TABLE OF SELECTED ABBREVIATIONS/DEFINED TERMS | |
Claimants | Cube Infrastructure Fund SICAV, Cube Energy S.C.A., Cube Infrastructure Managers S.A., and Demeter 2 FPCI and Demeter Partners S.A. |
Claimants' Submission | Claimants' Submission on Costs filed on 4 December 2018 |
Cube | Cube Infrastructure Fund SICAV, Cube Energy S.C.A., and Cube Infrastructure Managers S.A. |
Decision | Tribunal's Decision on Jurisdiction, Liability and Partial Decision on Quantum dated 19 February 2019 |
Demeter | Demeter 2 FPCI and Demeter Partners S.A. |
ECT | Energy Charter Treaty |
Experts | The Brattle Group and Econ One Research, Inc. |
ICSID Convention | Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March 1965 |
ICSID or the Centre | International Centre for Settlement of Investment Disputes |
Joint Expert Report | Joint Expert Report dated 16 April 2019, prepared by the Parties' Experts |
Respondent's Submission | Respondent's Submission on Costs filed on 1 April 2019 |
Spain or the Respondent | Kingdom of Spain |
Supplementary Joint Expert Report | Supplementary Joint Expert Report dated 13 May 2019, prepared by the Parties' Experts |
"VIII DECISIONS
A. On Jurisdiction
543. The Tribunal decides unanimously that the Respondent's jurisdictional objection on questions concerning taxation measures within the meaning of Article 21 ECT is upheld. All other jurisdictional objections are dismissed.
B. On Liability
544. The Tribunal decides unanimously that the Respondent breached the Claimants' right under Article 10 ECT to fair and equitable treatment in respect of their investments in PV plants. All other claims in respect of the PV plants are dismissed unanimously.
545. The Tribunal decides by a majority that the Respondent breached the Claimants' right under Article 10 ECT to fair and equitable treatment in respect of their investments in hydro plants. All other claims in respect of the hydro plants are dismissed."
"E. Summary on Damages
530. The Tribunal decides unanimously that the Claimants are entitled by way of damages €2.89 million in respect of losses caused to the PV investments.
531. The Tribunal decides by a majority that the Claimants are entitled by way of damages a sum in respect of losses caused to the hydro investments, calculated by reducing by forty per cent (40%) the difference between the projected cash flows under the But For and the Actual Scenarios underlying the Claimants' computation in its Post-Hearing Brief of €41.8 million in damages for post-June 2013 measures.
532. Subject to our above analysis, in order to implement the decision in the previous paragraph, the Tribunal directs Brattle and Econ One, as the experts for the two Parties, to submit a joint report computing the reduced losses in respect of the hydro investments on the basis of the assumptions and methodology used in the Brattle Reports that are on the record, except that the 40% discount decided upon by the Tribunal is to be applied. Both experts may comment upon the method of making this new computation, but no further submissions are to be made in relation to the assumptions and methodology adopted in the reports and submissions that are already on the record before the Tribunal. If the two experts are unable to agree upon the computation, they are each to append to the joint report a concise note identifying precisely the points on which they disagree and the reasons for the disagreement, and indicating the mathematical impact of the disagreement upon the sums computed.
533. The joint report referred to in the previous paragraph is to be submitted to the Tribunal within thirty days of the date of this Decision. The Tribunal will thereafter issue an Award incorporating this Decision and confirming (or, in the event of disagreement between the experts, deciding upon) the precise amount awarded in respect of the hydro investments.
F. Interest
534. The valuation date is 20 June 2014. Interest is payable on the amount that will be awarded in order to ensure full reparation for the injury caused......
538.... [T]he Tribunal considers that the EURIBOR rate is the appropriate rate at which interest on the damages payable under this Decision and the Award that the Tribunal will render as explained in paragraph 533 above should be computed. Other tribunals have fixed interest rates to six-monthly bond rates, compounded semi-annually, and the Tribunal considers this to be the appropriate measure.
539. The Tribunal accordingly decides that interest shall be payable on the amount that it has decided will be awarded, computed at the six-month EURIBOR rate compounded semi-annually, from 20 June 2014 up to the date of payment.
540. In order to implement the decision in the previous paragraph, the Tribunal directs Brattle and Econ One, as the experts for the two Parties, to submit a joint report computing the amount of interest payable. If the two experts are unable to agree upon the computation, they are each to append to the joint report a concise note identifying precisely the points on which they disagree and the reasons for the disagreement, and indicating the mathematical impact of the disagreement upon the sums computed.
541. The joint report referred to in the previous paragraph is to be submitted to the Tribunal within thirty days of the date of this Decision. The Tribunal will thereafter issue an Award, as explained in paragraph 532 above, confirming (or, in the event of disagreement between the experts, deciding upon) the precise amount awarded in respect of interest."
"VIII. DECISIONS
C. On Damages and Interest
546. The Tribunal decides unanimously that the Claimants are entitled by way of damages €2.89 million in respect of losses caused to the PV investments. Interest shall be payable on the sum awarded computed at the six-month EURIBOR rate compounded semi-annually, from 20 June 2014 up to the date of payment.
547. The Tribunal decides by a majority that the Claimants are entitled by way of damages a sum in respect of losses caused to the hydro investments, calculated by reducing by forty per cent (40%) the difference between the projected cash flows under the But For and the Actual Scenarios underlying the Claimants' computation in its Post-Hearing Brief of €41.8 million in damages for post-June 2013 measures. Interest shall be payable on the sum awarded, computed at the six-month EURIBOR rate compounded semi-annually, from 20 June 2014 up to the date of payment.
D. On Costs
548. The Tribunal decides unanimously that
(a) Each Party shall bear its own costs incurred in preparing the reports directed in paragraphs 532 and 540 above; and
(b) Reserves for the Award its decision on the other costs in this case."
"The Tribunal notes that the experts agree on the implementation of the Tribunal's instruction regarding interest pursuant to paragraphs 539-540 of the Tribunal's Decision on Jurisdiction, Liability and Partial Decision on Quantum (the "Decision") dated 19 February 2019.
The Tribunal also notes that the experts do not agree on the computation of the Tribunal's instruction concerning the application of the 40% discount outlined in paragraph 532 of the Decision. While the experts agree that the calculations of the reduced losses in respect of the hydro investments should start from the damages estimate of €41.8 million presented in the Claimants' Post-Hearing Brief, the experts disagree on the following four issues:
(i) whether the discount should apply to pre-June 2014 cash flows;
(ii) which cash flows the discount should apply to (revenues, project cash flows or equity cash flows);
(iii) whether the 40% discount replaces or supplements Brattle's original regulatory risk haircut in the But For scenario; and
(iv) whether the 40% discount should cumulate over time.
Having deliberated on the four issues listed above, the Tribunal decides as follows:
First, the 40% discount should not apply to pre-June 2014 cash flows because they were not subject to regulatory risk as the circumstances were known. The Tribunal determined that 20 June 2014 was the valuation date.
Second, the discount should be applied to equity cash flows, not to revenue or project cash flows. The 40% discount is the Tribunal's assessment of regulatory risk applied to recoverable damages, not revenue.
Third, the 40% discount should replace Brattle's regulatory risk haircut. This discount factor is the Tribunal's assessment of regulatory risk. Accordingly, the computation should remove the regulatory risk haircut from Brattle's projection, before applying the Tribunal's 40% discount.
Fourth, the discount should not accumulate over time. The Tribunal considers that it is not appropriate to apply a time profile of risk on the basis that risk increases over time. The 40% was a broad assessment by the Tribunal, rather than a precise computation.
The Tribunal requests the parties to instruct their respective experts to prepare a supplementary joint report, taking the above decisions into account and calculating the sum accordingly. The parties shall file the supplementary report by 17 May 2019.
Finally, pursuant to paragraph 548(a) of the Decision, the parties shall also file their final updated statements of costs by 17 May 2019."
Arbitrators' fees and expenses
Prof. Vaughan Lowe | USD 141,398.00 |
The Honourable James Jacob Spigelman | USD 156,344.92 |
Prof. Christian Tomuschat | USD 129,066.76 |
ICSID's administrative fees | USD 148,000.00 |
Direct expenses (estimated)13 | USD 189,304.34 |
Total | USD 764,114.02 |
The above costs have been paid out of the advances made by the Parties in equal parts.
"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."
"Rule 28
Cost of Proceeding
(1) Without prejudice to the final decision on the payment of the cost of the proceeding, the Tribunal may, unless otherwise agreed by the parties, decide:
(a) at any stage of the proceeding, the portion which each party shall pay, pursuant to Administrative and Financial Regulation 14, of the fees and expenses of the Tribunal and the charges for the use of the facilities of the Centre;
(b) with respect to any part of the proceeding, that the related costs (as determined by the Secretary-General) shall be borne entirely or in a particular share by one of the parties.
(2) Promptly after the closure of the proceeding, each party shall submit to the Tribunal a statement of costs reasonably incurred or borne by it in the proceeding and the Secretary-General shall submit to the Tribunal an account of all amounts paid by each party to the Centre and of all costs incurred by the Centre for the proceeding. The Tribunal may, before the award has been rendered, request the parties and the Secretary-General to provide additional information concerning the cost of the proceeding."
a. Unanimously, that the Respondent's jurisdictional objection on questions concerning Taxation Measures within the meaning of Article 21 ECT is upheld. All other jurisdictional objections are dismissed;
b. Unanimously, that the Respondent breached the Claimants' right under Article 10 ECT to fair and equitable treatment in respect of their investments in PV plants. All other claims in respect of the PV plants are dismissed unanimously;
c. By a majority, that the Respondent breached the Claimants' right under Article 10 ECT to fair and equitable treatment in respect of their investments in hydro plants. All other claims in respect of the hydro plants are dismissed;
d. Unanimously, that the Respondent shall pay the Claimants €2.89 million in respect of losses caused to the PV investments. Interest shall be payable on the sum awarded computed at the six-month EURIBOR rate compounded semi-annually, from 20 June 2014 up to the date of payment;
e. By a majority, that the Respondent shall pay the Claimants €30.81 million in respect of losses caused to the hydro investments. Interest shall be payable on the sum awarded, computed at the six-month EURIBOR rate compounded semi-annually, from 20 June 2014 up to the date of payment.
f. By a majority, that the Respondent shall pay the Claimants €1,545,501.80 plus USD 262,500.00 in respect of the costs (other than the costs of preparing the Joint Expert Report and the Supplementary Joint Expert Report) of bringing this claim;
g. Unanimously, that each Party shall bear its own costs incurred in preparing the Joint Expert Report and the Supplementary Joint Expert Report;
h. That any sums previously advanced by the Parties and remaining in the account established by ICSID for the purposes of the proceedings in this case shall, after all fees and expenses have been paid by ICSID, be divided equally between the Parties and returned to them.
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