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INTERNATIONAL CENTRE FOR SETTLEMENT

OF INVESTMENT DISPUTES

In the Matter of

THE DSG DEUTSCHE SOLARGESELLSCHAFT GROUP (the “DSG GROUP”)

and

THE TAUBER SOLAR INVESTORS GROUP (the “TS INVESTORS GROUP”),

Claimants

v.

THE KINGDOM OF SPAIN,

Respondent

REQUEST FOR ARBITRATION

March 19, 2015

TABLE OF CONTENTS

[Page 1]

1. The DSG Deutsche Solargesellschaft Group (the “DSG Group”) and the Tauber Solar Investors Group (the “TS Investors Group”) as defined herein (collectively, “Claimants”) hereby request the initiation of an arbitration proceeding against the Kingdom of Spain (“Spain”) under the Convention and Rules of the International Centre for Settlement of Investment Disputes (“ICSID”). Claimants file this Request for Arbitration pursuant to Article 25 of the ICSID Convention, ICSID Institution Rules 1 and 2, and Article 26(4)(c) of the Energy Charter Treaty (“ECT” or “Treaty”).¹

I. PARTIES TO THE DISPUTE

Claimant DSG Group

2. The DSG Group is comprised of (a) sixty-five limited liability partnerships and two private companies, all duly established under the laws of Germany and (b) six individuals of German nationality. As described further below, the members of the DSG Group invested together in related solar energy projects in Spain.

3. The limited liability partnerships are Solar Andaluz 1-20 GmbH & Co. KG;² Solarpark Calasparra 251-265 GmbH & Co. KG;³ and Solarpark Tordesillas 1-30 GmbH & Co. KG.⁴ The address of each partnership is:

¹ A copy of the ECT is attached as Claimants’ Exhibit (“CEX-”) 1. ↩

² “Solar Andaluz 1-20 GmbH & Co. KGs” includes Solar Andaluz 1 GmbH & Co. KG, Solar Andaluz 2 GmbH & Co. KG, Solar Andaluz 3 GmbH & Co. KG, Solar Andaluz 4 GmbH & Co. KG, Solar Andaluz 5 GmbH & Co. KG, Solar Andaluz 6 GmbH & Co. KG, Solar Andaluz 7 GmbH & Co. KG, Solar Andaluz 8 GmbH & Co. KG, Solar Andaluz 9 GmbH & Co. KG, Solar Andaluz 10 GmbH & Co. KG, Solar Andaluz 11 GmbH & Co. KG, Solar Andaluz 12 GmbH & Co. KG, Solar Andaluz 13 GmbH & Co. KG, Solar Andaluz 14 GmbH & Co. KG, Solar Andaluz 15 GmbH & Co. KG, Solar Andaluz 16 GmbH & Co. KG, Solar Andaluz 17 GmbH & Co. KG, Solar Andaluz 18 GmbH & Co. KG, Solar Andaluz 19 GmbH & Co. KG, and Solar Andaluz 20 GmbH & Co. KG. Copies of these Claimants’ registration certificates in the Stuttgart Commercial Register are attached as CEX-2. ↩

³ “Solarpark Calasparra 251-265 GmbH & Co. KGs” includes Solarpark Calasparra 251 GmbH & Co. KG, Solarpark Calasparra 252 GmbH & Co. KG, Solarpark Calasparra 253 GmbH & Co. KG, Solarpark Calasparra 254 GmbH & Co. KG, Solarpark Calasparra 255 GmbH & Co. KG, Solarpark Calasparra 256 GmbH & Co. KG, Solarpark Calasparra 257 GmbH & Co. KG, Solarpark Calasparra 258 GmbH & Co. KG, Solarpark Calasparra 259 GmbH & Co. KG, Solarpark Calasparra 260 GmbH & Co. KG, Solarpark Calasparra 261 GmbH & Co. KG, Solarpark Calasparra 262 GmbH & Co. KG, Solarpark Calasparra 263 GmbH & Co. KG, Solarpark Calasparra 264 GmbH & Co. KG, and Solarpark Calasparra 265 GmbH & Co. KG. Copies of these Claimants’ registration certificates in the Stuttgart Commercial Register are attached as CEX-3. ↩

⁴ “Solarpark Tordesillas 401-430 GmbH & Co. KGs” includes Solarpark Tordesillas 401 GmbH & Co. KG, Solarpark Tordesillas 402 GmbH & Co. KG, Solarpark Tordesillas 403 GmbH & Co. KG, Solarpark Tordesillas 404 GmbH & Co. KG, Solarpark Tordesillas 405 GmbH & Co. KG, Solarpark Tordesillas 406 GmbH & Co. KG, Solarpark Tordesillas 407 GmbH & Co. KG, Solarpark Tordesillas 408 GmbH & Co. KG, Solarpark Tordesillas 409 GmbH & Co. KG, Solarpark Tordesillas 410 GmbH & Co. KG, Solarpark Tordesillas 411 GmbH & Co. KG, Solarpark Tordesillas 412 GmbH & Co. KG, Solarpark Tordesillas 413 GmbH & Co. KG, Solarpark Tordesillas 414 GmbH & Co. KG, Solarpark Tordesillas 415 GmbH & Co. ↩

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Bismarckstraße 107
74074 Heilbronn
Germany

4. The private companies are Kruck Beteiligungs GmbH and DSG Deutsche Solargesellschaft mbH.⁵ Their address is:

Bismarckstraße 107
74074 Heilbronn
Germany

5. The addresses of each of the German nationals are as follows:⁶

Claimant TS Investors Group

6. The TS Investors Group is comprised of (a) forty-one private companies duly incorporated under the laws of Germany and (b) two individuals of German nationality. As described further below, the members of the TS Investors Group invested in related solar energy projects in Spain.

KG, Solarpark Tordesillas 416 GmbH & Co. KG, Solarpark Tordesillas 417 GmbH & Co. KG, Solarpark Tordesillas 418 GmbH & Co. KG, Solarpark Tordesillas 419 GmbH & Co. KG, Solarpark Tordesillas 420 GmbH & Co. KG, Solarpark Tordesillas 421 GmbH & Co. KG, Solarpark Tordesillas 422 GmbH & Co. KG, Solarpark Tordesillas 423 GmbH & Co. KG, Solarpark Tordesillas 424 GmbH & Co. KG, Solarpark Tordesillas 425 GmbH & Co. KG, Solarpark Tordesillas 426 GmbH & Co. KG, Solarpark Tordesillas 427 GmbH & Co. KG, Solarpark Tordesillas 428 GmbH & Co. KG, Solarpark Tordesillas 429 GmbH & Co. KG, and Solarpark Tordesillas 430 GmbH & Co. KG. Copies of these Claimants’ registration certificates in the Stuttgart Commercial Register are attached as CEX-4.

⁵ Copies of the registration certificates for Kruck Beteiligungs GmbH and DSG Deutsche Solargesellschaft mbH in the Stuttgart Commercial Register are attached as CEX-5. ↩

⁶ Copies of the individuals’ passports or nationality cards are attached as CEX-6. ↩

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7. The private companies are WBG GmbH (formerly Weimer Holding GmbH); TS Cuenca zwei GmbH; TRC Energy GmbH; Sunburn Verwaltungs GmbH (formerly TS Cuenca GmbH); Tauber-Solar Sierra GmbH; TS Villalba GmbH; ZKS GmbH (formerly TS Cuenca 30 GmbH); TS Cuenca 20 GmbH; TS Valtou GmbH; TS Cuenca 40 GmbH; TS Avila Eins GmbH; and TS Abuzaderas 1-30 GmbH.⁷ The contact address of each entity is:

Siemensstraße 7
97941 Tauberbischofsheim
Germany

8. The two German nationals are Mr. Karsten Reiss and Mr. Jürgen Reiss.⁸ Their address is:

Bürgermeister-Fröber-Weg 5
97892 Kreuzwertheim
Germany

Claimants’ Counsel

9. Claimants are represented in this proceeding by King & Spalding and Gómez-Acebo & Pombo.⁹ All correspondence and communications with Claimants should be directed to Claimants’ counsel as follows:

⁷ “TS Abuzaderas 1-30 GmbH” includes TS Abuzaderas eins GmbH; TS Abuzaderas zwei GmbH; TS Abuzaderas drei GmbH; TS Abuzaderas vier GmbH; TS Abuzaderas fünf GmbH; TS Abuzaderas sechs GmbH; TS Abuzaderas sieben GmbH; TS Abuzaderas acht GmbH; TS Abuzaderas neun GmbH; TS Abuzaderas zehn GmbH; TS Abuzaderas elf GmbH; TS Abuzaderas zwölf GmbH; TS Abuzaderas dreizehn GmbH; TS Abuzaderas vierzehn GmbH; TS Abuzaderas fünfzehn GmbH; TS Abuzaderas sechszehn GmbH; TS Abuzaderas siebzehn GmbH; TS Abuzaderas achtzehn GmbH; TS Abuzaderas neunzehn GmbH; TS Abuzaderas zwanzig GmbH; TS Abuzaderas einundzwanzig GmbH; TS Abuzaderas zweiundzwanzig GmbH; TS Abuzaderas dreiundzwanzig GmbH; TS Abuzaderas vierundzwanzig GmbH; TS Abuzaderas fünfundzwanzig GmbH; TS Abuzaderas sechsundzwanzig GmbH; TS Abuzaderas siebenundzwanzig GmbH; TS Abuzaderas achtundzwanzig GmbH; TS Abuzaderas neunundzwanzig GmbH; and TS Abuzaderas dreißig GmbH. Copies of TRC Energy’s registration certificate in the Darmstadt commercial register, all other TS Investors’ Group Claimant companies’ registration certificates in the Mannheim commercial register, and documents verifying change of company name are attached as CEX-7. ↩

⁸ Copies of the individuals’ nationality cards are attached as CEX-8. ↩

⁹ Copies of the Claimants’ respective powers of attorney to King & Spalding and Gómez-Acebo & Pombo are attached as CEX-9. ↩

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Respondent

10. The Respondent is the Kingdom of Spain. The governmental authority likely to represent Spain in this proceeding is the Abogacía General del Estado (Attorney General’s Office) of the Ministry of Justice, which is located at the following address:

Calle San Bernardo, 45
28015 Madrid
Spain

II. BRIEF SUMMARY OF THE LEGAL DISPUTE

A. Claimants’ Investments in Spain

11. The DSG Group specializes in developing, financing, and operating renewable energy facilities while the TS Investors Group focuses on managing financing for and operating renewable energy projects. Both the DSG Group and TS Investors Group operate

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in several European countries, and they each invested in a number of photovoltaic power plant facilities in Spain, as described below.

12. Through individual Spanish subsidiaries, the DSG Group owns and operates sixty-five photovoltaic power plants in Spain, comprising three major projects, which they acquired and developed beginning in November 2006. Those investments include:

• twenty 100 kW photovoltaic generation plants located in Alcolea de Calatrava, (“Alcolea”), which were granted a final commissioning certificate (“acta de puesta en servicio definitiva”) on February 12, 2008, and achieved final registration with the Administrative Registry for Facilities Included in the Special Regime (“RAIPRE”) on April 4, 2008;
• fifteen 100 kW photovoltaic generation plants located in Calasparra (“Calasparra”), which achieved final registration with the RAIPRE on September 24, 2008; and
• thirty 100 kW photovoltaic generation plants located in Tordesillas (“Tordesillas”), which were granted an acta de puesta en servicio definitiva on September 15, 2008, and achieved final registration with the RAIPRE on September 26, 2008.

13. To date, the DSG Group has invested more than €57 million in the above-mentioned projects, the combined capacity of which is 6.5 MW.

14. For its part, the TS Investors Group owns and operates eighty-four photovoltaic power plants in Spain, divided into ten major projects, which it acquired and developed beginning in June 2008. Those projects include:

• twenty 100 kW photovoltaic generation plants located in Gotarrendura, Ávila (“Ávila”), which were commissioned on March 25, 2008, and obtained final registration with the RAIPRE on April 15, 2008;
• thirty 100 kW photovoltaic generation plants located in Partida las Abuzaderas, Albacete (“Abuzaderas”), which were commissioned on February 20, 2008, and obtained final registration with the RAIPRE on April 25, 2008;
• six 100 kW photovoltaic generation plants located in Pozoblanco, Córdoba (“Cabeza Oliva”), which were commissioned on June 30 and July 30, 2008, and obtained final registration with the RAIPRE on August 6 and August 18, 2008;
• seven 100 kW photovoltaic generation plants located in Cuenca (“Cuenca I”), which were commissioned on August 27, 2008, and obtained final registration with the RAIPRE on September 5, 2008;

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• fifteen 100 kW photovoltaic generation plants located in Villares del Saz, Cuenca (“Cuenca III”), which were commissioned on September 3, 2008, and obtained final registration with the RAIPRE on September 5, 2008;
• two 100 kW rooftop mounted photovoltaic generation plants located in Pozoblanco, Córdoba (“Pozoblanco Rooftop”), which were commissioned on August 29, 2008, and obtained final registration with the RAIPRE on September 9, 2008;
• a 415 kW photovoltaic generation plant located in Campanillas, Málaga (“Henibra”), which was commissioned on November 11, 2011, and obtained final registration with the RAIPRE on December 7, 2011;
• a 415 kW photovoltaic generation plant located in Campanillas, Málaga (“Boguar”), which was commissioned on November 11, 2011, and obtained final registration with the RAIPRE on December 7, 2011;
• a 476 kW photovoltaic generation plant located in Hinojosa del Duque, Córdoba (“Valtou”), which was commissioned on March 2, 2012, and obtained final registration with the RAIPRE on March 12, 2012;
• a 340 kW photovoltaic generation plant located in Hinojosa del Duque, Córdoba (“Juan del Valle”), which was commissioned on March 2, 2012, and obtained final registration with the RAIPRE on June 15, 2012.

15. To date, the TS Investors Group has invested more than €73 million in the above-mentioned projects, the combined capacity of which is approximately 9.65 MW.

16. Claimants made all of the foregoing investments in Spain in reliance on certain incentive regimes that governed those facilities and that Spain specifically established to attract investment in the type of projects that Claimants own and operate. The DSG Group acquired its three projects with the expectation that those parks would benefit from the remunerative regime established in Royal Decree 661/2007 of May 25, 2007, regulating the activity of electrical energy generation by means of renewable facilities. Similarly, the TS Investors Group acquired and developed six of its projects – namely, Cuenca I, Cuenca III, Cabeza Oliva, Pozoblanco Rooftop, Abuzaderas, and Avila — with the expectation that they would benefit from the RD 661 regime. Further, the TS Investors Group expected four of its solar projects — Henibra, Boguar, Valtou, and Juan del Valle — to benefit from a second incentive regime that Spain established in Royal Decree 1578/2008 of September 26, 2008.

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B. Spain Implemented RD 661 and RD 1578 to Induce Investments in Renewable Energy

17. The production of electricity from renewable energy sources is among Spain’s most important policies (as it is for the European Union and numerous other states, as embodied in international agreements such as the United Nations Framework Convention on Climate Change). This policy goal reflects a broad consensus that the production of electricity from traditional resources, e.g., fossil fuels such as coal and natural gas, relies on dwindling nonrenewable resources and imposes substantial externalized costs on society through pollution and contribution to climate change. However, because the cost of producing electricity from renewable resources is substantially higher than the cost of producing electricity from fossil fuels, encouraging private investment in renewable energy projects requires above-market incentives. For more than two decades, Spain enacted various incentive schemes to promote investment in its renewable energy sector, both to satisfy international commitments regarding environmental protection and to reduce its dependence on nonrenewable energy sources.

18. Starting in 1994, Spain enacted several legislative schemes to encourage investments in renewable energy, although its early programs were insufficient to achieve the results that Spain needed to meet its domestic and international policy goals. The first regime that Spain implemented, through Royal Decree 2366/1994, contained financial incentives for electricity generated from renewable sources. That legislation, however, contained no stability clause or fixed duration and thus was not successful in attracting significant new investment in the sector.

19. In 1997, Spain enacted a new law on electricity, Law 54/1997, which de-regulated the electricity market and regulated the “special regime” governing electricity generating facilities from renewable, cogeneration, and waste sources. To meet its international commitments and its domestic policy goals, however, Spain still needed a significant influx of private investment in facilities covered by the special regime. Thus, in 1998, through Royal Decree 2818/1998 (“Royal Decree 2818”), Spain enacted a premium pricing program that applied to electricity generated from facilities in the special regime. However, while Royal Decree 2818 did offer price incentives, those incentives were not adequate to cover the fixed costs of renewable energy production. Moreover, the legislation itself contained no specific duration, and the offered rates were subject to review every four years. The possibility for fluctuation in the incentivized pricing offered by Royal Decree

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2818 meant that few investors could rely on it for long-term investments, and few banks were willing to finance investments in costly renewable energy facilities without additional guarantees.

20. By 2004, Spain was clearly not on track to meet its renewable energy targets. Consequently, it implemented a new feed-in tariff program under Royal Decree 436/2004 (“Royal Decree 436”). That decree was an improvement on earlier incentives programs, because it offered a choice between a feed-in tariff and an above-market premium price for electricity generated from facilities in the special regime, either of which would apply for a fixed period of time. It also stated that subsequent reviews of the program would not apply retroactively to reduce the rates guaranteed to existing facilities. But while Royal Decree 436 contained the legal guarantees that investors needed to feel secure in their investments, the feed-in tariff and premium pricing rates in Royal Decree 436 were not transparent and, in some cases, not high enough to attract the amount of investment that Spain needed to meet its renewable energy targets.

21. Finally, in 2007, after more than a decade of failed attempts to spawn substantial investment in renewable energy facilities, Spain enacted Royal Decree 661/2007 of May 25, 2007, regulating the activity of electrical energy generation by means of renewable facilities (“RD 661”). RD 661 was a critical component of Spain’s efforts to reduce its dependence on nonrenewable energy sources, improve its pollution rating, and comply with its obligations under European Union and international law. In particular, Spain had undertaken to ensure that, by 2010, 29.4% of its electricity would be generated from renewable energy sources. To achieve that ambitious goal, Spain needed far more private investment in new renewable energy facilities than previous regulatory schemes had generated. In other words, Spain needed a much more robust incentives program, which it implemented in RD 661.

22. RD 661 included target capacities for different types of renewable technologies that Spain hoped to achieve by 2010. For photovoltaic technology, Spain’s capacity target was 371 MW. It was 500 MW for solar-thermal facilities; 20,155 MW for wind facilities; 2,400 MW for so-called “mini”-hydro facilities; and more than 1,300 MW for biomass and biogas facilities. To achieve these ambitious goals, RD 661 contained attractive remuneration schemes that made the development, construction, financing, and operation of such renewable energy facilities in Spain worthwhile and economically viable. Critically, Spain specifically guaranteed that 100% of the attractive feed-in tariffs offered in RD 661

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would remain available to photovoltaic plants registered under the regime for twenty-five years. Thereafter, photovoltaic plants would be entitled to 80% of the initial feed-in tariff throughout the remainder of their operating lives.

23. To track progress toward its target capacity objectives and to monitor the effectiveness and viability of the incentives regime, RD 661 specified that when installed capacity of a given technology reached 85% of the target objective, Spain would establish a period of time of at least twelve months for final enrollment in the RD 661 program. All projects registered before the end of that period would benefit from the incentives in RD 661. But after that deadline, the regulatory scheme would be “closed” to new entrants. In other words, RD 661 was designed to attract a significant influx of new renewable energy projects to meet certain targets, but growth would be tempered by a cut-off period to be announced at least a year in advance, once the program was found to be achieving its intended result.

24. Investor response to RD 661 was robust, particularly in new photovoltaic projects. By September 27, 2007 — only four months after RD 661 was published in Spain’s Official Gazette — investment in photovoltaic facilities had reached 85% of the 371 MW capacity target. Thus, as stated in the legislation, on September 29, 2007, Spain established a one-year, final enrollment period, during which all photovoltaic investors who completed the construction and permitting phases of their plants would benefit from the price guarantees in RD 661.

25. The enrollment period and target capacities were not the only monitoring mechanisms in the RD 661 regime, which also contained provisions for periodic reviews and adjustments to the price incentives. Importantly, however, RD 661 expressly stated that any future revisions that might be made to the legislation would not apply to facilities already commissioned, operating, and benefitting from the feed-in tariffs granted under it. Specifically, RD 661 stated: “The revisions to the regulated tariff ... shall not affect facilities for which the deed of commissioning shall have been granted prior to 1 January of the second year following the year in which the revision shall have been performed.” In other words, future changes to RD 661 would be prospective, and would neither impact already commissioned and operating facilities, nor facilities whose construction and commissioning would be completed in the year following the announcement of the revision.

26. To attract the investments it desired in the renewable energy sector, Spain widely promoted the new incentives program in RD 661, both within and outside Spain.

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Spain regularly highlighted the principal advantages of RD 661, which included the promises that (i) the new legal framework was stable, (ii) future changes would not apply retroactively to existing plants, and (iii) the incentives granted would remain available throughout the operating lives of the facilities enrolled in the program.

27. The official press release from the Ministry of Industry, Tourism and Commerce regarding RD 661 was unequivocal, stating that the regime “provides legal certainty for producers, providing stability to the sector and promoting their development” and confirming that future “new rules will not be retroactive.”¹⁰ Spain’s General Secretary of Energy echoed those sentiments by stating simply that RD 661 provides “total legal certainty.”¹¹

28. Once the enrollment period for new photovoltaic facilities under RD 661 ended in September 2008, Spain raised its photovoltaic capacity target and enacted a second incentives regime to further encourage investments specific to the photovoltaic sector. Royal Decree 1578/2008 (“RD 1578”) offered reduced but still attractive premiums to new photovoltaic facilities that were not registered by the deadline applicable under RD 661. Importantly, RD 1578 did not eliminate or otherwise affect the application of RD 661 to projects registered under that decree. As it had done with RD 661, Spain also promoted RD 1578, stating that it too would benefit investors by providing predictable future remuneration.

29. RD 1578 established a tariff assignment system for the sale of electricity from photovoltaic sources based on a newly-created Photovoltaic Compensation Pre-Allocation Registry (the “Pre-Allocation Registry”). That registry was designed to further monitor the incentives regime and to ensure that the prices offered to investors did not overly burden Spain’s electricity system, both with the aim of maintaining investor confidence in the system. Spain imposed limits for subscribing to the Pre-Allocation Registry, which were reported quarterly.

30. Spain assured investors that the pricing available under RD 1578 would be paid to facilities enrolled in the regime for a period of twenty-five years. In absolute terms, the feed-in tariff established in RD 1578 was somewhat lower than the tariff established by

¹⁰ “El Gobierno prima la rentabilidad y la estabilidad en el nuevo Real Decreto de energías renovables y cogeneración. Apuesta gubernamental por las energías limpias y autóctonas,” Ministry of Industry, Tourism and Commerce, May 25, 2007, available at http://www.minetur.gob.es/es-ES/GabinetePrensa /NotasPrensa /2007/ Paginas/nprdregimenespecial.aspx. ↩

¹¹ “Nieto dice que la nueva regulación eólica ofrece ‘total seguridad jurídica,’” Cinco Días, May 10, 2007, available at http://cincodias.com/cincodias/2007/05/10/empresas/1178804382_850215.html. ↩

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RD 661. Due to declines in the price for photovoltaic facility components such as modules and inverters, however, the incentives under RD 1578 resulted in total project economics that were comparable to the RD 661 tariff regime, and thus, RD 1578 was still adequate to encourage additional foreign and domestic investment in photovoltaic facilities in Spain. Indeed, this drop in component prices had been one of Spain’s goals in enacting RD 661. Consequently, the incentives in RD 1578 resulted in further growth in the photovoltaic sector, and the upper limits for registration in the Pre-Allocation Registry for ground-mounted photovoltaic projects were achieved in all annual rounds under the regime.

31. RD 661 and RD 1578 were successful in achieving Spain’s goal of encouraging significant new investment in renewable energy projects. Thousands of investors with highly diverse backgrounds — including large utility companies, independent renewable energy companies, banks, private equity firms, and private investors — invested billions of euros in reliance on Spain’s guarantees in RD 661 and RD 1578.

32. Spain’s efforts to encourage renewable energy investments were particularly successful in the photovoltaic sector. In 2001, before Spain had established any meaningful incentives program, Spain’s photovoltaic sector had a total installed capacity of less than 5 MW. By 2006, however, the installed capacity slightly exceeded 100 MW, and the reaction to RD 661 in 2007 spurred projections of more than doubling that figure. As it turned out, by the end of 2007, Spain’s installed capacity of photovoltaic facilities had reached 690 MW. By 2008, installed capacity increased to well over 3,000 MW, and even after RD 661 had closed to new entrants, Spain continued to promote investment in photovoltaic facilities through RD 1578.

C. Claimants Invested in Reliance on Spain’s Incentives Regimes

DSG Group

33. The DSG Group traces its origin to six individuals with German nationality – Joachim Kruck, Ralf Hofmann, Frank Schumm, Rolf Schumm, Hermann Flachsmann, and Peter Flachsmann – who saw the investment opportunity presented by Spain’s renewable energy incentive legislation. In 2006, they incorporated an engineering, procurement, and construction company in Spain called Solar Andaluz 2006 S.L. (“Solar Andaluz”) to manage

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construction of the Alcolea solar park.¹² They also incorporated companies in Germany, Solar Andaluz 1-20 GmbH & Co. KGs, through which they provided the initial equity financing for the development of the Alcolea project.

34. All of the DSG Group’s photovoltaic projects qualified under RD 661. The feed-in tariffs under RD 661 varied depending upon the size of the photovoltaic facility, with the highest feed-in tariff available to photovoltaic facilities of 100 kilowatts or less. Many investors, including Claimants, thus designed solar parks comprised of several 100 kilowatt plants, with each plant owned by a distinct Spanish entity that in turn is wholly owned by a distinct German parent. While that corporate structure results in a large number of legal entities, and thus appears complicated at first glance, the structure is in fact repetitive and quite basic.

35. Thus, Solar Andaluz 1-20 GmbH & Co. KGs were incorporated in Germany between July 20 and August 15, 2006. Each of those companies, in turn, owns an SPV incorporated in Spain that owns a 100 kW solar park, which together form the Alcolea project. The Alcolea plants received their RAIPRE registrations under RD 661 on April 4, 2008.

36. In addition to the Alcolea project, several of the founders of Solar Andaluz wanted to make additional investments in Spain. Thus, Messrs. Kruck, Hofmann, and Peter Flachsmann incorporated DS Hispano Alemana Fotovoltaica Sociedad Unipersonal S.L. (“DS Hispano”) to manage construction of the Calasparra and Tordesilla projects.

37. Consequently, on May 19, 2008, the companies Solarpark Tordesillas 401-430 GmbH & Co. KGs were incorporated in Germany. Each of those companies, in turn, owns an SPV incorporated in Spain that owns a 100 kW solar park, which together form the Tordesillas project. The Tordesillas plants received their RAIPRE registrations under RD 661 on September 26, 2008.

38. Likewise, the companies Solarpark Calasparra 251-265 GmbH & Co. KGs were incorporated in Germany between August 15, 2006 and May 19, 2008. Each of those companies, in turn, owns an SPV incorporated in Spain that owns a 100 kW solar park, which

¹² Solar Andaluz was originally owned by Messrs. Kruck, Hofmann, Frank Schumm, Rolf Schumm, Hermann Flachsmann, and a minority investor of Swiss nationality. Frank Schumm and Rolf Schumm made their investments through their wholly-owned Spanish company Monte Grace Paradise S.L. Hermann Flachsmann later transferred his interest to his son, Peter Flachsmann. ↩

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together form the Calasparra project. The Calasparra plants received their RAIPRE registrations under RD 661 on September 24, 2008.

39. In reliance on the guaranteed tariffs in Spain’s incentives regime, members of the DSG Group and their affiliates also made contractual investments in Spain in the form of various contractual arrangements with the Spanish SPVs, including operation and maintenance contracts, liability management agreements, and real estate leases. The Claimants structured the compensation terms of these contracts in reliance on the feed-in tariffs guaranteed by RD 661. In particular:

• Claimant Kruck Beteiligungs GmbH entered into contracts with each German limited partnership to serve as their general partner, in exchange for an annual payment out of the revenues that the German limited partnerships obtained from the Spanish SPVs. In order to make their payments, the Spanish SPVs depended on the feed-in tariffs;
• Claimants Peter Flachsmann and Joachim Kruck, through their ownership of Claimant DSG Deutsche Solargesellschaft mbH (“DSG GmbH”),¹³ entered into operation and management contracts with each of the Spanish SPVs. In exchange for its services under those contracts, DSG GmbH receives a bonus payment from each SPV based on the annual revenues of the SPV in excess of a defined threshold;
• Claimants Peter Flachsmann, Joachim Kruck, Ralf Hofmann, Frank Schumm, and Rolf Schumm, through their ownership of Solar Andaluz Grundstücks S.L. (SAG S.L.), entered into lease agreements with the SPVs for the real estate occupied by Alcolea. The compensation under the real estate leases also is based on the annual revenues of the SPVs in excess of a defined threshold.

TS Investors

40. The Tauber Solar Group is a group of German companies that plan, organize financing for, and operate photovoltaic plants across Europe. Because of its interest in economically sustainable renewable energy projects, the Tauber Solar Group primarily focuses on markets with stable legislative and regulatory regimes that support such

¹³ Joachim Kruck owns DSG GmbH through his wholly-owned company Kruck + Partner Wohnbau und Projektentwicklung GmbH & Co. KG. ↩

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investments. Through one of its subsidiaries, the Tauber Solar Group organized the various claimant companies as vehicles for investments in photovoltaic projects in Spain.

41. The members of the TS Investors Group acquired ten photovoltaic projects in Spain from the developers of the projects after the facilities were developed and either were registered or were close to registration under the applicable tariff regime.

42. Specifically, the TS Investors Group invested in six projects that were registered under RD 661:

• Claimants TS Abuzaderas 1 – 30 GmbH acquired the Abuzaderas photovoltaic facilities on June 26, 2008. The Abuzaderas plants had obtained final RAIPRE registration on April 25, 2008;
• Claimant TS Avila Eins GmbH acquired the Avila photovoltaic facilities on July 30, 2008. The Avila plants had had obtained final RAIPRE registration on April 15, 2008.¹⁴
• Claimants Sunburn Verwaltungs GmbH, TRC Energy GmbH, and TS Villalba GmbH acquired Cuenca III between August 13 and November 28, 2008. The Cuenca III plants obtained final RAIPRE registration on September 5, 2008.
• Cuenca I obtained RAIPRE registration under RD 661 on September 5, 2008, and Claimants Karsten and Jürgen Reiss, TS Cuenca zwei GmbH, WBG GmbH, and TRC Energy GmbH subsequently acquired their interests in the Cuenca I plants between September 11, 2008 and November 25, 2009.
• Claimant Sunburn Verwaltungs GmbH acquired the Cabeza Oliva photovoltaic facilities on July 31, 2009. The Cabeza Oliva plants had obtained final RAIPRE registration on August 6 and August 18, 2008.
• Claimant Sunburn Verwaltungs GmbH acquired the Pozoblanco Rooftop photovoltaic facilities on December 3, 2010. The Pozoblanco plants had obtained final RAIPRE registration on September 9, 2008.

¹⁴ TS Avila Eins GmbH was originally structured similarly to Abuzaderas, with one German investor company per SPV. After acquiring the investment, TS Avila 1 – 20 GmbH merged to form TS Avila Eins GmbH. The ownership structure did not change. ↩

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43. Members of the TS Investors Group also invested in four photovoltaic projects registered under RD 1578. Specifically:

• Claimant ZKS GmbH acquired the Henibra photovoltaic facilities on November 10, 2011. The Henriba plant obtained final RAIPRE registration on December 7, 2011;
• Claimant TS Cuenca 20 GmbH acquired the Boguar photovoltaic facilities on November 10, 2011. The Boguar plant obtained final RAIPRE registration on December 7, 2011;
• Claimant TS Valtou GmbH acquired the Valtou photovoltaic facilities on June 19, 2012. The Valtou plant obtained final RAIPRE registration on March 12, 2012; and
• Claimant TS Cuenca 40 GmbH acquired the Juan del Valle photovoltaic facilities on June 20, 2012. The Juan del Valle plant obtained final RAIPRE registration on June 15, 2012.

D. Spain Wrongfully Altered the Incentive Regimes

44. Despite the legal guarantees and economic incentives granted in RD 661 and RD 1578, Spain subsequently amended those decrees and substantially altered the legal and economic regimes applicable to Claimants’ photovoltaic facilities. Spain’s amendments to RD 661 and RD 1578 breach the ECT and international law and entitle Claimants to compensation for the damages they have suffered. The measures discussed below are illustrative rather than exhaustive.

45. In 2010, Spain approved at least two pieces of legislation that reduced the remuneration that had been guaranteed to photovoltaic facilities operating under RD 661 and RD 1578. The first of those amendments was Royal Decree 1565/2010,¹⁵ which cancelled the right of projects operating under RD 661 to receive premium pricing after year 25 of their operating lives,¹⁶ despite the clear wording in RD 661 that the projects would be entitled to 80% of the incentivized remuneration throughout their operating lives after year 25. That

¹⁵ Royal Decree 1565/2010, of November 19, regulating and amending certain aspects related to the activity of generating electricity under the special regime. ↩

¹⁶ That amendment was later extended to year 28 by Royal Decree-Law 14/2010, dated December 23, establishing urgent measures for the correction of the tariff deficit of the electricity sector, and finally to year 30 by Law 2/2011, of March 4, on Sustainable Economy. ↩

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amendment thus reduced the value of nine of Claimants’ projects, including Alcolea, Calasparra, Tordesillas, Cuenca I, Cuenca III, Cabeza Oliva, Pozoblanco Rooftop, Abuzaderas, and Avila.

46. Additionally, Royal Decree-Law 14/2010 placed limits on the annual operating hours of photovoltaic facilities that were eligible for incentivized compensation under both RD 661 and RD 1578. That amendment contained two levels of reductions on operating hours for the plants: a general reduction that applied to all photovoltaic facilities indefinitely and an “extraordinary” reduction that applied to facilities operating under RD 661 for a period of three years. While Royal Decree-Law 14/2010 stated that electricity produced beyond the operating hour thresholds could be sold at market prices, those prices were far below the feed-in tariffs that Spain had originally guaranteed. Thus, Royal Decree-Law 14/2010 arbitrarily reduced the quantity of electricity that qualified for the guaranteed feed-in tariff, which further harmed Claimants’ investments.

47. The effect of both Royal Decree 1565/2010 and Royal Decree-Law 14/2010 was a substantial reduction in the current and projected revenues and profits that Claimants expected from their photovoltaic projects when they invested in them.

48. On December 27, 2012, Spain enacted a further alteration to the economic regime established in RD 661 and RD 1578. Law 15/2012 reduced the incentives available to Claimants’ photovoltaic facilities under RD 661 and RD 1578 through the guise of a so-called “tax on the value of electricity generation.”¹⁷ That purported “tax” is calculated at a rate of 7% of all revenue received from the production of electricity, including the incentive remuneration established in RD 661 and RD 1578. Thus, the “tax” does not operate as a tax at all, but instead as a direct reduction in the incentive remuneration promised under RD 661 and RD 1578. All of Claimants’ photovoltaic plants have been wrongly subjected to that reduction since January 1, 2013.

49. Furthermore, in February 2013, Spain enacted Royal Decree-Law 2/2013, which amended the method for updating the incentivized pricing formulas in RD 661 and RD 1578 by de-linking it from the general Consumer Price Index and substituting a lower index.¹⁸ This measure further reduced the remuneration to which Claimants’ photovoltaic

¹⁷ Law 15/2012, of December 27, on tax measures for energy sustainability. ↩

¹⁸ Royal Decree-law 2/2013, of February 1, on urgent measures in the electricity system and in the financial sector. ↩

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facilities were entitled and that Claimants reasonably expected when deciding to invest in those facilities in Spain.

50. Each of the measures described above constitutes a wrongful repudiation of Spain’s guarantees of stable, incentivized pricing under RD 661 and RD 1578, which should have applied to Claimants’ facilities, unmodified, for a period of at least twenty-five years (and for the remaining life of the facilities in the case of RD 661). Spain is liable under the ECT for significantly altering RD 661 and RD 1578 only three to four years after enacting those legislative programs, thereby failing to fulfill its commitments to Claimants. As discussed below, however, these were not the only breaches of the ECT that Spain has committed.

E. Spain Wrongfully Abrogated the Incentives Regimes

51. The foregoing material alterations to the legal and economic regimes guaranteed in RD 661 and RD 1578 — in reliance on which Claimants made their investments — caused significant damage to Claimants, principally by reducing the profits and revenues that Claimants reasonably expected when they decided to invest in Spain. However, the treaty-breaching conduct described above pales in comparison to Spain’s violations of the ECT through the enactment of Royal Decree-Law 9/2013 on July 12, 2013 (“RDL 9”)¹⁹ and its subsequent implementing measures.

52. Unlike the measures before it, which reduced the remuneration promised to Claimants’ photovoltaic facilities through RD 661 and RD 1578, RDL 9 retroactively abolished the incentivized pricing system previously guaranteed to facilities operating under those regimes. When RDL 9 was announced in July 2013, it was clear to investors, including Claimants, that the attractive price guarantees granted under RD 661 and RD 1578, which induced them to invest, would no longer apply to their facilities. However, it was not clear what new pricing system would apply to those facilities. Instead of providing a clear indication, RDL 9 merely stated that compensation under the new regime would be limited to remuneration based on the electricity market price, supplemented when necessary to obtain a “reasonable return on the investment.” Given that that term would be unilaterally defined by Spain, Claimants and other investors like them could not determine what, if any, future profits their facilities would generate.

¹⁹ Royal Decree-Law 9/2013, of July 12, enacting urgent measures to ensure the financial stability of the electricity system. ↩

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53. RDL 9 also stated that the new compensation scheme would be based on estimates of the costs and revenues of a “standard” electricity-generating plant built and operated by an “efficient and well-managed company,” and the so-called “reasonable rate of return” would be based on the yield of the Spanish government’s bonds over a ten-year period. Thus, while it was clear to Claimants in the summer of 2013 that the profits they and other investors could reasonably expect to earn until the end of the facilities’ useful lives were now strictly in the hands of Spain, it was not at all clear what those profits would be.

54. Subsequent implementing measures did little to clarify the situation. Act 24/2013 of December 26, 2013 on the Electricity Sector, (“Act 24”), simply confirmed the scheme established in RDL 9 and it added that any payments made to Claimants until Spain implemented a new regime could be further reduced to balance the electricity system’s revenues and expenses. Spain also informed investors that the revenues they had already earned would be taken into account when determining whether a given facility had reached Spain’s notion of a “reasonable rate of return.” Thus, approximately six months after Spain announced the abolition of the incentivized pricing under RD 661, investors learned that whether their plants had achieved a “reasonable rate of return” (as defined by Spain) would be measured as from the plant’s date of commissioning.

55. Nearly a full year after first announcing the premature termination of RD 661 and RD 1578, Spain finally issued formulas that served as guidance to what, if any, future remuneration would apply to Claimants’ facilities. On June 6, 2014, Spain enacted Royal Decree 413/2014, and on June 16, 2014, Spain enacted Ministerial Order IET/1045/2014 to further implement both RDL 9 and Act 24 and establish specific remuneration parameters for existing facilities.²⁰ Those acts included over 1500 different formulas, based on over 1500 different “standard facilities,” which investors had to sift through to determine what new remuneration applied (retroactively, as from July 2013) to their plants. Thus, Claimants and other investors like them operated their facilities in Spain for nearly a year without knowing any specific information about the remunerative regime that applied to them, and once the new formulas were announced, deciphering them required the assistance of expert legal and economic analysts.

²⁰ Royal Decree 413/2014, of June 6, regulating the activity of electrical power generation by means of renewable energy, cogeneration and waste sources; Order IET/1045/2014, of June 16, approving the remuneration parameters of standard facilities applicable to certain facilities of electrical power generation by means of renewable energy, cogeneration and waste sources. ↩

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56. Under the new remunerative regime, which is now governed by RDL 9, Act 24, Royal Decree 413/2014, and Ministerial Order IET/1045/2014, no additional remuneration is available to some of Claimants’ facilities, because Spain considers that those facilities have already achieved “reasonable” rates of return. For the remaining facilities, the new legislation provides remuneration at rates far below what Spain promised in RD 661 and RD 1578.

57. Furthermore, the new remuneration formulas are set for review in 2016 and 2019, and thus are subject to further reduction despite the original guarantees in RD 661 and RD 1578 fixing feed-in tariffs for the lives of qualifying projects.

58. Spain’s conduct has severely harmed Claimants’ investments in photovoltaic facilities. Claimants seek relief through arbitration under the ECT for all harms they have suffered.

III. JURISDICTION OF ICSID

59. As a Contracting Party to the ECT and a Contracting State to the ICSID Convention, Spain granted Claimants the right to submit this dispute to ICSID arbitration. Article 26 of the ECT, governing the settlement of disputes between an investor and a Contracting Party, provides:

(1) 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 shall, if possible, be settled amicably.

(2) If such disputes can not be settled according to the provisions of paragraph (1) within a period of three months from the date on which either party to the dispute requested amicable settlement, the Investor party to the dispute may choose to submit it for resolution:

(a) to the courts or administrative tribunals of the Contracting Party to the dispute;

(b) in accordance with any applicable, previously agreed dispute settlement procedure; or

(c) in accordance with the following paragraphs of this Article.

(3) (a) Subject only to subparagraphs (b) and (c), each Contracting Party hereby gives its unconditional consent to the submission of a dispute to international arbitration or conciliation in accordance with the provisions of this Article.

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(b) (i) The Contracting Parties listed in Annex ID do not give such unconditional consent where the Investor has previously submitted the dispute under subparagraph (2) (a) or (b).²¹ ...

(c) A Contracting Party listed in Annex IA does not give such unconditional consent with respect to a dispute arising under the last sentence of Article 10(1).²²

(4) In the event that an Investor chooses to submit the dispute for resolution under subparagraph (2) (c), the Investor shall further provide its consent in writing for the dispute to be submitted to:

(a) (i) The International Centre for Settlement of Investment Disputes, established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington, 18 March 1965 (hereinafter referred to as the “ICSID Convention”), if the Contracting Party of the Investor and the Contracting Party party to the dispute are both parties to the ICSID Convention; ...

(5) (a) The consent given in paragraph (3) together with the written consent of the Investor given pursuant to paragraph (4) shall be considered to satisfy the requirement for:

(i) written consent of the parties to a dispute for purposes of Chapter II of the ICSID Convention ...

(6) A tribunal established under paragraph (4) shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law.

60. Article 25 of the ICSID Convention states that “the jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State ... and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre.”

61. The requirements for ICSID jurisdiction under Article 26 of the ECT as well as under Article 25 of the ICSID Convention may be summarized as follows: a) the dispute must be a legal dispute arising directly out of an investment and concerning an alleged breach of Part III of the ECT; b) the dispute must involve a covered “investment;” c) the Respondent

²¹ Spain has submitted a statement under Annex ID of the ECT. However, Claimants have not previously submitted this dispute to the courts or administrative tribunals of Spain or in accordance with any previously agreed dispute settlement procedure. Consequently, Spain’s statement under Annex ID is irrelevant. ↩

²² Spain is not listed under Annex IA. Consequently, Claimants are entitled to assert a claim based on the last sentence of Article 10(1), the ECT’s “umbrella clause,” which they do. ↩

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must be a Contracting Party to the ECT and a Contracting State of the ICSID Convention; d) the opposing party must be a covered “investor” that is a national or company of another Contracting Party to the ECT and of a Contracting State of the ICSID Convention; e) the parties must have consented to ICSID jurisdiction; and f) the parties must have failed to amicably settle the dispute within a three-month period after the notice of dispute was given.

62. Each of these requirements is satisfied in the present case.

A. This is a Legal Dispute Arising Directly Out of an Investment and Concerning an Alleged Breach of Part III of the ECT

63. As explained in the previous section, this dispute concerns the failure of Spain to fulfill legislative and regulatory commitments it made relative to Claimants’ photovoltaic facilities and related investments. The acts and omissions of Spain described above and to be developed further in the course of this proceeding constitute serious and repeated breaches of the protections accorded to Claimants’ investments in Spain under Part III of the ECT. Those protections include, but are not limited to, those found in Articles 10 and 13 of the ECT.

64. Article 10 provides a number of guarantees and protections to Claimants and their investments, including: 1) fair and equitable treatment; 2) a requirement that the host state accord “the most constant protection and security” to investments; 3) a prohibition against unreasonable or discriminatory measures that impair the management, maintenance, use, enjoyment, or disposal of investments; 4) a prohibition against treatment less favorable than that required by international law, including treaty obligations; 5) a requirement to observe any obligations the host state has entered into with an investment or an investor; 6) most-favored nation treatment; and 7) national treatment. By way of example only, Spain treated Claimants’ investments unfairly and inequitably by altering, and then abrogating, the incentives regimes governing those investments, in violation of its commitments and the clear terms of RD 661 and RD 1578. Spain’s misconduct in that respect also unlawfully impaired Claimants’ investments in an unreasonable or discriminatory manner.

65. Additionally, Article 13 of the ECT prohibits Spain from unlawfully expropriating Claimants’ investments or subjecting them to measures having an equivalent effect. As Claimants will demonstrate during the course of this proceeding, Spain breached Article 13 of the ECT by abrogating the rights granted to Claimants’ investments through RD 661 and RD 1578. Since those rights, granted by law, formed part of Claimants’ investments

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in this case, Spain’s repudiation of those rights constitutes a measure tantamount to expropriation, if not a direct expropriation, under the ECT and international law.

66. Spain’s violations of those provisions of the ECT, as well as its violations of international law, involve Claimants’ legal rights and entitle Claimants to legal remedies. This is a classic legal dispute.

B. The ECT Covers Claimants’ Investments

67. The term “investment” is not defined in Article 25 of the ICSID Convention, but it is widely understood to have a broad definition such as that found in the ECT. Article 1(6) of the ECT defines “investment” as:

every kind of asset, owned or controlled directly or indirectly by an Investor and includes:

(a) tangible and intangible, and movable and immovable, property, and any property rights such as leases, mortgages, liens, and pledges;

(b) a company or business enterprise, or shares, stock, or other forms of equity participation in a company or business enterprise, and bonds and other debt of a company or business enterprise;

(c) claims to money and claims to performance pursuant to contract having an economic value and associated with an Investment;

(d) Intellectual Property;

(e) Returns;

(f) any right conferred by law or contract or by virtue of any licences and permits granted pursuant to law to undertake any Economic Activity in the Energy Sector.

A change in the form in which assets are invested does not affect their character as investments and the term “Investment” includes all investments, whether existing at or made after the later of the date of entry into force of this Treaty for the Contracting Party of the Investor making the investment and that for the Contracting Party in the Area of which the investment is made (hereinafter referred to as the “Effective Date”) provided that the Treaty shall only apply to matters affecting such investments after the Effective Date.

“Investment” refers to any investment associated with an Economic Activity in the Energy Sector.

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68. Under this definition, there are a number of different investments of Claimants involved in this case, including, but not limited to: (i) Claimants’ ownership of tangible and intangible property and property rights; (ii) Claimants’ ownership of shares and equity participation in Spanish companies and renewable energy facilities/business enterprises, as well as debt obligations; (iii) Claimants’ right to returns, claims to money, and claims to performance pursuant to contracts having economic value and related to the investments; (iv) rights conferred by law, specifically, the rights to fixed feed-in tariff pricing conferred through RD 661 and RD 1578; and (v) rights conferred by licenses and permits.

69. Claimants thus own several covered “investments” under both the ECT and the ICSID Convention.

C. Respondent is a Contracting Party to the ECT and a Contracting State of the ICSID Convention

70. Spain is a Contracting Party to the ECT. Spain signed the ECT on December 17, 1994, and ratified it on December 11, 1997. Spain deposited its instrument of ratification on December 16, 1997. The ECT entered into force for Spain on April 16, 1998.²³

71. Spain is a Contracting State of the ICSID Convention. Spain signed the ICSID Convention on March 21, 1994, and deposited its ratification of the Convention on August 18, 1994. The ICSID Convention entered into force for Spain on September 17, 1994.²⁴

D. Claimants are Covered “Investors” and Nationals of a Contracting Party to the ECT and a Contracting State of the ICSID Convention

72. For purposes of Article 25 of the ICSID Convention, nationality is determined by the domestic laws of each Contracting State. Article 1(7) of the ECT likewise provides that the term “investor” means “a company or other organization organized in accordance with the law applicable in that Contracting Party.”²⁵

73. Claimants are comprised of individuals with German nationality and business entities duly established in Germany. Claimants currently own 100% of the investments related to their photovoltaic facilities in Spain. Claimants also owned their investments on

²³ See CEX-10 regarding the date of the ECT’s entry into force for Spain. ↩

²⁴ See CEX-11. ↩

²⁵ See CEX-1. ↩

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the date of consent to ICSID jurisdiction (discussed below) and immediately before the events giving rise to this dispute.

74. Germany is a Contracting Party to the ECT. Germany signed the ECT on December 17, 1994, and ratified it on March 14, 1997. Germany deposited its instrument of ratification on December 16, 1997. The ECT entered into force for Germany on April 16, 1998.²⁶

75. Germany is also a Contracting State of the ICSID Convention. Germany signed the ICSID Convention on January 27, 1966, and deposited its ratification of the Convention on April 18, 1969. The ICSID Convention entered into force for Germany on May 18, 1969.²⁷

76. Thus, Claimants are covered “Investors” and nationals of a Contracting Party to the ECT and a Contracting State of the ICSID Convention.

E. Consent to ICSID Arbitration

77. Spain consented to submit legal disputes like the present one to ICSID arbitration by signing and ratifying the ECT. Article 26(4) of the ECT expressly includes ICSID as a dispute settlement option for investors. The ECT entered into force for Spain on April 16, 1998.²⁸

78. Claimants’ notified Spain of their consent to arbitrate the dispute pursuant to Article 26 of the ECT through letters dated June 16, 2014, and August 11, 2014.²⁹ Claimants further confirm their consent to settle this dispute through ICSID arbitration through this Request for Arbitration. Thus, Claimants have satisfied the “consent” requirement under the ICSID Convention.

F. Claimants Attempted to Settle This Dispute Amicably

79. Before submitting a dispute to arbitration, Article 26 of the ECT requires disputing parties to settle their disputes amicably, if possible. Both the DSG Group and the TS Investors Group sent letters to Spain on June 16, 2014, and August 11, 2014, respectively, which described their various concerns regarding Spain’s alterations

²⁶ See CEX-12 regarding the date of the ECT’s entry into force for Germany. ↩

²⁷ See CEX-11. ↩

²⁸ See CEX-10 regarding the date of the ECT’s entry into force for Spain. ↩

²⁹ A copy of those letters are attached as CEX-13. ↩

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to the legal and economic regimes applicable to their photovoltaic facilities, notifying it of this dispute and offering to settle the dispute amicably.³⁰ Spain has not responded to Claimants’ offers to pursue a settlement and no resolution of the present dispute has been achieved.

80. Article 26 of the ECT permits an Investor to submit its dispute to ICSID arbitration if the dispute is not settled amicably within a three month period. As more than three months have passed since Claimants attempted to settle this dispute amicably with Spain, Claimants are entitled to submit this Request for Arbitration with ICSID.

IV. PROCEDURAL MATTERS

81. In accordance with Article 37 of the ICSID Convention, Claimants request that a Tribunal be constituted to hear this matter as soon as possible. In view of the size and complexity of this case, the Tribunal should consist of three arbitrators.

82. Pursuant to Rule 22(1) of the ICSID Rules of Procedure for Arbitration Proceedings, Claimants select English as the procedural language for this arbitration.

83. Pursuant to Articles 62 and 63 of the ICSID Convention, and in view of the locations of Claimants and Respondent, Claimants request that the arbitration proceedings be held at ICSID’s facilities in Paris, France.

84. The request is submitted in six (6) signed original paper copies, as well as an electronic copy, and it is accompanied by payment of the fee for lodging requests.

V. REQUEST FOR RELIEF

85. Claimants request an award granting them the following relief:

• a declaration that the dispute is within the jurisdiction of ICSID, and the ECT;
• a declaration that Spain has violated Part III of the ECT, including but not limited to Article 10 and Article 13, as well as international law with respect to Claimants’ investments;
• compensation to Claimants for all damages they have suffered, to be developed and quantified in the course of this proceeding but likely to include, by way of example and without limitation, sums invested by

³⁰ Id. ↩

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Claimants to acquire and develop the investments, lost profits, and consequential damages flowing from Spain’s breaches;

• all costs of this proceeding, including Claimants’ attorneys’ fees; and
• pre- and post-award compound interest until the date of Spain’s final satisfaction of the award.

VI. CONCLUSION

86. For the reasons set forth above, Claimants respectfully request that ICSID promptly register this arbitration against the Kingdom of Spain.

Dated: March 19, 2015

Respectfully submitted,