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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES

MATHIAS KRUCK AND OTHERS

Respondents on Annulment

and

KINGDOM OF SPAIN

Applicant

ICSID Case No. ARB/15/23
Annulment Proceeding

DECISION ON ANNULMENT

Members of the ad hoc Committee
Prof. Dr. Dário Moura Vicente, President
Ms. Katherine González Arrocha
Mr. Carlos José Valderrama

Secretary of the ad hoc Committee
Ms. Ana Constanza Conover Blancas

Date of dispatch to the Parties: December 22, 2025

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REPRESENTATION OF THE PARTIES

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TABLE OF ABBREVIATIONS AND DEFINED TERMS

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I. INTRODUCTION

1. These proceedings concern a request for the annulment of the Award rendered on October 6, 2023 (hereinafter the “Award”) by an arbitral tribunal composed of Prof. Vaughan Lowe, acting as President, Dr. Michael Pryles and Prof. Zachary Douglas, acting as co-arbitrators (hereinafter the “Arbitral Tribunal” or “Tribunal”).

2. The 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 Mathias Kruck and others (hereinafter “Kruck” or “Claimants") to the Kingdom of Spain (hereinafter “Applicant”, “Respondent” or “Spain”) in ICSID Case No. ARB/15/23, collectively referred to hereinafter as the “Parties".

3. The dispute concerned compensation sought by Claimants, pursuant to the ECT, for losses arising from investments made in the renewable energies sector and the alleged breach by Spain, as the host State thereof, of its obligations under the ECT in their respect.

4. In its Award, the Tribunal decided:¹

(a) To reaffirm its Decision on Jurisdiction and Admissibility dated April 19, 2021 (hereinafter the “Decision on Jurisdiction and Admissibility”), and its Decision on Jurisdiction, Liability and Principles of Quantum dated September 14, 2022 (hereinafter the “Decision on Jurisdiction, Liability and Principles of Quantum"), together with the three Decisions on the Requests for Reconsideration, respectively dated December 6, 2021, July 25, 2022 and February 22, 2023, and to incorporate all of those Decisions in the Award;

(b) By a majority, that the Respondent had violated Part III of the ECT with respect to the Claimants' investments, and specifically that the Respondent violated the rights

¹ Award (RL-0184), ¶ 82. ↩

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of the DSG Claimants under Article 10 of the ECT to fair and equitable treatment by establishing the New Regulatory Regime;

(c) That amount due to the group of DSG Claimants by way of reparation was € 15,019,540, and that interest on that sum was payable as from June 21, 2014, at a rate of 1.16%, in accordance with paragraphs 54 and 55 of the Award; and

(d) That the Respondent should pay its own costs and contribution to the costs of the Tribunal, and should pay to the Claimants three-fifths of the Claimants' costs (including the Claimants' contribution to the costs of the Tribunal), i.e., € 2,885,356.85 plus US$ 340,151.73, with interest on those sums payable at a rate of 1.16% as from the date of the Award.

II. PROCEDURAL HISTORY

5. On February 2, 2024, ICSID received from Spain an application for the annulment of the Award rendered on October 6, 2023 (the “Application for Annulment” or “Application”). The Application also contained a request under Article 52(5) of the ICSID Convention and Rule 54(1) of the ICSID Rules of Procedure for Arbitration Proceedings (the “Arbitration Rules”) for the stay of enforcement of the Award until the Application was decided.

6. On February 13, 2024, the Secretary-General of ICSID registered the Application for Annulment, pursuant to Rule 50(2) of the ICSID Arbitration Rules. On the same date, in accordance with Arbitration Rule 54(2), the Secretary-General informed the Parties that the enforcement of the Award had been provisionally stayed.

7. By letter dated May 30, 2024, in accordance with Rules 6 and 53 of the ICSID Arbitration Rules, the Parties were notified that an ad hoc committee composed of Prof. Dr. Dário Moura Vicente, a national of Portugal, designated as President of the Committee, Ms. Katherine González Arrocha, a national of Panama and France, and Mr. Carlos José Valderrama, a national of Peru, had been constituted (the "Committee” or “ad hoc Committee"). On the same date, the Parties were

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notified that Ms. Ana Constanza Conover Blancas, ICSID Legal Counsel, would serve as Secretary of the Committee.

8. On July 15, 2024, the Committee held a first session with the Parties by video conference pursuant to Rules 13(1) and 53 of the ICSID Arbitration Rules.

9. Following the first session, on July 22, 2024, the Committee issued Procedural Order No. 1 (“PO 1") concerning the rules of procedure applicable to the annulment proceeding, and the procedural calendar. To this purpose, the Committee considered (i) the draft procedural order circulated to the Parties on June 11, 2024; and (ii) the Parties' comments on the draft procedural order received on July 5, 2024, indicating the items on which they agreed and their respective positions regarding the items on which they did not agree. The Parties' agreement on the number, sequence and dates for the submission of the Parties' pleadings was set out in Annex B of PO 1.

10. On August 1, 2024, Spain filed a request to submit a legal report on European Union Law, pursuant to Section 15.5 of PO1 which provides as follows:

Without prejudice to each party's right to submit new factual evidence or legal authorities in accordance with §15.4, the filing of new witness statements or expert reports, if any, shall be subject to a timely reasoned written request, followed by observations from the other party and the Committee's approval. A Party desiring to make use of this provision must submit its reasoned request for leave at least 30 working days prior to the submission deadline in which it intends to rely on the new document(s).

11. On August 12, 2024, the Claimants filed their observations opposing Spain's request.

12. On August 26, 2024, the Committee issued Procedural Order No. 2 (“PO 2”) regarding Spain's request of August 1, 2024. The Committee allowed Spain to file an expert report subject to the following conditions:

(a) The expert report's subject matter shall be strictly limited to the annulment grounds invoked by the Kingdom of Spain in the present proceeding;

(b) The expert report may not reproduce any previously submitted report in the underlying arbitration or in analogous proceedings;

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(c) The expert report shall not exceed 30 pages typed in Times New Roman size 12, single spaced, and any footnotes typed in Times New Roman size 10, single spaced. The report's page limit excludes the expert's curriculum vitae and a list of legal authorities, which may be appended to it;

(d) The acceptance of the filing of such a report does not imply a decision by the Committee on its probative value;

(e) Claimants shall be allowed to file a reply report, which shall be restricted to the analysis of the arguments submitted in the report filed by the Kingdom of Spain and observe the same format specified above in subsection (c);

(f) The expert report or reports shall be filed on the dates to be agreed by the Parties on or before 9 September 2024 or, failing such agreement, on the dates to be determined by the Committee;

(g) The expert or experts shall make themselves available to be cross-examined and to reply to the Committee's questions at the hearing scheduled for 19-21 March 2025;

(h) The impact of the submission of expert reports on the costs of the proceeding will be assessed by the Committee in its final decision, when determining the apportionment of the costs of the proceeding between the Parties.²

13. On September 9, 2024, Spain filed an Application for the Continuation of the Stay of Enforcement of the Award (the “Application for Continuation of the Stay”), with exhibits R-0414 to R-0419 and legal authorities RL-0192 to RL-0219.

14. On September 23, 2024, the Claimants filed an Opposition to Spain's Application for the Continuation of the Stay of Enforcement of the Award (the “Opposition”), with exhibits C-0545 to C-0548 and legal authorities CL-0258 to CL-0305.

15. On October 3, 2024, Spain filed (i) a Memorial on Annulment (the “Memorial”) with exhibits R-0420 to R-0425 and legal authorities RL-0220 to RL-0269; and (ii) an Expert Declaration by Professor Steffen Hindelang, dated October 3, 2024, with an accompanying list of exhibits 1 to 105 (non-consecutive) (the “Hindelang Report I”).

² PO 2, ¶ 16. ↩

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16. On October 7, 2024, Spain filed a Reply on the Continuation of the Stay of Enforcement of the Award (the “Reply on the Continuation of the Stay”), with legal authorities RL-0270 to RL-0274.

17. On October 21, 2024, the Claimants filed a Rejoinder in Opposition to Spain's Application for the Continuation of the Stay of Enforcement of the Award (the “Rejoinder on the Continuation of the Stay”), with exhibits C-0549 to C-0550 and legal authorities CL-0306 to CL-0311.

18. On November 15, 2024, the Committee wrote to the Parties regarding the absence of a specified deadline in the procedural calendar annexed to PO 1 for issuing a decision on Spain's Application for Continuation of the Stay. In light of the Parties' agreement to fix October 21, 2024, as the date for the final submission on the stay of enforcement, the Committee understood this as the Parties' agreement to extend the deadline set forth in ICSID Arbitration Rule 54(2). Given the lack of an express deadline in the procedural calendar, the Committee advised the Parties that it would render its decision “within a reasonable time,” pursuant to Section 5.3 of PO 1, unless either Party objected by November 19, 2024. Neither Party raised objections within the specified timeframe.

19. On November 18, 2024, the Claimants filed (i) a Counter-Memorial on Annulment (the “Counter-Memorial”), with exhibits C-0551 to C-0593 and legal authorities CL-0312 to CL-0352; and (ii) an Expert Report by Professor Piet Eeckhout with a list of supporting documents (the “Eeckhout Report I”).

20. On December 23, 2024, Spain filed (i) a Reply on Annulment (the “Reply”), with legal authorities RL-0275 to RL-0285; and (ii) a Second Expert Report by Professor Steffen Hindelang, dated December 16, 2024 (the “Hindelang Report II”).

21. On January 15, 2025, the Committee issued Procedural Order No. 3 (“PO 3") on the Stay of Enforcement of the Award. In PO 3, the Committee decided to lift the provisional stay of enforcement of the Award, subject to the fulfilment by the Claimants of the following condition:

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55. Claimants shall, no later than 25 January 2025, formally undertake to deposit in an escrow account any amounts that they might receive from the enforcement of the Award until the request for annulment is decided by this Committee immediately upon such receipt.

56. Alternatively, by the same date, Claimants shall formally undertake to provide a security in the amounts received through the enforcement of the Award immediately upon such receipt. Such security shall be provided by way of an irrevocable bank guarantee in favour of Spain from a first-class international bank.

22. On January 23, 2025, the Claimants filed (i) a Rejoinder on Annulment (the "Rejoinder”), with exhibits C-0594 to C-0599 and legal authorities CL-0353 to CL-0355; and (ii) a Second Expert Report by Professor Piet Eeckhout, dated January 23, 2025 (the “Eeckhout Report II”).

23. On January 24, 2025, the Claimants filed seven undertakings, pursuant to the directions of the Committee as described in paragraph 55 of PO 3.

24. By letter of February 19, 2025, and in accordance with paragraph 57 of PO 3, which provided that "[o]n receipt of Claimants' undertaking [...] the Committee shall confirm to the Parties the lifting of the provisional stay of enforcement of the Award”, the Committee confirmed to the Parties that the provisional stay of enforcement of the Award was lifted.

25. On February 20, 2025, the Committee held a pre-hearing organizational meeting with the Parties by video conference.

26. On February 24, 2025, the Committee issued Procedural Order No. 4 (“РО 4”) concerning the organization of the hearing. To this purpose, the Committee considered (i) a draft procedural order circulated to the Parties on February 12, 2025; and (ii) the Parties' comments on the draft procedural order received on February 18, 2025, indicating the points on which they agreed as well as the points of disagreement.

27. A hearing on annulment was held in Paris on March 19 and 20, 2025 (the “Hearing”). The following persons attended the Hearing:

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Committee:
Prof. Dr. Dário Moura Vicente President
Ms. Katherine González Arrocha Member of the Committee
Mr. Carlos José Valderrama Member of the Committee

ICSID Secretariat:
Ms. Ana Constanza Conover Blancas Secretary of the Committee

For the Kingdom of Spain:

Counsel
Ms. Inés Guzmán Gutiérrez General State Attorney's Office, Madrid, Spain
Mr. Guillermo Blanco Cenjor General State Attorney's Office, Madrid, Spain
Mr. Eduardo Tahoces López General State Attorney's Office, Madrid, Spain

Expert
Prof. Steffen Hindelang

For the Claimants:

Counsel
Ms. Amy Roebuck Frey King & Spalding
Ms. Héloïse Hervé King & Spalding
Ms. Lorna Maupilé King & Spalding
Ms. Alexia Olouman (intern) King & Spalding
Ms. Gaelle Saade (intern) King & Spalding

Expert
Prof. Piet Eeckhout

Court Reporters:
Mr. Trevor McGowan English court reporter
Mr. Maximiliano Pessoni Spanish court reporter
Ms. Celina Rinaldi Spanish court reporter

Interpreters:
Ms. Amalia de Klemm
Ms. Anna Sophia Chapman
Mr. Juan Maria Burdiel

28. Pursuant to paragraph 20.1 of PO 1 and paragraphs 34 and 35 of PO 4, audio recordings of the Hearing were provided to the Parties and the Committee on March 21, 2025 (“Hearing Recordings”).

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29. Pursuant to paragraphs 20.2 and 20.3 of PO 1, and paragraphs 36 and 38 of PO 4, real-time court reporting in English and Spanish was made available at the Hearing. In addition, electronic transcripts of the Hearing were provided to the Parties and the Committee on March 20, 2025 (“Hearing Transcripts”).

30. During the Hearing, the Parties agreed the following: (i) no post-hearing briefs would be filed; (ii) the Parties would agree on any corrections to the transcripts within 30 days after the conclusion of the Hearing, i.e., by April 19, 2025; and (iii) each Party would file its respective statement of costs within 30 days after the conclusion of the Hearing, i.e., by April 19, 2025.

31. On April 18, 2025, following communications from the Parties, the Committee extended the deadline for submission of agreed transcript corrections to April 25, 2025.

32. On April 19, 2025, the Claimants filed their costs submission.

33. On April 21, 2025, the Applicant filed its costs submission.

34. On April 25, 2025, the Parties filed their agreed corrections to the Hearing Transcripts.

35. The proceeding was closed on September 2, 2025.

III. SPAIN'S APPLICATION

36. Spain requests the annulment of the Award under Article 52(1)(b) and (e) of the ICSID Convention on the following two grounds:

(a) The Tribunal has manifestly exceeded its powers; and

(b) The Award does not state the grounds on which it is based.³

³ MoA, ¶ 59. ↩

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A. MANIFEST EXCESS OF POWERS

37. Spain submitted, both in its pleadings and at the Hearing, that the Tribunal has manifestly exceeded its powers by:

(a) Going beyond its jurisdiction, in contravention of EU law;

(b) Omitting the law applicable to the dispute and, in particular, by failing to apply EU law to the merits of the dispute.⁴

a) Jurisdiction over the Dispute

38. Spain considers that, according to the case-law of the CJEU, and as a result of the application of international law, there is no possibility of submitting to arbitration the investments of a company from an EU Member State in another Member State.⁵

39. In support of this contention, Spain submits that the Tribunal lacked (i) jurisdiction ratione personae to hear the dispute raised by the Claimants, and (ii) jurisdiction ratione materiae on the ground that EU law, as international law, precludes the submission of the present dispute to arbitration.⁶

40. In fact, according to Spain, both Spain and Germany are Member States of the European Union and therefore part of a Regional Economic Integration Organization (hereinafter “REIO”), as defined in Article 1(3) of the ECT. Thus, Claimants and Respondent are part of the same Contracting Party of the ECT.⁷ In fact, the present case deals, in Spain's view, with a “purely European dispute.”⁸

41. Because EU law is part of international law and applicable ex Article 26(6) ECT in all EU Member States, the Tribunal lacked jurisdiction to hear the present dispute insofar

⁴ MoA, ¶ 60; AoS, slides 7, 30 and 57; AcS, slides 2, 18, 31 and 35. ↩

⁵ MoA, ¶ 85. ↩

⁶ MoA, ¶ 91. ↩

⁷ MoA, ¶ 92. ↩

⁸ MoA, ¶ 93. ↩

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as EU law precludes the submission of the present dispute to arbitration. Neither Spain nor the investor's home State, Germany, have made a valid offer for arbitration to investors from other EU Member States. This has been confirmed by the CJEU in the Achmea and Komstroy cases.⁹

42. In the case of a conflict between the ECT and EU law, the EU Member States have agreed on a specific rule for the resolution of treaty conflicts, which is the primacy of EU law over other international obligations of the Member States towards each other.¹⁰

43. In other words, the primacy of EU law is a special conflict rule under international law. The principle of primacy of EU law applies equally to domestic law and international treaties within the EU, even when third countries are also parties to such treaties.¹¹

44. As a consequence of the fact that the dispute at stake concerns purely intra-EU relations and does not affect any third country or its investors, it follows that, in accordance with the conflict rules established and accepted among the EU Member States, Article 26 ECT is not applicable in this case and therefore cannot give rise to a valid arbitration agreement.¹²

45. According to Spain, the ECT provides for the dispute settlement mechanism of Article 26 as being applicable in cases where an investor of a contracting party has made an investment in the territory of another contracting party, but not in cases where the investment is made in the territory of that same contracting party.¹³

46. Given that the EU was the only REIO that promoted, negotiated and signed the ECT – the references to the REIO in Article 1 must necessarily be understood as being made to the EU –, arbitrations whose purpose is to resolve disputes between Member States

⁹ MoA, ¶ 94. ↩

¹⁰ MoA, ¶ 96. ↩

¹¹ MoA, ¶ 97. ↩

¹² MoA, ¶ 102. ↩

¹³ MoA, ¶ 113. ↩

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cannot be considered to fall within the scope of Article 26 of the ECT, since an investment made by a European investor in the territory of a Member State of the European Union is not, for the purposes of the Treaty, an investment made in the territory of another contracting party.¹⁴

47. This consideration of the EU as a REIO, and, consequently, as a Contracting Party, necessarily implies that the ECT was not designed to accommodate disputes between EU Member States, since, in such cases, both Member States would be part of the same REIO and, therefore, of the same contracting party.¹⁵

48. In the present case, the investor is incorporated in Germany. Both Germany and the Kingdom of Spain are EU Member States, contracting parties to the ECT, as they were at the time of the negotiation, ratification and entry into force of the ECT.¹⁶

49. In short, an effective interpretation of the ECT leads to the conclusion that there is no consent to submit to arbitration the resolution of disputes on matters requiring the interpretation or application of EU law because (i) the EU Member States could not bind themselves under Part III of the ECT as this would be a violation of the principle of EU autonomy and (ii) the ECT itself recognises in Article 25 the principle of the primacy of EU law.¹⁷

50. The Arbitral Tribunal has thus, in Spain's view, manifestly exceeded its powers by declaring its jurisdiction when it manifestly lacked jurisdiction.¹⁸

51. In its Reply, Spain reiterated its aforementioned views and submitted that in the Sapec and ESF awards, rendered on October 11, 2024, the arbitral tribunals endorsed the ECT's meaning defended by Spain, according to which the EU's participation in it, as

¹⁴ MoA, ¶ 114. ↩

¹⁵ MoA, ¶ 115. ↩

¹⁶ MoA, ¶ 118. ↩

¹⁷ MoA, ¶ 146. ↩

¹⁸ MoA, ¶ 290. ↩

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a REIO, introduced into its scope of application the primacy of EU law in the area of competences transferred by the Member States to the EU.¹⁹

52. Spain moreover noted that “the Arbitral Tribunal made an erroneous interpretation of the ECT because, despite referring to the need to comply with the requirements established in Article 31 of the Vienna Convention on the Law of Treaties in order to carry out this interpretative work, it concluded that it had jurisdiction to hear the dispute.”²⁰

53. The Sapec and ESF awards are, according to Spain, proof of this error.²¹

b) Disregard of EU Law Applicable to the Merits of the Dispute

54. Spain also submitted that the Arbitral Tribunal manifestly exceeded its powers by "totally disregarding the application of European Union law, which is applicable international law."²²

55. According to Spain's Memorial, the Tribunal did not apply the correct law either to the determination of jurisdiction or to the merits of the dispute, as the Kingdom of Spain argued throughout the underlying arbitration.²³

56. In fact, Spain notes, the Tribunal stated that EU law cannot prevail over international law and “even denies the international law status of the latter."²⁴

57. However, Spain argues, EU law does not cease to be international law merely because it applies to a certain number of countries and in a certain territory. Therefore, there is

¹⁹ RoA, ¶ 39. ↩

²⁰ RoA, ¶ 75 (internal footnote omitted). ↩

²¹ RoA, ¶ 76. ↩

²² MoA, ¶ 291. ↩

²³ MoA, ¶ 292. ↩

²⁴ MoA, ¶ 301. ↩

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no prevalence of international law over European Union law, as the latter is also international law.²⁵

58. Accordingly, Spain concludes, the Tribunal did not apply the appropriate law to decide either the jurisdiction or the merits of the case: European Union law.²⁶

59. Moreover, EU State aid rules are fully applicable to the dispute of the present arbitration and binding on Spain.²⁷

60. Thus, according to Spain, the Tribunal has exceeded its powers by manifestly erring in determining the applicable law because the present case relates to State aid.²⁸

61. In sum, the Tribunal's excess of powers through excess of jurisdiction also arises from the incorrect determination of the applicable law.²⁹

62. In Spain's view, the application of EU law would have had very important consequences not only for the jurisdiction of the Tribunal but also for the merits of the case. In short, the failure to apply the applicable rules amounts to a clear excess of powers which must lead to the annulment of the Award.³⁰

B. FAILURE TO STATE REASONS

63. Spain also considers that the Award should be annulled because it “failed to comply with its essential obligation to state reasons as to (1) the impact of the European State Aid rules on the claimant's legitimate expectations and (2) the existence of the claimant's legitimate expectations.”³¹

²⁵ MoA, ¶ 304. ↩

²⁶ MoA, ¶ 308. ↩

²⁷ MoA, ¶ 310. ↩

²⁸ MoA, ¶ 311. ↩

²⁹ MoA, ¶ 315. ↩

³⁰ MoA, ¶ 345. ↩

³¹ MoA, ¶ 346. ↩

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64. In fact, Spain submits, the Tribunal does not explain why the State aid regime is not applied to determine the legitimate expectations of the Claimants. It merely makes a statement without any motivation to consider EU law as a regional legal system. There is a “missing link" in the chain that does not allow Spain to know how the Tribunal goes from one reasoning to another.³²

65. Notably, the Tribunal does not analyse the State aid, invoked by the Kingdom of Spain in the underlying arbitration as an indispensable issue in order to modulate the Claimants' legitimate expectations. Moreover, it gives no reason not to analyse it.³³

66. That is why, according to Spain, it does not understand the reasons why the Tribunal did not apply EU law to the merits of the case.³⁴

67. The Tribunal does not provide, Spain goes on to say, a minimally reasoned explanation of the reasons why it decided to “radically disregard” the relevance of Articles 107 and 108 TFEU, despite the arguments and evidence presented.³⁵

68. In the view of Spain, the Tribunal fails to give reasons for the unavoidable relevance of EU law to this dispute, is incapable of drawing the consequences of this inescapable applicable law, completely ignores EU law and commits a clear failure to state reasons which must lead to its annulment.³⁶

69. Moreover, according to Spain, in paragraphs 163 and 164 of the Decision on Jurisdiction, Liability and Principles of Quantum, the Tribunal states that an investor cannot rely on subjective expectations based on a negligent disregard of the applicable

³² MoA, ¶ 361. ↩

³³ MoA, ¶ 362. ↩

³⁴ MoA, ¶ 363. ↩

³⁵ MoA, ¶ 364 (emphasis omitted). ↩

³⁶ MoA, ¶ 365. ↩

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regulatory regime. In this respect, the investor has the burden of informing himself about the circumstances of the place where he intends to invest.³⁷

70. The Tribunal stated that it took into consideration Spain's argument on the alleged foreseeability of the legal changes for a diligent investor, and on the alleged lack of diligence on the part of the investors.³⁸

71. However, in paragraph 209 of the Decision on Jurisdiction, Liability and Principles of Quantum, the Tribunal omitted, according to Spain, to give reasons for its decision on the issue of legitimate expectations when it relies on the allegations made by third parties to assert Claimants' legitimate expectations.³⁹

72. Therefore, the Tribunal made contradictory findings and failed to give reasons for its decision on the unpredictability of regulatory changes. It adopted a first approach in which it takes into consideration Spain's argument on the alleged foreseeability of the legal changes for a diligent investor, but then concludes without giving any reason that the changes were not foreseeable.⁴⁰

73. As a consequence of the above, Spain submits that the “legitimacy and validity” of the Award has been vitiated, and it must therefore be annulled.⁴¹

C. SPAIN'S PETITA

74. In light of the foregoing, Spain requests that the Committee:

(a) Annul the Award in its entirety pursuant to Article 52(1)(b) of the ICSID Convention, “for manifestly exceeding its powers by improperly declaring its jurisdiction over an intra-EU dispute and for grossly and improperly

³⁷ MoA, ¶ 366. ↩

³⁸ MoA, ¶ 367. ↩

³⁹ MoA, ¶ 368. ↩

⁴⁰ MoA, ¶ 369. ↩

⁴¹ MoA, ¶ 370. ↩

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misapplying fundamental rules for the shaping of investors' legitimate expectations, such as European Union law;"

(b) Annul the Award in its entirety pursuant to Article 52(1)(e) of the ICSID Convention, for “failure to state reasons in relation to the impact of the State aid regime on [Claimants'] Legitimate Expectations”; and

(c) Order Mathias Kruck and others to pay all the costs of the proceedings.⁴²

IV. CLAIMANTS' REPLY

75. In their Counter-Memorial, as well as in their presentations at the Hearing, Claimants submitted in essence that:

(a) The Tribunal did not manifestly exceed its power;⁴³ and

(b) The Tribunal did not fail to state the reasons on which the Award is based.⁴⁴

A. MANIFEST EXCESS OF POWERS

76. Regarding the alleged manifest excess of powers, Claimants submit, in sum, that:⁴⁵

(a) The Tribunal's exercise of jurisdiction was proper; and

(b) The Tribunal did not err in deciding the applicable law.

77. Regarding jurisdiction, Claimants note that the underlying dispute involved Parties of different ECT Contracting Parties, as is required for the applicability of Article 26 ECT.

⁴² MoA, ¶ 371; RoA, ¶ 171. ↩

⁴³ C-MoA, ¶¶ 23-125; CoP, slides 15-33. ↩

⁴⁴ C-MoA, ¶¶ 126-148; CoP, slides 38-46; CcP, slides 22-26. ↩

⁴⁵ C-MoA, ¶ 25. ↩

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78. Claimants stress that "Spain has not pointed to a single ECT annulment decision finding that a tribunal's exercise of jurisdiction over an intra-EU dispute or its refusal to apply EU law amounted to any error at all, much less manifest errors. The fact that there are also more than fifty arbitral decisions reaching the same conclusion also demonstrates that these conclusions are not manifestly in error.”⁴⁶

79. Moreover, Claimants submit, Spain is wrong to claim that the dispute before the Tribunal was a “European” dispute, and in any event the REIO clauses in the ECT do not mean what Spain contends.⁴⁷

80. Claimants contest that they and the Respondent are part of the same contracting party to the ECT, as contended by Spain: Spain and Germany were not the “parties to the dispute." Rather, the parties to the dispute were Investors of Germany – namely, Claimants – who had a dispute against Spain alone.⁴⁸

81. There is no dispute that the EU is a REIO and a Contracting Party to the ECT in its own right; however, that fact simply was not implicated in the Kruck dispute, because Claimants were not bringing a claim against the EU, but rather against Spain, which is a Contracting Party in its own right.⁴⁹

82. Article 26 ECT offers international arbitration to resolve “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, which concern an alleged breach of an obligation of the former under Part III.” Because Claimants' dispute was with Spain (and not the EU), the criterion that they be Investors of “another” Contracting Party is met.⁵⁰

⁴⁶ C-MoA, ¶ 41 (emphasis in the original). ↩

⁴⁷ C-MoA, ¶ 48. ↩

⁴⁸ C-MoA, ¶ 49. ↩

⁴⁹ C-MoA, ¶ 50. ↩

⁵⁰ C-MoA, ¶ 52. ↩

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83. The Tribunal applied these provisions –and addressed Spain's REIO argument– when assessing its jurisdiction.⁵¹

84. Moreover, both Claimants and Spain agreed to the resolution of the dispute under the ICSID Convention, an international treaty to which the EU is not a party, and they agreed that the place of arbitration was outside the EU, in Washington, D.C.⁵²

85. The Tribunal ultimately concluded that the EU's existence as a Contracting Party to the ECT in its own right did nothing to eliminate the Tribunal's jurisdiction over the dispute between German nationals and Spain.⁵³

86. Claimants additionally invoke that Spain, Germany, and the EU gave their “'unconditional consent' to arbitrate disputes" when they concluded the ECT.⁵⁴

87. On the one hand, this is the effect of Article 26(3) ECT's plain text.⁵⁵

88. On the other hand, nothing in the ECT provides for an exception for intra-EU disputes.⁵⁶

89. Notably, the declaration submitted to the Energy Charter Secretariat by the EU with respect to ECT Article 26(3) produced by Spain does not comprise disputes between an EU Member State and an investor of a Member State.⁵⁷

90. The original version of this declaration, which was submitted by the European Communities to the Energy Charter Secretariat in conjunction with the EU joining

⁵¹ C-MoA, ¶ 53. ↩

⁵² C-MoA, ¶ 56. ↩

⁵³ C-MoA, ¶ 57. ↩

⁵⁴ C-MoA, section III(B)(2). ↩

⁵⁵ C-MoA, ¶ 65. ↩

⁵⁶ C-MoA, ¶ 66. ↩

⁵⁷ C-MoA, ¶ 69. ↩

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the ECT, dates from March 9, 1998, and contains no intra-EU carve-out referring to Article 26 ECT.⁵⁸

91. The ECT drafting history also confirms that non-EU parties strongly opposed any type of intra-EU carve-out.⁵⁹

92. Thus, the ECT Contracting Parties affirmatively decided not to include these intra-EU carve-outs.⁶⁰

93. The EU law principle of autonomy does not mean that Member States could not have decided, in 1997, to the dispute resolution mechanism in the ECT.⁶¹

94. If the EU had wished for the ECT to contain a disconnection clause, it would have had to have taken some measure to do so.⁶²

95. In light of the ECT's express wording that each Contracting Party gave “unconditional consent" to arbitrate disputes and made no carve-out for intra-EU disputes, the Tribunal was correct to apply the plain text of the ECT and uphold its jurisdiction.⁶³

96. Claimants further seek to demonstrate that EU Law does not have primacy over international law, an argument made by Spain before the Arbitral Tribunal, which it rejected.⁶⁴

97. This is so notably because the EU law principle of primacy does not mean that EU law prevails outside the EU legal order. In fact, that principle says nothing at all about

⁵⁸ C-MoA, ¶ 75. ↩

⁵⁹ C-MoA, ¶ 78. ↩

⁶⁰ C-MoA, ¶ 79. ↩

⁶¹ C-MoA, ¶ 81. ↩

⁶² C-MoA, ¶ 86. ↩

⁶³ C-MoA, ¶ 89. ↩

⁶⁴ C-MoA, ¶ 90. ↩

[Page 20]

EU law's relationship with international law but merely confirms that EU law enjoys primacy over the law of Member States in accordance with CJEU case law.⁶⁵

98. Anyway, Claimants submit, in a situation where EU law conflicts with ECT Article 26(3), the specific conflict provision in ECT Article 16 prevails; and every ICSID tribunal and annulment committee to date has held that any conflict between the ECT and EU law in relation to the availability of intra-EU arbitration must be resolved in favor of the ECT.⁶⁶

99. For this reason, according to Claimants, the EU law-based decisions that Spain cites are not relevant or applicable to the case at hand.⁶⁷

100. In their Rejoinder, Claimants take issue with Spain's argument drawn from the abovementioned Sapec and ESF awards.⁶⁸

101. In this respect, Claimants note, in sum, that: (i) These decisions are outliers; (ii) The Sapec and ESF decisions do not indicate a real “debate” on the matter of jurisdiction over intra-EU disputes under the ECT, and both decisions were drafted by the same tribunal president, David Unterhalter; (iii) The reasoning of the majorities in Sapec and ESF is seriously flawed, both in terms of the majorities' understanding of the ECT and their understanding of EU law; (iv) The Sapec and ESF decisions are not properly before this Committee, because they did not exist and therefore were not before the Kruck Tribunal and so cannot form a basis on which the Kruck Tribunal's decision can be impugned; (v) While the holding in Sapec and ESF has sweeping consequences, it is in fact extremely narrow because those tribunals rejected nearly every argument Spain raised to try to avoid jurisdiction; (vi) The majorities were only able to reach the conclusion that they did not have jurisdiction by (wrongly) torturing the meaning of ECT Article 1(3) and, in so doing, disregarding the plain text of several other express

⁶⁵ C-MoA, ¶ 91. ↩

⁶⁶ C-MoA, ¶ 100. ↩

⁶⁷ C-MoA, ¶ 102. ↩

⁶⁸ RejoA, ¶¶ 24-39. ↩

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ECT provisions, including Article 26 and Article 16; and (vii) The meaning that the majorities give to Article 1(3) is irreconcilable with the plain text of several other ECT provisions.

102. Regarding the Tribunal's alleged error in deciding the applicable law, Claimants submit that in the underlying arbitration there was no dispute between the Parties as to what governing law rule to apply – both Claimants and Spain agreed the answer was the specific governing law rule in ECT Article 26(6). Similarly, there is no dispute in this annulment proceeding that the Tribunal applied ECT Article 26(6). The only question here is whether the Tribunal erred in its application of ECT Article 26(6) by interpreting that article to not include EU law. Thus, Spain's argument is not that the Tribunal failed to apply the rule on governing law as agreed by the Parties; but rather that the Tribunal erred in its interpretation or application of that rule.⁶⁹

103. However, Claimants note, even if it were not the case that a review of how the Tribunal applied ECT Article 26(6) is beyond the scope of this Committee, Spain would still need to convince the Committee that the Tribunal erred in finding that Article 26(6) did not include EU law.⁷⁰

104. Regarding Spain's argument that the Tribunal erred by not applying EU State aid law to delimitate the scope of the Claimants' legitimate expectations, Claimants hold that this was no error at all, because the Tribunal properly found that the international law standard of legitimate expectations prevailed, not any standard found in EU law. In any event, Claimants go on to say, given that Spain never notified the incentives at issue to the Commission for a State aid determination, as it was obliged to do if it considered the regime to be State aid, Claimants were entitled to assume that Spain was acting lawfully.⁷¹

⁶⁹ C-MoA, ¶ 111. ↩

⁷⁰ C-MoA, ¶ 112. ↩

⁷¹ C-MoA, ¶ 124. ↩

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105. For these reasons, Spain's claim that the Tribunal manifestly exceeded its power in its determination of the applicable law is, according to Claimants, without merit.⁷²

B. FAILURE TO STATE REASONS

106. In respect of the Award's alleged failure to state reasons, Claimants consider that Spain's arguments based on Article 52(1)(e) ICSID Convention do not reveal a valid basis on which the Award can or should be annulled.⁷³

107. According to Claimants, it is perfectly obvious why the Tribunal did not apply or analyse EU State aid rules when assessing Claimants' legitimate expectations under the FET provision in the Treaty.⁷⁴

108. In fact, the Tribunal interpreted the phrase "applicable rules and principles of international law” in ECT Article 26(6) as not including EU law.⁷⁵

109. The Tribunal moreover noted that EU law is a regional law system, similar to municipal legal systems, before confirming that EU law could not alter international law obligations, including those in the ECT.⁷⁶

110. According to Claimants, a reader of the Award can therefore easily understand why, when assessing Claimants' claim that Spain violated the FET provision and their legitimate expectations, the Tribunal would not employ any analysis of EU State aid law. No further explanation from the Tribunal is necessary.⁷⁷

111. In any event, in assessing liability, therefore, the Tribunal plainly analysed the international law standard –and not any other legal standard– for the assessment of

⁷² C-MoA, ¶ 125. ↩

⁷³ C-MoA, ¶ 127. ↩

⁷⁴ C-MoA, ¶ 131. ↩

⁷⁵ C-MoA, ¶ 132. ↩

⁷⁶ C-MoA, ¶ 138. ↩

⁷⁷ C-MoA, ¶ 139. ↩

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legitimate expectations. A reader can readily understand why the Tribunal did so, which again is all that is required.⁷⁸

112. But, Claimants add, even if this Committee were to consider that the Tribunal should have included a State aid analysis in the Award, the lack of that analysis cannot give rise to annulment, because it was not established that the incentives at issue were unlawful State aid.⁷⁹

113. As a result, Spain's argument must fail.⁸⁰

114. Claimants also submit that the Award is not contradictory regarding the type of statements and diligence on which Claimants could rely for a claim of legitimate expectations.⁸¹

115. In fact, the Tribunal found that Claimants should not have expected unpredictable changes as a result of Spain's representations regarding the stability of the incentive framework in RD 661/2007, which contained express assurances that its fixed tariffs would apply to qualifying, registered PV facilities for a fixed period, and that changes to the regulatory regime would not apply to facilities already registered. Spain contends that there is a contradiction regarding stability, but the truth is that the Tribunal rejected Spain's argument that Claimants should have anticipated changes to the regime.⁸²

116. In conclusion, Claimants submit, the Tribunal's decision not to apply EU law either when determining jurisdiction or the merits of the arbitral dispute did not constitute any error. The Tribunal's reasoning and conclusions were at least tenable, if not the only proper way to apply the ECT and the ICSID Convention.⁸³

⁷⁸ C-MoA, ¶ 141. ↩

⁷⁹ C-MoA, ¶ 142. ↩

⁸⁰ C-MoA, ¶ 143. ↩

⁸¹ C-MoA, ¶ 144. ↩

⁸² C-MoA, ¶¶ 147 and 148. ↩

⁸³ C-MoA, ¶ 149. ↩

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117. Spain has not shown any error at all, much less a “manifest” error arising to the high threshold required for annulment. Similarly, Spain has not demonstrated that the Award fails to state the reasons on which it is based. The Tribunal's decision not to analyse EU State aid law stemmed directly from its conclusion that EU law was not relevant and its decision to apply the international law FET standard to determine Spain's liability.⁸⁴

118. Furthermore, even if the Tribunal had considered EU State aid law to have been relevant, the outcome of this case would not have changed because there was no evidence that the incentive regime under which Claimants invested was contrary to EU law.⁸⁵

C. CLAIMANTS' PETITA

119. For the foregoing reasons, Claimants request that the Committee:

(a) Dismiss Spain's Application for Annulment of the Award in its entirety;

(b) Uphold the validity of the Award;

(c) Order Spain to reimburse them for all their legal costs and expenses associated with the entirety of the proceedings (including professional fees and disbursements) to be quantified;

(d) Order Spain to immediately comply with the Award; and

(e) Award Claimants any other relief that the Committee deems just and proper.⁸⁶

⁸⁴ C-MoA, ¶ 149. ↩

⁸⁵ C-MoA, ¶ 149. ↩

⁸⁶ C-MoA, ¶ 151; RejoA, ¶ 78. ↩

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V. EXPERTS' REPORTS

A. THE HINDELANG REPORT I

120. With the Committee's permission, granted as mentioned above, Spain submitted an Expert Report by Professor Dr. Steffen Hindelang on October 3, 2024. The report presents the following main arguments:⁸⁷

(a) The Tribunal in Mathias Kruck v. Spain had to apply the EU Treaties, as well as the legal order flowing therefrom, including the standing case law of the CJEU that the EU Treaties “must be regarded [. . .] as deriving from an international agreement between the [EU] Member States.”

(b) The EU legal order bears this nature when applied between the EU Member States and falls under the scope of “applicable rules and principles of international law” within the meaning of Article 26(6) of the ECT.

(c) The relevant principles contained in the EU Treaties, applicable between the EU Member States, include the principle of autonomy and the principle of primacy.

(d) The principle of autonomy flows from Article 267 of the TFEU which provides for a mechanism for the courts and tribunals of the EU Member States to obtain preliminary rulings of the CJEU on questions concerning the interpretation and validity of EU law; and from Article 344 of the TFEU which prohibits EU Member States from submitting a dispute concerning the interpretation or application of the EU Treaties to any method of settlement other than those provided in the EU Treaties.

(e) The CJEU's ruling in Achmea, as confirmed in Komstroy, means that in terms of its temporal effect intra-EU investment arbitration has always been incompatible

⁸⁷ Hindelang Report I, ¶¶ 13-16. ↩

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with the EU Treaties from the moment they, or their respective predecessor treaties, entered into force.

(f) The principle of primacy of EU law provides, among others, that in case of a conflict between a public international law rule created between the EU Member States, like the ECT, and the EU Treaties, the latter takes precedence and overrides such a rule.

(g) The principle of primacy of EU law extends beyond the EU Member States' courts and tribunals to any competent authority required to apply the EU Treaties, such as the Tribunal in Mathias Kruck v. Spain as well as this Committee.

(h) The fundamental importance of the principle of primacy to the proper functioning of the EU is such that no derogation is permitted. Neither can the EU exempt the Member States from observing this principle, nor can the EU Member States agree among each other on any other conflict rule to override the one established by the EU Treaties. The only way for the EU Member States to escape the principle of primacy is to amend the EU Treaties by following the amendment procedure set out in Article 48 of the TEU.

(i) The principles of autonomy and primacy as articulated by the CJEU in Achmea and confirmed in Komstroy are applicable to Mathias Kruck v. Spain.

(j) Because CJEU decisions determine the law as it stands from its enactment, Article 26 of the ECT is inoperative between EU Member States ex tunc, i.e., from the time the ECT came into force. This in turn means that from the moment the ECT was concluded, no valid offer could have been made by any EU Member State to arbitrate disputes with nationals of another EU Member State.

(k) For this reason, there could not have been an arbitration agreement between Spain, on the one hand, and investors from another EU Member State, like Mathias Kruck, on the other, under Article 26 of the ECT.

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(l) The CJEU in Achmea did not differentiate between bilateral and multilateral agreements between the EU Member States while holding that intra-EU investment arbitration is incompatible with the EU Treaties. Indeed, the application of the principle of autonomy is not limited to bilateral agreements but extends to all international agreements between EU Member States, irrespective of whether they are bilateral or multilateral, with or without participation of the EU.

(m) The Tribunal in Mathias Kruck v. Spain, purportedly constituted under Article 26 of the ECT, would have been required to adjudicate in accordance with the EU Treaties and, consequently, to decline its jurisdiction.

(n) The EU Treaties are applicable law to annulment proceedings under Article 52 of the ICSID Convention, which must be interpreted in conformity with the EU Treaties in an intra-EU context.

(o) The Tribunal manifestly exceeded its powers in passing the Award that, thus, needs to be annulled. Such manifest excess of powers is attributable to the obvious lack of jurisdiction and application of wrong law under Article 26(6) of the ECT.

B. THE EECKHOUT REPORT I

121. In response, and as previously allowed by the Committee, Claimants filed an Expert Report by Professor Dr. Piet Eeckhout, dated November 18, 2024, which submits, in sum, the following:⁸⁸

(a) First, the Kruck Tribunal was correct in establishing its jurisdiction on the basis of the clear provisions of the ECT and of the ICSID Convention. Those provisions do not make any exception for intra-EU arbitration, explicitly or implicitly. EU law does not and cannot govern that jurisdiction, because there is no basis for any such principle, in either the ECT, the ICSID Convention, general public international

⁸⁸ Eeckhout Report I, ¶¶ 10-13. ↩

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law, or even EU law. The CJEU case law in Achmea and Komstroy is confined to the internal EU legal order.

(b) Second, even if EU law were accepted as applicable law to the jurisdiction of an ECT/ICSID tribunal, one would still need to resolve the conflict between EU law and the express and clear ECT provisions. The relevant conflict rule is Article 16 ECT, which gives precedence to the ECT, particularly in terms of dispute resolution. The principle of the primacy of EU law is emphatically not an international conflict rule. That is clear from the CJEU case law on that principle.

(c) Third, a conflict with EU law can only be resolved by the EU Member States acting so as to modify or withdraw from their ECT obligations. As long as they have not done so, the ECT provisions in issue embody valid and enforceable international obligations.

(d) Fourth, Professor Hindelang's opinion that, in intra-EU relations, EU law rules are supreme, including in relation to the obligations entered into by the Member States on the international plane, is not supported by CJEU case law. Achmea and Komstroy are concerned with an internal, constitutional EU law issue. No other CJEU case law points in the opposite direction. The jurisdiction of the CJEU is confined to matters of EU law and does not extend to the international obligations of the Member States. Again, this follows from clear EU treaty provisions, in the TEU and in the TFEU.

C. THE HINDELANG REPORT II

122. On December 23, 2024, Spain filed a second Expert Report by Professor Dr. Steffen Hindelang dated December 16, 2024, which formulates the following main assertions:⁸⁹

⁸⁹ Hindelang Report II, ¶¶ 7-10. ↩

[Page 29]

(a) Where there is an obvious conflict between the EU Treaties and the Award because the CJEU has established on principle the illegality under the EU Treaties of investor-state arbitration in an intra-EU context, the Committee has no discretion and must annul the Award.

(b) The Award in the present case is to be annulled due to a manifest lack of powers according to Article 52 of the ICSID Convention. The Tribunal failed to apply the EU Treaties. Thus, it evidently applied the wrong law to jurisdiction and merits.

(c) Article 26(2)(c) and (3) of the ECT does not apply between EU Member States. An EU Member State cannot extend a valid offer to arbitrate to a national of another EU Member State. The Tribunal did not at any point in time have jurisdiction.

(d) The EU Treaties are applicable law to the present annulment proceedings. This is based, to begin with, on Article 52(4) in conjunction with Articles 42(1) and 44 of the ICSID Convention.

(e) Irrespective of what the interpretation of Articles 42(1) and 44 of the ICSID Convention is, arguendo, due to the fact that all Contracting States concerned by the present ICSID annulment proceedings are EU Member States, the EU Treaties are always part of the package when EU Member States deal in international law among themselves. EU Member States cannot opt out or deselect the EU Treaties in their inter se relations. Thus, they are always applicable law in an intra-EU context.

(f) Alternatively, the EU Member States concerned have modified the ICSID Convention in the way that EU law is applicable to the present proceedings.

(g) Moreover, interpreting the ICSID Convention in light of and in conformity with the EU Treaties is not disregarding the former, but giving due effect to the sovereign will of the masters of the treaties in question.

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(h) Varying obligations inter se under the ICSID Convention is not contrary to good faith or the principle of pacta sunt servanda.

(i) In an intra-EU context, in case of conflict, the EU Treaties take precedence over the ICSID Convention.

(j) Finally, the applicable law in an investment dispute allegedly based on the ECT in an intra-EU context always includes EU law.

D. THE EECKHOUT REPORT II

123. In response, Claimants have submitted a second Expert Report by Professor Dr. Piet Eeckhout, dated January 23, 2025. This report essentially argues the following:

(a) Article 42(1) provides that a Tribunal must decide a dispute in accordance with the agreed applicable law, and Article 52(4) extends this norm to annulment committees. In the current case, the agreed law is provided for in Article 26(6) ECT as being the ECT and applicable rules and principles of international law. Those provisions do not include EU law. Even if they did, EU law cannot override the clear provisions of the ECT. In case of conflict, Article 16 ECT gives precedence to the ECT over the EU Treaties.⁹⁰

(b) The case law of the CJEU on the primacy of EU law has never, in terms, stated that primacy of EU law is an international conflict rule. All it has done is to confirm that the primacy of EU law, in the domestic law of a Member State, cannot be set aside on grounds of any international law requirement to respect other international obligations (with the exception of the obligations covered by Article 351 TFEU).⁹¹

⁹⁰ Eeckhout Report II, ¶ 3. ↩

⁹¹ Eeckhout Report II, ¶ 8. ↩

[Page 31]

(c) The CJEU's case law stems from a court whose jurisdiction is confined to the EU Treaties. It does not have jurisdiction over non-EU treaties and agreements, or indeed general jurisdiction over the inter se relations of the EU Member States.⁹²

(d) It would be unheard of for the primacy of EU law to constitute an absolute international conflict rule in all circumstances –including with respect to obligations which the Member States have entered into towards third countries. This would mean that the primacy of EU law works in all directions: the domestic laws of the Member States and public international law. EU law would truly rule supreme. That cannot be correct.⁹³

(e) The only correct and defensible understanding of the primacy of EU law is that it is confined to the relationship between the EU Treaties and the domestic laws of the Member States.⁹⁴

(f) The EU Treaties are silent about conflicts with other treaties. Even Article 351 TFEU is not a conflict rule. It is a provision which allows a Member State to derogate from EU law when this is required to comply with obligations towards third countries pre-dating EU membership. It is therefore an exception to the primacy of EU law.⁹⁵

(g) It would remain wholly unclear on what basis an ECT/ICSID tribunal should apply the EU law primacy rule. The relevant ECT and ICSID provisions are clear, they establish the tribunal's jurisdiction to hear an intra-EU case and Article 16 ECT prioritises the ECT over EU law. On what basis, then, would an arbitral tribunal

⁹² Eeckhout Report II, ¶ 9. ↩

⁹³ Eeckhout Report II, ¶ 11. ↩

⁹⁴ Eeckhout Report II, ¶ 13. ↩

⁹⁵ Eeckhout Report II, ¶ 14. ↩

[Page 32]

have the authority to disregard the plain text of the ECT in favour of the opinion from the court of one of the ECT Contracting Parties that does not bind it?⁹⁶

(h) The academic literature to which Professor Hindelang refers does not support his conception of the primacy of EU law as an international conflict rule, governing conflicts between the EU Treaties and other inter se agreements.⁹⁷

(i) The 2024 Declaration made by the Governments of EU Member States cannot serve as a basis on which to suggest that the Kruck Tribunal, which did carry out an interpretive analysis of the ECT according to VCLT standards, committed an excess of power. Notably, the Tribunal never had an opportunity to consider the 2024 Declaration or any Parties' arguments as to its relevance.⁹⁸

(j) The existing and applicable EU legal norms were not affected by the entry into force of the Lisbon Treaty. The Lisbon Treaty simply does not constitute an inter se modification as per Article 41(1)(b) VCLT.⁹⁹

(k) In the recent Sapec v Spain and ESF v Spain awards, the tribunals clearly misinterpreted the relevant provisions of the ECT.¹⁰⁰

(l) This is so, first, given the emphasis placed on Article I (3) ECT. That provision does no more than define a Regional Economic Integration Organisation.¹⁰¹

(m) Second, the Tribunals' reasoning completely overlooks Article 16 ECT.¹⁰²

(n) Third, Article 25 ECT on Economic Integration Agreements points in the opposite direction of the conclusion drawn by the ESF and Sapec tribunals. In contrast with

⁹⁶ Eeckhout Report II, ¶ 17. ↩

⁹⁷ Eeckhout Report II, ¶ 18. ↩

⁹⁸ Eeckhout Report II, ¶ 35. ↩

⁹⁹ Eeckhout Report II, ¶ 37. ↩

¹⁰⁰ Eeckhout Report II, ¶¶ 38-40. ↩

¹⁰¹ Eeckhout Report II, ¶ 43. ↩

¹⁰² Eeckhout Report II, ¶ 49. ↩

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Article I (3), this is a provision which, in terms, speaks to the rights and obligations of the parties to an Economic Integration Agreement (which does not equate to a Regional Economic Integration Organisation). It is common ground that the EU Treaties constitute such an agreement. However, Article 25 is confined to exempting the parties to such an agreement from extending preferential treatment to other ECT Contracting Parties. It contains no other exemptions.¹⁰³

(o) In other words, the better contextual interpretation of Articles I (3), 16 and 25 is that the REIO members are bound by all of the ECT provisions, with the exception of the non-extension of preferential treatment; and that, in case of a conflict between the ECT and the REIO's constituent instrument, Article 16 is the applicable provision. Any other interpretation would make these explicit ECT provisions irreconcilable.¹⁰⁴

(p) The Statement submitted by the European Communities to the Secretariat of the Energy Charter on March 9, 1998, pursuant to Article 26(3)(b)(ii) ECT is confined to regulating the position of the EU and of its Member States in disputes brought by investors, in cases where there may be uncertainty about the appropriate respondent party. Regardless of how one interprets that Statement, however, there is no support in the law of treaty interpretation that would see an admittedly unclear statement override the clear and unequivocal text of the ECT itself.¹⁰⁵

(q) The ESF and Sapec tribunals' interpretation of the ECT goes further than simply reading a disconnection clause into it. It has the effect of making the interpretation and application of the ECT subject to EU law, insofar as the EU and its Member States are concerned. That is clearly not what the Contracting Parties intended.¹⁰⁶

¹⁰³ Eeckhout Report II, ¶ 50. ↩

¹⁰⁴ Eeckhout Report II, ¶ 51. ↩

¹⁰⁵ Eeckhout Report II, ¶ 52. ↩

¹⁰⁶ Eeckhout Report II, ¶ 58. ↩

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VI. THE COMMITTEE'S ANALYSIS

A. APPLICABLE LEGAL STANDARDS

124. In considering Spain's request for annulment of the Award and the Claimants' opposition thereto, this Committee is guided by the legal framework established in the ICSID Convention, as interpreted consistently by other ad hoc committees. The following principles govern the Committee's assessment:

(a) Annulment under the ICSID Convention does not permit a review of the merits of the arbitral award;

(b) An annulment based on excess of powers requires that such excess be manifest —i.e., it must be obvious, clear, or self-evident;

(c) Allegations of excess of powers must be assessed solely on the basis of the evidentiary record that was before the original tribunal;

(d) A failure to state reasons may justify annulment only where the tribunal has entirely omitted to provide reasons, not where the reasons given are unpersuasive, incomplete, or erroneous;

(e) The Committee may examine alleged failures to state reasons only with respect to issues that were raised by the Parties before the Arbitral Tribunal; new issues may not be introduced at the annulment stage; and

(f) Only failures to address issues that were properly raised and that were material to the outcome of the case may warrant annulment on the ground of failure to state reasons.

125. The following sections will elaborate on these standards.

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a) Applicable Standards to the Committee's Review of the Award

126. Pursuant 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.

127. In light of the principle of finality of arbitral awards enshrined in this provision, annulment proceedings must be distinguished from appeals, in that they may not involve a review of the merits of awards, or their modification, by ad hoc committees called upon to decide annulment requests. Rather, annulment is a limited remedy designed to safeguard the integrity of the arbitral tribunal, the arbitral process and the arbitral award, by ensuring that the Tribunal respected the fundamental procedural and jurisdictional requirements set out in Article 52 of the ICSID Convention.

128. Safeguarding the integrity of the arbitral tribunal, process, and award is essential to uphold the legitimacy and credibility of investor-State arbitration. It ensures that tribunals operate within their mandate, respect due process, and provide reasoned decisions, thereby reinforcing legal certainty. Without such safeguards, the system risks losing the trust of both States and investors, undermining its effectiveness as a reliable mechanism for resolving international disputes.

129. This view was upheld, inter alia, by the ad hoc committee in Tidewater v. Venezuela, which found that:

(a) Under ICSID Rules, no appreciation is allowed in annulment proceedings of the quality of reasons of the award;¹⁰⁷

(b) No examination of the merits of the award is allowed in such proceedings either. In fact, an ad hoc committee must not re-assess the merits of the case, which it

¹⁰⁷ Tidewater Investment SRL and Tidewater Caribe, C.A. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5, Decision on Annulment, December 27, 2016 (hereinafter “Tidewater v. Venezuela, Decision on Annulment”) (RL-0188), ¶ 168. ↩

[Page 36]

would do notably “if it discarded the Tribunal’s exercise of discretion in fixing the amount of compensation and replaced it by its own discretion;”¹⁰⁸ and

(c) An ad hoc committee must therefore “abstain from scrutinizing whether the Tribunal has established the facts correctly, has interpreted the applicable law correctly and has subsumed the facts as established correctly under the law as interpreted.”¹⁰⁹

130. More recently, the same view was shared by the ad hoc committee that decided the request for annulment of the arbitral award rendered in Antin v. Spain, which specifically held that an annulment committee cannot review de novo the facts, evidence and criteria used by an arbitral tribunal in its award of damages.¹¹⁰

131. In the instant case, both Parties have expressed their agreement with this standard: (i) Spain expressly affirmed in its Opening Statement at the hearing that “Ad hoc Committees are not appellate bodies”;¹¹¹ and (ii) Claimants likewise submitted in their Opening Presentation that “[a]n Annulment Proceeding is not an appeal.”¹¹²

b) Applicable Standards to the Assessment of Manifest Excess of Powers

132. Article 52(1)(b) of the ICSID Convention provides for the annulment of an arbitral award when two conditions are met:

(a) The arbitral tribunal has exceeded its powers; and

(b) Such excess is manifest.

¹⁰⁸ Tidewater v. Venezuela, Decision on Annulment (RL-0188), ¶ 171. ↩

¹⁰⁹ Tidewater v. Venezuela, Decision on Annulment (RL-0188), ¶ 172. ↩

¹¹⁰ 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 Annulment, July 30, 2021 (hereinafter “Antin v. Spain, Decision on Annulment”) (CL-0292), ¶ 168. ↩

¹¹¹ AoS, slide 4. ↩

¹¹² CoP, slide 5. ↩

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133. ICSID ad hoc committees have 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 the Tribunal exceeds the scope of its jurisdiction.”¹¹³

134. However, since an arbitral tribunal is the judge of its own competence, in order to annul an award on the basis of its determination of the scope of its own jurisdiction, the excess of powers must be manifest.¹¹⁴ This high threshold preserves the finality of awards and ensures that only clear and self-evident overreach justifies annulment, thereby safeguarding legal certainty and the integrity of the arbitral process.

135. 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.”¹¹⁵ This is in line with the abovementioned exceptional and limited character of an annulment, as opposed to an appeal.¹¹⁶

136. An error that is manifest must be one that would be “readily apparent without a need to resort to extensive argumentation and analysis to reveal it.”¹¹⁷

137. While an annulment claim must be resolved on its own merits, the fact that the Arbitral Tribunal has explicitly arrived, in the Award under consideration, at conclusions that are consistent with those adopted by multiple other tribunals addressing the same legal question under the same treaty framework may indicate that the alleged excess of powers is not manifest.

138. For this purpose, arbitral jurisprudence constante constitutes a relevant authority, with persuasive value, as to how other adjudicating bodies have treated similar matters.

¹¹³ ICSID, Updated Background Paper on Annulment for the Administrative Council of ICSID, May 5, 2016 (hereinafter “Background Paper on Annulment”) (RL-0186), ¶ 87, citing several decisions from ad hoc committees (footnotes omitted). ↩

¹¹⁴ Background Paper on Annulment (RL-0186), ¶ 88. ↩

¹¹⁵ Background Paper on Annulment (RL-0186), ¶ 83. ↩

¹¹⁶ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 151. ↩

¹¹⁷ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 152. ↩

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Taking such jurisprudence into account moreover contributes to the predictability of the decisions of arbitral tribunals and ad hoc annulment committees and the consistency of the case-law of investor-State dispute settlement mechanisms.¹¹⁸

139. Thus, for example, in Antin v. Spain, the fact that fifty-six other tribunals shared the Antin arbitral 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.¹¹⁹

140. In any event, and without prejudice to the importance of consistency in decisions rendered by ad hoc committees in proceedings for annulment of arbitral awards, a committee should only annul an award for an error that is obvious on the face of it. A committee should not make its own findings of fact or law apart from what is established in the award.¹²⁰

141. As stated by the ad hoc committee in TECO v. Guatemala:

[I]n determining whether a tribunal has committed a manifest excess of powers, 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.¹²¹

142. A tribunal’s failure to apply the proper law may also constitute a manifest excess of powers if it amounts to a complete disregard of that law, or if the tribunal acts ex aequo et bono without permission of the parties to do so.¹²²

¹¹⁸ See, on this, ¶¶ 154-156 hereunder. ↩

¹¹⁹ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 154. ↩

¹²⁰ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 169. ↩

¹²¹ TECO Guatemala Holdings LLC v. Republic of Guatemala, ICSID Case No. ARB/10/23, Decision on Annulment, April 5, 2016 (RL-0243), ¶ 78. ↩

¹²² Hussein Nuaman Soufraki v. The United Arab Emirates, ICSID Case No. ARB/02/7, Decision of the ad hoc Committee on the Application for Annulment of Mr. Soufraki, June 5, 2007 (RL-0098), ¶¶ 41-45; Background Paper on Annulment (RL-0186), ¶ 93. ↩

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143. Furthermore, according to many ad hoc committee’s decisions, an erroneous application of the law does not amount to a manifest excess of powers by the arbitral tribunal, unless a gross or egregious misapplication or misinterpretation of the law has occurred.¹²³

144. It is moreover the case that ICSID annulment committees may only assess an alleged excess of powers by an arbitral tribunal considering evidence that was also available to that tribunal.¹²⁴

145. In the instant case, this rule was reflected in Sections 15.3 and 15.4 of PO 1, pursuant to which:

15.3. Given the nature of an annulment proceeding, the Committee expects that the Parties will refer primarily to the evidentiary record from the arbitration proceeding and it does not expect to receive new evidence (exhibits, witness statements or expert reports).

15.4. If either Party wishes to submit factual evidence or a legal authority that was not submitted in the arbitration proceeding, the factual evidence or legal authority must concern the ICSID annulment process, interpretation of the ICSID Convention, or the legal standards governing the grounds of annulment invoked.

c) Applicable Standards to the Assessment of Failure to State Reasons

146. According to a well-settled understanding, Article 52(1)(e) of the ICSID Convention only concerns a failure to state any reasons; not the failure to state correct or convincing reasons.¹²⁵ Reasons given should, in any event, relate to the issues, facts,

¹²³ Background Paper on Annulment (RL-0186), ¶ 93. ↩

¹²⁴ ESPF Beteiligungs GmbH, ESPF NR.2 Austria Beteiligungs GmbH, and Infraclass Energie 5 GmbH & Co. KG v. Italian Republic, ICSID Case No. ARB/16/5, Decision on Annulment, July 31, 2023 (CL-0355), ¶¶ 85-86. ↩

¹²⁵ Compañía de Aguas del Aconquija S.A. and Vivendi Universal (formerly Compagnie Générale Des Eaux) v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on Annulment, July 3, 2002 (RL-0278) ¶ 64. See, along the same lines, more recently, 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 (hereinafter “NextEra v. Spain, Decision on Annulment”) (CL-0246), ¶ 128, where the ad hoc Committee stated 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 Cube Infrastructure Fund SICAV and Others v. Kingdom of Spain, ICSID Case No. ↩

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and legal arguments raised in the arbitration, and allow a reader to understand the path of the tribunal’s reasoning from the claims to the conclusion.

147. As noted by the MINE v. Guinea ad hoc 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 (1)(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.¹²⁶

148. 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.”¹²⁷

149. Considering the abovementioned principle of finality of awards, as laid down 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 arbitral tribunal.¹²⁸

150. The Committee moreover notes that, as stated above in paragraph 144, as a corollary of the said principle of finality of ICSID awards, it may only assess alleged failures to state reasons by the arbitral tribunal in respect of issues that were raised by the parties

ARB/15/20, Decision on Annulment, March 28, 2022 (hereinafter “Cube v. Spain, Decision on Annulment”) (CL- 0247), ¶ 320, where the ad hoc Committee stated that: “[T]he 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.”

¹²⁶ 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, December 14, 1989 (hereinafter “MINE v. Guinea, Decision on Annulment”) (RL-0189), ¶ 5.08. ↩

¹²⁷ MINE v. Guinea, Decision on Annulment (RL-0189), ¶ 5.09. See also SolEs Badajoz GmbH v. Kingdom of Spain, ICSID Case No. ARB/15/38, Decision on Annulment, March 16, 2022 (hereinafter “SolEs Badajoz v. Spain, Decision on Annulment”) (CL-0245), ¶ 83 where the ad hoc Committee stated 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.” ↩

¹²⁸ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 234. ↩

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before the tribunal, so that no new issues regarding the substance of the dispute may be raised before the Committee.

151. Finally, the Committee observes that, as was held in the Cube v. Spain Decision on Annulment, a “failure to provide reasons, in any event, requires that the failure to address the specific argument or evidence would have changed the outcome of the award.”¹²⁹

B. EXCESS OF POWERS

a) Jurisdiction

i) The Tribunal’s reasoning

152. In its Decision on Jurisdiction and Admissibility, rendered on April 19, 2021, the Arbitral Tribunal based its finding that it had jurisdiction over the claims submitted by Kruck and others, despite the intra-EU objection raised by Spain, on which the latter’s excess of powers argument in these proceedings is also based, on the following reasoning:

(a) “The Tribunal is established under the ICSID Convention, pursuant to the dispute settlement provisions of the ECT and the consent of the parties to this arbitration. It is axiomatic that the competence of the Tribunal is determined by those instruments;”¹³⁰

(b) “The Respondent’s objection is based upon the proposition that the ECT is not applicable. The Tribunal must approach that question by applying the provisions of the relevant instruments – the ECT and the ICSID Convention – construing them

¹²⁹ Cube v. Spain, Decision on Annulment (CL-0247), ¶ 337. ↩

¹³⁰ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 280. ↩

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in accordance with the rules of international law as reflected in the familiar terms of Articles 30-32 [...] VCLT;”¹³¹

(c) Article 26 ECT sets out the dispute settlement provisions pursuant to which the Claimants’ application in this case has been filed. This provision concerns, pursuant to Article 26(1), “[d]isputes between a Contracting Party and an Investor of another Contracting Party relating to an [i]nvestment of the latter in the Area of the former, which concern an alleged breach of an obligation of the former under Part III.” Article 26(3)(a) ECT provides that “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”;¹³²

(d) “The only question here is whether the Claimants are ‘Investors’ of ‘another Contracting Party.’ If they are, the remaining requirements in Article 26(1) ECT are plainly met;”¹³³

(e) “It is argued that the Claimants are all ‘Investors’ of the EU, of which Spain is a Member State, and are therefore not ‘Investors’ of ‘another Contracting Party’ to the ECT. This is the ‘intra-EU’ argument, according to which the ECT does not operate in the context of intra-EU States but only in the context of a dispute involving an EU State and a non-EU State;”¹³⁴

(f) “The Tribunal understands the thinking and the policy behind the intra-EU argument, and the relevant principles of EU law; but it is bound to interpret and apply the instruments to which it owes its existence and its powers and, in the words

¹³¹ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 281. ↩

¹³² Decision on Jurisdiction and Admissibility (RL-0182), ¶ 282. ↩

¹³³ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 283. ↩

¹³⁴ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 284. ↩

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of ECT Article, to do so ‘in accordance with [the ECT] and applicable rules and principles of international law’”;¹³⁵

(g) “The starting point is the rule of interpretation set out in VCLT Article 31(1): ‘1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’”;¹³⁶

(h) “Both Spain and Germany are ECT Contracting Parties. On the face of it, and giving the terms of Article 26(1) ECT their ordinary meaning, this is plainly a dispute ‘between a Contracting Party and an Investor of another Contracting Party;’”¹³⁷

(i) “[N]othing in the wording of Article 26 ECT points to the conclusion that because the EU is itself a Contracting Party, Germany and Spain cease to be distinct Contracting Parties vis-à-vis one another.”¹³⁸ “Provision could have been made to that effect in Article 26 ECT [...] [but] [n]o such step was taken;”¹³⁹

(j) “The “incompatibility” of the ECT and the TFEU may have been the result of an oversight at the time that the ECT was adopted or at the time that the TFEU was adopted. But if a treaty does not say what one or more of the parties wished (or has come to wish) it to mean, the remedy cannot be for one or some of the parties to impose a different meaning upon the treaty by a unilateral declaration of its position;”¹⁴⁰

(k) The ECT itself does make provision for circumstances where two treaties appear to be in conflict in Article 16, whose ordinary meaning is plain. Applied in this

¹³⁵ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 285. ↩

¹³⁶ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 286. ↩

¹³⁷ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 287. ↩

¹³⁸ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 288. ↩

¹³⁹ Decision on Jurisdiction and Admissibility (RL-0182), ¶¶ 288-289. ↩

¹⁴⁰ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 291. ↩

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context it means that “nothing in the ECT derogates from any provision of any of the EU treaties in relation to investment promotion and protection (ECT Part III) or from any right to dispute resolution; and nothing in the EU treaties derogates from any provision of any of the ECT in relation to investment promotion and protection (ECT Part III) or from any right to dispute resolution;”¹⁴¹

(l) “The Tribunal understands that the EU, as a REIO, will decide for itself on the relationship between its legal order and international law, as must any system of municipal law. But just as the Union Court may consider itself bound to uphold the supremacy of EU law, this Tribunal must apply the rules and principles of international law, in accordance with ECT Article 26(6). EU law, like municipal laws, has a very important role in the development and the application of international law, but it cannot prevail over it;”¹⁴²

(m) “The Tribunal accordingly [found] that its jurisdiction under the ECT and the ICSID Convention [was] not precluded or excluded by provisions of EU law and dismiss[ed] this objection.”¹⁴³

153. The Tribunal thus sought to base its reasoning on the provisions of the ECT, which it decided was bound to apply to the determination of its jurisdiction. Spain ostensibly disagrees with this decision, which it considers was rendered in error; but such error, if any existed, is far from being “manifest”, “obvious”, “clear” or “self-evident”, as will be explained in more detail below. The Award cannot therefore be annulled on such grounds.

ii) Prior case law: arbitral awards

154. Having concluded that the Tribunal did not exceed its powers, nor was any such alleged excess of powers manifest within the meaning of Article 52(1)(b) of the ICSID

¹⁴¹ Decision on Jurisdiction and Admissibility (RL-0182), ¶¶ 292-293. ↩

¹⁴² Decision on Jurisdiction and Admissibility (RL-0182), ¶ 294. ↩

¹⁴³ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 295. ↩

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Convention, the Committee could, in principle, conclude its analysis at this point determining that the Award cannot be annulled on such grounds. However, the Committee considers it appropriate to underscore that, having carefully examined the evidence and arguments submitted by the Parties in the context of these annulment proceedings, it has reached the same conclusion in light of that examination, as further elaborated below.

155. In fact, the Committee’s conclusion in paragraph 153 is largely confirmed by the fact that a significant number of decisions rendered by tribunals and ad hoc committees have reached similar conclusions to those of the Kruck Tribunal in respect of the jurisdictional issues that it decided. This highlights that, irrespective of differing views, the Tribunal’s reasoning was tenable.

156. Although this Committee is conscious, as noted above, that each request for annulment of an arbitral award should be examined on its own merits, and that it is thus not bound to follow prior decisions when ruling on the annulment request lying before it, it cannot ignore previous decisions of other tribunals and committees, which will be briefly mentioned hereafter.

157. The jurisdictional issues raised in these proceedings were first dealt with at length in the Vattenfall Decision on the Achmea Issue, according to which the arbitral tribunal’s assessment of its own jurisdiction should 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.”¹⁴⁴

158. Thus, for the Vattenfall tribunal, as for the Kruck Tribunal, the starting point in respect of the said issues should be Article 26 ECT, which sets out the terms of the Contracting Parties’ agreement to arbitrate.¹⁴⁵

¹⁴⁴ Vattenfall AB and others v. Federal Republic of Germany, ICSID Case No. ARB/12/12, Decision on the Achmea Issue, August 31, 2018, (hereinafter “Vattenfall, Decision”) (CL-0204), ¶ 128. ↩

¹⁴⁵ Vattenfall, Decision (CL-0204), ¶ 128. ↩

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159. Moreover, according to the Vattenfall Tribunal, the principles of international law relevant to the interpretation and application of Article 26 ECT are primarily those set out in the VCLT, which the Kruck Tribunal also applied.¹⁴⁶

160. The Vattenfall Tribunal accordingly declared 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.”¹⁴⁷

161. Taking into account the wording of Article 26 of the ECT, the Vattenfall Tribunal could therefore not agree that intra-EU arbitrations had been carved out from the application of Article 26 of the ECT.¹⁴⁸

162. The notion that the source of an arbitral tribunal’s competence, when constituted under the ECT and the ICSID Convention, is international law has been subsequently upheld in a vast number of other ICSID arbitral awards and preliminary decisions on jurisdictional issues. Such was the case, for example, of:

(a) The RREEF v. Spain Decision on Jurisdiction of 2016, which noted that “this Tribunal has been established by a specific treaty, the ECT, which binds both the EU and its Member States on the one hand and non-EU States on the other hand [...]. The Tribunal observes, however, that should it ever be determined that there existed an inconsistency between the ECT and EU law – quod non in the present case – and absent any possibility to reconcile both rules through interpretation, the unqualified obligation in public international law of any arbitration tribunal constituted under the ECT would be to apply the former. This would be the case

¹⁴⁶ Vattenfall, Decision (CL-0204), ¶ 132. ↩

¹⁴⁷ Vattenfall, Decision (CL-0204), ¶ 166. ↩

¹⁴⁸ Vattenfall, Decision (CL-0204), ¶ 188. ↩

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even were this to be the source of possible detriment to EU law. EU law does not and cannot ‘trump’ public international law.”¹⁴⁹

(b) The Eiser v. Spain award of 2017, according to which “[t]he Tribunal’s jurisdiction is derived from the express terms of the ECT, a binding treaty under international law. The Tribunal is not an institution of the European legal order, and is not subject to the requirements of that legal order. However, the Tribunal need not address the possible consequences that might arise in a case of a conflict between its role under the ECT and the European legal order, because no such conflict has been shown to exist.”¹⁵⁰

(c) The Novenergia v. Spain award of 2018, according to which “this Tribunal’s jurisdiction is based exclusively on the explicit terms of the ECT. As is evident, the Tribunal is not constituted on the basis of the European legal order and it is not subject to any requirements of such legal order.”¹⁵¹

(d) The LBBW v. Spain Decision on Jurisdiction of 2019, which held that “[a] judgment of the CJEU in response to a reference from a national court for a preliminary ruling is binding only upon the court making the reference. EU law has no concept of stare decisis, so such a judgment would not bind other courts. [...] This Tribunal, however, derives its authority not from national or EU law but from an international agreement and from the rules of public international law. There is therefore no question of it being bound by the CJEU Achmea Judgment.”¹⁵²

¹⁴⁹ 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, June 6, 2016 (CL-0136), ¶¶ 74, 87, stating also that the “ECT is the ‘constitution’ of the Tribunal”. ↩

¹⁵⁰ Eiser Infrastructure Limited Energía Solar Luxembourg S.à r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/36, Award, May 4, 2017 (CL-0182), ¶ 199. ↩

¹⁵¹ Novenergia II – Energy & Environment (SCA) (Grand Duchy of Luxembourg), SICAR v. The Kingdom of Spain, SCC Arbitration (No. 2015/063), Final Arbitral Award, February 15, 2018 (CL-0191), ¶ 461 (footnotes omitted); CoP, slide 31. ↩

¹⁵² Landesbank Baden-Württemberg et al. v. Kingdom of Spain, ICSID Case No. ARB/15/45, Decision on the “Intra- EU” Jurisdictional Objection, February 25, 2019 (CL-0345), ¶ 102; CoP, slide 31. ↩

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(e) The Rockhopper v. Italy Decision on the Intra-EU objection of 2019, which held that “a proper reading of the Achmea does not lead to the conclusion that it is in any way a relevant consideration for the investor-State arbitration mechanism established in Article 26 of the ECT as regards intra-EU relations.”¹⁵³

(f) The Eskosol v. Italy Decision on Italy’s Request of Immediate Termination and Italy’s Jurisdictional Objection Based on Inapplicability of the Energy Charter Treaty to Intra-EU Disputes of 2019, which declared that “[a] second and independent reason why the Achmea Judgment does not preclude this Tribunal from exercising jurisdiction – even arguendo, if it were deemed to extend to ECT cases as a matter of EU law – is that the decisions of the CJEU with respect to EU law are not binding on an international investment tribunal empaneled under a different legal order.”¹⁵⁴

(g) The ESPF v. Italy award of 2020, stating that “the instrument that gives rise to the Tribunal’s jurisdiction in this arbitration” is the ECT.¹⁵⁵

163. Reference should also be made here to the Antin v. Spain ad hoc Committee’s decision, which settled issues similar to those under discussion in the present proceeding. According to that decision, “[o]n their plain and ordinary reading, the ECT provides the Tribunal with the jurisdiction to entertain claims against Spain (a Contracting Party) by investors of Luxembourg and the Netherlands (both Contracting Parties) related to investments made by the Claimants in Spain.”¹⁵⁶

164. The ECT’s purpose does not, therefore, according to the Antin committee, support Spain’s interpretation thereof. In fact, as the committee then noted, “[n]othing in

¹⁵³ Rockhopper Italia S.p.A., Rockhopper Mediterranean Ltd, and Rockhopper Exploration Plc v. Italian Republic, ICSID Case No. ARB/17/14, Decision on the Intra-EU Jurisdictional Objection, June 26, 2019 (CL-0211), ¶ 173. ↩

¹⁵⁴ Eskosol S.p.A. in Liquidazione v. Italian Republic, ICSID Case No. ARB/15/50, Decision on Italy’s Request of Immediate Termination and Italy’s Jurisdictional Objection Based on Inapplicability of the Energy Charter Treaty to Intra-EU Disputes, May 7, 2019 (CL-0194), ¶ 178. ↩

¹⁵⁵ ESPF Beteiligungs GmbH, ESPF NR.2 Austria Beteiligungs GmbH, and Infraclass Energie 5 GmbH & Co. KG v. Italian Republic, ICSID Case No. ARB/16/5, Award, September 14, 2020 (CL-233), ¶ 273. ↩

¹⁵⁶ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 236 (footnotes omitted). ↩

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Article 2 of the ECT [...] ‘suggests the exclusion of claims by investors who are nationals of an EU Member State who is also a party to the ECT against another EU Member State’”.¹⁵⁷

165. According to the Antin committee, an arbitral tribunal’s jurisdiction arises from the express terms of the ECT, which is binding on the State parties and the EU:

The EU 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.¹⁵⁸

166. Moreover, in Antin, as in the present case, the arbitral tribunal had stated clearly and comprehensibly in its award why EU law would not bar its jurisdiction. Accordingly, the Antin committee concluded that “[w]hile Spain may dispute the soundness of the Tribunal’s premises and findings, such criticisms do not give rise to a ground for annulment.”¹⁵⁹

iii) Prior case law: ad hoc committees’ decisions

167. The same fundamental line of reasoning as that of the abovementioned arbitral tribunals has prevailed in other decisions rendered by ad hoc committees on annulment requests concerning ICSID arbitral awards that had rejected Spain’s “intra-EU objection” to their jurisdiction. This was notably the case of the decisions rendered in the following proceedings:

(a) NextEra Energy v. Spain, in which the ad hoc committee found that “the Tribunal did not exceed its powers by upholding jurisdiction to hear the case under Art. 26 of the ECT despite Spain’s intra-EU objection. The Tribunal’s decision was tenable

¹⁵⁷ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 237(b) (footnotes omitted). ↩

¹⁵⁸ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 237(d) (footnotes omitted). ↩

¹⁵⁹ Antin v. Spain, Decision on Annulment (CL-0292), ¶ 239. ↩

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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”.¹⁶⁰

(b) SolEs Badajoz v. Spain, in which the ad hoc committee noted that “the fact that the Tribunal allegedly relied on a simple textual interpretation of relevant terms under the ECT is not an interpretative approach that may be characterized in itself as constituting a gross error in the interpretation of a given treaty provision. Rather, the Committee notes that a reading of the relevant section of the Award shows that the Tribunal conducted a complex interpretative task, with various layers of analysis, and certainly went beyond a simple reliance on the ordinary meaning of the terms contained in the ECT.” Therefore, the committee concluded it had “not been able to identify a gross or egregious error in the Tribunal’s interpretation and application of Article 26 and other related provisions of the ECT in the establishment of the Tribunal’s jurisdiction pursuant to the ECT. Accordingly, the Committee considers that the Tribunal did not exceed its powers within the meaning of Article 52(1)(b) of the ICSID Convention.”¹⁶¹

(c) RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.À R.L. v. Spain, where the ad hoc committee found that “properly construed, Article 26 of the ECT applies to claims by any investor from a Contracting Party (including an investor from an EU member State) against another EU member State.”¹⁶²

(d) InfraRed Environmental Infrastructure GP Limited and others v. Spain, in which the ad hoc committee decided that “the Committee does not find that the Award fails the test of Article 52(1)(b) of the ICSID Convention as there is no manifest

¹⁶⁰ NextEra v. Spain, Decision on Annulment (CL-0246), ¶ 231. ↩

¹⁶¹ SolEs Badajoz v. Spain, Decision on Annulment (CL-0245), ¶¶ 127-128. ↩

¹⁶² 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 Annulment Application, June 10, 2022 (hereinafter “RREEF, Decision on Annulment”) (CL-0249), ¶ 75. ↩

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excess of powers when the Tribunal refused to decline its jurisdiction and the solution was not in itself unreasonable.”¹⁶³

(e) Cube Infrastructure v. Spain, in which the ad hoc committee held: “Spain’s arguments do not affect the conclusion that as a matter of international law, EU law does not have primacy. The provisions invoked by Spain are provisions of EU law and their scope and relevance must be determined insofar as EU law is applicable and relevant. They do not serve as a means of elevating EU law and equating it with international law. Insofar as the interpretation of the ECT is concerned, this is not a question to be addressed at the level of EU law. As a multilateral treaty, the ECT and the determination of the scope of jurisdiction of disputes submitted on the basis thereof is to be determined on the basis of international law.”¹⁶⁴

(f) 9REN v. Spain, in respect of which the Decision on Annulment states that: “It was therefore to the ECT alone that the 9REN Tribunal owed its existence, and which accordingly determined its jurisdiction.”¹⁶⁵

iv) The Experts’ Reports

168. The notion that the issue of whether the ECT’s investor-State dispute settlement provisions apply in intra-EU relations was also affirmed by Professor Eeckhout in his Report, which placed that issue in the realm of public international law, not of EU law. According to his first Report:

The question whether the ECT provisions on Investment Promotion and Protection (Part III) and on Dispute Settlement (Part V) apply in an intra-EU context is a question of public international law, and not of EU law. This short statement needs some unpacking. The EU is of course itself an international organization, and EU law is therefore a kind of sub-branch of international law. However, the

¹⁶³ InfraRed Environmental Infrastructure GP Limited and others v. Kingdom of Spain, ICSID Case No. ARB/14/12, Decision on Annulment, June 10, 2022 (CL-0248), ¶ 496. ↩

¹⁶⁴ Cube v. Spain, Decision on Annulment (CL-0247), ¶ 211. ↩

¹⁶⁵ 9REN Holding S.à.r.l v. Kingdom of Spain, ICSID Case No. ARB/15/15, Decision on Annulment, November 17, 2022 (hereinafter “9REN v. Spain, Decision on Annulment”) (CL-0250), ¶ 243. ↩

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EU’s own supreme court, the CJEU, characterizes EU law as a “legal order” that is distinct from international law. There is moreover interminable academic debate about the precise nature of the relationship between EU law and public international law. That debate needs not detain us here. It is beyond doubt or debate that, 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). The EU must respect its international obligations. In this regard, EU law is in many ways a kind of municipal (or domestic) law, contrary to what Professor Hindelang contends.¹⁶⁶

169. The same Expert went on to say in this respect:

In the above sense, the question of whether the provisions of the ECT apply in intra-EU relations is a question of public international law, not EU law. Answering it requires first and foremost that one determines the correct interpretation of the ECT, as regards the relevant obligations entered into by the EU and its Member States. And the EU is bound by the ECT, as interpreted in accordance with the relevant international law rules, codified in the VCLT.¹⁶⁷

170. The Hindelang Report I, as mentioned above, disagrees with this view, in that it holds that the EU treaties modified the ICSID Convention pursuant to Article 41(1)(b) of the VCLT, for which reason those treaties are always applicable as between EU Member States.¹⁶⁸

171. But, as noted in the Eeckhout Reports I and II, the ICSID Convention postdates the EU treaties; and Article 41(1)(b) of the VCLT speaks of two or more parties to a multilateral treaty concluding an agreement to modify an earlier treaty inter se; which is not the case here.¹⁶⁹

¹⁶⁶ Eeckhout Report I, ¶ 22 (footnotes omitted). ↩

¹⁶⁷ Eeckhout Report I, ¶ 25 (footnotes omitted). ↩

¹⁶⁸ Hindelang Report I, ¶ 65 ff. ↩

¹⁶⁹ Eeckhout Report I, ¶ 120; Eeckhout Report II, ¶ 36. ↩

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172. Article 41(2) of the VCLT further requires that such modifications be notified by parties to an international treaty to the other parties, which also hasn’t occurred here.

173. The Hindelang Report I also holds that the primacy of EU law operates as a conflict rule which overrides any contrary rules created by EU Member States in public international law.¹⁷⁰

174. Again, however, this view is convincingly rebutted in the Eeckhout Report I, which notes that: (i) The CJEU never used the term primacy for such a purpose; (ii) Article 351 TFEU allows for the derogation from EU law through international agreements entered into by EU member states; and (iii) Article 16(2) ECT provides that other agreements entered into by its Contracting States may not derogate from the ECT’s provisions that are more favourable to investors.¹⁷¹

175. The Eeckhout Report II adds to this that “[t]he relevant ECT and ICSID provisions are clear, they establish the tribunal’s jurisdiction to hear an intra-EU case and Article 16 ECT prioritises the ECT over EU law.”¹⁷²

176. The Hindelang Report I further holds that Article 26(2)(c) ECT is not applicable between EU Member States because there has been long-standing case law of the CJEU, observed by the EU Member States, establishing the autonomy and primacy of EU law, and there is opinio iuris that the EU Member States can disconnect inter se from international treaties with no disconnection clause, i.e., for intra-EU affairs.¹⁷³

177. Evidence of such opinio iuris is however, as noted in the Eeckhout Report I, scarce; and in any event it is doubtful that it could trump express provisions of the ECT.¹⁷⁴

¹⁷⁰ Hindelang Report I, ¶ 30 ff. ↩

¹⁷¹ Eeckhout Report I, ¶¶ 60, 83 ff., and 111. ↩

¹⁷² Eeckhout Report II, ¶ 17. ↩

¹⁷³ Hindelang Report I, ¶ 111. ↩

¹⁷⁴ Eeckhout Report I, ¶ 94. ↩

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178. In fact, the Committee notes that the sole evidence of the said opinio iuris is Article 19 of Regulation (EU) 2016/1191 which according to Professor Hindelang disconnects EU Member States from the 1961 Hague Convention on the legalization of Public Foreign Documents (hereinafter the “Apostille Convention”).

179. Article 19(1) of this Regulation, however, states that it “is without prejudice to the application of international conventions to which one or more Member States are party at the time of adoption of this Regulation and which concern matters covered by this Regulation;”¹⁷⁵ and Whereas 5 of that Regulation states that “the Apostille Convention could still be used, at a person’s request, in relations between Member States.”¹⁷⁶ It is therefore unclear to this Committee how can this EU instrument be pointed out as an example of a disconnection inter se of EU Member States from an international convention, since they have expressly preserved the applicability of the Convention in their mutual relations; and it is even less clear how it can be presented as evidence of an opinio iuris legitimizing implicit disconnection clauses.

180. In conclusion, the Committee fails to see in the Experts’ Reports compelling evidence that the jurisdiction of the Arbitral Tribunal should be assessed under EU law instead of the international law instruments to which the Tribunal owed its existence and which it was bound to apply. Nor has the Committee found in the Experts’ Reports persuasive evidence that the Arbitral Tribunal committed a gross misapplication or misinterpretation of international law. In any event, as previously noted, annulment committees should not review the correctness of a tribunal’s substantive determination regarding the applicable law. The fact that the Tribunal applied the law and provided tenable reasoning for doing so is, in itself, sufficient to reject the request for annulment.

¹⁷⁵ Regulation (EU) 2016/1191 of the European Parliament and of the Council of 6 July 2016 on promoting the free movement of citizens by simplifying the requirements for presenting certain public documents in the European Union and amending Regulation (EU) No 1024/2012, OJ L 200/1, 26 July 2016 (hereinafter “Regulation (EU) 2016/1191”) (Hindelang Report I, Exhibit 52), Article 19. ↩

¹⁷⁶ Regulation (EU) 2016/1191, Whereas 5. ↩

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v) The Green Power award and other arbitrations held under the law of an EU Member State

181. An important distinction regarding the applicability of EU law to the determination of an arbitral tribunal’s jurisdiction in respect of investment disputes was, to be sure, made in the Green Power award, rendered in 2022¹⁷⁷, which Spain claims to have accepted its arguments in these proceedings.¹⁷⁸

182. In that case, the arbitral tribunal found that it had no jurisdiction to hear claims brought under the ECT by two Danish companies against Spain. This was so, as the tribunal noted, because claimants had opted to conduct the proceedings under the Stockholm Chamber of Commerce Rules (“SCC Rules”), instead of the ICSID Rules, as they could have done under Article 26(4)(a)(i) ECT; and, upon the claimants’ proposal in a letter dated October 21, 2016, the seat of the arbitration had been located in Stockholm, Sweden.¹⁷⁹

183. Both parties agreed, according to the tribunal, that this choice of the arbitral tribunal’s seat attracted the application of Swedish arbitration law, particularly the Swedish Arbitration Act (hereinafter the “SAA”), as the lex arbitri.¹⁸⁰

184. Moreover, as the tribunal noted, since “the Parties [had] not explicitly agreed on the law governing the arbitration agreement and neither the ECT nor the SCC Rules, to which the Parties [had] agreed, determines the law applicable to the arbitration agreement, it follow[ed] that, pursuant to Section 48 SAA, Swedish law, i.e. the law of the seat, [was] applicable to the determination of jurisdictional matters.”¹⁸¹

¹⁷⁷ Green Power Partners K/S and SCE Solar Don Benito v. The Kingdom of Spain, SCC Arbitration V (2016/135), Award, June 16, 2022 (hereinafter “Green Power, Award”) (RL-0175). ↩

¹⁷⁸ MoA, ¶ 207. ↩

¹⁷⁹ Green Power, Award (RL-0175), ¶ 162. ↩

¹⁸⁰ Green Power, Award (RL-0175), ¶ 162. ↩

¹⁸¹ Green Power, Award (RL-0175), ¶ 165. ↩

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185. The selection of the seat in Sweden, an EU Member State also triggered “the application of EU law, which is part of the law in force in every EU Member State, including Sweden.”¹⁸²

186. This reasoning cannot, however, be transposed to the case under consideration in this annulment proceeding. In fact, unlike the Green Power tribunal, which was seated in a Member State of the EU, the Kruck Arbitral Tribunal functioned exclusively under the ICSID Convention and Rules. Accordingly, the Kruck Arbitral Tribunal was subject neither to the law of an EU Member State, as its lex arbitri, nor to the control of the courts of such a State, as the Green Power tribunal was.

187. This distinction had already been made in the Vattenfall Decision on the Achmea Issue, which stated:

[I]n cases where the investor opts for another forum, such as an ad hoc UNCITRAL arbitration or arbitration under the SCC Rules, that tribunal’s jurisdiction may be circumscribed by the local law of the place of arbitration.¹⁸³

188. The said distinction was again clearly made by the Green Power tribunal itself, which stated:

The question of whether or not EU law applies to the determination of jurisdiction and, if so, the extent to which it does so, does not arise in the same manner in the circumstances of this arbitration as in ICSID proceedings.¹⁸⁴

189. The relevance of this distinction was also stressed by Professor Piet Eeckhout, in his first Report:

¹⁸² Green Power, Award (RL-0175), ¶ 166. ↩

¹⁸³ Vattenfall, Decision (CL-0204), ¶ 127. ↩

¹⁸⁴ Green Power, Award (RL-0175), ¶ 441. ↩

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[T]he tribunal clearly noted, and placed strong emphasis, on the fact that its jurisdiction was also governed by Swedish law; and that EU law is part of Swedish law.¹⁸⁵

190. The same distinction applies in respect of the Svea Court of Appeal’s and the Swedish Supreme Court judgments in Novenergia¹⁸⁶ and of the Paris Court of Appeal’s judgements in Strabag v. Poland¹⁸⁷ and Slot v. Poland,¹⁸⁸ equally invoked by Spain.¹⁸⁹

191. In fact, none of those judgements concerned arbitrations exclusively subject to the ICSID Convention and Rules, but rather arbitrations that had as their lex arbitri the law of a Member State of the EU and were thus subject to the control of EU Member States’ courts.

192. As has been noted by other ICSID ad hoc Committees, while EU law may determine the jurisdiction of arbitral tribunals in proceedings subject to the law of EU Member States as their lex arbitri and to the control of jurisdictional bodies that are subject to EU law, such as the courts of EU Member States, the same cannot be said in respect of delocalized arbitration proceedings, such as those conducted exclusively under the ICSID Convention and Rules, in respect of which the jurisdiction of the arbitral tribunal must be assessed primarily pursuant to international law.¹⁹⁰

193. Accordingly, no argument can be drawn from the Green Power award and the said judgements to the determination of the Arbitral Tribunal’s jurisdiction in Kruck v. Spain.

194. In this respect, it should be noted that Spain requested the Kruck Tribunal to reconsider its decisions on jurisdiction in light of the GreenPower award and subsequent

¹⁸⁵ Eeckhout Report I, ¶ 102. ↩

¹⁸⁶ Svea Court of Appeal, Judgment in case No. T 4658-18, December 13, 2022 (RL-0176). ↩

¹⁸⁷ Paris Court of Appeal, Judgment in case No. 48/2022, April 19, 2022 (RL-0249). ↩

¹⁸⁸ Paris Court of Appeal, Judgment in case No. 49/2022, April 19, 2022 (RL-0248). ↩

¹⁸⁹ MoA, ¶¶ 190 and 230-260. ↩

¹⁹⁰ See, e.g., 9REN v. Spain, Decision on Annulment (CL-0250), ¶¶ 235-238. ↩

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judgments; and the Arbitral Tribunal rejected those requests after considering the Parties’ arguments.

195. In fact, the Tribunal stated in its decision on Spain’s second request for reconsideration:

The Tribunal has considered the submissions relating to the Green Power award, in which not only was the dispute between a national of one EU Member State and another EU Member State but the lex arbitri was the law of a third EU Member State. The Tribunal does not consider that the handing down of an award in another case that takes a view on a question of law that is different from the view taken by this Tribunal (and by many other tribunals) is a sufficient ground to warrant the reconsideration of its earlier decisions. The Tribunal’s Decision on Jurisdiction and Admissibility dated 19 April 2021 is accordingly maintained.¹⁹¹

196. Subsequently, in its decision on Spain’s third request for reconsideration, the Tribunal stated:

The decisions to which the Respondent primarily draws attention in its Request of 27 December 2022 are decisions in cases in the courts of a Member State of the European Union (‘EU’) applying rules of its national law and of EU law. The Tribunal is constituted in accordance with two multilateral treaties: the Energy Charter Treaty, to which both the EU and also individual EU Member States are parties alongside many States that are not Members of the EU; and the ICSID Convention, to which both individual EU and non- EU States are similarly parties. The Tribunal is a creature of public international law, which is binding upon EU and non- EU States alike; and its powers and its duties require it to decide the case before it in accordance with those multilateral treaties and with public international law.

The Tribunal does not consider that the handing down of an award in another case or a judgment of a national court of a State that is not a party to the present proceedings, which takes a view on a question of law that is different from that taken by this Tribunal is a

¹⁹¹ ICSID Secretariat’s letter to the Parties, July 25, 2022 (CL-0268), p. 2. ↩

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sufficient ground to warrant the reconsideration of the Tribunal’s earlier decisions.¹⁹²

vi) The REIO argument

197. The abovementioned conclusions are not contradicted by Spain’s argument based on the EU’s characterization as a REIO, as defined in Article 1(3) ECT.¹⁹³

198. As was noted by the Arbitral Tribunal in its Decision on Jurisdiction and Admissibility, “nothing in the wording of ECT Article 26 points to the conclusion that because the EU is itself a Contracting Party, Germany and Spain cease to be distinct Contracting Parties vis-à-vis one another.”¹⁹⁴ The fact, therefore, that the EU, as a REIO, is also a Contracting Party of the ECT does not per se exclude a tribunal’s jurisdiction in disputes involving EU Member States.

199. 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, namely the offer to arbitrate contained therein, and that, accordingly, the ECT was not intended to apply among those States. For this to happen, an express agreement aimed at modifying the ECT inter se would be required under Article 41 VCLT, as well as compliance with the conditions stated therein. None of this has occurred in the premises.

200. As acknowledged by the RREEF ad hoc committee, a judicial assertion by the CJEU would be insufficient to operate such a modification of an international treaty:

The Committee is fully conscious of the desire of the CJEU to state that EU law should be interpreted and applied consistently and that it is so charged with that responsibility. However, that objective could, in the Committee’s view, only be achieved by a subsequent amendment to the ECT provisions, adding a disconnection clause or by permitting other customarily acceptable declarations and

¹⁹² ICSID Secretariat’s letter to the Parties, February 22, 2023 (CL-0269), p. 2 (footnotes omitted). ↩

¹⁹³ AfA, ¶ 23 et seq. ↩

¹⁹⁴ Decision on Jurisdiction and Admissibility (RL-0182), ¶ 288. ↩

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acceptances by other parties to the ECT. It should not, with respect, be made by a unilateral judicial assertion by the CJEU that it alone has the monopoly to finally interpret the ECT provisions which has a direct impact on third-party investors who have relied on the plain and clear provisions of the ECT and unconditional consent to arbitration given by the Contracting States. The Committee is therefore not persuaded that the Komstroy Judgment provides support to suggest that the Tribunal had acted in excess of its powers.¹⁹⁵

201. The same fundamental view was espoused in Professor Eeckhout’s First Report, in which he stated:

The ECT’s legislative history in no way contradicts the above finding. All of the abovementioned techniques for avoiding intra-EU application were available at the time and had been used on previous occasions. Yet the EU and its Member States chose to forego their use in the case of the ECT. No disconnection clause was inserted in the ECT and that is hugely significant. In the absence of such a clause, there is no indication whatsoever in either the text of the ECT, or in its object and purpose, of an understanding that the ECT does not apply in intra-EU relations. The incompatibility of intra- EU arbitration with EU law, as established in the CJEU case law, cannot cure that absence. All of the EU Contracting Parties, including the EU Member States, were full ECT Contracting Parties, with mutual commitments.¹⁹⁶

202. In his Second Report, Professor Eeckhout further noted that Article 1(3) ECT “does no more than define a Regional Economic Integration Organisation”; and that it “does not, in terms, state any rights or obligations, of the REIO, its members, or other ECT Contracting Parties.”¹⁹⁷

203. This Committee cannot but fully subscribe to this point of view.

¹⁹⁵ RREEF, Decision on Annulment (CL-0249), ¶ 97 (footnotes omitted). ↩

¹⁹⁶ Eeckhout Report I, ¶ 93 (footnotes omitted). ↩

¹⁹⁷ Eeckhout Report II, ¶¶ 43-44. ↩

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204. The Committee, moreover, does not understand how a different interpretation of the ECT, compared to that of the Arbitral Tribunal, could be considered so egregiously mistaken as to warrant the Award’s annulment.

205. To interpret the ECT as meaning that, because the EU is a contracting party to the ECT, EU Member States are thereby shielded from the application of the ECT’s dispute resolution mechanism is, in light of the above, a highly strained reading. To suggest that this interpretation is so self-evident that any contrary view constitutes a manifest excess of powers justifying the annulment of the Award is, plainly, untenable.

206. The Committee is aware of the fact that the Sapec and ESF awards of 2024 took a different stance in respect of Spain’s intra-EU jurisdictional objection, and in particular Spain’s REIO argument.

207. However, these awards were not before the Kruck Arbitral Tribunal, since they were rendered after the Award.

208. The same applies to the 2024 Declaration made by the Governments of EU Member States which the Kruck Tribunal could not have considered, since it post-dates the Award.

209. This evidence should therefore be classified as “new evidence”, i.e. not submitted to the Kruck Tribunal.

210. It is true that Section 15(4) of PO 1 states that Parties could be allowed to “submit factual evidence or a legal authority that was not submitted in the arbitration proceeding”; but this was only so subject to the condition that, according to the same provision, “the factual evidence or legal authority must concern the ICSID annulment process, interpretation of the ICSID Convention, or the legal standards governing the grounds of annulment invoked.”

211. It is debatable whether the two abovementioned awards and the 2024 EU Declaration are solely concerned with: (i) the ICSID annulment process; (ii) the interpretation of

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the ICSID Convention; or (iii) the legal standards governing the grounds of annulment invoked by Spain.

212. But even if the Committee were to find that the ex post evidence adduced by Spain were admissible under Section 15(4) of PO 1, it is of the view that such evidence does not carry sufficient probative evidence that would allow it to conclude that the Kruck Tribunal exceeded its powers in respect of its jurisdiction, and the Award should thus be annulled.

213. Moreover, considering such evidence would, of necessity, entail a different analysis of the merits of the dispute decided by the Arbitral Tribunal, which this Committee is precluded from undertaking, given its limited powers in the assessment of the annulment grounds invoked before it.

vii) Conclusion on excess of powers in respect of jurisdiction

214. In relation to Spain’s request for annulment of the Award based on an alleged excess of powers, this Committee finds that no manifest excess of powers was committed by the Arbitral Tribunal in its assessment of its own jurisdiction.

b) Disregard of EU Law Applicable to the Merits of the Dispute

215. Spain contends that the Tribunal also exceeded its powers by “totally disregarding the application of European Union law, which is applicable international law.”¹⁹⁸

216. The Tribunal did, however, apply the provisions of international law that it deemed applicable to the dispute.

217. In this respect, the Tribunal undertook the following analysis:

¹⁹⁸ MoA, ¶ 291. ↩

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(a) The dispute is to be decided, pursuant to Article 42(1) ICSID Convention and Article 26(6) ECT, in accordance with the ECT and applicable rules and principles of international law;¹⁹⁹

(b) “[T]here is no reason to suppose that the term ‘international law’ in ECT Article 26(6) has a meaning different from the term ‘international law’ in Article 42(1) of the ICSID Convention. The Tribunal consider[ed], [therefore,] that the question whether EU Law ‘is in fact international law’ [should] be viewed in this context, and that the question [had but] one answer, applicable as between any and all ECT Contracting Parties;”²⁰⁰

(c) International law is, according to the Tribunal, the “body of rules and principles recognised by States as binding and applicable in the relations between them” and is to be “distinguished from municipal laws, which vary from State to State and are created by and applicable in each individual State.”²⁰¹

(d) On the international stage, EU law “is a regional legal system”. It has a very important role in the development of international law and is also relevant as a matter of fact. “What EU law and municipal law cannot do, under ECT Article 26, is have dispositive legal force, definitively determining whether acts and omissions are or are not compatible with the international law obligations undertaken by the States that are Contracting Parties to the ECT;” “in the absence of some provision in the ECT admitting that EU law can alter the scope and content of rights and duties established by the ECT, EU law cannot have such an effect;”²⁰²

¹⁹⁹ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 78. ↩

²⁰⁰ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 79. ↩

²⁰¹ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 80. ↩

²⁰² Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 81. ↩

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(e) The Tribunal accordingly decided the issues in dispute based on the ECT and applicable rules and principles of international law.²⁰³

218. It is clear, therefore, that: (i) The Tribunal addressed the issue of the applicability of EU law to the dispute; (ii) In a reasoned decision, it concluded that it was bound to apply the ECT and international law to the dispute; (iii) The meaning of international law should, according to the Tribunal, be the same for all ECT Contracting States; (iv) Absent a provision in the ECT determining that EU law could alter the Contracting Parties’ rights and duties laid down in it, the Tribunal could not apply EU law to the dispute with such an effect.

219. In light of the above, Spain has not demonstrated that the Arbitral Tribunal’s decision on the merits constitutes a manifest excess of powers in the sense Article 52(1)(b) of the ICSID Convention, or an interpretative error of such an egregious character that it should be characterized as a manifest excess of powers, and hence, determine the annulment of the Award under that provision.

c) Conclusion

220. Considering the above, Spain’s request for annulment on grounds that the Tribunal has manifestly exceeded its powers in assuming jurisdiction over the dispute must be dismissed.

C. FAILURE TO STATE REASONS

a) Claimants’ Legitimate Expectations

221. The Kruck Tribunal decided that Spain had breached its fair and equitable treatment obligations towards Claimants under Article 10 ECT. Spain, however, submits that the Award should be annulled because it purportedly failed to state reasons as to the

²⁰³ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 82. ↩

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existence of the legitimate expectations invoked by Claimants for the purposes of applying that provision of the ECT.

222. To evaluate this annulment ground invoked by Spain, it is important to recall the Tribunal’s reasoning regarding this matter.²⁰⁴ In its Decision on Jurisdiction, Liability and Principles of Quantum, the Tribunal found that:

(a) The enactment of RD 661/2007 and RD 1578/2008 “gave rise to the possibility of legitimate expectations upon which potential DSG investors could rely;”²⁰⁵

(b) RD 661/2007 could not reasonably be understood “to have guaranteed only that the tariff and premium regime would remain unchanged unless and until it was changed by law;”²⁰⁶

(c) “The compensation framework in RD 661/2007 was intended to elicit investment; and it did so;”²⁰⁷

(d) No one questioned that Spain “had the legal capacity to change the regulatory regime. The question [was] whether it was fair and equitable to do so in a manner that caused harm to certain investors who had relied on representations that Spain would not exercise that undoubted power in relation to their investments;”²⁰⁸

(e) “RD 661/2007 set out assurances on which it was intended that potential investors could and would rely, concerning the stability of the compensation framework established [therein];”²⁰⁹

²⁰⁴ See Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶¶ 153-225. ↩

²⁰⁵ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 189. ↩

²⁰⁶ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 190. ↩

²⁰⁷ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 192. ↩

²⁰⁸ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 193. ↩

²⁰⁹ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 195. ↩

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(f) Spain’s commitment to a “reasonable return” for producers and the “reasonable return” itself were defined by the detailed compensation framework set out in RD 661/2007;²¹⁰

(g) “RD 661/2007 was presented as a regulatory regime that guaranteed fixed tariffs for a fixed term to investors who constructed and were allowed to register qualifying facilities before the RD 661/2007 register was closed to new investments. Those are the assurances that the Tribunal [found] were made in and in relation to RD 661[/2007];”²¹¹

(h) “RD 661/2007 and RD 1578/2008 did not authorize any changes to the economic regime that qualified plants had the explicit right to receive under Articles 17, 24, 25, and 36 of the decree [...], subject to the qualification that modifications to the regime that did not affect its fundamental characteristics could be adopted by Spain without breaching the legitimate expectations of those who had invested on the basis of RD 661/2007;”²¹²

(i) Spain thus “gave assurances concerning the stability of the regime established by RD 661/2007 on which investors were intended and invited to rely;”²¹³

(j) “[I]nvestments made by the DSG Claimants after 25 May 2007 were induced by and made in reliance upon the representations and commitments made by [Spain] as to the stability of the regime established by RD 661/2007;”²¹⁴

(k) The New Regulatory Regime established by a series of measures including RDL 9/2013, Law 24/2013, RD 413/2014, and Ministerial Order IET/1045/2014 completely replaced the regime established by RD 661/2007 and “abandoned the

²¹⁰ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶¶ 196-197. ↩

²¹¹ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 197. ↩

²¹² Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶¶ 201-202. ↩

²¹³ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 203. ↩

²¹⁴ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 210. ↩

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previous guaranteed price mechanisms [replacing] it with a regime in which prices were set so as to deliver a ‘reasonable rate of return’ to electricity producers, calculated for each PV installation according to its installed capacity” and by reference to the deemed costs of operating of one of the hypothetical facilities defined in the Ministerial Order;²¹⁵

(l) The New Regulatory Regime was reasonable. “What was not reasonable was the imposition of [that] Regime upon investors who had already committed the large up-front capital expenditures necessary to construct and commission PV plants and had done so in reliance upon the commitment by Spain to offer fixed, pre- determined Feed-In tariffs for the whole of their electricity production over a period of 25 years (with 80% of that tariff payable thereafter);”²¹⁶

(m) “That denial of the legitimate expectations of the DSG Claimants amounted to a breach of their rights to Fair and Equitable Treatment under Article 10 ECT. To the extent that they suffered financial losses as a result of that breach, [Spain was] liable to compensate them.”²¹⁷

223. In light of the above, it can be concluded that the Tribunal maintained a clear and coherent reasoning to determine that Spain violated its fair and equitable treatment obligations under Article 10 ECT.

224. The Award, which reaffirmed the Decision on Jurisdiction, Liability and Principles of Quantum, cannot therefore be held to omit sufficient reasons in respect of its determinations on this issue.

225. Nor can it be deemed to have been based upon contradictory reasons in respect of Claimants’ expectations. This is notably the case of paragraphs 163 and 164, on the one hand, and paragraph 209, on the other, which Spain alleges are contradictory.

²¹⁵ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 222. ↩

²¹⁶ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 224. ↩

²¹⁷ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 225. ↩

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226. The Tribunal did, in fact, state that certain statements made by lawyers and law firms consulted by Claimants “cannot form the foundation of a legitimate expectation that creates obligations binding on the Respondent.”²¹⁸

227. But the Tribunal immediately thereafter stated that, when these secondary sources are excluded, Claimants’ reliance rested on certain other representations made by Spain in the text of RD 661/2007 and RD 1578/2008, the RAIPRE registration process and Spain’s promotional efforts concerning its incentive regime.²¹⁹

228. In its analysis of the issue of expectations, the Tribunal reiterated that representations by third parties, not acting on behalf of or under the direction or control of Spain, cannot themselves create obligations for the latter on which Claimants were entitled to rely; but the Tribunal acknowledged that such representations can “cast light upon what statements that are attributable to the Respondent were understood to mean by some of those to whom the statements were addressed” and that they “corroborate and support the Claimants’ assertions as to what they understood the Respondent to be promising.”²²⁰

229. The Committee fails to see any contradiction between the Tribunal’s reasons in this respect, which are entirely compatible with each other.

230. Although such reasons may be subject to criticism from Spain’s point of view, this Committee is, again, prevented from scrutinizing their accuracy or soundness, since this does not constitute, under the ICSID Convention, a ground for the annulment of the Award.

²¹⁸ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 164 (footnotes omitted). ↩

²¹⁹ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 165. ↩

²²⁰ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶ 209. ↩

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b) Impact of the European State Aid Rules on Claimants’ Expectations

231. Spain further contends that the Tribunal failed to explain why the EU State aid regime was not applied in the Award to determine the legitimate expectations of the Claimants.

232. In this respect, it should be recalled that, as noted above, in its Decision on Jurisdiction, Liability and Principles of Quantum the Tribunal found that:²²¹

(a) The applicable law to the dispute was the ECT and international law;

(b) The meaning of international law should be the same for all ECT Contracting States;

(c) Absent a provision in the ECT determining that EU law could alter the Contracting Parties’ rights and duties laid down in it, the Tribunal could not apply EU law to the dispute with such an effect;

(d) The Tribunal thus decided the issues in dispute in accordance with the ECT and applicable rules and principles of international law.

233. It is clear therefore why the Tribunal declined to apply EU State aid rules in determining whether the Claimants’ expectations were unduly defeated. There is thus no “missing link” in the Tribunal’s reasoning in this respect.

234. Spain may, of course, find such reasoning wrong; but it is beyond the remit of this Committee to scrutinize, on the basis of Article 52(1)(e) ICSID Convention, the accuracy of that reasoning.

235. This conclusion is reinforced by the fact that Spain, albeit invited by the Committee to do so at the hearing,²²² did not demonstrate that it had pleaded, in the underlying arbitration, the illegality of RD 661/2007 in light of the EU rules on State aid, and that such illegality had been determined by a competent European authority, as can be

²²¹ Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶¶ 76-82. ↩

²²² Transcript, Day 2, pp. 108-119. ↩

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inferred from the Arbitral Tribunal’s detailed description of the arguments on which Spain based its contention that it had not violated Claimants’ legitimate expectations, none of which concerns this issue.²²³

236. Consequently, the Kruck Arbitral Tribunal could not have assessed the illegality of RD 661/2007 in light of the EU rules on State aid.

237. But even if the Tribunal could have assessed that matter ex officio, it would be beyond the remit of this Committee to assess how the Arbitral Tribunal should have decided the matter in such a case (including whether it should or not have allowed Spain to rely on its own unlawful conduct under EU law to counter Claimants’ compensation claims based on the denial of their legitimate expectations formed under RD 661/2007).

238. Considering the above, the Committee must reject Spain’s claim according to which the Tribunal failed to give reasons for its findings on the impact of the European State aid rules on the Claimants’ legitimate expectations.

c) Conclusion

239. Spain’s request for annulment on grounds that the Tribunal has failed to state reasons in respect of the merits of the dispute must therefore also be dismissed.

D. GENERAL CONCLUSION

240. In view of the above, the Committee finds that:

(a) No grounds for annulment of the Award exist in the present case;

(b) Spain’s application for annulment must therefore be rejected; and

(c) The Parties shall abide by and comply with the terms of the Award.

²²³ See Decision on Jurisdiction, Liability and Principles of Quantum (RL-0183), ¶¶ 129-146. ↩

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VII. COSTS

A. SPAIN’S SUBMISSION

241. According to its Statement of Costs of April 10, 2025, the costs incurred by Spain, and for which it seeks recovery, are, in sum, as follows:²²⁴

242. Spain moreover submits, among other things, that:

(a) “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.”²²⁵

(b) “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 Mathias Kruck Tribunal lacked jurisdiction to hear a dispute initiated by an investor from the European Union against a Member State of the European Union. Thus, Mathias Kruck should be responsible for the costs incurred by the Applicant in connection with these proceedings: it was Mathias Kruck –and not the Kingdom of Spain- who decided

²²⁴ Applicant’s Statement on Costs, ¶ 18. ↩

²²⁵ Applicant’s Statement on Costs, ¶ 6. ↩

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to initiate the dispute before an arbitral tribunal who lacked jurisdiction to hear intra-EU disputes.”²²⁶

(c) “In short, the Applicant was left with no choice but to initiate this annulment proceedings and it should be compensated for the costs incurred.”²²⁷

(d) “In a nutshell: if the ad hoc Committee understands – as the Kingdom of Spain is confident that it will – that the grounds for annulment raised by the Kingdom of Spain should be upheld and that the award must be annulled, Mathias Kruck should be ordered to pay for the legal, arbitration, and annulment costs of the Kingdom of Spain.”²²⁸

(e) “Finally, the Kingdom of Spain must also note that the costs mentioned below are reasonable considering the complexity and duration of the case.”²²⁹

(f) “The Kingdom of Spain further requests that Mathias Kruck is 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”.²³⁰

B. CLAIMANTS’ SUBMISSION

243. In their Costs Submission of April 19, 2025, Claimants have, in turn, stated that they incurred costs in the following amounts:²³¹

²²⁶ Applicant’s Statement on Costs, ¶ 7. ↩

²²⁷ Applicant’s Statement on Costs, ¶ 8. ↩

²²⁸ Applicant’s Statement on Costs, ¶ 9. ↩

²²⁹ Applicant’s Statement on Costs, ¶ 10. ↩

²³⁰ Applicant’s Statement on Costs, ¶ 20. ↩

²³¹ Claimants’ Costs Submission, ¶ 9. ↩

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244. Claimants additionally submit, among other things, that:

(a) “In their briefs on annulment, Claimants have consistently sought an award of all legal fees and expenses they have incurred in this proceeding.”²³²

(b) “Ad hoc committees enjoy wide discretion to allocate fees, expenses, and costs between the parties as they see fit pursuant to Articles 52(4) and 61(2) of the ICSID Convention and ICSID Arbitration Rule 28(1), as reaffirmed by this Committee in Procedural Order No. 1. Ad hoc committees typically allocate fees, expenses, and costs between the parties based on a number of factors, including, but not limited to, the extent to which a party has succeeded on its various claims and arguments.”²³³

(c) “Claimants base their request for an award of the fees and expenses they have incurred on the fact that, for all the reasons outlined in their prior written and oral submissions, Claimants should prevail in this annulment proceeding. Claimants have presented their case with efficiency, which is one of the criteria used by arbitral tribunals and annulment committees to determine awards of costs. By contrast, 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.”²³⁴

²³² Claimants’ Costs Submission, ¶ 2 (footnotes omitted). ↩

²³³ Claimants’ Costs Submission, ¶ 3 (footnotes omitted). ↩

²³⁴ Claimants’ Costs Submission, ¶ 4 (footnotes omitted). ↩

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(d) “In short, Claimants were forced to incur legal fees and expenses defending against arguments 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 Claimants the entirety of their legal fees and expenses in the present proceeding.”²³⁵

(e) “Further, in line with established jurisprudence, Claimants should not be required to contribute to the costs of the proceeding (i.e., the costs and expenses of ICSID as well as the fees and expenses of the Members of the Committee). To Claimants’ knowledge, no ad hoc committee has ever required a successful annulment respondent to reimburse the applicant any of the costs of the proceeding. [...] Thus, Spain should bear all of 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.”²³⁶

(f) “In summary, the Committee should order Spain to pay the legal fees and expenses incurred by Claimants in this annulment proceeding, and it should declare that Spain is responsible for all costs of the proceeding.”²³⁷

(g) “Claimants also respectfully request 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.”²³⁸

²³⁵ Claimants’ Costs Submission, ¶ 5. ↩

²³⁶ Claimants’ Costs Submission, ¶ 6. ↩

²³⁷ Claimants’ Costs Submission, ¶ 7. ↩

²³⁸ Claimants’ Costs Submission, ¶ 12. ↩

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C. COSTS OF THE PROCEEDINGS

245. The costs of the annulment proceeding, including the Committee’s fees and expenses, ICSID’s administrative fees and direct expenses, are as follows:

1. Committee Members’ fees and expenses: USD 313,945.85
2. ICSID administrative fees: USD 104,000.00
3. Other expenses: USD 78,171.10
4. Total: USD 496,116.95

D. COMMITTEE’S DECISION

246. In respect of the allocation of the costs of arbitral proceedings, Article 61(2) of the ICSID Convention provides the following:

In the case of arbitration proceedings the Tribunal shall, except as the parties otherwise agree, assess the expenses incurred by the parties in 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.

247. This provision, together with ICSID Arbitration Rule 47(1)(j), both of which are applicable to annulment proceedings by virtue of ICSID Arbitration Rule 53, give the Committee discretion in the allocation of the costs of the proceedings.

248. In the exercise of that discretion, the Committee shall take the “costs follow the event” principle, to which both Parties referred in their submissions, and which they requested be applied, as the basis of its assessment of how costs should be allocated between the Parties, without prejudice to taking into account other aspects of the proceeding and the dispute.

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249. Additionally, the Committee will consider the requests from both Parties to award post-decision interest, compounded at a rate determined by the Committee, until full compliance with the Committee’s decision.

250. To this effect, the following aspects are, in the Committee’s view, of particular relevance:

1. Spain’s application for annulment is entirely rejected;
2. Spain’s request to file an expert report was granted in Procedural Order No. 2, despite Claimants’ opposition thereto, but its impact on the costs of the proceedings was reserved by the Committee until the final decision;
3. Spain’s request for a continuation of the stay of enforcement was rejected in Procedural Order No. 3;
4. Both Parties have complied, in all instances, with its orders and decisions, and their conduct during the proceedings was overall correct;
5. The issues under discussion, particularly those related to 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;
6. Paragraph 55 of the Award dated October 6, 2023, indicates that:

   The Tribunal has considered the Parties’ submissions on the question of the amount of interest payable, and confirms that it considers the rate of 1.16%, calculated originally by the Claimants’ experts on the basis of the yields on Spanish Government bonds, to be a fair and appropriate rate which is to be applied uniformly as a fixed rate to calculate pre- and post-award interest. That calculation is left to be made by the Parties as and when the sums due are paid.

251. In light of the above, the Committee, exercising its discretion, decides the following in respect of the apportionment of costs:

1. Spain shall bear its own legal costs and expenses;

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2. Spain shall reimburse Claimants 90% of their costs, in the amount of EUR 420,404.04;
3. Claimants shall bear the remaining 10% of their costs;
4. Spain shall bear all costs of the annulment proceedings, including the Committee’s fees and expenses and ICSID’s costs, in the amount of USD 496,116.95;
5. If payment of the above-mentioned amounts (420,404.04 EUR and USD 496,116.95) is not made by Spain within ninety (90) days from the notification of the present decision, the amount payable shall be increased by interest at a rate of 1.16%, based on the average yield on Spanish Government 10-year bonds at June 2016, and compounded on a monthly basis, as determined in the Award.

VIII. DECISIONS AND ORDERS

252. For the foregoing reasons, the Committee unanimously decides the following:

1. Spain’s application for annulment is dismissed;
2. The Parties shall abide by and comply with the terms of the Award;
3. Spain shall bear all the costs of the annulment proceedings, including the fees and expenses of the Committee and ICSID’s administrative fees and direct expenses, as reflected in ICSID’s final financial statement (USD 496,116.95), and pay 90% of Claimants’ costs up to the amount of 420,404.04 EUR;
4. These amounts shall be increased by interest at a rate of 1.16% compounded monthly until the date of payment, if such payment is not made within ninety (90) days from the notification of the present decision.

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