implicitly – for its conclusions. If reasons are given, the Committee's
¹⁰⁵ Claimant's Submission on Five New Legal Authorities, 20 May 2022, ¶ 5, citing the NextEra annulment decision, ¶¶ 351-353; the SolEs annulment decision, ¶ 219; and the Cube annulment decision, ¶ 342.
¹⁰⁶ CoS, slide 98.
¹⁰⁷ Id., slide 111.
¹⁰⁸ C-MoA, ¶ 220, citing Poštová banka, a.s. and ISTROKAPITAL SE v. Hellenic Republic, ICSID Case No. ARB/13/8, Decision on Annulment, Sept. 29, 2016, ¶ 143.
¹⁰⁹ Id., citing Sociedad Anónima Eduardo Vieira v. Republic of Chile, ICSID Case No. ARB/04/7, Decision on Annulment, Dec. 10, 2010, ¶ 355.
¹¹⁰ C-MoA, ¶ 224, citing Total S.A. v. Argentine Republic, ICSID Case No. ARB/04/1, Decision on Annulment, Feb. 1, 2016, ¶ 265.
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inquiry on this ground must end.¹¹¹
127. Spain claims that the Award fails to state reasons for the Tribunal's rejection of the intra-EU objection. However, 9REN submits, the Tribunal assessed Spain's objection and provided adequate reasons for dismissing it.
128. Spain obviously disagrees with the Tribunal's reasoning or conclusions, but that is not the standard by which the Committee must judge the Award. The fact is that reasons are present in the Award, and, for 9REN, that is the end of the analysis.¹¹²
129. Article 26(1) of the ECT is “the starting point” to determine jurisdiction under the ECT. Spain seems to contend that the Tribunal did not properly carry out its analysis in accordance with this provision, but Spain's position is mistaken. The Tribunal began its analysis by quoting Article 26(1), which, it found, “sets out the conditions precedent to the availability of ECT arbitration”.¹¹³
130. Spain's arguments about the REIO definition are wrong in 9REN's view. The definition of “REIO” and “territory” of a REIO in ECT Articles 1(3) and 1(10) contain no language affecting the ability of investors of EU Member States to commence arbitration against other EU Member States. Instead, the ECT merely acknowledges that some Contracting Parties are also members of regional organizations. Those are defined terms, nothing more. The fact that the ECT defines a Contracting Party as “a State or a [REIO] which has consented to be bound by this Treaty and for which the Treaty is in force” does not in any way support Spain's position that the ECT was not intended to apply among the EU Member States.¹¹⁴
¹¹¹ C-MoA, ¶ 230.
¹¹² RejoA, ¶ 205.
¹¹³ Id., ¶ 208.
¹¹⁴ Id., ¶ 210.
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131. Article 26 thus applies to disputes between a Contracting Party and an investor of another Contracting Party relating to an investment of the latter in the area of the former.¹¹⁵
132. The Tribunal carefully analysed the Achmea judgment in its Award and reached the same conclusion that every single ECT tribunal has reached to date.¹¹⁶
133. In particular, 9REN notes that:
134. According to 9REN, it has been well-settled for years that a denial of benefits provision may not be invoked once an arbitration has begun, because a contrary rule would be used opportunistically by states to wipe out any claim by a claimant with upstream ownership in a third state.¹¹⁸
135. 9REN Holding S.à.r.l. has carried out normal business activities in Luxembourg since its founding. 9REN has leased office space and has maintained at least one locally-based
¹¹⁵ Id., ¶ 211.
¹¹⁶ Id., ¶ 217.
¹¹⁷ CoS, slides 131-140.
¹¹⁸ C-MoA, ¶ 203.
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employee in Luxembourg since July 2009. 9REN has also maintained bank accounts there, since incorporation, with ING Luxembourg. Further, 9REN pays taxes in Luxembourg.¹¹⁹
136. The Tribunal explicitly quoted the testimony from Mr. Giuliani in its Award, which explained in detail 9REN's activities in Luxembourg.¹²⁰
137. In summary, this ground for annulment fails, according to 9REN, for many of the same reasons why the EU law arguments fail: the Tribunal thoroughly considered the facts before it in light of each of Spain's arguments; it correctly rejected Spain's objection; and its findings are consistent with every other ECT tribunal that has considered these issues to date.¹²¹
138. 9REN notes that the Award states reasons for the Tribunal's findings on liability in paragraphs 214 et seq.¹²² In fact:
¹¹⁹ Id., ¶ 205.
¹²⁰ RejoA, ¶ 230.
¹²¹ C-MoA, ¶ 207.
¹²² CoS, slide 147-148.
¹²³ RejoA, ¶ 241.
¹²⁴ Id., ¶ 245.
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139. Spain's position on the quantum of damages is, according to 9REN, nothing more than a claim that the Tribunal articulated no specific reasons why the discount to FTI's damages valuation to account for regulatory risk and other variables should be 20% rather than some other figure.¹²⁶
140. The jurisprudence constante makes clear that tribunals need to say very little in order to satisfy the obligation to provide an explanation of reasons for quantum findings, precisely because the exercise inherently involves judgment and discretion, which often are incapable of precise articulation.¹²⁷
141. The fact that tribunals have wide latitude in providing reasons for their decisions on quantum flows inexorably from the fact that they have – and as described above, must have – broad authority to arrive at decisions on quantum based on their judgment and discretion rather than on mathematical precision. Quantum awards are often the result of approximation or estimation, and often a result of widely diverging competing views.¹²⁸
142. According to 9REN, the NextEra ad hoc committee confirmed these views, in that it found that: (i) “a tribunal must engage in a fact intensive inquiry and must make a discretionary judgment to assess what it deems appropriate for damages;" (ii) “a consensus ... exists among committees that tribunals have a wide margin of appreciation when determining damages;" and (iii) for these reasons, an annulment application based on damages “must
¹²⁵ Id., ¶ 247.
¹²⁶ Id., ¶ 261.
¹²⁷ Id., ¶ 264.
¹²⁸ Id., ¶ 26.
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meet a higher bar.”¹²⁹
143. In any event, the Award states reasons for the Tribunal's findings on quantum in paragraphs 405-407.¹³⁰
144. In its closing statement, 9REN added that the 20% reduction in damages decided by the Tribunal comprises the following:
| 7% TVPEE | Neutralized by NRR (Award ¶ 191) |
| 30 year life | EUR 7.5 million reduction (Award ¶ 416) |
| Formiñena | Less than EUR 1 million (on Spain's case) |
| Risk | Approx. EUR 2 million (implicit from other inputs) |
| Total | EUR 10.44 million (EUR 52.2 million minus EUR 41.76 million) ¹³¹ |
145. For the foregoing reasons, 9REN requests that the Committee:
¹²⁹ Claimant's Submission on Five New Legal Authorities, 20 May 2022, ¶ 7, citing the NextEra annulment decision, ¶ 273.
¹³⁰ CoS, slide 156.
¹³¹ Id., slides 2-25.
¹³² RejoA, ¶ 265.
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146. The EC concluded its submission as a NDP as follows:
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(i) Finally, Spain may not pay the Award, not at least until the EC has taken a final decision on the compatibility, or lack thereof, of such a payment. That is an obligation not only under EU law, but also under the international law applicable between the parties.133
147. Spain agrees with the EC on the paramount relevance of the Komstroy ruling. The Komstroy ruling clearly sets out that the Achmea holdings are applicable to multilateral agreements, which ultimately generate bilateral obligations between two of the ECT contracting parties.134
148. The Komstroy ruling entirely confirms Spain's views: (i) the CJEU set out in the Achmea ruling clear criterions, drafted in general terms and to be applied not only to BITs but also to multilateral Treaties; (ii) those criterions are to be applied to the ECT in order to properly interpret ECT Article 26; and (iii) ECT Article 26(2)(c) must be interpreted as not being applicable to disputes between a Member State and an investor of another Member State concerning an investment made by the latter in the first Member State.135
149. As explained by the EC, the CJEU decision reiterates that an international agreement cannot affect the allocation of powers laid down by the Treaties and, hence, the autonomy of the EU legal system. This autonomy of EU law with respect both to the law of the Member States and to international law is justified by the essential characteristics of the EU and its law.136
150. The autonomy of the EU and the preferential application of the EU legal framework for intra-EU affairs over international conventions, even if they do not have any disconnection
133 European Commission's Written Submission as Non-Disputing Party, 9 December 2021, ¶¶ 95-103. ↩
134 Respondent's Comments on the European Commission Submission, 30 December 2021, ¶¶ 14-15. ↩
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clause, has been admitted by all States and is international custom that must be respected.137
151. In light of the EC's submission, Spain concludes the following:
152. In its comments on the EC's submission, 9REN reiterates that the Committee may not review or address alleged errors of law in this proceeding. For this reason alone, the Committee should disregard that submission as beyond the scope of this annulment proceeding.139
153. Moreover, 9REN alleges, the EC's reliance on Komstroy is flawed because: (i) Komstroy is based on an EU law interpretation of the ECT and does not even purport to apply international law; and (ii) a decision from the CJEU is not binding upon an ECT tribunal or an ICSID annulment committee, which are constituted under the ECT and the ICSID Convention, respectively, and are not bodies of the EU legal order.140
154. The original incentives regimes that induced 9REN's investments in Spain were not considered to be “State aid” under EU law when 9REN invested and held the expectations
139 Claimant's Comments on the European Commission's amicus brief, 30 December 2021, ¶ 6. ↩
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it did, or for that matter ever. In fact, as of today, there still has been no determination by the EC that the original aid schemes were State aid, much less unlawful State aid.141
155. In assessing the EC's position on jurisdiction, the starting point is the plain language of the ECT itself. 9REN notes that the EC focuses its arguments almost exclusively on matters of EU law, while disregarding the express terms of the ECT, which contradict its position. The Committee may not proceed in the same manner. The ECT was the basis for the constitution of the Tribunal and the ICSID Convention was the exclusive source of its jurisdiction and mandate.142
156. Komstroy is only relevant within the realm of EU law. It cannot and does not have any bearing on the meaning of the ECT under international law. Komstroy also may not serve as a basis for annulment, since the judgment did not exist when the Tribunal made its determination of its jurisdiction. Thus, it cannot be said that the Tribunal manifestly exceeded its power as a result of Komstroy.143
157. Under international law, the Tribunal was required to apply ECT Article 26 as written, which contains no exception or reservation for intra-EU disputes. Further, nothing in the ECT would have permitted the Tribunal to rely on or to apply EU law in determining its jurisdiction, even if the Komstroy judgment had existed at the time it did (which, of course, it did not). Thus, the CJEU's EU law-based interpretation of ECT Article 26(2)(c) is irrelevant for multiple reasons, and has no bearing upon the Tribunal's determination of its jurisdiction under the ECT and international law.144
158. The BayWa tribunal confirmed 9REN's position and expressly stated that “the source of its competence is the ECT, a valid multilateral treaty to which all EU Member States and the EU itself are parties and which is governed by international law. Specifically,
[Page 38]
Article 26 defines the jurisdiction of the Tribunal, which (as already held) had inter se application when it was concluded.”145
159. The ICSID Convention, at Article 26, makes this point all the more unequivocal, stating that “[c]onsent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy.” Thus, the fact that, under EU law following Komstroy, intra-EU investment treaty disputes must be brought before EU courts is irrelevant: the ICSID Convention confirms that when Spain gave its “unconditional consent” to arbitrate disputes in the ECT, it did so to the exclusion of any other remedy. The CJEU's decision cannot and does not revoke or invalidate Spain's consent to be bound by an international treaty such as the ECT or the ICSID Convention.146
160. Even if it had carried out the appropriate international law analysis, the CJEU's decision would not be binding upon an ECT tribunal, which is constituted under the ECT and the ICSID Convention and beholden only to those instruments and general or customary international law (which EU law is not).147
161. The ECT contains a lex specialis conflict of law provision, which governs any matters of conflict, including the situation in which EU law, as interpreted in Komstroy, conflicts with ECT Article 26. An application of ECT Article 16 would result in an ECT tribunal upholding its jurisdiction over an intra-EU arbitration because the ECT is more favorable to the investor and its investments than the new EU rule articulated by the CJEU in Komstroy.148
162. The Kruck tribunal correctly observed that the “solution” to the problem of the conflict resulting from Komstroy is not a matter for arbitral tribunals to determine, but instead “lies
[Page 39]
in the hands of the Contracting Parties to the ECT who alone hold the power to amend the ECT pursuant to its Article 42.”149
163. The EC's position on EU State aid law is incorrect because: (i) EU law was not part of the governing law to be applied by the Tribunal, and (ii) there has never been any finding, under EU law or otherwise, that Spain's incentives programs were State aid, much less unlawful State aid.150
164. The fact that Spain did not notify RD 661/2007 or RD 1578/2008 to the EC for a State aid analysis is clear evidence that Spain did not consider those regimes to be State aid, as is the fact that the EC never opened a State aid investigation into either regime. It is reasonable for investors to believe that Spain and the EC contemporaneously act in compliance with their EU law obligations.151
165. For all the foregoing reasons, even if the Committee determines that it is entitled to revisit the merits of the Award (which it is not), the EC's arguments on State aid lack merit, are irrelevant, or both; and they should be disregarded.152
166. Both Parties submitted reports by experts of their own choice: Spain submitted two reports by Professor Steffen Hindelang; and 9REN submitted two reports by Professor Piet Eeckhout. The Parties also had the opportunity to cross-examine and re-examine the experts at the hearing. Their reports are briefly described in the following sections.
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(i) Jurisdiction
167. According to Prof. Hindelang, the Tribunal had to apply the Treaty on European Union (hereinafter “TEU”) and the Treaty on the Functioning of the European Union (hereinafter “TFEU”) (collectively, hereinafter “EU Treaties”) as well as the legal order derived therefrom. Its purported jurisdiction on the basis of Article 26 of the ECT conflicts with the EU Treaties. The EU Treaties enjoy primacy over any conflicting international law obligation between EU Member States, including an offer to arbitrate purportedly contained in Article 26 of the ECT. By virtue of the principle of primacy, the Tribunal was therefore not only entitled, but legally obliged – like any public body created by one or more EU Member States, to prevent conflict by declining its jurisdiction.153
168. As explained in Achmea, any provision in an international agreement that is incompatible with EU law, like Article 26 of the ECT, would be precluded by EU law from having any legal effect. Therefore, a putative offer to arbitrate extended by an EU Member State to an investor from another EU Member State, like Article 26 of the ECT, is rendered inapplicable and cannot be accepted to form an agreement to arbitrate.154
169. The principle of primacy of EU law also applies to international agreements or treaties between EU Member States. EU law therefore takes precedence over the rules created by EU Member States in international agreements or treaties concluded between them.155
153 First Expert Declaration of Prof. Steffen Hindelang, ¶ 5. ↩
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170. Under Achmea, Member States are precluded from extending an offer to arbitrate to matters that may require the interpretation or application of EU law where such an interpretation or application is insufficiently reviewable by the CJEU.156
171. For the very same reasons as set out in Achmea, Article 26 of the ECT does not contain a valid offer by any Member State to arbitrate matters of EU law in an intra-EU context. Such an offer is precluded by the principles of primacy and autonomy and particularly by Articles 267 and 344 of the TFEU. Article 26 of the ECT runs afoul of the EU Treaties, circumventing the EU Member States' national courts and the preliminary ruling procedure under Article 267 of the TFEU and interfering with the CJEU's exclusive authority to ultimately determine the content and validity of EU law under Articles 267 and 344 of the TFEU. Thus, Article 26 has been inoperative ab initio for intra-EU disputes.157
172. A tribunal established under Article 26 of the ECT may be called upon to interpret or apply EU law in regard to a range of issues. For example, in an arbitration in which the claimant alleges that the responding State has breached the requirement under Article 10(1) of the ECT, to provide its investment with fair and equitable treatment, the tribunal would need to assess the investor's assertion of its “legitimate expectations” vis-à-vis its investment. The content of those “expectations” is normally assessed by reference to the prevailing legal regime, which includes the applicable EU regulatory framework.158
(ii) Payment of the Award
173. Payment of the Award in the present case to 9REN would have to be financed through Spain's state resources and is imputable to the State; and such payment would qualify as State aid to an investor. It is therefore subject to the obligation imposed by Article 108(3) of the TFEU that an EU Member State cannot put in effect any measures that constitutes
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State aid unless and until approved by the EC. The payment of the Award would therefore be in violation of EU law.159
(i) Jurisdiction
174. Article 26 of the ECT is, according to Prof. Hindelang in his second report, inoperative between EU Member States ex tunc, i.e., from the time the ECT came into force.160
175. This conclusion is in line with a view expressed recently by two of the CJEU's Advocate Generals, and most prominently, Advocate General Maciej Szpunar in Komstroy.161
176. Achmea precludes intra-EU arbitration under Article 26 of the ECT. The principle of primacy of EU law, enshrined in the EU Treaties, is the supreme conflict rule governing the relationship between the EU Treaties and other international agreements with regard to obligations of the EU Member States inter se. This means that Article 26 of the ECT does not apply between EU Member States and precludes an EU Member State from extending a valid offer to arbitrate to a national of another EU Member State.162
177. The ECT is a multilateral treaty. The specific provision at issue, Article 26, is analogous to Article 8 of the Dutch-Slovak BIT because it creates bilateral undertakings among the Contracting Parties.163
178. The lack of a disconnection clause in the ECT does not mean that the EU held the position that the ECT applies in an intra-EU context.164
160 Second Expert Declaration of Prof. Steffen Hindelang, ¶ 8. ↩
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179. There is no need for an explicit disconnection clause in the ECT because the EU Treaties and EU secondary law can disconnect EU Member States from a treaty inter se. For example, the 1961 Hague Convention on the Legalization of Public Foreign Documents (the “Apostille Convention”) has been ratified by 117 States, and has no disconnection clause at all.165
180. The EU Treaties establish an all-encompassing conflict rule, the principle of primacy of EU law. This rule means that in the international law relationships between EU Member States, the EU Treaties and the legal order created by them prevail over any inconsistent treaty provision entered into by Member States.166
(ii) Payment of the Award
181. Spain's payment of the Award in contravention of its obligations under Article 108 (3) of the TFEU and the respective implementation legislation would make Spain liable under EU law. The EC has, then, the power to compel Spain to recover any amounts paid under the Award without the EC's approval. It can also commence an infringement proceeding against Spain before the CJEU if Spain is unable to recover such payments, and, eventually, may seek the imposition of monetary penalties.167
182. Prof. Eeckhout's first report concludes as follows:
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conclusion was a “tenable” one, then in his view, the point is wholly unarguable: clearly the Tribunal's conclusion was a tenable one;
(b) There is no conflict between EU law and the intra-EU application of the ECT. Such intra-EU application does not offend against the principle of autonomy of EU law. But even if such a conflict did exist, it would be correct to give precedence to the ECT pursuant to its Article 16(2);
(c) The ECT Tribunal in this case correctly concluded that the law applicable to determining whether Spain had violated Part III of the ECT was the ECT itself together with applicable rules and principles of international law. The Tribunal was correct to find that this did not include EU law, such as EU internal market law and State aid law. If the limited inquiry under Article 52 is whether the Tribunal's conclusion was a “tenable” one, in his view, the Tribunal's conclusion was a tenable one;
(d) In any event, the Award is not a form of EU State aid and the EC has never rendered a finding to that effect. Furthermore, as in the Kadi case, any lack of compatibility between the Award and EU State Aid law would be limited to EU law in its effects, and would not invalidate the Award, which derives its status from the ECT and the ICSID Convention (not from EU law).168
(i) Jurisdiction
183. Regarding jurisdiction, Prof. Eeckhout observes that the CJEU case law on primacy is confined to the relationship between EU law and the domestic legal orders of the EU Member States. At no point has the CJEU ever ruled on how any conflict between a Member State's EU law obligations and its international (non-EU) law obligations should be resolved, on the international plane. That is unsurprising because the CJEU's jurisdiction is limited to EU law.
184. EU law is not “applicable” international law in an ECT investment arbitration. EU law does not govern the jurisdiction of an ECT tribunal at all, and nor is such a tribunal required or even empowered to apply EU law. The fact that the EU Treaties impose international
168 First Expert Opinion of Prof. Piet Eeckhout, ¶¶ 87-90. ↩
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obligations on the EU Member States is not sufficient for bringing those obligations within the jurisdiction of an ECT tribunal.
185. The CJEU's jurisdiction is limited to EU law and therefore is not binding on an investment treaty tribunal constituted under the ECT. Achmea does not purport to govern the interpretation of any international agreements concluded by EU Member States.
186. The act of concluding the ECT has not been annulled or declared invalid. Effectively, Spain and Professor Hindelang are requesting this Committee to rule on a point of EU law which is within the CJEU's sole jurisdiction, and is not within the jurisdiction of any other court or tribunal in the EU Member States: that intra-EU investment arbitration under the ECT violates the autonomy of EU law.
187. Where the EU acts under international law, as it did when becoming a Contracting Party to the ECT, it is bound by the relevant rules and principles of international law. This includes, first and foremost, the principle of pacta sunt servanda (as codified in, inter alia, the VCLT).
188. Any conflicts between those EU Treaties and other international treaties to which the EU Member States are parties need to be resolved within the “four corners of public international law.” However, what the EU cannot do is to claim that its own system of law governs such conflicts.
189. The EU can negotiate a “disconnection clause,” which addresses the non-applicability of the treaty or some of its provisions exclusively between EU Member States. Such a disconnection clause may be used where the EU considers there to be potentially overlapping obligations, between an EU Member State's treaty obligations and its EU law obligations. The clause has the effect of excluding the application of the treaty in intra-EU relations and has been used by the EU in multiple occasions.
190. Giving meaning to the terms used, in their context and in the light of a treaty's object and purpose, is the first customary international law rule of treaty interpretation. A simple reading of the terms of the ECT, in their ordinary meaning, confirms that all of the Contracting Parties are bound by all of the ECT's provisions.
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191. Prof. Eeckhout therefore concludes that the ECT applies in intra-EU relations, on the basis of its express provisions, and on the basis of the absence of any of the well-established techniques that could avoid such intra-EU application.
192. The ECT contains an express conflict rule in Article 16(2), which states that where two or more Contracting Parties have entered into another treaty, whose terms “concern the subject matter of Part III or V of this Treaty,” the terms of Part III and Part V prevail, provided they are “more favourable to the Investor or Investment.”
193. The fact that the EU's founding treaties, or EU law more generally, cannot invalidate treaties or agreements which the Member States have concluded, on their own, is confirmed by Article 351 of the TFEU.
194. As Advocate General Mischo established in Commission v. Portugal, the first paragraph of this provision is merely declaratory, in the sense that it confirms the international law principle of pacta sunt servanda.
195. This means that there is no automatic primacy of the EU Treaties under international law; for else, there would be no need to remove any lack of compatibility.169
(ii) State aid
196. To constitute unauthorized State aid, the award must first constitute State aid that requires authorization. There is no authority confirming that that is the case, nor could there be any because the award does not meet the definition of a State aid under EU law.170
197. In his second report, Prof. Eeckhout essentially reiterates the reasoning set out in his first report and concludes as follows:
169 First Expert Opinion of Prof. Piet Eeckhout, ¶¶ 9-77. ↩
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198. In its analysis of Spain's request for annulment of the Award, the Committee bases itself on the following standards, which ad hoc committees constituted under the ICSID
171 Second Expert Opinion of Prof. Piet Eeckhout, ¶¶ 65-68. ↩
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Convention have repeatedly applied in their decisions and are consistent with the Convention.
199. According to Article 53(1) of the ICSID Convention:
“The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention.”
200. Annulment proceedings must therefore be distinguished from appeals, since they do not involve a review of the merits of the award, or the possibility of its modification. In the words of an authoritative commentator, any ad hoc committee “will either leave the award intact or put a definitive end to its binding force.”172
201. This view was upheld, inter alia, by the ad hoc committee in Tidewater v. Venezuela, which stressed that:
172 Aron Broches, “Observations on the Finality of ICSID Awards”, 6(2) ICSID Review – Foreign Investment Law Journal, 321, 324 (1991), CL-300. ↩
173 Tidewater, ¶ 168, RL-0127. ↩
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202. More recently, the same view was shared by the ad hoc committee that decided the request for annulment in Antin v. Spain, which specifically held that an annulment committee cannot review de novo the facts, evidence and criteria used by the tribunal in its award of damages.176
203. Article 52(1)(b) of the ICSID Convention provides for annulment of an award only where:
204. The manifest nature of an excess of powers has been interpreted by most ad hoc committees to mean an excess that is “obvious, clear or self-evident.”177 This is in line with the exceptional and limited character of an annulment as opposed to an appeal.178
205. Nevertheless, ad hoc committees have also held that there may be an excess of powers if a tribunal “incorrectly concludes that it has jurisdiction when in fact jurisdiction is lacking, or when Tribunal exceeds the scope of its jurisdiction.”179
206. An error that is obvious or self-evident must necessarily be one that would be “readily apparent without a need to resort to extensive argumentation and analysis to reveal it.”180
176 Infra. Servs. Lux. S.à.r.l. and Energia Termosolar B.V. v. Kingdom of Spain, ICSID Case No. ARB/13/31 – Annulment Proceeding, Decision on Annulment (hereinafter “Antin v. Spain, Decision on Annulment”), ¶ 168, CL-361. ↩
177 ICSID, Updated Background Paper on Annulment for the Administrative Council of ICSID, May 5, 2016, ¶ 83, RL-0125. ↩
178 Antin v. Spain, Decision on Annulment, ¶ 151. ↩
179 ICSID, Updated Background Paper on Annulment for the Administrative Council of ICSID, May 5, 2016, ¶ 87, RL-0125. ↩
180 Antin v. Spain, Decision on Annulment, ¶ 152. ↩
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207. While an annulment claim must be resolved based on its own merits, the fact that a tribunal has arrived at the same conclusion as other tribunals in similar situations might be an indication that an alleged excess of powers is not manifest.181
208. For this purpose, an arbitral jurisprudence constante provides a persuasive, reasoned, and documented analytical framework as to how other adjudicating bodies have treated similar matters. In Antin v. Spain, the fact that 56 other tribunals agreed with the Tribunal's views was held by the ad hoc committee as sufficient to show that the tribunal's reasoning was tenable and not clearly or self-evidently wrong.182
209. In any event, a committee can only annul the tribunal's award on damages if the tribunal has made an obvious or manifest error that is discernible from the face of the award. A committee should not make its own findings of fact or law apart from what is clearly established in the award.183
210. A debatable application of the law does not amount to a manifest excess of power by the tribunal.184 As stated in the decision of the TECO v. Guatemala annulment committee:
“In determining whether a tribunal has committed a manifest excess of power, an annulment committee is not empowered to verify whether a tribunal's jurisdictional analysis or a tribunal's application of the law was correct, but only whether it was tenable as a matter of law. Even if a committee might have a different view on a debatable issue, it is simply not within its powers to correct a tribunal's interpretation of the law or assessment of the facts.”185
181 Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del Sur S.A. v. Argentine Republic, ICSID Case No. ARB/09/1, Decision on Annulment (hereinafter “Teinver”), ¶ 59, CL-290. ↩
182 Decision on Annulment, ¶ 154. ↩
183 Antin v. Spain, Decision on Annulment, ¶ 169. ↩
184 ICSID, Updated Background Paper on Annulment for the Administrative Council of ICSID, May 5, 2016, ¶ 90, RL-0125. ↩
185 TECO Guatemala Holdings LLC v. Republic of Guatemala, ICSID Case No. ARB/10/23, Decision on Annulment, at ¶ 78, RL-0168EN. ↩
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211. It is well accepted, both in prior cases and literature, that Article 52(1)(e) of the ICSID Convention concerns a failure to state any reasons; not the failure to state correct or convincing reasons.186 As noted by the MINE v. Guinea committee:
“[T]he requirement that an award has to be motivated implies that it must enable the reader to follow the reasoning of the Tribunal on points of fact and law. It implies that, and only that. The adequacy of the reasoning is not an appropriate standard of review under paragraph (l)(e), because it almost inevitably draws an ad hoc Committee into an examination of the substance of the tribunal's decision, in disregard of the exclusion of the remedy of appeal by Article 53 of the Convention.”187
212. According to the same committee, that requirement “is satisfied as long as the award enables one to follow how the tribunal proceeded from Point A. to Point B. and eventually to its conclusion, even if it made an error of fact or of law.”188
213. It is also noteworthy, in this respect, that a tribunal is not required to state every reason explicitly, nor is it required to address all the parties' arguments individually.189 As the ad hoc committee in Teinver held:
“Article 52(1)(e) expresses the minimum requirement that a good faith reader of the award can understand the motives that led the Tribunal to adopt its decisions. In assessing whether that is the case, the award must be
186 Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on Annulment, July 3, 2002, ¶ 64, CL-129. See, along the same lines, more recently, the decision rendered on 18 March 2022 by the ad hoc committee in NextEra, CL-372, stating, in ¶ 128, that: “The Committee finds that it must not engage in an assessment of the 'correctness' of the Tribunal's reasoning or whether it was 'appropriate or convincing.'” See also the decision rendered on 28 March 2022 by the ad hoc Committee in Cube v. Spain, CL-371, stating, in ¶ 320, that: “the Committee agrees with the notion that the ability to follow the reasoning, does not imply a right or ability to review the adequacy of the reasons.” ↩
187 Maritime International Nominees Establishment (MINE) v. Government of Guinea, ICSID Case No. ARB/84/4, Decision on the Application by Guinea for Partial Annulment of the Arbitral Award, ¶ 5.08, RL-0124 (hereinafter “MINE”). ↩
188 Id., ¶ 5.09. See also the decision rendered on 16 March 2022 by the ad hoc committee in SolEs, CL-373, at ¶ 83, stating that: “While a failure to state reasons can take many forms, the ultimate question is whether the Committee is satisfied that the Tribunal's award is possible to follow from Point A. to Point B.'. If so, there can be no basis for annulment on this ground.” ↩
189 However, a tribunal's failure to address questions that might have affected the tribunal's conclusion may constitute, in certain circumstances, a failure to state reasons. MINE, ¶¶ 6.99-101, RL-0124. ↩
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considered in its entirety. The mere fact that reasons are unclear or imperfectly expressed is therefore insufficient to annul an award. Likewise, contradictory reasons may only entail annulment if the contradiction is such that it becomes impossible to understand the motives that led such tribunal to adopt its solution.”190
214. Considering the principle of finality set out in the ICSID Convention, an annulment committee is limited in its ability to characterise a tribunal's reasoning as deficient, inadequate or otherwise faulty, and cannot substitute its own judgment for that of the tribunal.191
(i) The Relevant Normative Texts
215. The starting point of the analysis of the jurisdictional issues raised in these proceedings is ECT Article 26(3)(a), which states that:
“Subject only to subparagraphs (b) and (c), each Contracting Party hereby gives its unconditional consent to the submission of a dispute to international arbitration or conciliation in accordance with the provisions of this Article.”
216. Parties agree that this provision should be interpreted in conformity with VCLT Article 31(1), which lays down that:
“A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms in their context and in the light of its object and purpose.”
191 Antin v. Spain, Decision on Annulment, ¶ 234. ↩
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217. ECT Article 16 addresses possible conflicts between the Contracting Parties' obligations under the ECT and other international agreements, and states in this respect that:
“Where two or more Contracting Parties have entered into a prior international agreement, or enter into a subsequent international agreement, whose terms in either case concern the subject matter of Part III or V of this Treaty, (1) nothing in Part III or V of this Treaty shall be construed to derogate from any provision of such terms of the other agreement or from any right to dispute resolution with respect thereto under that agreement; and (2) nothing in such terms of the other agreement shall be construed to derogate from any provision of Part III or V of this Treaty or from any right to dispute resolution with respect thereto under this Treaty, where any such provision is more favourable to the Investor or Investment.”
218. Declaration 17 to the Treaty of Lisbon amending the TEU and the Treaty establishing the European Community, signed on 13 December 2007, states, in turn, that:
“The Conference recalls that, in accordance with well settled case law of the Court of Justice of the European Union, the Treaties and the law adopted by the Union on the basis of the Treaties have primacy over the law of Member States, under the conditions laid down by the said case law.”
(iii) The Relevant Case-law: the Vattenfall decision
219. The jurisdictional issues raised in these proceedings, and on which the Award relied upon,192 have been extensively dealt with in the Vattenfall decision on the Achmea issue, according to which a tribunal's assessment of its jurisdiction is to be made “under the ICSID Convention, interpreted in the light of general principles of international law, and the instrument(s) containing the consent to arbitration. For the Tribunal, the starting point is Article 26 ECT, setting out the terms of the agreement to arbitrate.”193
193 Vattenfall AB et al. v. Federal Republic of Germany, ICSID Case No. ARB/12/12, Decision on the Achmea Issue (hereinafter “Vattenfall”), ¶ 128, CL-196. ↩
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220. According to the Vattenfall tribunal, the principles of international law “relevant to the interpretation, application, and other aspects of treaties,” namely ECT Article 26, are primarily those set out in the VCLT.194 It added that “EU Law does not constitute principles of international law which may be used to derive meaning from Article 26 ECT, since it is not general law applicable as such to the interpretation and application of the arbitration clause in another treaty such as the ECT.”195 The Vattenfall tribunal noted that EU law is, to be sure, international law because it is rooted in international treaties.196 However, the EC's approach that EU law forms part of the analysis of the tribunal's jurisdiction via VCLT Article 31(3)(c) (as “any relevant rule[] of international law applicable in the relations between the parties”) is “unacceptable as it would potentially allow for different interpretations of the same ECT treaty provision,” “creat[ing] one set of obligations applicable in at least some ‘intra-EU' disputes and another set of different obligations applicable to other disputes.”197
221. The Vattenfall tribunal further held that:
“When States enter into international legal obligations under a multilateral treaty, pacta sunt servanda and good faith require that the terms of that treaty have a single consistent meaning. States parties to a multilateral treaty are entitled to assume that the treaty means what it says, and that all States parties will be bound by the same terms. It cannot be the case that the same words in the same treaty provision have a different meaning depending on the legal obligations entered into by one State or another and depending on the parties to a particular dispute. The need for coherence, and for a single unified interpretation of each treaty provision, is reflected in the priority given to the text of the treaty itself over other contextual elements under Article 31 VCLT.”198
196 Id., ¶ 146, citing Electrabel v. Hungary, ¶ 4.120. ↩
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222. EU law may therefore not be used to provide a meaning of Article 26 that departs from the ordinary meaning of the terms of that Article.199
223. The Vattenfall tribunal accordingly concluded that “the law applicable to the assessment of its jurisdiction [is] the ECT, in particular Article 26 thereof, in conjunction with Article 25 of the ICSID Convention. These treaties are to be interpreted in accordance with general principles of international law, in particular as set out in the VCLT.”200 Taking into account the wording of Article 26 of the ECT, read together with the above provisions, the Vattenfall tribunal could not agree that intra-EU arbitrations have been carved out from the application of Article 26 of the ECT.201
224. Moreover, even though it considered that there was a simpler and clearer route to the answer to the jurisdictional challenge based on the provisions of the EU Treaties,202 the Vattenfall tribunal noted that pursuant to Article 16(2) of the ECT, the Contracting Parties to the ECT, including the EU:
“[S]pecifically and explicitly agreed that prior or subsequent treaties that they enter into with each other, whose terms concern the subject matter of Part III or V of the ECT, shall not be construed so as to derogate from any provision in Part III (‘Investment Promotion and Protection, ' including the substantive protections) or Part V (‘Dispute Settlement') ECT, where a provision is more favourable to the Investor or Investment.”203
225. In this way, by the terms of Article 16 of the ECT itself, it would be prohibited for a Contracting Party to construe the EU Treaties so as to derogate from an investor's right to dispute resolution under Article 26 of the ECT, to the extent that they are understood to concern the same subject matter.204
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226. Article 16 of the ECT was deemed to be a lex specialis as a conflict of laws rule in the Vattenfall case. In the tribunal's view, Article 16 poses an insurmountable obstacle to the respondent's argument that EU law prevails over the ECT. The application of Article 16 confirms the effectiveness of Article 26 and the investor's right to dispute resolution, notwithstanding any less favourable terms under the EU Treaties.205
(iv) The 9REN Award
227. The Tribunal followed the Vattenfall line of reasoning with regard to its own jurisdiction. In this respect, the Tribunal stated that:
“Although EU law, comprised of and derived from treaties between EU Member States, is properly characterized as international law, it does not displace the general rule of interpretation in Article 31(1) VCLT [...].”206
228. To the extent that EU law may be “taken into account, together with the context” under Article 31(3), the Tribunal went on to say that EU law does not displace the plain reading of Article 26 of the ECT because otherwise:
“[T]he same words in the same treaty provision may have a different meaning depending on the independent legal obligations entered into by one State or another, and depending on the parties to a particular dispute. An ECT dispute between an Australian claimant and Spain, for example, would be subject to different rules than an ECT dispute between a German claimant and Spain. The need for coherence, and for a single unified interpretation of each treaty provision, is reflected in the priority given to the text of the treaty itself over other contextual elements under Article 31 VCLT.”207
229. Accordingly, the Tribunal noted that:
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“The exclusion of intra-EU disputes from the scope of ECT would not be consistent with the plain language of the ECT or the ICSID Convention.”208
230. Moreover, the Tribunal addressed Spain's argument that the CJEU judgment in Achmea precluded the Tribunal to accept jurisdiction.209 The Tribunal explained its understanding of the Achmea decision. It noted that this decision affirmed the scope of the EU treaty making power, including the establishment of dispute resolution mechanisms outside the framework of the EU courts, and considered that this notion rebutted “Spain's position that EU laws exist in a bubble subject to interpretation and consideration only by EU courts (and tribunals).”210 It further found that Spain's argument that the ECT has different Member categories, with different access to different remedies (according to their EU or non-EU membership), “has no basis in the text of the ECT itself or in the Achmea decision.”211
231. The Tribunal also addressed the subsidiary argument that even if it had jurisdiction, the Tribunal could not apply EU law (as a component of “International Law” under Article 26(6)) and set itself “as an interpreter of EU Law, which is the exclusive province of EU courts.”212 The Tribunal considered that the case did not rest on EU law, but rather on whether the Claimant was entitled to compensation under the ECT. It considered therefore that it was not required to interpret and apply EU law.213 However, it noted that “in the application of international law, [it] may have regard from time to time to national law (e.g. with respect to the Claimant's corporate status) as well as to EU law (e.g. Spain's justification for its regulatory steps).”214 The Tribunal then found that:
“[H]aving properly taken jurisdiction to resolve this dispute it is within that jurisdiction to consider EU law to the extent necessary for the resolution of
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the dispute under international law. For the purpose of its decision on jurisdiction, the Tribunal does not consider that EU law is materially incompatible with the applicable international law, including the EU treaties and Article 26 of the ECT as to investor-State arbitration under the ICSID Convention.”215
232. In sum, the Tribunal concluded in respect of its own jurisdiction:
“(i) the ECJ's judgment in Achmea does not extend to the ECT, a multilateral treaty to which both EU Member States and the EU are signatory parties, including (especially) Article 26 of the ECT; (ii) there was and is no material conflict between the ECT and EU law (including the EU treaties, particularly the Treaty of the European Union (“TEU”) and TFEU); (iii) EU law does not modify Spain's obligations under the ECT, including Article 26 of the ECT; (iv) this Tribunal's jurisdiction and its exercise in the present case rests upon the ECT (with international law as the applicable law) and not EU law; and (v) this is an ICSID arbitration under the ICSID Convention without a seat or legal place in any national jurisdiction, still less in any EU Member State.”216
(iv) Analysis
233. It is undisputed that an exercise of jurisdiction that is not conferred upon a tribunal is in principle an excess of powers.217 In this case, however, no such excess has been established. The Tribunal addressed Spain's jurisdictional objection based on the relevance of EU law under the “governing law” argument, the “institutional” argument and the “application of EU Law” argument. With respect to the first two arguments, the Tribunal conducted an interpretation of the jurisdictional clause contained in Article 26 of the ECT. It found that the plain language of this provision does not allow the exclusion of intra-EU disputes from the scope of the ECT, and that a different position – either through the alleged context provided by EU law or through the Achmea decision – would lead to incoherent or
217 ICSID, Updated Background Paper on Annulment for the Administrative Council of ICSID, May 5, 2016, ¶ 87, RL-0125; Teinver, ¶ 59, CL-290. ↩
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variable interpretative results of Article 26 (according to the involvement of EU or non-EU ECT Contracting Parties)218 and without any basis on the text of the ECT.219 Spain raises multiple arguments based on certain principles of EU law, which in its view should have prevailed over the Tribunal's plain reading of the text of Article 26. However, other than seeking a re-interpretation of Article 26 by this Committee, Spain fails to demonstrate how the Tribunal's reliance on the notion of coherence and uniformity for the interpretation of the same terms of Article 26 of the ECT (as applicable to different ECT Contracting Parties (EU and non-EU Contracting Parties) could constitute an interpretative error of such an egregious character that should be characterized as an excess of power in the Tribunal's reading of its jurisdictional clause. Spain's arguments based on the primacy of EU law over the terms of the ECT are dealt with further below.
234. Spain also challenges the manner in which the Tribunal addressed the “application of EU Law” argument. The challenge is based on the alleged contradictions incurred by the Tribunal in disregarding EU law as part of the applicable law, while, on the other hand, retaining its ability to consider EU law if necessary and deeming it as not materially incompatible with the applicable international law.220 At the outset, it must be noted that annulment applications based on alleged contradictions that render a tribunal's conclusion null relate to the ground of failure to state reasons under Article 52.1(e), and not to that of a manifest excess of power under Article 52.1(b) of the ICSID Convention. On this basis alone, this application for annulment should be rejected. Furthermore, it is not “manifest” that such an alleged contradiction would constitute an excess of powers by the Tribunal. The Tribunal made it clear that it was required to apply the ECT as the applicable law, and not required to do so with respect to EU law. It explained its position by noting that the Claimant's case rested on the ECT, and not on EU law. The Tribunal also noted, however, that it could have regard to national and regional law as part of its adjudicating task under international law (e.g., with respect to the Claimant's corporate status or Spain's
220 MoA, ¶¶ 99-106; RoA, ¶ 83. ↩
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justification for its regulatory steps). It is difficult to see in this explanation, or in the manner in which the Tribunal addressed the question of the applicable law, an error of such an egregious character, let alone “manifest,” which would be equivalent to a plain misapplication of the applicable law to the dispute.
235. Furthermore, in the present proceedings, two distinct normative systems have been invoked in respect of the Tribunal's jurisdiction over the dispute, namely:
236. The relationship between these two normative systems can be considered in light of different rules:
237. Prior decisions have invoked both these rules. The former has prevailed in arbitral tribunals' case law on investment disputes subject to the ICSID Convention and Rules, even after Achmea and Komstroy. The latter prevailed in the abovementioned CJEU rulings, as well as in the Paris Court of Appeal rulings of 19 April 2022, and in the SCC-
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2016/135 arbitral award on Green Power K/S and SCE Solar Don Benito v. Kingdom of Spain.
238. The Committee notes, in this regard, that those rules have different addressees:
239. The former was the case of: (i) the CJEU in the abovementioned Achmea and Komstroy rulings; (ii) the Paris Court of Appeal in its rulings of 19 April 2022, which annulled, based on the principle of primacy of EU law, two awards that had upheld arbitral tribunals' jurisdiction to hear disputes between EU Member States and investors from other EU Member States;222 and (iii) the tribunal in the SCC-2016/135 case, which declined jurisdiction to hear the dispute brought by the Claimant against Spain, because it was bound by the law of an EU Member State, specifically Swedish law, as its lex arbitri.223
240. The latter was the case of the 9REN Tribunal. In light of the above, the Committee understands why the Tribunal in 9REN relied on the ECT when assessing its jurisdiction, despite the CJEU rulings to the contrary, and that no excess of powers has thus been incurred by the Tribunal.
222 Paris Court of Appeal, Ruling of 19 April 2022, Strabag et al. v République de Pologne, No. 48/2022, RL-210; Paris Court of Appeal, Ruling of 19 April 2022, Slot et al. v République de Pologne. No. 49/2022, RL-0211. ↩
223 Green Power, ¶ 478, RL-0213. ↩
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241. The Committee cannot therefore concur with Prof. Hindelang's view according to which “[b]y virtue of the principle of primacy, the said Tribunal was therefore not only entitled, but legally obliged – like any public body created by one or more EU Member States, to prevent conflict by declining its jurisdiction.”224
242. The Tribunal was not a body created by one or more EU Member States, or subject to the law of those States, but rather a jurisdictional body instituted according to Article 26(4)(a)(i) of the ECT and operating under ICSID Arbitration Rules.225
243. It was therefore to the ECT alone that the 9REN Tribunal owed its existence, and which accordingly determined its jurisdiction: “The ECT is the ‘constitution' of the Tribunal,” as noted in the RREEF Decision on Jurisdiction.226
244. The relevance of this point was expressly acknowledged by the SCC-2016/135 arbitral tribunal, which stated in its award:
224 First Expert Declaration of Prof. Steffen Hindelang, ¶ 5. ↩
226 RREEF Infrastructure (G.P.) Limited and RREEF Pan- European Infrastructure Two Lux S.à.r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/30, Decision on Jurisdiction, ¶ 74, CL-101 (hereinafter “RREEF, Decision on Jurisdiction”). ↩
227 Green Power, ¶ 162, RL-0213. ↩
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245. In light of the above, the reasoning that led to the conclusion arrived at by the SCC-2016/135 arbitral tribunal in respect of its own jurisdiction cannot be transposed to the assessment of the 9REN Tribunal's jurisdiction.
246. In any event, as pointed out by Prof. Eeckhout, “there is simply no CJEU case law that states that the primacy of EU law constitutes an international conflict rule” whereby EU law prevails over any inconsistent treaty provision entered into by EU Member States.232
247. In this respect, it is noteworthy that a significant number of decisions rendered by tribunals and ad hoc committees have upheld the view endorsed by the Tribunal in respect of the jurisdictional issues that it decided.
232 Second Expert Opinion of Prof. Piet Eeckhout, ¶ 50. ↩
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248. It suffices to mention in this regard, in addition to the Vattenfall decision described above, the following decisions:
233 Landesbank Baden-Württemberg et al. v. Spain, ICSID Case No. ARB/15/45, Decision on the “Intra-EU” Jurisdictional Objection (hereinafter “LBBW Decision”), ¶ 102, CL-277. ↩
234 Eiser Infrastructure Limited Energia Solar Luxembourg S.a.r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/36, Award, ¶ 199, CL-158. ↩
235 Rockhopper Exploration Plc, Rockhopper Italia S.p.A. and Rockhopper Mediterranean Ltd v. Italian Republic, ICSID Case No. ARB/17/14, Decision on the Intra-EU jurisdictional objection (hereinafter “Rockhopper Decision”), ¶ 173, CL-279. ↩
236 Novenergia II – Energy & Environment (SCA), SICAR v. Kingdom of Spain, SCC Arb. 2015/063, Final Award, ¶ 461, CL-177. ↩
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249. Reference should also be made here to the Antin v. Spain ad hoc committee decision on annulment, which settled issues similar to those under discussion in the present proceedings:
237 OperaFund Eco-Invest SICAV PLC and Schwab Holding AG v. Kingdom of Spain, ICSID Case No. ARB/15/36, Award, ¶ 330, CL-247. ↩
238 RREEF, Decision on Jurisdiction, ¶¶ 74 y 87, CL-101. ↩
239 Antin v. Spain, Decision on Annulment, ¶ 236. ↩
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treaties creating the EEC and the EU cannot be interpreted in a manner that undermines the prior consents to submit to arbitration under the ECT given by each of the EU Member States and the EU itself. The alleged problem of incompatibility between EU law and the ECT, if there is one, is to be sorted out by the EU and the EU States counterparties to the ECT.”241
250. More recently, the same fundamental line of reasoning has prevailed in three decisions rendered by ad hoc committees on annulment requests concerning ICSID arbitral awards, namely:
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as a matter of law and it could not be deemed a gross or egregious misapplication of the law that a reasonable person could not accept such that it would amount to a non-application of the law;”244 and
251. A particular problem arises in connection with Spain's argument based on the EU's characterization as a “REIO” as defined in Articles 1(2) and 1(3) of the ECT. However, as the Tribunal noted in its Award, “EU member states are as much parties to the ECT as the
246 RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.ÀR.L. v. Spain, ICSID Case No. ARB/13/30, Decision on Annulment, 10 June 2022, ¶ 75, CL-374. ↩
247 InfraRed Environmental Infrastructure GP Limited and others v. Spain, ICSID Case No. ARB/14/12, Decision on Annulment, 10 June 2022, ¶ 496, CL-375. ↩
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EU itself,” and both have legal standing as respondents in a claim under the ECT.248 Thus, the issue was effectively addressed by the Tribunal in the Award.
252. In this Committee's view, as the ad hoc committee in Antin v. Spain considered,249 the fact that the EU, as “REIO,” is also a Contracting Party of the ECT did not bar the Tribunal's jurisdiction.
253. In fact, under the VCLT's general principles of treaty interpretation, the EU's participation in the ECT as a Contracting Party thereto cannot, by itself, imply a carveout of its Member States from the Treaty's dispute resolution clauses and that, accordingly, ECT was not intended to apply among the EU Member States. For this to happen, an express provision would have to be inserted in the ECT, which is not the case.
254. As the Vattenfall tribunal noted in this respect:
“As a Contracting Party to the ECT, the EU has accepted the possibility of arbitration proceedings under Article 26, even against itself, without making a distinction between investors from EU or non-EU Member States. There is no language suggesting that EU Member States have “transferred competence" to the EU in respect of intra-EU arbitrations, or that such arbitrations are barred.”250
255. In any event, it should be noted that, according to the Statement submitted by the European Communities to the Secretariat of the Energy Charter, pursuant to Article 26(3)(b)(ii) of the Energy Charter Treaty:251
“The European Communities are a regional economic integration organization within the meaning of the Energy Charter Treaty. The Communities exercise the competences conferred on them by their Member States through autonomous decision-making and judicial institutions. / The European Communities and their Member States have both concluded the
249 Antin v. Spain, Decision on Annulment, ¶ 237 c. ↩
250 Vattenfall, ¶ 188, CL-196. ↩
251 Statement submitted by the European Communities to the Secretariat of the Energy Charter pursuant to Article 26(3)(b)(ii) of the Energy Charter Treaty, Official Journal of the European Communities, Series L, No. 69, 9 March 1998, p. 115, RL-203. ↩
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Energy Charter Treaty and are thus internationally responsible for the fulfilment of the obligations contained therein, in accordance with their respective competences.”
256. This Statement makes explicit that, despite the then European Communities (and now the EU) being a REIO, both the Union and its Member States are “internationally responsible for the fulfilment” of their responsibilities under the ECT, which must be interpreted as including the possibility of EU Member States being responding parties in arbitration proceedings commenced against them by foreign investors under Article 26 of the ECT.
257. And the Statement goes on to say that:252
“The Communities and the Member States will, if necessary, determine among them who is the respondent party to arbitration proceedings initiated by an Investor of another Contracting Party. In such case, upon the request of the Investor, the Communities and the Member States concerned will make such determination within a period of 30 days. The Court of Justice of the European Communities, as the judicial institution of the Communities, is competent to examine any question relating to the application and interpretation of the constituent treaties and acts adopted thereunder, including international agreements concluded by the Communities, which under certain conditions may be invoked before the Court of Justice.”
258. There is, clearly, no suggestion in these passages of the Statement that investors from EU Member States are precluded from commencing arbitration proceedings against other EU Member States. Quite to the contrary, the first of these paragraphs of the Statement expressly refers to the possibility of an EU Member State being a “respondent party to arbitration proceedings initiated by an Investor of another Contracting Party;” and nothing in that passage of the Statement allows the conclusion that “another Contracting Party” for the purposes of the Statement only includes non-EU Member States. If such an
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exclusion had been intended by the European Communities, good faith would have required them to state it expressly, which was not the case.
259. To be sure, the Statement mentions that the CJUE “is competent to examine any question relating to the application and interpretation of [...] international agreements concluded by the Communities,” which includes the ECT. But this does not mean that the CJUE is exclusively competent for that purpose and that, accordingly, the jurisdiction of tribunals constituted pursuant to Article 26 of the ECT is ousted in intra-EU investment disputes.
260. In sum, Article 26 of the ECT offers investors an option for arbitration regarding the settlement of their disputes with host States, to which the latter have given their unconditional consent. The EU submitted a Statement to the Secretariat of the ECT regarding the application of that provision to the EU as a REIO. Although the Statement safeguards the competence of the CJEU to interpret and apply the ECT, at no point does it exclude arbitration as a dispute settlement mechanism between its Member States and investors from other Member States.
261. Spain's request for annulment on grounds that the Tribunal has manifestly exceeded its powers in assuming jurisdiction over the dispute must, considering the above, be dismissed.
262. Spain further challenges the Award on grounds that the 9REN Tribunal exceeded its powers by awarding the Claimant a compensation that is allegedly inconsistent with the Tribunal's conclusions regarding the Spanish State's regulatory power and that compensates 9REN for damages in a “completely arbitrary manner”253 and “contrary to the Tribunal's own conclusions.”254 This would be the case, as mentioned above, of the findings laid down in paragraphs 416 and 417 of the Award, which state respectively:
“In the circumstances, having regard to the onus on the Claimant to prove the quantum of its claim, the Tribunal, on the evidentiary record before it,
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reduces the quantum asserted by the Claimant by 20% from €52.2 million to €41.76 million by removing the claim to reimbursement of the 7% TVPEE, reducing the expected useful operating life of the facilities from 35 to 30 years (which Mr. Edwards calculated would itself reduce the claim by €7.5 million), eliminating the tariff protection for the Formiñena plant in light of the explicit warning of potential tariff reductions in RD 1578/2008, and incorporating a discount for illiquidity and regulatory risk.”
“In the circumstances, the Tribunal therefore concludes that the Claimant has established a loss of €52.2 million less 20% for a net quantum of €41.76 million.”
263. For the reasons stated below, Spain has failed to demonstrate that, in determining the amount of compensation due, the Tribunal exceeded its powers within the meaning of Article 52.1(b) of the ICSID Convention. The Tribunal found that Spain had violated the FET standard in Article 10(1) of the ECT with respect to the Claimant's investments.255 Consequently, the Tribunal considered itself obliged to provide sufficient compensation to the Claimant to eliminate the consequences of Spain's wrongful conduct.256 The Tribunal proceeded to quantify the amount of compensation due. It agreed with the use of a discounted cash flow (DCF) methodology, but recognised that “its output is wholly dependent on the quality of the inputs, many of which are necessarily ... 'judgmental and subjective.'”257 At this point, the Tribunal considered that “[t]he element of imprecision reinforces the inevitability of a certain amount of approximation when assessing damages.”258 The Tribunal then assessed the evidence submitted by the Parties. Rather than accepting it at face value, the Tribunal questioned it, and decided to establish its own estimation of the appropriate amount of compensation due. By proceeding in this manner, it is unclear how the Tribunal would have exceeded its powers as Spain claims.
255 9REN Award, ¶¶ 309, 311 and 449(2). ↩
256 Id., ¶¶ 373-377, 404, 410. ↩
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264. Spain's case regarding the quantum portion of the Award is based on the allegation that the Tribunal established the amount of compensation ex aequo et bono, that the amount of reduction is inconsistent with the Tribunal's own findings, and that the Tribunal did not satisfy itself that the amount of compensation would not correspond to damages for the levy of the 7% TVPEE tax.
265. In the Committee's view, nothing in the impugned Award allows the conclusion that the Tribunal decided ex aequo et bono in respect of the quantum of damages. To the contrary, the Tribunal's findings are based on criteria expressly spelled out in paragraph 416 of the Award, which do not lend themselves to a characterization as elements of an ex aequo et bono administration of justice. It is one thing, in fact, to exercise a margin of appreciation when determining the quantum of damages under international law; and a different one to decide on the basis of equitable considerations, by departing from the applicable law.
266. The margin of appreciation invoked by the Tribunal259 is allowed by an arbitral jurisprudence constante. It consists of no more than a particular expression of any adjudicator's freedom to assess the evidence submitted by the parties, while remaining faithful to the applicable legal standards, notably that of full compensation for the injury caused by an internationally wrongful act. Such a margin of appreciation has been recently invoked, in ICSID cases, in the Antin award,260 and was upheld by the ad hoc committee that decided the request for annulment of that award.
267. In the instant case, it is evident that the Tribunal has gone no further than exercising the said margin of appreciation without unduly departing from the applicable principles of international law for the assessment of compensation, as expressed notably in the decision of the Permanent Court of International Justice in the case of Chorzów Factory, which the Tribunal has expressly cited in the Award.261
260 Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. (formerly Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V.) v. Kingdom of Spain, ICSID Case No. ARB/13/31, Decision on the Rectification of the Award, 29 January 2019, ¶¶ 26 y 36, CL-348. ↩
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268. The Tribunal was mindful of the fact that, as it noted, “[t]here [were] many contingencies and contingencies within contingencies.”262 Thus, it had to exercise a margin of appreciation to the best of its abilities “with the tools provided to it by the Parties.”263 Given these special circumstances, nothing suggests that by reducing the damages awarded to 9REN by 20%, the Tribunal failed to comply with the standard set out under customary international law. Quite to the contrary, the Tribunal's considerations in this respect indicate that it endeavored to restore, as faithfully as possible, the hypothetical situation that would have existed had Spain not acted in breach of the FET standard, which the Tribunal found to have occurred in the instant case. To this extent, no decision ex aequo et bono has been rendered in this instant case.
269. Furthermore, with respect to Spain's allegation that the 20% reduction is inconsistent with statements made by the Tribunal in its Award, the Committee considers that the assessment that Spain requests in respect of those passages would involve a review of the merits of the Award, in particular, the extent to which the conclusion is supported by the Tribunal's own findings of fact.
270. As already mentioned, such a review is outside the scope of this Committee's powers, which do not comprise the possibility of scrutinizing the correctness of the Tribunal's findings in respect of the disputed facts and the application of the relevant rules to those facts in order to determine the quantum of damages.
271. In the premises, the Tribunal has reduced the amount of the damages asserted by the Claimant by 20%, from EUR 52.2 million to EUR 41.76 million. This reduction was based by the Tribunal on the factors listed in paragraph 416 of the Award: (i) removing the claim to reimbursement of the 7% TVPEE; (ii) reducing the expected useful operating life of the facilities from 35 to 30 years; (iii) eliminating the tariff protection for the Formiñena plant in light of the explicit warning of potential tariff reductions in RD 1578/2008; and (iv) incorporating a discount for illiquidity and regulatory risk.
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272. Both parties agree that such a reduction was required; they nevertheless disagree on the amount of the reduction, which Spain held in its Request for Rectification should add up to at least 33% before applying any discount for regulatory risk.
273. That Request was denied by the Tribunal on the following terms:
“The crux of the Respondent's argument is that the Tribunal made a number of numerical findings of fact which should lead by simple arithmetic to a quantum award (the Respondent says €34.8 million) instead of the Tribunal's calculation of €41.76 million. In making this argument, the Respondent is obliged to argue that the Tribunal not only referred to some of the opinions of the expert witnesses but adopted the references as findings of fact when in fact the Tribunal did no such thing and in fact expressly warned against any such interpretation. The Tribunal referred to Mr Edward's expert evidence as based on a model whose “output is wholly dependent on the quality of the inputs, many of which are necessarily (to borrow Mr. Edwards' phrase) ‘judgmental and subjective.” The model incorporated a number of assumptions and inputs with which the Tribunal expressly disagreed. Further, the Tribunal stated, “[t]he element of imprecision reinforces the inevitability of a certain amount of approximation when assessing damages.” And further, “... the experts were often working not so much with specific figures but a range of figures, which, when combined one with the others, potentially unleashed a multiplier effect that could lead to a wide range of outcomes.” All of these factors required a “margin of appreciation.” In the face of these repeated disclaimers, the Respondent's attempt to transform some of the Tribunal's observations into precise numerical findings of fact which lead by a mathematical exercise to a different “precise” result is, to say the least, disingenuous. Moreover, the Respondent's resort to the Econ One ‘dynamic' Excel model to put on the record its own untested calculations that were never in evidence puts the Claimant to an unfair disadvantage in terms of due process.”264
274. And the Tribunal went on to say:
“Instead of reading the quantum analysis in its entirety and putting the references to the expert witnesses' in context, the Respondent also ignores
264 Decision on the Request for Rectification, ¶ 27, R-0344. ↩
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the countervailing evidence where the Tribunal noted items which, to some extent, offset the items relied on by the Respondent, such as corporate income tax33 and the reduction in operating costs following introduction of an outside partner (which FTI found would “marginally increase the compensation to the Claimant”). The Tribunal's decision on quantum was not “inadvertent” and in the Tribunal's view the quantum of the award was well within the “margin of appreciation” the jurisprudence constante allows.”265
275. On this basis, the Tribunal concluded as follows:
“In short, the Respondent's misreading of the award, and its selective citation of some of the award's observations, as well as the conclusions the Respondent purports to draw from its novel use of the Econ One “dynamic” Excel sheet, do not disclose any “clerical, arithmetical or similar error in the award.” On the contrary, the Respondent's application is simply an attempt to express its disapproval of the outcome.”266
276. As is evident from the foregoing, any scrutiny of the Tribunal's findings in this respect would necessarily involve an assessment by this Committee of the well-founded nature of the Tribunal's calculations of the quantum of damages. This is outside the scope of the Committee's powers. Spain's arguments in this regard cannot therefore be admitted under the legal framework to which this Committee is bound.
277. As the ad hoc committee in Impregilo v. Argentina noted:
“The Committee cannot review de novo the facts, evidence and criteria used by the Tribunal in assessing the damages nor the amount of compensation awarded to Impregilo [...]. Of course, the assessment of damages cannot be arbitrary, but a Tribunal's determination of the amount of compensation allows for a high level of discretion and a disagreement with the criteria used by the Tribunal cannot be a ground for annulment of an award.”267
267 Impregilo S.p.A. v. Argentine Republic, ICSID Case No. ARB/07/17, Decision of the ad hoc Committee on the Application for Annulment (hereinafter, "Impregilo v. Argentina, Decision on Annulment") ¶ 160, RL-0170. ↩
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278. More recently, this view was upheld by the NextEra committee on annulment in its decision, which states:
“As a general matter, the Committee agrees with the consensus that exists among committees that tribunals have a wide margin of appreciation when determining damages.”268
279. Concerning Spain's allegation that the Tribunal exceeded its powers by not ensuring that the amount for compensation was not attributed to the 7% TVPEE tax, there is no evidence showing that the 20% reduction did not in effect account for a reduction corresponding to the amounts due for the 7% tax.
280. Based on these grounds, it must be concluded that there are no valid reasons for the annulment of the Award for manifest excess of powers.
281. Spain further contends that the Award failed to state reasons in relation to the applicability of EU law, which it argues should apply to the determination of the Tribunal's jurisdiction.
282. Spain moreover adduces that the Award declares that EU law is not applicable, but subsequently that it would apply EU law; and that such allegedly contradictory reasoning is equivalent to a failure to state reasons.
283. Spain's argument cannot, however, be accepted. The Tribunal has dealt at length with the issue of the applicable law, in particular the applicability of EU law.269
284. The Tribunal summarized its findings in this respect as follows:
“(i) the ECJ's judgment in Achmea does not extend to the ECT, a multilateral treaty to which both EU Member States and the EU are
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signatory parties, including (especially) Article 26 of the ECT; (ii) there was and is no material conflict between the ECT and EU law (including the EU treaties, particularly the Treaty of the European Union (“TEU”) and TFEU); (iii) EU law does not modify Spain's obligations under the ECT, including Article 26 of the ECT; (iv) this Tribunal's jurisdiction and its exercise in the present case rests upon the ECT (with international law as the applicable law) and not EU law; and (v) this is an ICSID arbitration under the ICSID Convention without a seat or legal place in any national jurisdiction, still less in any EU Member State.”270
285. In light of the above, it is excessive to state that the Tribunal has failed to give reasons for its findings on the issue of applicable law. To the contrary, the Tribunal extensively considered this issue, and reached a conclusion that is in line with the case law of other tribunals that have dealt with the same issue previously, most notably in the abovementioned Vattenfall case.
286. There is also no contradictory reasoning in the Award regarding this issue, at least to the point that “it becomes impossible to understand the motives that led such tribunal to adopt its solution.”271 The Tribunal was clear in stating that its jurisdiction rests upon the ECT (with international law as the applicable law), and not upon EU law, but that nevertheless it was within that jurisdiction to consider EU law to the extent necessary for the resolution of the dispute under international law.272
287. There is no inconsistency in this finding. Whilst the applicable law to an international dispute may be one, namely international law, as it results in the instant case from Article 26(6) ECT, a tribunal is not precluded from taking into consideration other legal systems and from assessing the possible relevance of legal situations constituted, modified or extinguished under such other legal systems within the context of the applicable law that
271 Teinver v. Argentina, Decision on Annulment, ¶ 209. ↩
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it is bound to apply. Such other legal systems are then taken as facts whose relevance is to be assessed in light of the applicable law.
288. On this basis, the Tribunal declared itself “prepared to accept, arguendo, that Spain's' modifications of the FIT benefits in 2010 and the following years were permitted under both EU law and Spanish law” (paragraph 171), while insisting that “EU law does not modify Spain's obligations under the ECT, including Article 26 of the ECT.”273
289. In conclusion, the Award cannot be held to omit sufficient reasons in respect of the issue of the applicable law, nor to be based in its conclusion upon contradictory reasons. Although such reasons may be subject to criticism from a party's point of view, this does not constitute, under the ICSID Convention, a ground for the annulment of the Award and this Committee is accordingly barred from debating their accuracy or soundness.
290. According to Spain, the Tribunal has devoted “one single paragraph, with absolutely no reasoning, to dismiss this objection.”274
291. The matter was however dealt with in paragraphs 174 to 182 of the Award, which concludes: “quite apart from the timeliness issue, Spain has failed to establish that 9REN lacks substantial business activities in Luxembourg. Article 17 of the ECT has no application to the facts of this case,” for which reason the objection was rejected.275
292. In order to reach this conclusion, the Tribunal not only considered the applicable legal standard, as laid down in Article 17 of the ECT (paragraph 175), but also the arguments adduced by both Parties and the evidence carried by Claimant in respect of its plea that
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9REN carried on “substantial business operations” in Luxembourg, notably Mr. Giuliani's testimony.276
293. Therefore, it does not seem accurate that the matter was dealt with in “a single paragraph with absolutely no reasoning.” It must be noted that, as an objection to the Tribunal's jurisdiction, the burden of proof rested on Spain (to prove that the Claimant lacked substantial business activities in Luxembourg), and not on the Claimant (to prove that it had business activities in Luxembourg). In this sense, the Tribunal was not satisfied with the evidence submitted by Spain, and it so stated. Spain may consider the Tribunal's reasons insufficient or unconvincing, but the matter was the object of analysis by the Tribunal. It lies outside the scope of the Committee's powers to review the Tribunal's assessment of the evidence leading to its conclusion in this respect.
294. Spain's request for annulment on this ground must therefore be rejected.
295. The Award concluded that Spain denied 9REN fair and equitable treatment, inconsistently with Article 10(1) of the ECT, because 9REN's reasonable and legitimate expectations in the circumstances were frustrated.277
296. However, Spain complains that it does not understand how the Tribunal reached that conclusion. Hence, in its view, the Award should be annulled due to a failure to state reasons. Spain disagrees with the manner in which the Tribunal addressed the FET standard as if certain outcomes were already assumed and the burden of proof rested on Spain.278 It also disagrees with the meaning attributed by the Tribunal to certain Spanish Supreme Court's rulings and the weight given to the financial consequences arising from the adoption of Spain's regulatory choices.279 Spain equally questions the Tribunal's reading
277 Id., ¶¶ 307-309 y 449(2). ↩
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of RD 661/2007 as a source of the relevant specific commitment to the investor280, and the date of the investment chosen in the Award.281 Finally, Spain also takes issue with the Tribunal's findings on liability, in particular the relationship between the findings on legitimate expectations and those on the breach of the ECT.282
297. However, a disagreement with the findings of the Award does not necessarily mean that the Tribunal has failed to state reasons for those findings. Assuming that insufficient reasons would be enough to annul the Award, the question thus arises as to whether the Tribunal has failed to comply with its duty to provide reasons for its findings in respect of Spain's liability for the breach of FET.
298. In this respect, one should note that, as is widely recognized, tribunals are not required to deal with every argument raised by the parties. A tribunal is “entitled to be terse” and has “no duty to follow the parties in the detail of their arguments.”283
299. Moreover, even if the Tribunal misunderstood Spain's position and arguments, and such misunderstandings were material, these are not grounds for annulment. As stressed by the ad hoc committee in Impregilo v. Argentina:
“Article 52(1)(e) does not allow a committee to assess the correctness or persuasiveness of the reasoning in the award or to inquire into the quality of the reasons.”284
300. It is clear that the Tribunal arrived at conclusions different from those sought by Spain. Nonetheless, Spain's dissatisfaction with the quality of the reasoning of the Award, however justified it might be, is not a sufficient ground to annul it.
283 Antin v. Spain, Decision on Annulment, ¶ 241. ↩
284 Impregilo v. Argentina, Decision on Annulment, ¶ 181. ↩
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301. The Tribunal stated reasons for its findings. In the premises, the Tribunal, after it characterized as a “threshold issue” the question of “whether the facts of this case are capable of giving rise to the legitimate expectation asserted by the Claimant that the benefits set out in RD 661/2007 were irrevocable within the scope of the ECT's FET standard" (paragraph 214), it proceeded in Part 7 of the Award to an analysis of whether such legitimate expectations existed in the instant case, and whether their frustration amounted to a breach of the FET standard.285
302. The Tribunal's explanation in this respect is laid down in paragraph 309 of the Award, which reads as follows:
“Having rejected the Respondent's view that the extent of the Claimant's legitimate expectation was limited to a “reasonable rate of return,” and having accepted the Claimant's interpretation of RD 661/2007, and Mr. Giuliani's evidence of the actual expectation the Claimant possessed, and the reasonableness of the Claimant's reliance in the circumstances, the Tribunal concludes that the Respondent denied the Claimant fair and equitable treatment. In this respect, the Tribunal substantially adopts the list of violations alleged by the Claimant set out in paragraphs 299 to 301 above.”
303. The Tribunal went on to state that:
“The financial vulnerability of renewable energy projects is the heavy up- front capital costs. Once money is “sunk” in the PV facilities, the funds of the developer (and its bankers) are locked into the FIT contracts with their investments effectively (as the Claimant put it) long-term hostages. If energy prices rise, the benefit accrues to Spain not the operators who, in Spain's view, will recover only what Spain unilaterally declares to be a reasonable return by reference to the bond market. On the other hand, if energy prices fall, Spain claims the right to resile from what the Tribunal has concluded was a regulatory guarantee of price stability. Spain's position is that it alone should benefit from rising prices, but the burden of falling prices is to be off-loaded onto investors. As a matter of Spanish domestic law, such treatment of local investors has been held to be constitutional, but in the
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Tribunal's view, such one-sided treatment is neither fair nor equitable. Under the ECT, the Claimant, as a foreign investor, was entitled to fair and equitable treatment and in this case did not receive it.”286
304. In general, the Award provides reasons for the Tribunal's findings on Spain's liability under the ECT. While the wording might not be arguably the best model of clarity, for what matters in this proceeding, it does contain reasons supporting the final conclusion on liability. Accordingly, no annulment can therefore be granted on the basis of this ground.
305. Spain finally contests the 9REN Award for alleged failure to state reasons in respect of quantum of damages, because, in its view, it is impossible to understand how the Tribunal reached a 20% reduction on the Claimant's original claim.
306. According to Spain, the Tribunal's findings on jurisdiction and liability should instead reflect a reduction of the claimed damages of at least 33%, as explained in its Request for Rectification of the Award, which as mentioned above was denied.
307. In respect of the quantum of compensation owed to 9REN by Spain, the Tribunal noted in paragraph 405 of the Award that:
“Complex issues in the assessment of compensation that divide the Parties’ expert witnesses justify a margin of appreciation for the Tribunal under the ECT and international law. The required exercise is acknowledged to be less than an exact science.”
308. The Tribunal also stated that, “[i]n undertaking quantification, the Tribunal recognizes that while the DCF method presents a picture of mathematical precision, its output is wholly dependent on the quality of the inputs, many of which are necessarily ...judgmental and subjective.” It added that the assessment of damages “is often a difficult exercise,” which
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involves an exercise of estimation and “the weighing of competing (but equally legitimate) facts, valuation methods and opinions.”287
309. In examining the specific facts of the case, the Tribunal also explained that the experts “were often working not so much with specific figures but a range of figures, which when combined one with the others potentially unleashed a multiplier effect that could lead to a wide range of outcomes.”288 The Tribunal examined, questioned, agreed and disagreed with various propositions made by the Parties' experts. It reflected those views in its Award.289 Thus, the Tribunal did not just accept a particular compensatory formula, but rather decided to develop its own calculation. At the end of the process, in the light of the facts and views presented by the Parties' experts, the Tribunal gave account of the situation. In its view, the determination of the amount was “not capable of precise calculation on the basis of the materials before the Tribunal. There [were] too many contingencies and contingencies within contingencies].”290 Under these circumstances, the Tribunal decided to exercise its margin of appreciation. From the explanation given, the Tribunal made use of this margin of appreciation by weighing conflicting considerations, some of which were judgmental or subjective, and arrived at an estimate reduction rate, which it considered appropriate in the light of the circumstances. There is no reason to cast doubt on the good faith of the Tribunal when exerting this margin of discretion.
310. Such a margin of appreciation is widely acknowledged in international law and is to a large extent inevitable. The Tribunal has therefore properly invoked it and used it.
311. In essence, as stated above, the reduction in the amount of damages awarded to 9REN was based on the following reasons that the Tribunal listed as factors in paragraph 416 of the Award: (i) the need to remove the claim of reimbursement of the 7% TVPEE; (ii) the need to reduce the expected useful operating life of the facilities from 35 to 30 years; (iii) the
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need to eliminate the tariff protection for the Formiñena plant in light of the explicit warning of potential tariff reductions in RD 1578/2008; and (iv) the need to incorporate a discount for illiquidity and regulatory risk.
312. Based on the foregoing, the Tribunal gave reasons in the Award for the reduction of 9REN's claim for damages. If there is any error in the calculation of that reduction, this would be an error in the appreciation of the facts, which would be beyond the scope of this annulment proceeding.
313. It must therefore be concluded that the Tribunal has not failed to provide reasons for its assessment of damages, and that any scrutiny of those reasons is beyond the Committee's powers as laid down in Article 52(1)(e) of the ICSID Convention.
314. In view of the above, the Committee finds that no grounds for annulment of the Award exist in the present case. Spain's application must therefore be rejected.
315. In its submission on costs of 22 June 2022,291 Spain held, inter alia, that:
“In deciding how to allocate the costs of these proceedings, the Kingdom of Spain understands that the Committee should be guided by the principle that “costs follow the event" if there are no indications that a different approach should be called for;”
“In this regard, it is evident that the Applicant has been compelled to go through these annulment proceedings. The Kingdom of Spain noted from the very commencement of the underlying arbitration that the 9REN Tribunal lacked jurisdiction to hear a dispute initiated by an investor from the European Union
291 Respondent's Submission on Costs, ¶¶ 6-9. ↩
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against a Member State of the European Union. Thus, 9REN should be responsible for the costs incurred by the Applicant in connection with these proceedings: it was 9REN – and not the Kingdom of Spain – who decided to initiate the dispute before an arbitral tribunal who lacked jurisdiction to hear intra-EU disputes;”
“The Kingdom of Spain also notes that it would still be entitled to recover the costs incurred by it in the unlikely event that the Committee did not annul the award in its entirety, but it partially corrected the amount of the 9REN award. As the members of the Committee are aware, the Kingdom of Spain has underlined in the annulment proceedings the gross errors that the 9REN tribunal made in terms of damages;” and
“In short, the Applicant was left with no choice but to initiate this annulment proceedings and it should be compensated for the costs incurred.”
316. The costs incurred by Spain are, in sum, as follows:292
317. Spain asks the ad hoc Committee that 9REN pay all the costs of the proceedings, including its own costs in the total amount of EUR 1,864,701.68.293
318. Spain further requests that 9REN be ordered to pay post-Award interest on the foregoing sums, at a compound rate of interest to be determined by the Committee, until the date of full satisfaction of the Committee's decision.294
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319. In its submission on costs of 22 June 2022, 9REN has, in turn, submitted that:295
“9REN bases its request for an award of the fees and expenses it has incurred on the fact that, for all the reasons outlined in its prior written and oral submissions, 9REN should prevail in this annulment proceeding. Further, Spain has abused its right to annulment by seeking an appeal or retrial on dozens of issues that go well beyond the limited grounds for annulment under Article 52 of the ICSID Convention;”
“In this proceeding, Spain's abuses go further, because Spain's use of an EU law expert necessitated 9REN to retain a rebuttal expert and incur fees briefing numerous EU law issues that go well beyond the scope of this Committee's limited mandate;” and
“Both in relation to as well as apart from the intra-EU objection, 9REN was forced to incur legal fees and expenses defending against arguments from Spain that were not well-founded under the ICSID Convention or in international law. Therefore, in order to wipe out as far as possible the consequences of Spain's misconduct, the Committee should award 9REN the entirety of its legal fees and expenses in the present proceeding.”
320. In sum, 9REN submits that the Committee should order Spain to pay the legal fees and expenses incurred by 9REN in this annulment proceeding, and it should declare that Spain remains responsible for all costs of the proceeding.296
321. The costs incurred by 9REN are, in sum, as follows:297
295 Claimant's Costs Submission, ¶¶ 4-6. ↩
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322. For the foregoing reasons, 9REN requests the Committee to: (i) order that Spain reimburse all legal fees and expenses incurred by 9REN in the annulment proceeding, in the amounts of USD 1,515,466.02 and EUR 34,000.00; and (ii) declare that Spain remains responsible for all the costs of this proceeding, including the costs and expenses of ICSID as well as the fees and expenses of the Members of the Committee.298
323. 9REN also requests that Spain be ordered to pay post-decision interest on the foregoing sums, at a compound, commercial rate of interest to be determined by the Committee, until the date of Spain's full satisfaction of the Committee's orders on costs and payment of the Decision.299
324. The costs of the annulment proceeding, including the Committee's fees and expenses, ICSID's administrative fees and direct expenses, amount to (in USD):
| Committee Members' fees and expenses | |
Prof. Dr. Dário Moura Vicente | 97,232.06 |
Prof. Dr. Nicolas Molfessis | 84,000.00 |
Dr. Fernando Piérola-Castro | 86,617.51 |
Dr. Karim Hafez | 13,736.60 |
| ICSID administrative fees | 126,000.00 |
| Direct expenses | 75,799.18 |
| Total | 483,385.35 |
325. Article 61(2) of the ICSID Convention provides that:
“In the case of arbitration proceedings the Tribunal shall, except as the parties otherwise agree, assess the expenses incurred by the parties in
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connection with the proceedings, and shall decide how and by whom those expenses, the fees and expenses of the members of the Tribunal and the charges for the use of the facilities of the Centre shall be paid. Such decision shall form part of the award.”
326. This provision, together with ICSID Arbitration Rule 47(1)(j), applicable by virtue of ICSID Arbitration Rule 53, gives the Committee discretion to allocate all costs of the proceedings, including Counsel's fees and other costs, between the Parties, as it deems appropriate. Both Parties agreed on this in their submissions on costs.
327. In the instant case, and as stated above, Spain's application for annulment must be dismissed. The Committee recalls that it nevertheless decided to stay the enforcement of the Award pending decision on the application for annulment, as requested by Spain, despite 9REN's opposition. The outcome of this procedural step was therefore favourable to Spain.
328. Moreover, the issues under discussion in these proceedings, in particular that of the Tribunal's jurisdiction, present a high degree of complexity, and have been the object of divergent decisions by courts and tribunals of high standing. Therefore, albeit unsuccessful, Spain's application cannot be deemed as futile or unsubstantiated.
329. In addition to the above, the Committee notes that both Parties have complied forthwith in all instances with its orders and decisions, and that their conduct during the proceedings was irreprehensible.
330. In light of the abovementioned circumstances, the Committee, exercising its discretion, decides the following in respect of the apportionment of costs:
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331. For the foregoing reasons, the Committee unanimously decides the following:
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Signature Prof. Dr. Nicolas Molfessis Date: 15 November 2022 |
Dr. Fernando Piérola-Castro Date: |
Prof. Dr. Dário Moura Vicente
President of the ad hoc Committee
Date:
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|
Prof. Dr. Nicolas Molfessis Date: |
Signature Dr. Fernando Piérola-Castro Date: 15 November 2022 |
Prof. Dr. Dário Moura Vicente
President of the ad hoc Committee
Date:
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|
Prof. Dr. Nicolas Molfessis Date: |
Dr. Fernando Piérola-Castro Date: |
Signature
Prof. Dr. Dário Moura Vicente
President of the ad hoc Committee
Date: 16 November 2022