This annulment proceeding concerns an application for annulment (the "Application") of the award rendered on 15 June 2018 (the "Award") by a Tribunal composed of Mr. Eduardo Zuleta (President), Mr. Klaus Reichert, and Mr. J. Christopher Thomas (the "Tribunal"), in the arbitration proceeding between 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.) and the Kingdom of Spain (ICSID Case No. ARB/13/31), as rectified by the Tribunal's Decision on Rectification of the Award on 29 January 2019.

Representing the Claimants:

Mr. Jeffrey Sullivan
Ms. Ceyda Knoebel
Mr. Theo Tyrrell
Ms. Stephanie Collins
Gibson, Dunn & Crutcher UK LLP Telephone House
2-4 Temple Avenue
London, EC4Y 0HB
United Kingdom and
Mr. Rahim Moloo
Ms. Ankita Ritwik
Gibson, Dunn & Crutcher LLP
200 Park Avenue New York, NY 10166
United States of America

Representing Spain:

Mr. José Manuel Gutiérrez Delgado
Mr. Pablo Elena Abad
Ms. Gabriela Cerdeiras Megias
Ms. Lorena Fatas Pérez
Ms. Ana Fernández-Daza Alvarez
Ms. María del Socorro Garrido Moreno
Mr. Rafael Gil Nievas
Ms. Lourdes Martinez de Victoria Gómez Ms. Elena Oñoro Sainz
Ms. Mª José Ruiz Sánchez
Mr. Diego Santacruz Descartín
Mr. Alberto Torró Molés
Abogacía General del Estado
Dpto. Arbitrajes Internacionales
Ministry of Justice of the Government of Spain c/ Marqués de la Ensenada,
14-16 2ª planta
28004, Madrid
Spain

On 23 May 2019, pursuant to ICSID Arbitration Rule 50(2), the Secretary-General of ICSID registered the Application. On the same date, in accordance with ICSID Arbitration Rule 54(2), the Secretary-General informed the Parties that the enforcement of the Award had been provisionally stayed.

On 19 August 2019, in accordance with ICSID Arbitration Rules 6 and 53, the Parties were notified that an ad hoc Committee composed of Mr. Cavinder Bull, a national of Singapore, appointed to the Panel by Singapore, and designated as President of the Committee, Mr. José Antonio Moreno Rodríguez, a national of Paraguay, appointed to the Panel by Paraguay, and Prof. Dr. Nayla Comair-Obeid, a national of France and Lebanon, appointed to the Panel by Lebanon, had been constituted (the "Committee"). On the same date, the Parties were notified that Ms. Anna Toubiana, ICSID Legal Counsel, would serve as Secretary of the ad hoc Committee.

- Spain's first submission – 3 September 2019

- Claimants' response – 9 September 2019

- Spain's reply – 12 September 2019

- Claimants' rejoinder – 16 September 2019

In accordance with ICSID Arbitration Rules 53 and 13(1), the Committee held a first session with the Parties on 18 September 2019 by telephone conference.

On 9 October 2020, the EC informed the Committee that it regretted that the Committee had refused its application following an interpretation of ICSID Arbitration Rule 37(2) the EC considered incorrect.

Committee:

Mr. Cavinder Bull SC President
Mr. José Antonio Moreno Rodríguez Member of the Committee
Prof. Dr. Nayla Comair-Obeid Member of the Committee

ICSID Secretariat:

Ms. Anna Toubiana Secretary of the Committee

For the Claimants:

Counsel

Mr. Jeffrey Sullivan Gibson Dunn & Crutcher UK LLP
Mr. Rahim Moloo Gibson Dunn & Crutcher UK LLP
Ms. Ceyda Knoebel Gibson Dunn & Crutcher UK LLP
Mr. Theo Tyrrell Gibson Dunn & Crutcher UK LLP
Ms. Siham Freihat Gibson Dunn & Crutcher UK LLP

Expert

Prof. Piet Eeckhout

For Spain:

Counsel

Mr. José Manuel Gutiérrez Ministry of Justice of the Government of Spain – Abogacía General del Estado
Mr. Pablo Elena Abad Ministry of Justice of the Government of Spain – Abogacía General del Estado
Ms. Gabriela Cerdeiras Megías Ministry of Justice of the Government of Spain – Abogacía General del Estado
Mr. Alberto Torró Molés Ministry of Justice of the Government of Spain – Abogacía General del Estado
Ms. Lourdes Martínez de Victoria Ministry of Justice of the Government of Gómez Spain – Abogacía General del Estado
Mr. Juan Antonio Quesada Navarro Ministry of Justice of the Government of Spain – Abogacía General del Estado
Ms. Ana María Rodríguez Esquivias Ministry of Justice of the Government of Spain – Abogacía General del Estado

Expert

Prof. Ricardo Gosalbo Bono

Court Reporters:

Mr. Trevor McGowan Caerus Reporting Ltd
Mr. Dante Rinaldi DR - Esteno

Interpreters:

Ms. Silvia Colla
Ms. Amalia Thaler de Klemm
Mr. Charles Roberts
Mr. Daniel Giglio

On behalf of the Claimants:

Prof. Piet Eeckhout

On behalf of Spain:

Prof. Ricardo Gosalbo Bono

Spain argues that the Tribunal manifestly exceeded its powers by assuming jurisdiction over the Parties' dispute under the ECT. According to Spain, Articles 267 and 344 of the Treaty on the Functioning of the EU ("TFEU") "forbid any disputes on subjects regulated by EU Law not to be reviewed by the CJEU",¹² and such disputes therefore cannot be submitted to arbitration. This is pursuant to the principle of autonomy in the EU legal system which requires disputes concerning the interpretation of EU law be submitted to the EU's legal system, and not international arbitration.¹³

Spain argues that the Parties' dispute is governed by EU law pursuant to the principle of primacy, which gives EU law preference in the case of any conflict between the rules of a Member State and EU law. Spain also reiterated its position in the Arbitration that "EU law, including the treaties creating the European Economic Community ('EEC') and the EU and allocating competences among European institutions and their member countries, EU's internal legislation, and decisions of the CJEU constitute 'applicable rules and principles of international law' for purposes of Article 26(6) [of the ECT]".¹⁴

Spain then argues that a dispute concerning the application of EU law cannot be validly submitted to arbitration. Spain relies in particular on the 2018 judgment of the Court of Justice of the European Union ("CJEU") in Achmea.¹⁵ In Achmea, the CJEU decided a dispute between the Dutch insurer Achmea BV and Slovakia brought under the 1991 Netherlands-Slovakia bilateral investment treaty ("BIT"). Prior to the CJEU proceedings, Achmea had commenced arbitration against Slovakia under the BIT and obtained an award of damages against Slovakia. The CJEU set aside the award, holding that the arbitration clause in the Netherlands-Slovakia BIT was incompatible with the principle of autonomy under EU law as the clause provided for disputes involving the interpretation of EU law to be determined by bodies outside the EU's judicial system.¹⁶

As for the CJEU's decision in Achmea, the Claimants submit that Achmea has no relevance to the ECT. This is because (i) EU law (including Achmea) is not relevant to the question of jurisdiction; (ii) even if EU law were relevant, Achmea cannot retroactively invalidate Spain's consent to arbitrate given that the Claimants' initiated arbitration proceedings in 2013, almost five years before the Achmea decision was rendered; and (iii) even if Achmea could have retroactive effect, it remains irrelevant to the Arbitration because the judgment does not apply to the ECT, but only to the BIT at issue in that particular case.³⁷

"[T]he excess must be plain on its face for annulment to be an available remedy. Any excess apparent in a Tribunal's conduct, if susceptible of argument 'one way or the other', is not manifest. As one commentator has put it, 'If the issue is debatable or requires examination of the materials on which the tribunal's decision is based, the tribunal's determination is conclusive'."⁵²

"Concerning the meaning of 'manifest', the Committee shares Professor Schreuer's view that the term relates to the ease with which an excess of powers is perceived, rather than its gravity, and that such an excess must be able to 'be discerned with little effort and without deeper analysis.' Such an approach is consistent with a manifest excess being one which is at once 'textually obvious and substantively serious.'"⁵³

The Committee sees no reason to depart from the well-established approach taken by the international arbitration community. On the contrary, the Committee finds that the above definition of 'manifest' is in line with the exceptional and limited character of an annulment as opposed to an appeal. Further, it better accords with the intentions of the drafters of the ICSID Convention. As Prof Schreuer observes, the term 'manifest' in Article 52(1)(b) was deliberately chosen by the drafters of the ICSID Convention to promote finality in ICSID arbitration and to minimise the "risk of frustration of awards".⁵⁴ This objective justifies a higher standard for when an ICSID award may be annulled on the ground of an excess of power.

"It is also clear from the language of Article 52, and it is well established in ICSID annulment practice, that annulment is an extraordinary remedy and not an appeal from the legal or factual findings of the arbitral tribunal. The object and purpose of annulment proceedings is not to test the substantive correctness of the award… The function of an ICSID ad hoc committee is not to review the factual findings of an ICSID tribunal or its decision on the merits, but to determine whether any of the annulment grounds in Article 52 has been established."

"… [The annulment committee] cannot review de novo the facts, evidence and criteria used by the Tribunal in assessing the damages nor the amount of compensation awarded to Impregilo. It is clear that Argentina disagrees with the causal connection found by the Tribunal between the damages and the disputed measures; that it considers that there was a gap in the analysis of causation and that the evidence produced should have resulted in a different compensation; and that it disagrees with the interpretation by the Tribunal of the applicable law in the assessment of the damages. However, a disagreement with the analysis of the Tribunal as to causation, or with respect to the assessment of the evidence or the interpretation of the law does not constitute ground for annulment under Article 52." (emphasis added)

"… the tribunal must be satisfied that the claimant has suffered some damage under the relevant head as a result of the respondent's breach. But once it is satisfied of this, the determination of the precise amount of this damage is a matter for the tribunal's informed estimation in the light of all the evidence available to it."

Spain submits that it was deprived of its right to submit two crucial pieces of evidence in the Arbitration below, namely (i) the European Commission's Decision C(2017) 7384 dated 10 November 2017 ("EC Decision 7384") and (ii) the CJEU's decision in Achmea.⁸⁹ These were allegedly "vitally important documents" that would have informed the Tribunal on the proper approach that should have been taken with regard to EU law, and the Tribunal's refusal to allow these documents to be added to the record is a serious departure from a fundamental rule of natural justice.⁹⁰

As for the Achmea decision, the Tribunal found that Spain "did not articulate any convincing reason why the ECJ Judgment shall be considered "new evidence" under the terms of Arbitration Rule 38(2)" and that "reopening the proceeding requires more than a general affirmation that the alleged 'evidence' affects jurisdiction and some other issues related to the merits".¹⁰⁸ Spain submits that the Tribunal's reliance on "a formality such as the distinction between 'evidence' and 'authority' cannot justify such a serious limitation of a party's right of defence as that discussed here".¹⁰⁹

The Claimants submit that the Tribunal's assessment of damages is well-reasoned. First, the Tribunal had explained why and how it arrived at the standard of "fair market value" as the appropriate way to value the Claimants' losses.¹⁸¹ This standard was determined based on international law, as encapsulated in the Chorzow case and Article 31 of the ILC Articles of State Responsibility.¹⁸² It was also consistent with the decisions of other tribunals finding a breach of the FET standard.¹⁸³

"…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. A Committee might be tempted to annul an award because that examination disclosed a manifestly incorrect application of the law, which, however, is not a ground for annulment."

a. Other ECT tribunals, including the tribunals in Charanne v. Spain; Isolux v. Spain; and Eiser v. Spain, had rejected a similar argument that the context of the ECT results in the exclusion of intra-EU investor-State disputes under the ECT.¹⁹⁸

b. The ECT's purpose does not support Spain's interpretation. Nothing in Article 2 of the ECT, captioned "Purpose of the Treaty", "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".¹⁹⁹

c. The fact that the EU is also a Contracting Party and a "Regional Economic International Organization" ("REIO") as defined in Articles 1(2) and 1(3) of the ECT does not bar the Tribunal's jurisdiction. The ordinary meaning of Articles 1(2), 1(3) and 1(10) recognise the existence of REIOs as possible Contracting Parties and allows a claim to be brought by an investor in the REIO's defined area.²⁰⁰

d. The 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.²⁰¹ 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.

"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."

This provision, together with Arbitration Rule 47(1)(j) (applied by virtue of Arbitration Rule 53) gives the Committee discretion to allocate all costs of the proceeding, including attorney's fees and other costs, between the Parties as it deems appropriate.

Committee Members' fees and expenses

a. Rejects Spain's application for annulment;

b. Decides that Spain shall bear all the costs of the proceedings, including the fees and expenses of the Committee, ICSID's administrative fees and direct expenses (as reflected in ICSID's final financial statement) and pay €2,310,379.38 to the Claimants in respect of the Claimants' legal fees and expenses.