Spain raises the number of unpaid awards to 15, compared to the eight with which it closed last year, and is positioned as the third country in the world with the most obligations linked to these compensations, with 1.3 billion dollars (about 1.2 billion of euros). In this way, in just one year the amount pending payment by the State has doubled.
Only Russia and Venezuela surpass Spain in terms of compensation with 60.1 billion dollars (54.69 billion euros) and 7.1 billion dollars (6.46 billion euros), respectively. This is clear from the latest edition of the Compliance Index with International Resolutions, prepared by NL Investment Consulting. At the head of the firm is the Dutch jurist and academic Nikos Lavranos.
With regard specifically to the Energy Charter Treaty (ECT), the number of cases opened against Spain is the highest in the world (51), far ahead of Italy (14) and Romania (8), where the horrible of the awards have been resolved. The European Union has certified its departure from the ECT, but the exit clause of said agreement remains in force for a period of 20 years. Therefore, all investments made with the ECT in force and all those made in the two decades after leaving the agreement remain binding.
25 cases for which an award has not yet been issued
In fact, there are still 25 cases for which a final ruling has not yet been issued. It is estimated that at least 80% of these files will be resolved satisfactorily for the complainants, the final amount of the pending compensation is payable to the affected investors.
The State lost the first of the arbitrations in 2017. The award ruled in favor of the British firm Eiser Infrastructure Limited and its Luxembourg subsidiary Energía Solar Luxembourg. Eiser was a partner in Spain of Elecnor and the engineering firm Aries. In total, it invested 935 million euros in three plants in 2007, the year in which Royal Decree 661/2007 was approved, the application of which caused a rapid deployment of ‘green’ energies. However, the sector was subsequently subjected to pay cuts. The first of them occurred at the end of 2010, with the PSOE, and then in 2013 with the approval of the reform of the electricity sector by the Popular Party.
The complaints focus on cuts to solar and solar thermal energy and claim nearly 10 billion euros from the country in different international arbitration bodies for the damages allegedly caused by cuts in renewable energy premiums.
With Royal Decree 661/2007, a system was established that guaranteed renewable energy investors the collection of remuneration throughout the useful life of the plant, whether it was wind, solar thermal or photovoltaic. This is what is known as renewable premiums, aid charged to the electricity bill that guaranteed the profitability of this type of energy. With the promise of very high rates of profitability, national and foreign investors with interests in the sector attended the call.
In 2013, the 7% generation tax was introduced.
In this sense, and thanks to financing from large banks, a photovoltaic ‘boom’ occurred in a few months. However, in 2010, the Executive began to apply the first cuts. The deficit in the electricity sector led it to reduce the advantages offered by ‘clean’ energies in order to raise more and compensate for the losses. In 2013 another blow came: a tax on electricity generation was included and the announcement of non-remuneration for all new renewable energy installations after 2012. The reform of the electricity sector led to a 40% cut in the premiums that s They were still valid.
Everything related to the administrative, accounting, budgetary and financial management of expenses and contracts that are necessary to defend the country’s interests in renewable energy arbitrations is in the hands of the State Attorney’s Office. MLL Legal, Curtis, Mallet-Prevost, Colt & Mosle LLP and Simmons & Simmons are some of the law firms to which the State has turned to try to annul the arbitrations.
The latest episode that has been known is that of the provisional seizure of 800,000 euros from four bank accounts of the High Court of Justice of England and Wales that Spain has in the United Kingdom in relation to the Infrarrojos case and that are managed by Banco Santander, according to knowledgeable sources. of process. The events date back to 2013 and the judicial resolution was issued on November 9, in response to a request from the investment group Blasket Renewable Investments.
Specifically, the International Center for Settlement of Investment Disputes (ICSID), dependent on the World Bank, recognized the group’s right to receive 28.2 million euros in compensation for the electrical reform in Spain carried out in 2013. RWE, Renergy, Triodos, Nextera, Cube, Soles Badajoz and Eurus are some of those affected by the arbitrations. Government sources point out that Spain is reluctant to make the payments because “they may be contrary to EU law and constitute illegal State Aid.”
In parallel, the United States has issued a report warning of the risks faced by energy investments in Spain, while the Chamber of Commerce of the North American country has appeared in court to support the demands of the affected companies and warn of the consequences that defaults have for the legal security of international investments. However, despite the fact that the private sector has been denouncing regulatory instability, the latest Renewable Energy Country Attractive Index (Recai) report, prepared by the consulting firm EY, maintains Spain as the eighth most attractive country in the world to invest in renewables, behind the United States, Germany, China, the United Kingdom, France, India and Australia.
Arbitrations around the world: 1,257 proceedings
According to the 2023 International Judgment Compliance Index, the total number of international arbitrations held now reaches 1,257 processes, of which 890 have reached their conclusion (70%), while another 343 files (27%) are still in progress. . The status of another 24 procedures (3%) is unknown. Among the cases for which a side has already been issued, 37% have been saved in favor of the denounced governments, while 28% have concluded in a victory for the investors. 19% of the files have been settled with an agreement between the parties, 14% were discontinued and 3% concluded in tables, that is, with a neutral decision for both parties.
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