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TABLE OF SELECTED ABBREVIATIONS

Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings 2006
c-[#] Claimants' Exhibit
CL-[#] Claimants' Legal Authority
Cl. Mem. Claimants' Memorial on the Merits, dated 30 October 2014
Cl. Reply Claimants' Reply on the Merits and Counter-Memorial on Jurisdiction, dated 18 September 2015
Cl. Rej. Claimants' Rejoinder on Jurisdiction, dated 23 December 2015
Cl. Sub. New Def. Claimants' Additional Submission on the New Defense, dated 22 January 2016
Cl. St. Costs Claimants' Statement of Costs (as revised 16 September 2016)
First Meissner Statement First Witness Statement of Hans Meissner, dated 30 October 2014
Second Meissner Statement Second Witness Statement of Hans Meissner, dated 16 September 2015
First Hector Statement First Witness Statement of Jaime Hector, dated 30 October 2014
Second Hector Statement Second Witness Statement of Jaime Hector, dated 15 September 2015
Bolana Statement Witness Statement of Mauricio Bolana, dated 11 September 2015
First Brattle Regulatory Report Expert Report of the Brattle Group - Changes to the Regulation of Concentrated Solar Power Installations in Spain, dated 29 October 2014
Second Brattle Regulatory Report Second Expert Report of the Brattle Group - Rebuttal Report: Changes to the Regulation of Concentrated Solar Power Installations in Spain, dated 17 September 2015
First Brattle Quantum Report Expert Report of the Brattle Group - Financial Damages to EISER, dated 30 October 2014
Second Brattle Quantum Report Second Expert Report of the Brattle Group - Rebuttal Report: Financial Damages to EISER, dated 17 September 2015
First Mancini Report First Expert Report of Thomas R. Mancini - Evaluation of the Expected Lifetime of the EISER Solar Parabolic Trough Plants, dated 15 September 2015
Second Mancini Report Second Expert Report of Thomas R. Mancini - Regarding the Installed Capacity of the Generators at the Solar Thermal Plants ASTE-1A, ASTE-1B and ASTEXOL-2, dated 22 January 2016
ECT Energy Charter Treaty
Hearing Hearing on Jurisdiction and Merits, held 15-20 February 2016
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
R-[#] Respondent's Exhibit
RL-[#] Respondent's Legal Authority
Resp. C-Mem. Respondent's Counter-Memorial on the Merits and Memorial on Jurisdiction, dated 13 April 2015
Resp. Rej. Respondent's Rejoinder on the Merits and Reply on Jurisdiction, dated 27 November 2015
Resp. St. Costs Respondent's Statement of Costs (as revised 16 September 2016)
First Montoya Statement First Witness Statement of Carlos Montoya, dated 13 April 2015
Second Montoya Statement Second Witness Statement of Carlos Montoya, dated 24 November 2015
Olivas Statement Witness Statement of Alfonso Olivas, dated 26 November 2015
First BDO Regulatory Report BDO Expert Report - Economic and Financial Analysis of Incentives to the Solar Thermal Energy Sector, dated 10 April 2015
Second BDO Regulatory Report Second BDO Expert Report - Rejoinder Report to Brattle's "Rebuttal Report: Changes to the Regulation of Concentrated Solar Power Installations in Spain", dated 26 November 2015
First BDO Financial Report BDO Expert Report - Economic and Financial Analysis of EISER and the Solar Thermal Plants, dated 10 April 2015
Second BDO Financial Report Second BDO Expert Report - Rejoinder Report to Brattle's "Rebuttal Report: Financial Damages to EISER", dated 26 November 2015
Servert Report Expert Report of Jorge Servert -Astexol II (Badajoz), Aste 1A and Aste 1B (Alcazar de San Juan) CSP Plants - Lifetime Analysis, dated 26 November 2015
RfA Request for Arbitration, dated 9 December 2013
Rev. Tr. Day [#] (ENG/SPA), [page:line] ([Speaker(s)]) Transcript of the Hearing (as revised by the Parties on 1 April 2016)
Tribunal Arbitral Tribunal constituted on 8 July 2014

I. INTRODUCTION AND PARTIES

1.
This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Energy Charter Treaty which entered into force on 16 April 1998 for Luxembourg, the United Kingdom and the Kingdom of Spain (the "ECT"), and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on 14 October 1966 (the "ICSID Convention").
2.
The Claimants are Eiser Infrastructure Limited ("EIL" or the "First Claimant"), a private limited company incorporated under the laws of the United Kingdom, and Energia Solar Luxembourg S.a r.I. ("ESL" or the "Second Claimant"), a private limited liability company (societe a responsabilite limitee) incorporated under the laws of Luxembourg (together, "Claimants").
3.
The Respondent is the Kingdom of Spain ("Spain" or "Respondent").
5.
This dispute relates to measures implemented by Respondent modifying the regulatory and economic regime of renewable energy projects.

II. PROCEDURAL HISTORY

A. Registration and Constitution of the Tribunal

6.
On 13 December 2013, ICSID received a request for arbitration dated 9 December 2013 from Claimants against Spain (the "Request for Arbitration").
7.
On 23 December 2013, the Secretary-General of ICSID registered the Request for Arbitration in accordance with Article 36(3) of the ICSID Convention and notified the Parties of the registration. In the Notice of Registration, the Secretary-General invited the Parties to proceed to constitute an arbitral tribunal as soon as possible in accordance with Rule 7(d) of ICSID's Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.
8.
In accordance with Article 37(2)(a) of the ICSID Convention, the Parties agreed to constitute the Tribunal as follows: three arbitrators, one to be appointed by each Party, and the third, presiding arbitrator to be appointed by agreement of the Parties. Pursuant to the Parties' agreed method of constitution, failing an agreement of the Parties on the presiding arbitrator, s/he would be appointed by the Chairman of the ICSID Administrative Council without limitation to the ICSID Panel of Arbitrators.
9.
The Tribunal is composed of Professor John R. Crook, a national of the United States, President, appointed by the Chairman of the ICSID Administrative Council in accordance with the Parties' agreement on the method of constitution; Dr. Stanimir Alexandrov, a national of Bulgaria, appointed by Claimants; and Professor Campbell McLachlan QC, a national of New Zealand, appointed by Respondent.
10.
On 8 July 2014, the Secretary-General, in accordance with Rule 6(1) of the ICSID Rules of Procedure for Arbitration Proceedings (the "Arbitration Rules"), notified the Parties that all three arbitrators had accepted their appointments and that the Tribunal was therefore deemed to have been constituted on that date. Ms. Luisa Fernanda Torres, ICSID Legal Counsel, was designated to serve as Secretary of the Tribunal.

B. The First Session

11.
In accordance with ICSID Arbitration Rule 13(1), the Tribunal held a first session with the Parties on 5 September 2014 in Washington, DC.
12.
Following the first session, on 29 September 2014, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 1 embodying the Parties' agreements on procedural matters and the Tribunal's decisions on the disputed issues. Procedural Order No. 1 established, inter alia, that the applicable Arbitration Rules would be those in effect from 10 April 2006, that the procedural languages would be English and Spanish, and that the place of proceeding would be Washington, DC. Procedural Order No. 1 also set out the Procedural Calendar for this arbitration.

C. The Parties' Written Submissions and Procedural Applications

13.
On 30 October 2014, Claimants filed their Memorial on the Merits ("Claimants' Memorial") accompanied by exhibits C-001 to C-175; legal authorities CL-001 to CL-101; two (2) witness statements, by Mr. Hans Meissner and Mr. Jaime Hector, respectively; and two (2) expert reports by the Brattle Group, with exhibits BRR-001 to BRR-055 and BQR-001 to BQR-071.
21.
On 13 April 2015, Respondent filed its Counter-Memorial on the Merits and Memorial on Jurisdiction ("Respondent's Counter-Memorial"), accompanied by exhibits R-008 to R-154; legal authorities RL-010 to RL-059; two (2) witness statements, by Mr. Santiago Caravantes and Mr. Carlos Montoya, respectively; and two (2) expert reports by BDO, with exhibits BFR-001 to BFR-021 and BIR-001 to BIR-068.
22.
On 20 April 2015, following a joint request by the Parties, the Tribunal amended the Procedural Calendar.
23.
On 25 May 2015, Respondent filed an application concerning a disagreement over the language for the Parties' exchanges during the document production phase. On 26 May 2015, Claimants submitted their observations on this application.
24.
On 26 May 2015, the Tribunal issued Procedural Order No. 2 concerning the language for exchanges during the document production phase.
25.
On 8 June 2015, following exchanges between the Parties, and in accordance with Procedural Order No. 1, the Parties jointly submitted their Document Production Applications (Redfern Schedules) for decision by the Tribunal. Claimants' application was accompanied by exhibit C-181.
26.
On 15 June 2015, Respondent filed an application seeking (i) authorization to add to the record additional translations of documents filed with Respondent's Counter-Memorial; and (ii) an order from the Tribunal requiring Claimants to provide fuller translations of certain documents filed with Claimants' Memorial. On 19 June 2015, Claimants submitted observations on this application.
27.
On 23 June 2015, observing that the Parties appeared to have reached an agreement on the matter, the Tribunal authorized the Parties to submit the additional translations.
28.
On 29 June 2015, the Tribunal issued Procedural Order No. 3,on document production.
29.
On 14 July 2015, Respondent filed an application asking the Tribunal to exclude from production certain documents ordered by the Tribunal in Procedural Order No. 3. On 22 July 2015, Claimants filed observations on this application.
30.
On 23 July 2015, Claimants filed an application asking the Tribunal to order Respondent to provide the annexes to two exhibits (R-029 and R-031) to Respondent's CounterMemorial. On 4 August 2015, Respondent filed observations on this application.
31.
On 10 August 2015, the Tribunal issued Procedural Order No. 4 denying both Respondent's application of 14 July 2015 and Claimants' application of 23 July 2015.
32.
On 2 September 2015, Claimants filed an application arguing that Respondent had failed to comply with the Tribunal's order on document production with regard to Claimants' Document Request No. 16. Claimants asked the Tribunal to order Respondent to comply with the Tribunal's prior orders. On 7 September 2015, Respondent filed observations on this application.
33.
On 8 and 9 September 2015, the Parties submitted an agreed upon request for modification of the Procedural Calendar.
34.
On 9 September 2015, the Tribunal issued Procedural Order No. 5 (i) approving the agreed amendment to the Procedural Calendar; and (ii) ruling on Claimants' application of 2 September 2015. Referring to Claimants' Document Request No. 16, the Tribunal ruled, inter alia, that "[i]f the Respondent [...] produce[d] responsive documents [...] not in time to be taken into account by the Claimants in their Reply on the Merits and CounterMemorial on Jurisdiction, the Tribunal [would] consider a request by the Claimants for leave to file a short additional pleading addressing those documents."
35.
On 18 September 2015, Claimants filed their Reply on the Merits and Counter-Memorial on Jurisdiction ("Claimants' Reply") accompanied by exhibits C-182 to C-281; legal authorities CL-137 to CL-236; three (3) witness statements, by Mr. Hans Meissner, Mr. Jaime Hector, and Mr. Mauricio Bolana, respectively; an expert report by Dr. Thomas R. Mancini, with exhibits TRM-1 to TRM-48, and two (2) expert reports by the Brattle Group, with exhibits BRR-056 to BRR-114, and BQR-072 to BQR-97.
36.
Also on 18 September 2015, Respondent submitted a communication formally withdrawing from the record the witness statement of Mr. Santiago Caravantes, previously filed with Respondent's Counter-Memorial. On 12 October 2015, Claimants opposed the withdrawal.
37.
On 29 September 2015, Respondent filed an application arguing that Claimants had (i) failed to produce documents they had voluntarily agreed to produce; and (ii) failed to comply, or only partially complied, with some of the orders on document production in Procedural Order No. 3. On 14 October 2015, Claimants filed observations on this application.
38.
On 5 October 2015, following a joint request by the Parties, the Tribunal amended the Procedural Calendar.
39.
On 14 October 2015, pursuant to Procedural Order No. 5, Claimants sought (i) authorization to submit to the record certain documents produced by Respondent after the filing of Claimants' Reply, in connection with Document Production Request No. 16; and (ii) an order from the Tribunal instructing Respondent to confirm whether it had additional documents responsive to this request in its custody, possession or control.
40.
On 26 October 2015, the Tribunal issued Procedural Order No. 6 (i) authorizing Respondent's 18 September 2015 withdrawal of Mr. Caravantes' witness statement; (ii) dismissing Respondent's application of 29 September 2015; and (iii) authorizing Claimants' 14 October 2015 request to submit additional documents to the record, but declining to issue the additional order requested by Claimants.
41.
Pursuant to Procedural Order No. 6, on 30 October 2015, Claimants submitted exhibits C-282 to C-288 to the record.
42.
On 27 November 2015, Respondent filed its Rejoinder on the Merits and Reply on Jurisdiction ("Respondent's Rejoinder") accompanied by exhibits R-155 to R-234; legal authorities RL-060 to RL-081; two (2) witness statements, by Mr. Carlos Montoya and Mr. Alfonso Olivas, respectively; an expert report by Dr. Jorge Servert; and two (2) expert reports by BDO, with exhibits BFR-022 to BFR-062, and BIR-069 to BIR-107.
43.
On 23 December 2015, Claimants filed their Rejoinder on Jurisdiction ("Claimants' Rejoinder") accompanied by exhibits C-289 to C-290; and legal authorities CL-237 to CL- 240.2
44.
On 23 December 2015, Claimants filed an application asking the Tribunal (i) to rule as inadmissible a defense that, according to Claimants, was raised for the first time in Respondent's Rejoinder; or (ii) in the alternative, to authorize Claimants to file a submission in response to this new defense with additional evidence. Claimants' application was accompanied by three exhibits.
45.
On 28 December 2015, the Tribunal invited Respondent's observations on Claimants' application of 23 December 2015, noting that in the interim, the exhibits filed with the application would not be considered.
46.
On 30 December 2015, Respondent opposed Claimants' application of 23 December 2015 and argued that the submission of the exhibits attached to it was in breach of Procedural Order No. 1.
47.
On 11 January 2016, the Tribunal issued Procedural Order No. 9 (i) authorizing Claimants to file a further submission on the new defense (no longer than 25 pages), together with a "reasonable amount of supporting rebuttal evidence"; and (ii) refusing to admit the three exhibits attached to Claimants' application of 23 December 2015, for lack of compliance with the procedural rules on submission of documents after the last written submissions. However, Claimants were authorized to resubmit those documents, if appropriate, as rebuttal evidence in support of the Claimants' submission on the new defense.3
48.
On 12 January 2016, Respondent filed an application asking for authorization to (i) submit additional documents to the record agreed between the Parties, namely: the translation of Dr. Jorge Servert's expert report, exhibits JSR-01 to JSR-017, and a supplemental translation of exhibit C-156; and (ii) submit one additional document to the record (a ruling by the Spanish Constitutional Court dated 17 December 2015) (exhibit R-236). Claimants consented to Respondent's request (ii) during the pre-Hearing conference call on 13 January 2016, without agreeing to the assertions about the relevance of the document at issue. Noting Claimants' agreement on both items, on 13 January 2016, the Tribunal granted Respondent's application. Accordingly, on 14 January 2016, Respondent submitted exhibits JSR-01 to JSR-017, an additional translation of exhibit C-156 and exhibit R-236; and on 18 January 2016, Respondent filed the translation of Dr. Servert's report.
49.
On 14 January 2016, Respondent filed another application, now seeking authorization to submit six additional documents to the record. On 19 January 2016, Claimants filed observations opposing this application. Thereafter, by letters of 29 January 2016 and 2 February 2016, Respondent withdrew the request with respect to the majority of the documents, limiting its application to one. On 2 February 2016, the Tribunal granted Respondent's application to add that single document to the record. Accordingly, on 3 February 2016, Respondent submitted exhibit R-237 to the record.
50.
On 22 January 2016, Claimants filed an Additional Submission on the New Defense, accompanied by exhibits C-291 to C-298; legal authorities CL-241 to CL-242; and an expert report by Dr. Thomas Mancini with exhibits TRM-49 to TRM-52.
51.
On 25 January 2016, Claimants filed an application concerning a disagreement relating to the identification of the individual(s) who would testify at the Hearing to answer questions on the BDO expert reports. On 27 January 2016, Respondent submitted observations on this application.
52.
On 3 February 2016, the Tribunal issued Procedural Order No. 11 on the issue of expert testimony at the Hearing.
53.
On 28 January 2016, the Respondent filed an application seeking leave from the Tribunal to submit new documents to the record, namely: an additional legal authority (Charanne B.V. & Construction Investments S.A.R.L. v. Kingdom of Spain, Case SCC V 062/2012, Award and Dissenting Opinion, 21 January 2016); and five additional rulings of the Spanish Supreme Court of 22 January 2016. On 3 February 2016, Claimants consented to the submission of these materials to the record, while recording their disagreement with Respondent's characterizations on the relevance of these documents, and asking for an opportunity to file written submissions on the Charanne award and dissenting opinion after the Hearing.
55.
On 8 February 2016, the Tribunal (i) granted Respondent's application of 28 January 2016, noting that the Parties were free to address the Charanne award and dissent during their oral presentations at the Hearing; and (ii) granted Respondent's application of 8 February 2016 subject to confirmation from Claimants that they had been provided with all the Montoya Exhibits.4 Respondent submitted the new documents to the record on 11 and 13 February 2016, designating them as exhibits R-238 to R-256 and RL-084.
56.
In its ruling of 8 February 2016, the Tribunal also gave the following direction to the Parties:

The Tribunal notes the numerous recent requests by the Parties for Tribunal rulings on late admission of documents and other procedural matters. In the interests of fairness and efficiency, the Tribunal will not be disposed to consider further requests for such rulings by either Party prior to the hearing, absent a compelling and documented justification.

57.
On 9 February 2016, Claimants filed an application seeking authorization to add 29 additional documents to the record. This application was denied by the Tribunal on 11 February 2016.
58.
On 11 February 2016, Claimants filed a request seeking authorization to add a number of translations of documents already on the record. On 12 February 2016, Respondent consented to Claimants' request, and submitted its own request to add further translations to the record. In light of the Parties' agreement, both applications were granted by the Tribunal on 12 February 2016. The Parties filed the additional translations on 13 February 2016.

D. The Non-Disputing Party Applications

59.
On 14 November 2014, the European Commission (the "Commission") filed an Application for Leave to Intervene as a Non-Disputing Party dated 12 November 2014 ("the EC First Application").
60.
On 17 November 2014, the Tribunal invited the Parties to provide comments.
61.
On 3 December 2014, each Party filed its observations on the EC First Application. Respondent's observations were accompanied by exhibit R-001.
62.
On 17 December 2014, the Tribunal dismissed the EC First Application, on the ground that it was premature. The Tribunal observed that the Commission sought to invite the Tribunal to decline jurisdiction, at a time in which the Respondent had not yet indicated whether it intended to object to the Tribunal's jurisdiction. The Tribunal noted, however, that the Commission could renew the application "after the Respondent ha[d] indicated its position regarding the Tribunal's jurisdiction[;]" mentioning the dates by which that should occur (i.e., with the Respondent's Request for Bifurcation due on 22 December 2014, or if no bifurcation was sought, with the Counter-Memorial on the Merits and Memorial on Jurisdiction due on 26 February 2015). The Tribunal also reminded the Commission that, should the Commission decide to renew the application, the Tribunal would consider the requirements of Rule 37(2) of the Arbitration Rules, including that any submission did not disrupt the proceeding or unduly burden or unfairly prejudiced either Party.
63.
On 9 December 2015, the European Commission filed a second Application for Leave to Intervene as a Non-Disputing Party ("the EC Second Application"). That same day, the Tribunal invited the Parties to provide comments.
64.
On 16 December 2015, each Party filed its observations on the EC Second Application. Respondent's observations were accompanied by legal authority RL-082.
65.
On 21 December 2015, the Tribunal issued Procedural Order No. 7 ruling on the EC Second Application. The Tribunal authorized the European Commission to file a written non-disputing party submission no later than 31 December 2015, under certain parameters and subject to a condition. Observing that "[t]he present circumstances pose a significant risk of disruption and prejudice in light, inter alia, of the European Commission's filing of its Second Application little more than two months before the scheduled final hearing on jurisdiction and merits," the Tribunal ruled that "[a]s a condition for filing a non-disputing party submission and prior to any consideration of that submission by the Tribunal, the Commission shall provide a written undertaking, satisfactory to the Tribunal, to pay the additional costs of legal representation reasonably incurred by the parties in responding to that submission."
66.
On 31 December 2015, the European Commission submitted a Request to Alter Procedural Order No. 7, asking the Tribunal to remove the condition concerning the cost undertaking. This request also observed that "[g]iven that the deadline for the submission of the Commission's written observations falls on the same date as the deadline for the submission of the costs undertaking, the Commission has today delivered its written submission to the ICSID Secretariat, without directly sending copies to members of the Arbitral Tribunal, so as to avoid a fait accompli." The Parties received a copy of this request on 5 January 2016.
67.
Also on 31 December 2015, the European Commission submitted to the ICSID Secretariat (without copying the Members of the Tribunal), a separate document entitled "amicus curiae submission." The Tribunal instructed the ICSID Secretariat not to transmit this " amicus curiae submission" to the Members of the Tribunal or the Parties, pending further instructions from the Tribunal. The Parties and the Commission were informed of the Tribunal's instructions on 5 January 2016.
68.
On 8 January 2016, the Tribunal issued Procedural Order No. 8 declining the European Commission's Request to Alter Procedural Order No. 7, and inviting the Commission to submit the cost undertaking referred to in Procedural Order No. 7 by 15 January 2016. The Tribunal added that, should the European Commission fail to do so, the Tribunal would not receive the European Commission's " amicus curiae submission" dated 31 December 2015. The Tribunal reasoned, inter alia :

Given the posture of the case and the timing of the Commission's Second Application, the Tribunal sought in Procedural Order No. 7 to find a means to lessen the likelihood of disruption, undue burden, or unfair prejudice to either Party. Rescheduling the February hearing was not an acceptable option. The means identified by the Tribunal was the requirement that the Commission bear the reasonable financial burdens imposed upon the Parties as the result of the Commission's December submission. The Tribunal sees no change in the circumstances that led to this decision, indeed, they have become more compelling as the hearing comes nearer. Accordingly, the Tribunal does not agree to the Commission's Request.

[...]

[...] While it would be regrettable for the Tribunal not to receive the Commission's views, it would also be regrettable for those views to be received in circumstances involving significant risk of disruption, undue burden, or unfair prejudice to the Parties in this case.

69.
On 15 January 2016, the European Commission submitted a communication informing the Tribunal that it would not provide the undertaking on costs requested by the Tribunal.
70.
In consequence, pursuant to the Tribunal's order in Procedural Order No. 8, the European Commission's" amicus curiae submission" of 31 December 2015 was not received by the Tribunal or the Parties, and did not enter into the record of this proceeding.

E. The Oral Procedure

71.
On 13 January 2016, the President of the Tribunal held a pre-hearing organizational meeting with the Parties by telephone conference.
72.
On 20 January 2016, the Tribunal issued Procedural Order No. 10 embodying the Parties' agreements on procedural matters pertaining to the organization of the Hearing and the Tribunal's decisions on the disputed issues.
73.

The Hearing on Jurisdiction and the Merits was held in Paris, France from 15 to 20 February 2016 (the "Hearing").5 The following persons were present throughout the Hearing:

Tribunal :  
Professor John R. Crook President
Dr. Stanimir A. Alexandrov Arbitrator
Professor Campbell McLachlan QC Arbitrator
ICSID Secretariat  
Ms. Luisa Fernanda Torres Secretary of the Tribunal
For the Claimants
Ms. Judith GillQC Allen & Overy LLP
Mr. Jeffrey Sullivan Allen & Overy LLP
Ms. Marie Stoyanov Allen & Overy LLP
Mr. Ignacio Madalena Allen & Overy LLP
Ms. Naomi Briercliffe Allen & Overy LLP
Mr. Tomasz Hara Allen & Overy LLP
Ms. Lucy Judge Allen & Overy LLP
Ms. Stephanie Hawes Allen & Overy LLP
Ms. Kristin Bong Allen & Overy LLP
Mr. Jaime Hector* EISER Infrastructure Partners LLP
Mr. Hans Meissner* EISER Infrastructure Partners LLP
Mr. Lorenzo Cannizzo EISER Infrastructure Partners LLP
Mr. Mauricio Bolana* Antin Infrastructure Partners S.A.S
Mr. Carlos Lapuerta The Brattle Group
Mr. Jose Antonio Garcia The Brattle Group
Mr. Richard Caldwell The Brattle Group
Mr. Jack Stirzaker The Brattle Group
Dr. Thomas R. Mancini TRMancini Solar Consulting, LLC
For the Respondent :  
Mr. Diego Santacruz Abogatia del Estado, Ministerio de Justicia
Mr. Javier Torres Abogatia del Estado, Ministerio de Justicia
Ms. Monica Mr. Moraleda Abogatia del Estado, Ministerio de Justicia
Ms. Elena Onoro Abogatia del Estado, Ministerio de Justicia
Mr. Antolm Fernandez Abogatia del Estado, Ministerio de Justicia
Ms. Esther de Benito Navarro Abogatia del Estado, Ministerio de Justicia
Ms. Amaia Rivas Abogatia del Estado, Ministerio de Justicia
Mr. Carlos Montoya* Instituto para la Diversification y Ahorro de la Bnergia
Mr. Alfonso Olivas* Instituto para la Diversification y Ahorro de la Hnergia
Mr. Javier Espel BDO
Mr. David Mitchell BDO
Mr. Eduardo Perez BDO
Mr. Gervase MacGregor BDO
Mr. Gerdy Roose BDO
Mr. Manuel Alejandro Vargas BDO
Ms. Cristina Centellas BDO
Dr. Jorge Servert  
Court Reporters :  
Mr. Leandro Lezzi DR-ESTENO
Mr. Dionisio Rinaldi DR-ESTENO
Ms. Rachel Bradbury Opus 2
Ms. Rebecca Ridgway Opus 2
Interpreters :  
Mr. Jesus Getan Bornn  
Mr. Mark Viscovi  
Ms. Amalia Thaler de Klem  

 *not present prior to their testimony

74.

The following persons were examined during the Hearing:

On behalf of Claimants :

Fact Witnesses
Mr. Jaime Hector
Mr. Hans Meissner
Mr. Mauricio Bolana

Expert Witnesses
Dr. Thomas R. Mancini
Mr. Carlos Lapuerta
Mr. Richard Caldwell

On behalf of Respondent :

Fact Witnesses
Mr. Carlos Montoya
Mr. Alfonso Olivas

Expert Witnesses
Dr. Jorge Servert
Mr. Javier Espel
Mr. David Mitchell
Mr. Eduardo Perez

75.
On the first day of the Hearing, 15 February 2016, Claimants resubmitted an application to add new documents to the record, previously denied by the Tribunal on 11 February 2016, now narrowing the request to nine documents. Both Parties were heard extensively on this matter during the first and second days of the Hearing.6 Having required and received from Claimants an indication of the portions of the documents they intended to use and their specific purpose, on the third day of the Hearing (17 February 2016), the Tribunal authorized Claimants to submit the nine additional documents.7 Accordingly, on 17 February 2016, Claimants submitted exhibits BQR-98 to BQR-104, and BRR-115to BRR-116.
76.
During the Hearing, each Party also submitted various demonstrative exhibits, as follows:

• Claimants: C-299 to C-304, BQR-105, BRR-117 and TRM-53.

• Respondent: R-257 to R-261; and power point presentations by BDO and Dr. Servert (unnumbered).

77.
Following a request by the Tribunal during the Hearing, on 2 March 2016, Claimants submitted supplementary translations of exhibits BRR-36, BRR-37, BQR-88 and BQR-89.
78.
On 1 April 2016, the Parties submitted agreed corrections to the Hearing transcripts.

F. The Post-Hearing Procedure

79.
During the last day of the Hearing, it was agreed that there would be no post-Hearing briefs.8
80.
On 5 April 2016, the Parties filed their statements of costs.
81.
On 26 May 2016, Respondent submitted an application seeking authorization from the Tribunal to add seven additional documents to the record. On 3 June 2016, Claimants objected to the request. The Tribunal dismissed Respondent's application on 9 June 2016.
82.
On 29 June 2016, Claimants submitted an application seeking authorization to add one additional legal authority to the record (RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.a r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/30, Decision on Jurisdiction, 6 June 2016 (the "RREEF Decision")). On 8 July 2016, Respondent objected to the request.
83.
On 26 August 2016, the Tribunal ruled on Claimants' application of 29 June 2016. Noting that a redacted version of the RREEF Decision had become publicly available, the Tribunal observed that it considered that such public version could be referred to by the Tribunal. The Tribunal added that "[s]hould either Party wish to provide the Tribunal with any views or comments on the Decision, the Parties may submit a written request" to the Tribunal to do so.
84.
On 30 August 2016, Respondent filed comments on the RREEF Decision. On that same day, Claimants argued that Respondent's submission was not authorized, and requested an opportunity to respond to it. On 31 August 2016, Respondent opposed to Claimants' request.
85.
On 7 September 2016, the Tribunal authorized Claimants to "submit any views or comments on the substance of the RREEF Decision […]." The Tribunal did so, noting that on 26 August 2016 it had directed the Parties to first seek authorization from the Tribunal if they wished to submit comments on the RREEF Decision, which Respondent had failed to do.
88.
On 18 November 2016, Respondent filed an application seeking authorization to add a nonpublic additional legal authority to the record (Isolux Netherlands, BV v. Kingdom of Spain, SCC Case V2013/153, Award and Dissenting Opinion, 17 July 2016 (the " Isolux Award")). Claimants filed observations on 22 November 2016, Respondent replied on 23 November 2016, and Claimants replied again on 25 November 2016. Claimants argued, inter alia, that Respondent application should be dismissed unless and until Respondent provided evidence of consent by the claimant in the Isolux arbitration.
89.
On 8 December 2016, the Tribunal ruled that it would not allow the submission of the Isolux Award to the record unless Respondent showed that the submission would not breach confidentiality instructions of the Isolux tribunal.
90.
On 15 December 2016, Respondent sent an ex-parte communication with supporting documents to the Tribunal, in response to the Tribunal's ruling of 8 December 2016. Respondent requested that its communication not be transmitted to Claimants on grounds of confidentiality of the information referred therein. On 22 December 2016, the Tribunal wrote to the Parties regarding Respondent's 15 December 2016 ex-parte communication, observing that it was inappropriate and would not be considered by the Tribunal unless it was appropriately filed with a copy to Claimants.
91.
On 23 December 2016, Respondent filed a submission (this time, copying Claimants) providing observations in response to the Tribunal's ruling of 8 December 2016. On 6 January 2017, Claimants replied.
92.
On 23 February 2017, the Tribunal dismissed Respondent's application to add the Isolux Award to the record, observing that the condition established in the Tribunal's ruling of 8 December 2016 had not been met by Respondent.
93.
On 13 April2017, the Tribunal declared the proceeding closed.

III. FACTUAL BACKGROUND

A. Overview

95.
This case grows out of a failed investment in the Concentrated Solar Power ("CSP") sector in Spain. CSP plants can be built on different design principles. Those at issue here involved large stationary arrays of horizontal reflective trough-shaped collectors. These arrays focus the sun's rays onto horizontal tubes running through them carrying special heat-absorbent oil. The oil is heated to high temperatures as it passes through the collectors. It is then pumped in a continuous cycle to a heat exchanger. There, the heat energy stored in the oil is used to generate steam that turns steam turbines that turn generators. The process is broadly comparable to that utilized in a conventional coal or gas fired electric generation station, except that the heat used to create steam comes from concentrated solar power, not burning of gas or coal.
96.
CSP offers significant environmental benefits. It employs a renewable resource, solar power, rather than consumable resources like coal or gas. And, conventional solar plants introduce little or no pollution into the atmosphere. However, CSP plants are large facilities that are expensive to build, requiring large initial capital investments.
97.
Because of their high capital costs, CSP had not been economically competitive with traditional forms of power generation utilizing fossil fuels. Accordingly, Spain, like many other countries, determined that to promote the development of CSP, a regime of State subsidies was required. The evolution of Spain's policies in this regard is at the heart of the case.
98.
Investment in CSP plants is "front-end loaded," with the largest outlays incurred in planning, designing and then constructing the plants prior to their entry into service. The large initial investments in such plants must eventually be recouped from revenues from electrical power sold over a solar plant's service life, plus any subsidies received. The evidence showed that because of the large initial capital outlays, and the substantial period required to recover investment after CSP plants enter production, plants are often financed utilizing a high proportion of non-recourse loans from third-party lenders. Such financing is available because of the steady long-term cash flows expected from the production and sale of electricity.10

B. The Energy Charter Treaty

99.

The Energy Charter Treaty ("ECT") is a multilateral treaty adopted in 1994 that has over fifty parties, including the European Union, Luxembourg, Spain and the United Kingdom. As described in the Energy Charter Secretariat's Guide:

According to Article 2 of the ECT, the purpose of the Treaty is to establish a legal framework in order to promote long-term cooperation in the energy field, based on complementarities and mutual benefits, in accordance with the objectives and principles of the Energy Charter. It is a milestone in international energy cooperation. By creating a stable, comprehensive and nondiscriminatory legal foundation for cross-border energy relations, the ECT reduces political risks associated with economic activities in transition economies. It creates an economic alliance between countries with different cultural, economic and legal backgrounds, but all united in their commitment to achieve the following common goals:

- To provide open energy markets, and to secure and diversify energy supply;

- To stimulate cross-border investment and trade in the energy sector;

- To assist countries in economic transition in the development of their energy strategies and of an appropriate institutional and legal framework for energy, and in the improvement and modernisation of their energy industries.11

100.

The ECT's emphasis on developing secure long-term energy cooperation is coupled with provisions addressing the environmental aspects of energy development. Article 19(1) of the ECT thus requires:

In pursuit of sustainable development and taking into account its obligations under those international agreements concerning the environment to which it is party, each Contracting Party shall strive to minimize in an economically efficient manner harmful Environmental Impacts occurring either within or outside its Area from all operations within the Energy Cycle in its Area, taking proper account of safety. In doing so each Contracting Party shall act in a Cost-Effective manner. In its policies and actions each Contracting Party shall strive to take precautionary measures to prevent or minimize environmental degradation. The Contracting Parties agree that the polluter in the Areas of Contracting Parties, should, in principle, bear the cost of pollution, including transboundary pollution, with due regard to the public interest and without distorting Investment in the Energy Cycle or international trade [...].12

C. Spain's Policies Favoring Renewable Energy and Royal Decree 661/2007

101.
Building from multilateral agreements including the 1992 Framework Convention on Climate Change,13 the Energy Charter Treaty, and the 1997 Kyoto Protocol,14 in 2001, the European Union adopted a policy of reducing greenhouse gasses through development of renewable energy.15 The European Union's Directive 2001/77EC set out binding targets for developing renewable energy by member countries within the Union.16 This directive also recognized that subsidies would be required to attain these targets. Mr. Espel, an expert from Respondent's economic consultants BDO, highlighted the role of renewables in Spain's response to the European Union's ("EU") requirements in his testimony: "[t]here is no doubt that energy renewables are playing a relevant role in the Spanish electrical sector with a view to hit the 20% target for 2020 set forth in the European directives[...]."17
103.
Article 15 of the Electricity Law provides:

1. The activities involved in the supply of electric power shall be remunerated economically in the manner provided by this Act, as charged to the rates and prices paid.

2. To determine the rates and prices that consumers must pay, the remuneration of activities shall be stipulated in regulations with objective, transparent and non-discriminatory criteria that act as an incentive to improve the effectiveness of management, the economic and technical efficiency of said activities and the quality of the electricity supply.20

104.
The Electricity Law distinguishes between an "Ordinary Regime" of energy production and a "Special Regime" favouring generation from renewable sources of energy, inter alia, by authorizing payment of tariffs above market prices. It includes a chapter in title IV, "dedicated to the special regime for the production of electric power consisting of a set of specific rules which apply to electricity generated through renewable energy sources […]."21 Under Article 27:

1. Electricity generation activities shall be regarded as generation under the special regime in the following cases whenever they are carried out from installations whose installed capacity is no greater than 50 MW:

[...]

(b) Whenever non-consumable renewable energies, biomass or biofuels of any type are used as primary energy, provided their holder does not engage in generation activities under the ordinary regime.

[…]

2. Generation under the special system shall be governed by specific provisions and, in cases not provided for in these special provisions, by the general regulations on electricity generation where applicable. […]22

105.
In August 2005, the Spanish government approved its 2005-2010 Renewable Energy Plan, setting out the Government's policy for attaining the renewable energy targets set by the European Union.23 The plan observed that "[r]enewable energy contributes decisively to guaranteeing the long-term supply of energy, through independent and inexhaustible energy sources."24
107.
In 1998,26 200227 and 2004, Spain adopted a series of decrees to regulate and facilitate production from renewable sources and to provide incentives to producers. The last of these, RD 436/2004,28 regulated "the methodology for the updating and systematization of the legal and economic regime of the activity of electric power production under the special regime."29
109.
In February 2007, Respondent's National Energy Commission ("CNE") issued a report on a proposed successor decree that became RD 661/2007.32 The CNE report identified the elements required to promote production under the Special Regime and highlighted the importance of the proposed decree's assurances of stability to investors and their financiers:

(b) Minimise regulatory uncertainty. The National Energy Commission understands that transparency and predictability in the future of economic incentives reduce regulatory uncertainty, which in turn, incentivises investment in new capacity and minimises the cost of project financing, thereby reducing the final cost for consumers. Regulation must offer sufficient guarantee, in order to ensure that economic incentives are stable and predictable throughout the entire life of the installation, setting, where appropriate, both transparent mechanisms to be updated annually, linked to the evolution of strong indices (such as the average or baseline fee, the CPI, ten-year bonds, etc.) and periodic revisions, which would take place every four years, for example, and would only affect new installations, in terms of investment costs, whereby the reduction of operating costs might also affect existing installations.33

110.
The Regulatory Dossier prepared for the proposed decree also indicated that future changes in tariffs, etc., would not be applied to existing facilities:

The regulated tariffs, premiums, supplements and limits derived from any of these revisions will be applicable only to those facilities that have been registered definitively[...]after 1 January of the year following the year in which the revision is made.34

111.
In May 2007, Respondent adopted RD 661/2007.35 A 25 May 2007 press release by Respondent's Ministry of Industry, Energy and Tourism sets out the purposes and core elements of the new Royal Decree. The release, captioned "[t]he Government prioritises profitability and stability in new Royal Decree-Law on renewables and combined heat and power - Part of the government's commitment for clean domestic energy sources," summarizes aspects of a complex regime and expresses Respondent's intentions and expectations regarding it. A substantial excerpt follows:

The aim of this Royal Decree is to increase remuneration for facilities using newer technologies, such as biomass and solar-thermal, in order to comply with targets outlined under the Renewable Energies Plan 2005-2010 and those agreed upon between Spain and the European Union. As these renewable energy technologies are developed, renewable energy shall cover 12% of Spain's energy needs by 2010 [...] With regard to technologies in need of a boost in view of their limited development, such as biogas or solar-thermoelectric, profitability shall rise to 8% for facilities that choose to supply distributors and between 7% and 11% return for those participating in the wholesale market. Tariffs shall be reviewed every 4 years, taking into account compliance with the established targets. Such a revision shall allow for adjustments tobe made to the tariff in virtue of new costs and the level of compliance with the targets. Future tariff revisions shall not be applied to existing facilities. This guarantees legal certainty for the electricity producer and stability for the sector, thereby favouring development. The new legislation shall not be applied retroactively.

[...]

The new Royal Decree [...]is aimed at establishing a stable subsidy system that guarantees attractive profitability for electricity production under the special scheme, and shall regulate over coming years the legal and economic scheme under which electricity producing facilities using combined heat and power technology, renewable energy resources and waste shall operate.

The new text, substituting Royal Decree 436/2004, is in harmony with Spain's energy policy commitment to encourage the use of clean and efficient domestic energy resources. The Government's investment in favour of these energy technologies is behind the effort enshrined in the new legislation to create stability and give investors time to plan mid to long-term, and to guarantee sufficient and reasonable profitability, together with stability, thereby attracting more investors to this sector.

Similarly, the Royal Decree shall contribute towards reaching targets under the Renewable Energies Plan 2005-2010 and those agreed upon between Spain and the European Union. As these renewable energy technologies are developed, renewable energy shall cover 12% of Spain's energy needs by 2010, thereby avoiding [27] million tons of CO2 emissions during that year. Similarly, compliance with combined heat and power targets set for 2010 means that up to 6.3 million tons of CO2 emissions shall be averted every year.

Overview of the new Royal Decree

The new legislation provides the right to a special remuneration sum in exchange for energy produced by facilities operating under the special scheme, i.e. those with an installed power capacity of less than 50 MW [...]

This legislative reform shall not be applied retroactively. [...]

[...]

Future tariff revisions shall not be applied to existing facilities. This guarantees legal certainty for the electricity producer and stability for the sector, favouring development.36

112.
The RD 661/2007 regime has multiple elements. Inter alia, it:

• guaranteed "priority of dispatch" assuring that all production could be introduced into the grid subject to the established tariff;37

• allowed producers to annually elect between two different tariffs, a fixed tariff per unit of production (the "Fixed Tariff Option") and a premium for each unit on top of the market price (the "Premium Option");38

• provided for tariffs solely based on production39 for the entire operational life of the facility,40and without setting limits on total lifetime payments;

• established caps and floors for payments under the Premium Option;41

• allowed use of gas for up to 15 % of total generation.42

113.
With respect to the press release's statement that "[f]uture tariff revisions shall not be applied to existingfacilities," Article 44.3 of RD 661/2007 provides:

During the year 2010 [...] there shall be a review of the tariffs, premiums, supplements and lower and upper limits defined in this Royal Decree with regard to the costs associated with each of these technologies, the degree of participation of the special regime in covering the demand and its impact upon the technical and economic management of the system, and a reasonable rate of profitability shall always be guaranteed with reference to the cost of money in the capital markets. Subsequently a further review shall be performed every four years, maintaining the same criteria as previously.

The revisions to the regulated tariff and the upper and lower limits indicated in this paragraph 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.43

D. The Claimants and Their Decision to Invest

114.
The Claimants herein are collectively referred to here as "Eiser." As described in Claimants' Request for Arbitration:

13. The First Claimant, EIL [Eiser Infrastructure Limited], is the general partner of five limited partnerships (EISER Infrastructure Capital Equity Partners 1-A, EISER Infrastructure Capital Equity Partners 1-B, EISER Infrastructure Capital Equity Partners 1-C, EISER Infrastructure Capital Equity Partners 1-D and EISER Infrastructure Co-Investment Partners LLP). EIL directly and wholly owns the Second Claimant.

14. The Second Claimant, ESL [Energia Solar Luxembourg S.a r.l.], is a private limited company (societe a responsabilite limitee) incorporated under the laws of Luxembourg, having its registered address at [...] Luxembourg [...]. ESL owns shareholding and debt interests in two Spanish companies that own and operate three CSP plants in Spain with a total installed capacity of 149.7 MW.44

115.
The activities of Claimants and their associated companies are described on Eiser Infrastructure's website:

EISER is a London headquartered multinational asset manager specialising in deploying and managing equity and debt instruments in the real assets class. [...]

Founded in 2005 as part of a standalone initiative developed by ABN AMRO Bank, a leader in project financing, EISER today is an independent, wholly Partner-owned asset manager.

EISER has a particular focus in the following infrastructure sectors: energy, principally distribution and renewables power-generation; environmental services, mainly in the water and waste management sector; commercial transportation assets, such as city airports; and social infrastructure, particularly new-build development projects.

EISER currently manages real assets with a total enterprise value of over EUR 4 billion, for its fund and managed co-investment products. Throughout the challenging markets that have defined the post-2007 financial era, EISER has raised over EUR 2 billion in financing and overseen over EUR 1.5 billion of project capital expenditure.45

116.
The limited partners involved in Eiser's business model are retirement funds and other investors seeking long-term stable returns. Accordingly, Eiser seeks to invest in assets in public sector or regulated sectors characterized by stability of long-term returns, including multiple investments in regulated energy producers in numerous countries. Eiser's business model involves finding and developing such low risk investments involving public infrastructure with stable cash flows, often in regulated areas.46
117.
Following adoption of RD 661/2007, Eiser was introduced by a third party to the possibility of investing in the ASTE solar energy project in Spain, then at the initial stages of development. The evidence shows that Eiser quickly began a preliminary investigation, and concluded that investment in CSP in Spain offered attractive business potential consistent with their business model and their past experience in developing large capital projects in energy and other regulated sectors.47 The initial assessment of the economic potential of solar investments in Spain prepared by Claimants' deal team emphasized the favorable characteristics of RD 661/2007, contrasting it with the previous regulatory regime which the team described as "not bankable." By contrast, RD 661/2007 was viewed as consolidating the regulatory regime, "making it more stable and predictable."48 Claimants submit that this initial paper shows that they were well aware of the RD 661/2007 regime, and that it was central to their assessment of a possible investment in CSP in Spain.49
122.
In the summer of 2008, during theglobal financial crisis, ASTE's project lenders required a Tariff Window Guarantee against the risk of delayed completion of the ASTE projects, which would disqualify them from the RD 661/2007 Special Regime. Eiser could not provide the guarantee because its investment criteria barred commitment of substantial funds against a contingent liability.63 This led to discussions with Spanish Engineering, Procurement and Construction ("EPC") contractors potentially prepared to take an equity stake in the ASTE project and provide the required guarantee.64 These culminated in an agreement with Elecnor, a large and established Spanish engineering and construction firm that was then developing ASTEXOL, a large solar plant in Badojoz, Spain owned by a company called Dioxipe.65 The parties agreed that Elecnor would participate in the ASTE project in return for Eiser taking a stake in Dioxipe.66 On 6 May 2009, Eiser and Elecnor entered into a Memorandum of Understanding providing for Eiser to acquire a minority stake inboth the ASTE and ASTEXOL projects. Elecnor provided the required guarantee to cover the risk of delayed completion.67
123.
As of15 August 2008, Eiser's exposure in its solar investments in Spain amounted to €45 million.68 Over the ensuing months, the projects in which Claimants invested crossed various regulatory thresholds. Article 16 of RD 661/2007 required Claimants to acquire state licenses before concluding contracts to access the electrical grid. On 30 October 2008, the ASTE projects received the required state licenses,69 and on 31 March 2009, ASTE concluded a Technical Agreement with grid operator Red Electrica to access the electrical grid.
124.
In the meantime, Respondent became increasingly concerned by a large and growing cumulative "tariff deficit", the financial gap between the costs of subsidies paid to renewable energy producers and revenues derived from energy sales to consumers. In an effort to address this problem, on 30 April 2009 Respondent promulgated Royal Decree Law 6/2009 ("RDL 6/2009"),70 which introduced a pre-registration process ("RAIPRE") intended to limit the number of projects potentially eligible for the RD 661/2007 regime. Projects entered into the registry had three years to be completed and definitively registered. A document prepared by Eiser at this time viewed this evolution of the RD 661/2007 regime as "good news" because Claimants were confident of their ability to meet the three-year registration deadline.71
125.

The process of meeting regulatory and administrative requirements continued during 2009. A 26 November 2009 document prepared for Eiser's Investment Committee indicated that ASTE 1A and 1B had been successfully pre-registered for the RD 661/2007 regime under RDL 6/2009.72 This was perhaps a few days premature; the actual registrations of ASTE 1A and 1B and ASTEXOL were recorded in separate resolutions dated 11 December 2009. Allowing for slight discrepancies perhaps attributable to differences in interpretation, the three registration documents indicate in similar terms that all three plants had been granted the RD 661/2007regime.

• The registration document for ASTEXOL, captioned "Ruling of the Directorate General of Energy and Mining Policy in which [the ASTEXOL plant owned by DIOXIPE], who have been granted the economic regime regulated in Royal Decree 661/2007, of 25 May, is registered in the payment pre-allocation registry." The document states: "[...]the economic regime of the installations which are registered in the payment pre-allocation Registry [...] shall be as established in Royal Decree 661/2007[...]."73

• The registration document for ASTE-1A speaks of ASTE 1-A "to which the economic regimen regulated in Royal Decree 661/2007, dated 25 May, is granted." The text of the Resolution repeats the language of ASTEXOL registration regarding application of the RD 661/2007regime.74

• The registration document for ASTE-1B again speaks of ASTE 1-B "to which the economic regime regulated in Royal Decree 661/2007, dated 25 May, is granted."75 The text again repeats the language of the ASTEXOL registration regarding application of the RD 661/2007 regime.

126.
The Parties disagreed whether these documents constituted binding commitments by Respondent. In any case, they establish that as of November 2009, more than two years after Claimants acquired their interests in the ASTE projects, the responsible Spanish authorities viewed all three plants as subject to the RD 661/2007 regime.
127.
During this same period in 2009, the evidence indicates that Respondent's authorities were considering the possibility of other measures to limit availability of the RD 661/2007 regime to additional facilities. A 25 November 2009 update prepared for Eiser's Investment Committee reported on a successful lobbying effort by renewables generators to defeat a proposal to eliminate RD 661/2007 coverage of new plants coming on line during the 12-month period after 85% of the target capacity had been met.76
128.
The engineering, procurement and construction contracts with Elecnor, were signed on 27 April 2010 for ASTE and 3 March 2010 for ASTEXOL.77
129.
In April 2010, almost three years after Eiser was introduced to the possibility of a CSP investment in Spain, construction work began on the ASTE plants.78The next two months were marked by discussions between the government and renewables producers regarding possible further revisions to the RD 661/2007 regime. A June 2010 Eiser Asset Review document refers to Spain's budget and tariff deficits, and notes proposals to alter the regulatory framework, primarily aimed at the solar voltaic sector, but also impacting other technologies. The Asset Review document assessed that the worst possible outcome would still allow financing of the projects, but would "affect greatly" the financing base case used by the banks. As of that time, Claimants had invested €124 million in the ASTE projects.79
130.
The threatened changes did not materialize in a manner that significantly affected Claimants. On 2 July 2010, the Ministry of Industry, Tourism and Trade issued a press release setting forth revisions to the subsidy regime that had been agreed in negotiations with solar thermal and wind power producers' trade associations.80 The press release described limited reductions of the subsidy regime, but guaranteed continued availability of rates under the RD 661/2007 regime for existing registered facilities, describing the agreement between the Ministry and wind and solar thermal producers as "guaranteeing the current subsidies and rates of RD 661/2007 for the facilities in operation (and for those included in the pre-registration) starting in 2013." Claimants saw these developments as positive.81
131.
Substantial work on the ASTE projects got underway in July 2010 following the Ministry Press release.82 In November 2010, a draft decree implementing the elements of the July press release was published. This confirmed that any future changes to the RD 661/2007 regime would not affect registered installations.83 Aside from loss of the premium rate for one year, these changes had little impact on Eiser.84 On 8 December 2010, RDL 1614/201085 was promulgated, implementing the July 2010 agreement between operators and the government. Article 4 confirmed that the tariff reviews envisaged in RD 661/2007 would not apply to registered CSP plants. With clarification of the regulatory situation, banks were prepared to proceed with the financing for ASTE.86
132.
As of 16 December 2010, Claimants' half-year review reflected that their total "equity investment" in the projects would total €124.3 million.87 At 2010 year end, Eiser valued its investment in ASTE and ASTEXOL at €133.4 million.88
133.
On 30 November 2010, letters were written on behalf of each of the three plants, waiving their right to discharge into the grid prior to 1August 2012, thus implementing one of the changes agreed between the Ministry and renewables producers in July. Each letter also requested that the plant "be notified about the remunerative conditions of the installation during its operational life."89
134.
In three separate Resolutions dated 2 February 2011 and 1 March 2011,90 the Directorate accepted the plants' waiver of their rights to supply power prior to 1 August 2012. The documents continued to "inform that, currently," the remuneration of the three plants is as specified by the tariffs, premiums, limits and complements set out in RD 661/2007.91 As translated by Respondent, these informed the recipient that:

[C]urrently, by dint of the stipulations of section 1 [...] the remuneration applicable to the installation is made up of the tariffs, premiums, upper and lower limits and complements set out in Royal Decree 661 [...].92

135.
The Parties disputed the legal significance of the Resolutions' reference to the plants' remuneration under the RD 661/2007 regime. Claimants contend that it constituted a binding commitment by Respondent.93 Respondent insisted that it had no binding legal effect and was merely a statement of factual information provided in response to an inquiry. Whatever their legal status, the three statements show that as of February 2011, more than three-and-a-half years after Claimants began to consider a possible investment in Spain, and seven months after construction of the plants had commenced, the competent Spanish authorities continued to view the RD 661/2007regime as applicable to their investment.
136.
On 15 April 2011, the investors, the operating companies, and the banks closed on the financing required to complete the projects. Claimants' shareholder loans and interest in the amount of €124.3 million were repaid and reinvested in ASTE and ASTEXOL.94 As ultimately configured, the debt equity ratios for the plants were 70% debt -30% equity for ASTEXOL, and 63.5% debt - 36.5% equity for the two ASTE plants.95 (Substantial shareholder loans were treated as equity.96) Eiser's Quarterly Review for April 2011 then shows a total equity investment in the projects of €124.3 million.97 As of 31 December 2011, utilizing a DCF valuation, Eiser valued its investment in ASTE and ASTEXOL at €148.3 million.98
137.
In November 2011, Spain held elections, resulting in a significant defeat for the existing government and formation of a new government in December 2011.99 In his inaugural address, the President pointed to the accumulated tariff deficit, then amounting to more than €22 billion, and called for structural reforms in the energy system. "We must therefore introduce policies based on putting a brake on and reducing the average costs of the system [...]."100
138.
The new government quickly took measures aimed at reducing the tariff deficit, beginning in January 2012 with the adoption of RDL 1/2012, suspending new registrations for the Special Regime.101 The government also gave the National Energy Commission ("CNE") thirty days to produce a report with recommendations to curb the tariff deficit.102 The Commission initiated a substantial public consultation, and in March 2012 produced a report with several recommendations relevant to CSP plants, involving modifications of the existing Special Regime, not its complete replacement by a new type of regulation.103
139.
In 2012, as the plants neared completion and entry into service, they crossed additional licensing and regulatory thresholds, during which Spanish authorities again affirmed their participation in the Special Regime under RD 661/2007. On 14 March, the commissioning of the facilities connecting ASTE 1-A and 1-B to the grid was authorized.104 On 16May, a Resolution of the Castilla-La Mancha General Directorate of Industry, Energy and Mines recorded registration of ASTE 1-B in the b.1.2 group of the Special Regime, citing as background information, inter alia, RD 661/2007.105 On 22 and 24 May respectively, the final commissioning of ASTE 1-B106 and ASTE 1A107 were authorized.
140.
On 25 May 2012, ASTEXOL-2 received confirmation of preliminary registration by the Regional Department of Agriculture, Rural Development, the Environment and Energy. The registration resolution states, inter alia :

The applicable economic regime for the billing of the power and energy delivered to the grid shall be established by Royal Decree 661/2007, of25 May, regulating the production of electrical energy under the special regime.108

141.
On 25 May 2012, a regional authority issued a ruling marking commissioning of ASTEXOL-2 "under a special regime (thermoelectric solar energy)" under RD 661/2007.109 On 8 June 2012, the Ministry of Industry, Energy and Tourism issued certifications that all three plants were registered in the Administrative Register ("RAIPRE") for plants in the Special Regime, identifying all three as having been classified in the Special Regime in Group b.1.2 under RD 661/2007.110
142.
On 24 October 2012, ASTE 1A and ASTE 1B were finally registered by the Castilla-La Mancha Regional Directorate of Industry, Energy and Mines. The registration documents state:

The economical regime resulting from this final registry corresponds to group b.1.2 of article 24.1 a) of Royal Decree 661/2007, of the 25th of May, to sell electricity according to a regulated tariff and shall be applicable to such installation with effect from the 1st of June 2012, without prejudice of what is established in article 4 of Royal Decree-Law 6/2009 of the 30th of April.111

143.
19 November 2012 marked the Definitive Registration of ASTEXOL 2. The Resolution states:

The applicable economic regime for the billing of the power and energy delivered to the grid shall be established by Royal Decree 661/2007, of 25 May, regulating the production of electrical energy under the special regime.112

E. The Disputed Measures

145.
Royal Decree Law 2/2013 of 1 February 2013 ("RDL 2/2013") then eliminated the Premium Option altogether, leaving CSP producers the option of either the market price or the fixed rate tariff. RDL 2/2013 also cancelled the mechanism for updating the feed-in tariffs in accordance with the Consumer Price Index, substituting a different index lower than the CPI.115
146.
A much more drastic change came on 12 July 2013, with the enactment of Royal Decree Law 9/2013 ("RDL 9/2013").116 This legislation amended Article 34 of the 1997 Electricity Law (which created the Special Regime for renewables producers) and repealed RD 661/2007. It eliminated the entire regime of fixed tariffs and premiums, and substituted a system providing for "specific remuneration" based on "standard" (but not actual) costs per unit of installed power, plus standard amounts for operating costs. However, many key details of the new replacement regime were left uncertain.117 Then, in December 2013, Respondent adopted Law 24/2013, which superseded the 1997 Electricity Law and completely eliminated the distinction between the Ordinary and Special Regimes.118
149.
Thus, the new system is calculated to provide a lower pre-tax rate of return that Respondent judges to be reasonable. This is calculated on the basis of hypothetical assets and costs, without regard to specific existing plants' actual costs or efficiencies.123 Instead, existing plants' remuneration is based on their generating capacity and regulators' estimates of the hypothetical capital and operating costs, per unit of generating capacity, of a hypothetical standard installation of the type concerned.124 The regulatory regime also prescribes a twenty-five year regulatory life for CSP plants. Once set, neither this regulatory life nor the prescribed "initial value of the investment" can be changed.
150.
The new measures were intended to, and did, accomplish the objective of significantly reducing the level of subsidies paid to CSP and other renewables generators. At the Hearing, Mr. Espel of BDO informed the Tribunal that Spain's annual tariff deficit had been eliminated, and that a small surplus was projected for 2015.125
151.
However, Claimants' plants did not conform to the retroactively applied standard for hypothetical "efficient" plants. The historical capital costs of Claimants' plants were about 40% higher than the level deemed efficient under the new regime.126 Claimants' financial experts, Brattle, attribute the higher capital costs to several factors, including that two of the plants owned (rather than leased) the underlying land, and additional costs incurred in anticipation of adding future storage.127 The plants' operating and maintenance costs also exceeded those deemed efficient.128 The plants' revenues accordingly dropped sharply from those projected by the investors and their lenders under the prior regime. ASTE 1-A's revenues fell by 66% compared to those projected under the prior regime.129
153.
This sharp fall of revenues from the levels anticipated under the RD 661/2007 regime forced the operating companies into debt rescheduling negotiations with their external lenders. Following these negotiations, for the next several years, all revenues exceeding ASTE's operating costs go to the external lenders, leaving nothing to repay the investors' loans (which are being capitalized) or as return of capital.132
154.
In response to the Tribunal's question at the Hearing, Mr. Meissner, a founding partner of Eiser, drew a distinction between the changes in Spain's regulatory regime and other regulatory situations where regulators might "tinker a little bit with the returns." In contrast, he deposed that "here we had a complete value destruction. We lost all value in this particular project."133 In response to a further question, Mr. Meissner testified that, at the end of 2014, "the investment was valued at 4 million [Euros], compared to an investment which we made, invested in the plants of about 125 million; so a very significant loss."134

IV. SUMMARY OF THE PARTIES' CLAIMS AND REQUESTS FOR RELIEF

155.

Claimants' request for relief is formulated in the Memorial as follows:

537. The Claimants request the following relief:

(a) a declaration that the Respondent has violated Articles 10 and 13 of the ECT;

(b) an order that the Respondent make full reparation to the Claimants for the injury to its investments arising out of Spain's violation of the ECT and international law, such full reparation being in the form of:

(i) full restitution to the Claimants by re-establishing the situation which existed prior to Spain's breaches of the ECT, together with compensation for all losses suffered prior to the reinstatement of the prior regime; or

(ii) pay the Claimants compensation for all losses suffered as a result of Spain's breaches of the ECT; and

(iii) in any event:

A. pay the Claimants pre-award interest at a rate of 2.07% compounded monthly; and

B. pay post-award interest, compounded monthly at a rate to be determined by the Tribunal on the amounts awarded until full payment thereof; and

(c) pay the Claimants the costs of this arbitration on a full indemnity basis, including all expenses that the Claimants have incurred or will incur in respect of the fees and expenses of the arbitrators, ICSID, legal counsel and experts; and

(d) any other relief the Tribunal may deem appropriate in the circumstances.

538. The Claimants reserve their rights to amend or supplement this Memorial and to request such additional, alternative or different relief as may be appropriate.135

157.

As to jurisdiction, Claimants request in the Rejoinder:

Insofar as the jurisdictional objections are concerned (and in addition to the relief set out at paragraph 537 of the Claimants' Memorial and paragraph 997 of the Claimants' Reply on the Merits and Counter-Memorial on Jurisdiction), the Claimants request the Tribunal to:

(a) dismiss all of the Respondent's objections; and

(b) order that the Respondent bear the cost of the jurisdictional objections.137

158.

Respondent, in turn, asks:

1261. In view of the arguments set forth in this document, the Kingdom of Spain respectfully requests that the Arbitral Tribunal:

a) Declare it has no jurisdiction over the Claimants' claims, or inadmissibility, if applicable, in accordance with that set forth in section III of this brief, referring to Jurisdictional Objections;

b) In the alternative, in the event that the Arbitral Tribunal decides that it has jurisdiction over this dispute, to dismiss all the Claimant's pretensions regarding to merits as the Kingdom of Spain has not breached the ECT in any way, in accordance with the above-mentioned part (A) and (B) of Section IV of this brief, referring to the merits of the case;

c) In the alternative, to dismiss all reparation pretensions from the Claimants as they do not have right to compensation, in accordance with the foregoing in part (C) of Section IV of the present brief; and

d) Order the Claimants to pay all the costs and expenses arising from the present Arbitration, including the administrative costs incurred by ICSID, the fees of the arbitrators and the fees for legal representation of the Kingdom of Spain, their experts and advisers, as well as any other costs or expenses incurred, all of this including a reasonable rate of interest from the date on which these costs were incurred up to the date of payment.

1262. The Kingdom of Spain reserves the right to supplement, modify or complement these allegations and to present any additional arguments required in accordance with the ICSID Convention, the ICSID arbitration rules, the Procedural Orders and the guidelines of the Arbitral Tribunal in order to respond to all the allegations made by the Claimants in relation to the present matter.

1263. In particular, in the exercise of their right of defence, the Kingdom of Spain reserves the right to incorporate into these arbitral proceedings the necessary documents to discredit the manifestations of the witness for the Claimants, Mr Bolana. This presentation shall be requested to the Arbitral Tribunal as soon as the authorisation to lift the the confidentiality agreed in the Procedural Order by the Court in the case Antin is received.138

159.
The Parties' respective positions in connection with the matters at issue in the arbitration are summarized in the sections that follow. The Tribunal emphasizesthat it has considered the full extent of the Parties' arguments in their written and oral submissions. The fact that a given argument might not be referred to expressly in the brief summary of the Parties' positions included inthis Award should not be consideredas an indication that the Tribunal has not considered the argument.

V. JURISDICTION

A. First Objection: The Intra-EU Objection

160.
Spain maintains that the Tribunal lacks jurisdiction ratione personae because the ECT does not apply to disputes involving investments made within the EU by investors from other EU countries.

(1) The Parties' Positions

a. Respondent's Position

161.

Respondent summarizes the essence of its Intra-EU Objection in its Rejoinder:

[T]he Kingdom of Spain considers that there is no protected investor pursuant to the ECT. Both, [sic] the United Kingdom [...] and the Kingdom of Spain were Member States of the European Economic Community, currently the European Union (henceforth 'EU'), when subscribing the ECT. The EU is a Contracting Party of the ECT and hence the Claimants do not derive from 'another Contracting Party' as Article 26 of the ECT requires in order to seek arbitration. The arbitration dispute settlement mechanism foreseen in Article 26 of the ECT is not applicable to an intra-EU dispute such as the present one. In such disputes, European Law and its dispute resolution mechanisms take precedence over the ECT, thus determining the lack of jurisdiction of the Arbitral Tribunal to hear this dispute.139

162.
Article 26 of the ECT, providing for arbitration of disputes, covers disputes between "a Contracting Party" and "an Investor of another Contracting Party."140 As both Spain and the European Union are parties to the ECT, in Respondent's view, this "inevitably implies the exclusion of said Article in cases in which an investor from an EU Member State has a dispute [concerning an investment] with an [sic] Member State of the European Union [...]."141
163.
For Respondent, the EU grants to investors with EU citizenship specific protection superior tothat granted by the ECT and by bilateral investment treaties,142 a regime that must apply equally to all EU members without distinction.143 Accordingly, the proper mechanism for addressing any disputes arising in this regard are European national courts, with the possibility of ultimate recourse to the European Court of Justice, as the EU's judicial system has "the monopoly on the ultimate interpretation of EU law."144
164.
Respondent further contends that as the United Kingdom, Luxembourg, and Spain were all members of the European Economic Community ("EEC") when the ECT was concluded, they could not, as a matter of European law, enter into obligations inter se related to the internal electrical market, which was then harmonized by the EEC.145
165.
In Respondent's view, the ECT reflects this state of affairs and recognizes that the European legal regime should exclusively govern investments within the EU by investors from EU member countries.146 "[T]he ECT itself acknowledges the preferential application of EU law between EU Member States. Furthermore, any discrepancies between the ECT and EU Law must be resolved by granting primacy to the latter."147 Respondent finds support for this interpretation in the ECT's wording and object and purpose, referring in particular to the ECT provisions related to Regional Economic Integration Organizations ("REIOs"). The ECT provisions cited by Respondent include, inter alia :

• Article 1(3), the definition of REIOs, which clearly covers the EEC (and now the EU), the only such entity party to the ECT. Article 1(3) defines REIOs as organizations constituted by States to which they have transferred competence over certain matters, some governed by the ECT, "including the authority to take decisions binding on them in respect of those matters." Respondent views this as recognition in the ECT that the EU may exercise sole competence with respect to certain matters, presumably including the harmonized electrical market.148

• Article 25, under which the ECT's most-favored-nation treatment obligations do not extend to preferential treatment accorded to members of an Economic Integration Agreement eliminating or prohibiting discriminatory measures among its members. Respondent again regards this as recognition of the allegedly preferential treatment accorded to intra-EU investors, again presumably including the energy sector.149

• Article 36(7), which accords to a REIO a number of votes equivalent to the number of its member States when voting on matters as to which the REIO has competence. According to Respondent, this necessarily implies that a REIO fully stands in the shoes of its member states in areas where it has competence.150

166.
Respondent also emphasizes ECT Article 26(6), specifying the law that investment tribunals must apply in disputes between investors and ECT parties. It directs that tribunals "shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law."151 In Spain's view, the rules of the EU's legal order constitute rules of international law that this Tribunal must apply pursuant to Article 26(6).152
167.
Respondent urges that Article 26(6) shows that the ECT excludes intra-European disputes, because its application in such disputes would create an unacceptable legal situation. Respondent refers in this regard to Article 344 of the Treaty on the Functioning of the European Union ("TFEU"), which precludes Member States from submitting disputes concerning the interpretation or application of EU treaties to any method of settlement other than those provided in those treaties.153 In Respondent's view, allowing this arbitration to proceed would require the Tribunal to rule on the rights of a European investor within the EU's internal market,154 matters as to which the European Court of Justice retains exclusive ultimate authority.155 Accordingly, Article 26(6) "bans arbitration between an intra-EU investor and an EU Member State."156
168.
Respondent finds further support for its interpretation in the ECT's purpose. This is said to be "to establish the basis to extend the extant internal energy market to the former Soviet Socialist Republics. It was in no question a case of repealing or displacing EU Law, which is still preferentially applicable among its Contracting Parties and their citizens [...]."157
169.
As further support, Respondent refers to the European Commission's position "on the impossibility for there to be arbitrations between intra-EU members and EU member States under Article 26 of the ECT,"158 and to the Commission's longstanding position that intra-EU bilateral investment treaties are incompatible with EU law.159 Spain also invokes the supportive writings of Bruno Poulain and Professor Jan Kleinheisterkamp.160
170.
Respondent denies the relevance of other courts' and tribunals' decisions rejecting its position, observing that only two of those cited by Claimants involved the ECT.161 As to these, Spain distinguishes Electrabel S.A. v. Hungary, as Hungary was not a member of the EC/EU when it adhered to the ECT, and so had "full sovereignty" to enter into obligations prohibited to members of the Union.162
171.
Respondent denies that its interpretation is inconsistent with the ECT's plain meaning. In Respondent's view, it is immaterial that the ECT does not contain an express disconnection clause addressing EU members' internal relationships, as such a clause has no role in an area where there is complete harmonization of Community rules.163
172.
For Respondent, Claimants' position ignores the ECT's context, object and purpose, the EEC's role as a dominant actor in negotiating the ECT, and the impossibility that it would have agreed to subordinate its own superior internal system of investment protection tothe ECT's.164 Respondent also disputes Claimants' arguments that the ECT does not conflict with EU law, and that it provides investors protection superior to that under European law. Respondent contends in this regard that investment arbitration cases invoked by Claimants involved other issues, not Spain's argument regarding the primacy of European law.165
173.
Respondent's Rejoinder concludes its discussion of this objection by observing that European authorities might regard any monetary award by the Tribunal in favor of the Claimants as impermissible state aid, implying that payment of such an award by Spain would be contrary to European law.166

b. Claimants' Position

174.
Claimants dispute Respondent's Intra-EU Objection, contending that it ignores multiple decisions by investment tribunals and national courts that have considered and rejected the objection, three in cases involving the ECT.167 Claimants refer to six investment tribunal rulings in existence when the claims were filed,168 other unpublished decisions, including one - PVInvestors v. Spain - where Spain has not consented to this Tribunal's access to a relevant decision or award,169 and two other subsequent published awards.170 According to Claimants, no tribunals have upheld the Intra-EU Objection, and Spain's attempts to distinguish or dismiss tribunal awards rejecting it are unpersuasive and unavailing.171
175.
Claimants likewise reject Respondent's arguments to the effect that bilateral investment treaties are contrary to EU law; that the Intra-EU objection remains valid even if it has not been raised in some cases; that national court cases rejecting the objection may be subject to appeal; that high-level European institutions have "highlighted" the intra-EU issue; that a 2014 regulation of the European Parliament and Council shows that investment tribunals cannot consider intra-EU disputes; and invoking the Commission's order enjoining payment of the compensation awarded in Micula v. Romania.172
176.
For Claimants, the ordinary meaning of Article 26 of the ECT clearly demonstrates that Respondent has consented to arbitration of their claims. The claims fall within the clear treaty language, which contains no limitations or qualifications creating an exception for claims by EU investors against EU member countries.173 Claimants further dispute that the ECT provisions cited by Respondent show that the ECT excepts intra-EU claims.174 Claimants argue that the ECT contains no disconnection clause, and deny that one can be read into the ECT.175
177.
Finally, Claimants dispute Respondent's contentions that the ECT precludes intra-EU claims because the EEC and its member countries recognized that the ECT was contrary to European law, which provided and continues to provide a superior level of protection.176 Claimants urge that Respondent has identified no contradictions between the ECT and European law. Instead, the two regimes simply cover different subject matters, with the ECT providing certain protections - for example, a guarantee of fair and equitable treatment and direct recourse to arbitration - not found in European law.177
178.
Claimants further observe that, whatever the intentions of one or more parties to a multilateral treaty may have been, they are not binding on other parties. Moreover, there is no ambiguity in the text of Article 26 that would justify resort to supplementary means of interpretation under Article 32 of the Vienna Convention on the Law of Treaties.178

(2) The Tribunal's Analysis

B. Second Objection: Failure to Prove that the Investors Have Made an Investment "In the Objective Sense" in Conformity with the ECT and the ICSID Convention

208.
Respondent's second objection is that the Tribunal lacks jurisdiction ratione materiae, as Claimants have not shown that they made an investment "in the objective sense," that is, an investment in which Claimants contributed funds, incurred risk, and made a long-term investment.

(1) The Parties' Positions

a. Respondent's Position

209.
Respondent initially contends that because of an alleged failure to produce sufficient evidence, "we still do not know who the investor or investors making claims against the Kingdom ofSpain actually are."207 Further, in Respondent's submission, Claimants have not shown that they have made an investment or are investors. Respondent contends that both Article 1(6) of the ECT and Article 25 of the ICSID Convention require that putative claimants show that they have made an investment in "an objective or ordinary sense,"208 meaning that Claimants must show that they contributed funds in order to obtain profits or returns, assumed risk, and made a long-term investment.209 For Respondent, under both the ECT and the ICSID Convention, "an investment must be a real investment in the objective sense [...] what this means is that the investor has to provide funds, has to assume risk, and do that over a specific duration of time. In this case, we see that none of these requirements were satisfied."210
210.
While the definition of Investment in Article 1(6) of the ECT does not explicitly mention these three requirements, Respondent urges that they must be implied because the key term defined -Investment -sometimes appears in the definition in quotation marks and at other times without. This is said to show that the term has a broader meaning not confined to Article 1(6)'s list of types of covered investments.211 Respondent invokes the ECT's object and purpose, which it sees as emphasizing the goals of long-term cooperation and promoting the flow of investments. This is said to show that Article 1(6)'s definition of investment "requires the existence of an economic contribution with the intention of obtaining profits, the existence of risk associated to said contribution and duration."212
211.
Respondent also maintains that the ECT's context supports its "objective" concept of investment, citing eight other ECT provisions said to show in various ways that an investment implies provision of funds, making an economic contribution, or some form of active conduct by the putative investor.213
212.
With respect to Article 25 of the ICSID Convention, Respondent initially contended that arbitral decisions show the need for claimants invoking ICSID jurisdiction to prove that they have made an investment having the three specified elements. In response to Claimants' arguments that rulings likethe award in Biwater Gauff v. Tanzania214 and the decision in Malaysian Historical Salvors v. Malaysia215 and writings of authors like Dolzer and Schreuer show that there is no settled view on this question,216Respondent reaffirmed its position, but also indicated that the position in ICSID is not controlling because disputes under the ECT can be heard in other fora.217

b. Claimants' Position

216.
Claimants deny that they have in some way been insufficiently identified or documented, arguing that as a matter of English law, Eiser Infrastructure Limited is the proper entity to bring the claims on behalf of Eiser Global Infrastructure Fund ("EGIF"), which does not have separate personality enabling it to bring litigation.226 Further, Claimants argue that they "have disclosed to Spain the identity of each of the five Limited Partnerships and their Limited Partners. Spain has not attempted to articulate (nor could it) why it would need any more information."227
217.
Claimants maintain that they have made a qualifying investment protected by the ECT.228 Their interests fall within ECT Article 1(6)'s list of types of covered assets constituting investments, and moreover conform to the ordinary meaning of the word "investment."229 For Claimants, if an asset thus satisfies Article 1(6), there is a rebuttable presumption that it also satisfies Article 25 of the ICSID Convention. Respondent makes no showing to displace that presumption.230 For Claimants, the question of conformity with ICSID Article 25 might arise only if a claimed investment is of an unusual character "at the margin." Only then might the contribution of economic resources and assumption of risk (but not duration) be considered. This is not such a case.231
218.
For Claimants, the VCLT's rules of interpretation do not support Spain's additional criteria.232 Respondent does not address the ECT decision in Anatolie Stati v. Kazakhstan, rejecting application of additional tests or criteria to any investment clearly covered by Article 1(6).233 Further, ECT Article 1(6) does not support the claim that an investment requires some dynamic action, but in any case, Claimants have "made" an investment in the dynamic sense urged by Respondent.234 The cases invoked by Respondent do not involve the ECT and do not advance its case;235 indeed, the cited academic commentary supports Claimants' position.236
219.
For Claimants, Respondent's narrow definition of investment would actually contradict the ECT's object and purpose,237and Respondent's invocation of Caratube Intl. v. Kazakhstan, a case under the US-Kazakhstan bilateral investment treaty in this regard is inapposite.238 Further, the ECT provisions relied upon by Respondent do not provide relevant context, and do not support Respondent's interpretation.239
220.
In any case, Claimants maintain that their interests satisfy the criteria of contribution, risk and duration.240 While they dispute the existence of any "origin of capital" requirement as a condition of investment,241 they contend that they have in any case made a significant contribution to the interests.242 With respect to assumption of risk, Claimants contend that Respondent misapprehends the structure and allocation of risks among the entities involved inits business structure.243 As to duration, Claimants urge that their interests are by their very nature long-term.244

(2) The Tribunal's Analysis

C. Third Objection: No Shareholder Claims

232.
Respondent's third objection is that the Tribunal lacks jurisdiction ratione materiae to entertain Claimants' claims for alleged damage directly incurred by the operating companies in which they held minority shareholdings.255 Respondent contends that Claimants assert such claims, pointing to language in their written submissions said to reflect this position.
233.
The Tribunal initially observes that the Parties agree on a central issue: that a shareholder claiming under the ECT may frame and value its claim on the basis of the claimed reduction in the value of its shareholding interests.256 Given this agreement, it is not apparent the third objection requires the Tribunal to decide any matters actually in dispute.

(1) The Parties' Positions

a. Respondent's Position

234.
In Respondent's view, shareholders' claims for alleged damages suffered by companies in which they have invested (described by Respondent as "reflective losses") are barred by public international law and by "advanced national systems of Commercial Law."257 Respondent's written pleadings present extensive public and private international law arguments to the effect that a shareholder cannot claim for injuries incurred by a company in which the shareholder owns stock. Respondent also urges that ICSID Convention Article 25 allows ICSID arbitration only of claims arising "directly" out of an investment.258
235.
However, Respondent agrees that an investor in Claimants' position - as minority shareholders in Spanish operating companies - can assert a claim for diminution of the value of their shareholding interests resulting from actions claimed to violate the ECT. Spain's Counter-Memorial thus affirms:

The Kingdom of Spain does not deny that the shareholders have legitimation to have resort to an Arbitral Tribunal for damages suffered directly in their authentic investment.

[…] the legitimation of the shareholders and the Jurisdiction of the Tribunal can only be extended to […] the dispute relating to the loss of value of the shareholders' shares as a consequence of the measures approved by the State.259

236.
Indeed, Respondent's Rejoinder indicates that Spain would withdraw this objection if Claimants limited their claims to losses "suffered due to their alleged indirect participation in the shares and credits of the partners of the Spanish companies that own the Plants."260 Accordingly, Respondent accepts that there can be no jurisdictional objection to a claim for "for the lower value their indirect stake in the companies that own the Plants and their credits with the companies that own the plants may have suffered as a consequence of the measures of the Kingdom of Spain that are challenged in this Arbitration."261
237.
However, Respondent points to language in Claimants' written submissions that it understands to show that Claimants assert more extensive claims. Respondent cites, inter alia, Claimants' description of their investment in their Memorial:

[T]he Claimants have made substantial investments in the CSP electricity generation sector in Spain, which include, without limitation, the Claimants' direct and indirect shareholding and debt interests in the Operating Companies that own and operate the CSP Plants, as well as interests in those CSP Plants (Article 1(6)(b)); claims to money (Article 1 (6)(c)); returns (Article 1 (6)(e)); and rights conferred by law (including those conferred by RD 661/2007) (Article 1(6)(f)). The Claimants' investments thus fall within the ECT's definition of ‘Investment.'262

238.
Respondent disputes this conception of Claimants' investment, instead arguing that:

The alleged investment of the Claimants would not affect:

- the installations or the Plants;

- credits of any kind of the Spanish companies that own the Plants,

- the alleged rights granted by RD 661/2007 to the Spanish companies that own the Plants;

- returns of any other nature of the Spanish companies that own the Plants.263

239.
At the Hearing, Respondent's counsel reaffirmed Spain's understanding that Claimants' claims are not confined to diminution of shareholder value, again referring tothe paragraph cited above.264
240.
In addition to being contrary to public and private international law, Respondent contends that allowing claims for alleged damages to the operating companies improperly permits "two bites of the same apple." Respondent notes in this regard that the new regulatory scheme incorporated in Order IET/1045/2014 has been disputed by another shareholder in the plants before the Spanish Supreme Court. Respondent implies that Claimants acted in bad faith by bringing these proceedings challenging measures that are also being challenged in Spanish courts by another investor in the same projects.265

b. Claimants' Position

241.
Claimants dispute Respondent's objection, affirming in their Reply that "the Claimants are bringing their treaty claims for damages caused to the value in their shareholding interest in the Operating Companies."266 However, they maintain in this regard that those shareholding interests include "an interest in the assets of that company, including its licences, contractual rights, rights under law, claims to money or economic performance […]."267
242.
Claimants refer to the ECT's definition of "Investment," pointing out that under ECT Article 1(6), Investment "means every kind of asset, owned or controlled directly or indirectly by an Investor […]."268 The term is further defined to include "a company or business enterprise, or shares[…]." For Claimants, the definition of covered investments under the ECT "includes not only the underlying business unit, but also the share or participation (direct or indirect) in the ownership of the underlying assets."269 Thus, under the ECT's definition, Claimants' investments encompass both their rights to ownership of their shares, and their indirect rights in the assets of the Spanish operating companies.270
243.
Claimants point in this regard to decisions of investment tribunals such as Azurix v. Argentina that draw no distinction between shareholders' direct rights of ownership in their shares and their indirect interests in local companies affected by State action. Claimants maintain that Respondent has failed to address or rebut these.271
244.
Claimants deny Spain's allegations of bad faith in connection with domestic court litigation brought by the majority shareholder in the operating companies, insisting that they haveno interest or involvement in that litigation, and that in any case, Claimants' international law rights under the ECT are legally distinct from those being asserted by the other shareholder.272

(2) The Tribunal's Analysis

245.
As noted above, the Parties agree that Claimants can bring claims for reduction of value of their shareholdings on account of conduct alleged to violate the ECT. Claimants contend that this is what they are doing.
246.
The Tribunal understands Claimants' claim in this way as well. The report of the Brattle Group, Claimants' economic experts, makes clear that the claim is for the reduction in the fair market value of the Claimants' investments in the Spanish companies that built and operate the CSP plants:

20. […] EISER holds shares and shareholder loans in dedicated project companies, which themselves have borrowed substantial sums. Reflecting standard practice, we first estimate the value of the relevant project companies as a whole, before deducting the value of the outstanding liabilities of the project companies to derive the value of EISER's investment interests. The final step is to reduce the value of EISER's investment interests by a further 18% to account for their relatively illiquid nature. Investors attribute value to liquidity, since it provides the opportunity to acquire or dispose of investments at short notice and for low cost. The 18% discount reflects recent published research in corporate finance concerning the effects of liquidity.

21. We conclude that in the Actual world the alleged violations reduced the fair market value of EISER's financial interests in CSP assets by a further €193 million as of June 2014, relative to their value under the But For scenario and the continued application of the Original Regulatory Regime. […].273

247.
The Brattle Group's second rebuttal report reaffirmed this position, again concluding that the disputed measures "severely diminished the fair market value of its equity and other shareholder interests in the ASTE and ASTEXOL project companies."274
248.
As discussed infra, the Tribunal has accepted this line of analysis -valuing the reduction of the value of the companies in which Claimants held interests -in assessing damages.
249.
Respondent's third jurisdictional objection is denied.

D. Fourth Objection: No Jurisdiction over Taxation Measures

(1) The Parties' Positions

a. Respondent's Position

b. Claimants' Position

(2) The Tribunal's Analysis

E. Fifth Objection: Failure to Refer to the Competent Tax Authorities

(1) The Parties' Positions

273.
Spain's fifth objection is that the claim that it unlawfully expropriated Claimants' investments in part by adopting the 7% tax on energy production under Law 15/2012 is inadmissible because Claimants did not comply with ECT Article 21(5)(b).315
274.
As discussed above in connection with Respondent's fourth jurisdictional objection, ECT Article 21(1)precludes claims based on ECT Article 10 with respect to taxation measures. However, under Article 21(5)(a), this "carve-out" does not apply to expropriation claims based on Article 13, subject to the further requirements of Article 21(5)(b). These establish a procedure for expropriation claims involving taxation measures. This requires that expropriation claims involving taxation receive preliminary consideration by national taxation authorities.316
275.
Article 21(5) provides:

(5) (a) Article13 shall apply to taxes.

(b) Whenever an issue arises under Article 13, to the extent it pertains to whether a tax constitutes an expropriation or whether a tax alleged to constitute an expropriation is discriminatory, the following provisions shall apply:

(i) The Investor or the Contracting Party alleging expropriation shall refer the issue of whether the tax is an expropriation or whether the tax is discriminatory to the relevant Competent Tax Authority. Failing such referral by the Investor or the Contracting Party, bodies called upon to settle disputes pursuant to Article 26(2)(c) or 27(2) shall make a referral to the relevant Competent Tax Authorities;

(ii) The Competent Tax Authorities shall, within a period of six months of such referral, strive to resolve the issues so referred. [...]

(iii) Bodies called upon to settle disputes pursuant to Article 26(2)(c) or 27(2) may take into account any conclusions arrived at by the Competent Tax Authorities regarding whether the tax is an expropriation. Such bodies shall take into account any conclusions arrived at within the six-month period prescribed in subparagraph (b)(ii) by the Competent Tax Authorities regarding whether the tax is discriminatory. Such bodies may also take into account any conclusions arrived at by the Competent Tax Authorities after the expiry of the six-month period;

(iv) Under no circumstances shall involvement of the Competent Tax Authorities, beyond the end of the six-month period referred to in subparagraph (b)(ii), lead to a delay of proceedings under Articles 26 and 27.317

276.
Article 21(7)(c) defines "Competent Tax Authority":

(7) For the purposes of this Article:

[...]

(c) A ‘Competent Tax Authority' means the competent authority pursuant to a double taxation agreement in force between the Contracting Parties or, when no such agreement is in force, the minister or ministry responsible for taxes or their authorized representatives.318

277.
Respondent contends that Claimants did not refer their claim regarding the allegedly expropriatory effect of Law 15/2012 to the Competent Tax Authorities as required by Article 21(5)(b), so that this claim is inadmissible.319
278.
Claimants first respond, as discussed above in connection with Respondent's fourth jurisdictional objection, that Law 15/2012 does not involve a bona fide tax, so that Article 21(5)(b) does not apply.320 However, if the Article applies, Claimants contend that they have complied with it, in that on 11 October 2012, they and other investors raised the issue of the 7% tax with the Ministry of Finance and Public Administrations,321 the Spanish Competent Tax Authority.322 Claimants also cited their 26 April 2013 letter to the President of Spain as satisfying this requirement.323 Claimants finally contended that any referral would be futile, and that investment jurisprudence confirms that in such a case, they "need not comply with the requirement, which is procedural in nature."324

(2) The Tribunal's Analysis

279.
The Tribunal has not accepted Claimants' contention that Law 15/2012 is not a bona fide tax. Accordingly, it initially considers whether the two communications cited by Claimants satisfy Article 21(5)(b)'s requirement that Investors refer expropriation claims involving taxation to the Competent Tax Authority in order to trigger a process of consultation between that authority and its foreign counterpart.
280.
This raises two issues: were these communications directed to the appropriate authority(ies), and did they refer the relevant issue in a manner sufficient to inform the recipient(s) of the communications' purpose and of the need to respond in accordance with the procedure set out in Article 21(5)(b)?
281.
As to the first issue, Article 21(7)(c) defines "Competent Tax Authority" as "the competent authority pursuant to a double taxation agreement in force between the Contracting Parties [...]." Thus, the relevant authorities are those under the bilateral double tax agreements between Spain and Luxembourg,325 and Spain and the United Kingdom.326 Claimants introduced into the record the double tax treaties between Spain and these two countries; each identifies the Minister of Finance as the competent Spanish authority under the treaty, albeit with different formulations of the Minister's title.
282.

This first issue brings to light an ambiguity in the wording of Article 21. Article 21(5)(b) appears to envision bilateral consultations between the national tax authorities identified in bilateral double tax conventions, that is, those of the State of the investor and those of the State against which the investor claims. According to the English text of the ECT, the investor is required to refer a claim that a tax measure is expropriatory to "the relevant Competent Tax Authority." However, it is not apparent whether the "relevant" authority is that of the investor's State or that of the respondent State.327 (In a situation where an arbitral tribunal is to seek referral, according to the English text of the ECT, the tribunal "shall make a referral to the relevant Competent Tax Authorities" - presumably both.)328

283.
A further question arises where -as here -there are two investors from two different States. Is it sufficient for the one of the two to refer the issue to the Competent Tax Authority of the respondent State? Or must each investor refer the issue to its national authority?
284.
The Tribunal assumes, without deciding, that Article 21(5)(b)'s requirements can be satisfied by an appropriately phrased communication from one of the Claimants to Respondent's Competent Tax Authority. Thus, it would suffice for a Claimant to refer the issue to Spain's Minister of Finance, recognizing that the Minister's title is stated differently in different documents in the record.
285.
The second issue then is whether the two communications cited by Claimants satisfy the requirement that they "refer" their claim that the 7% tax is expropriatory to the Minister for consideration and consultations under Article 21(5)(b).
286.
The first communication is a two-page letter dated 11 October 2012 addressed to three Spanish Government Ministers, including the Minister of Finance and Public Administration.329 This letter was signed by representatives of eight foreign investors, including by Mr. Hector on behalf of Eiser Infrastructure Partners. The letter contains a brief statement of the signatories' concerns about the draft law that became Law 15/2012, and a general reference to the possibility of international legal action. It does not refer to the ECT, let alone to Article 21(5). It does not contain the word expropriation. Nothing in it indicates that the senders viewed the future tax (which had yet to be enacted) as expropriatory, or that they sought to refer "the issue of whether the tax is an expropriation" to the Minister for action under Article 21(5).
287.
Under the VCLT, the key term "refer" must be read in good faith and in accordance with its ordinary meaning. In this light, it is not possible to view this letter as a reference for purposes of ECT Article 21(5)(b). This document cannot reasonably be read to put the recipient on notice that the senders view the proposed tax as expropriatory and that the recipient should therefore initiate the process of international consultations envisioned by Article 21(5).
288.
The second communication cited by Claimants is less compelling in this regard. It is a 26 April 2013 letter written on behalf of Claimants by Allen & Overy to the President of the Government, Mariano Rajoy Brey.330 This letter briefly lists numerous changes made to the CSP legal regime, and indicates that these do not comply with Spain's obligations under the ECT. It requests negotiations under ECT Article 26 with a view to reaching an amicable settlement, and reserves Eiser's right to submit claims to arbitration if settlement is not possible.
289.
Claimants presented no evidence that the President of the Government is a "Competent Authority" under the relevant tax treaties, and it seems unlikely that such a high officer of the State would perform this function. More to the point, the contents of the letter again are not sufficient to inform a conscientious reader that the Investor alleges a tax measure to be expropriatory and seeks to have the issue referred for international consultations under Article 21(5)(b).
290.
Accordingly, the Tribunal finds that Claimants did not refer their expropriation claims involving the 7% tax on energy production under Law 15/2012 to the "Competent Tax Authority" as required by Article 21(5)(b) of the ECT.
291.
Claimants' final contention is that the Tribunal should disregard any non-compliance with the requirements of Article 21(5), urging in this regard that "investment treaty jurisprudence has confirmed that where a referral would be futile, as it would be in the present circumstances, an investor need not comply with the requirement, which is procedural in nature."331
292.
Claimants briefly advance three arguments to show that a referral to the competent tax authorities would be futile and therefore unnecessary.332 The first two are similar: that Claimants twice informed Spain of their concerns regarding Law 15/2012, but Spain did not respond to those concerns:

[...] Spain made no attempt to engage its tax authorities to ‘strive to resolve the issues.' Had there been any prospect of the issue being addressed by the tax authorities before commencing the present proceedings, it is reasonable to assume that Spain would have informed the tax authorities to consider the matter. Spain did not do so[…].333

293.
Third, Claimants contend that their claim and the measures giving rise to it "are far too broad and complex for the Spanish tax authorities to have resolved within six months,"334 so that it would be futile to refer the issue for consideration. This argument appears to rest on the premise that the issue to be referred would encompass the whole of Claimants' dispute with Spain, and not the narrower issue of whether the 7% tax is expropriatory.335
294.
This final contention - that recourse to the procedure mandated by Article 21(5)(b) would be futile and therefore can be disregarded - largely rests on Claimants' speculation about Spain's response to a properly framed referral under Article 21. The Tribunal cannot assume, as Claimants urge, that the Spanish authorities would ignore such a referral, particularly as the ECT appears to allow Claimants to have recourse as well to their national tax authorities. This argument also reflects an apparent misconception that any response to a referral would be a wholly Spanish affair. Instead, although perhaps not perfectly drafted, Article 21(5) appears to envision a process of interaction between national tax authorities regarding a vexed question of international law - when and whether a tax measure may be expropriatory. The existence of this provision indicates that this was a matter of concern to the ECT Contracting Parties, who nevertheless took care to assure that the agreed procedure could not be allowed to frustrate arbitration of a future claim.
295.
The 7% tax on energy production under Law 15/2012 is a tax. Claimants did not refer their claim that it is expropriatory to the Competent Tax Authority as required by Article 21(5)(b) of the ECT, and they have not sustained their contention that complying with this procedure would be futile, so that non-compliance can be disregarded.
296.
The Respondent's fifth objection is therefore sustained. Claimants' claim that the 7% tax is expropriatory is inadmissible to the extent that the Tribunal cannot at this stage of the proceedings decide this claim, because Claimants have not complied with ECT Article 21(5)(b)(i).
297.
Were Claimants' claim that the 7% tax on energy production is expropriatory to figure in the Tribunal's final award, Article 21(5)(b)(i) would oblige the Tribunal to itself refer the tax to the appropriate national authorities for consideration. The result would be further delay in the proceedings, although this need not exceed six months.
298.
As explained, infra, however, the Tribunal finds that it is not necessary for it to decide Claimants' expropriation claim, as the case can be appropriately resolved on another basis. Accordingly, it is not necessary for it to take the action indicated by Article 21(5)(b)(i).

F. Sixth Objection: Cooling Off Period

299.
Respondent's sixth objection to jurisdiction is that Claimants did not comply with ECT Article 26's requirement to request negotiations to settle their disputes regarding Law 24/2013, RD 413/2014, and Ministerial Order IET/1045/2014, and then to observe a three-month waiting period before initiating arbitration regarding those measures. Respondent contends that the Tribunal therefore lacks jurisdiction over claims involving them.336

(1) Background

300.
Article 26 of the ECT provides in relevant part:

(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:

[...]

(c) in accordance with the following paragraphs of this Article [setting out the procedure applicable in this arbitration]

(3) (a) Subject only to subparagraphs (b) and (c),337 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.338

301.
On 26 April 2013, Claimants wrote a letter in English to His Excellency Mariano Rajoy Brey, President of the Government of Spain. The letter, captioned, "Energy Charter Treaty - Request for Negotiations" listed a number of changes made by Spain to the legal regime for CSP plants. It contended that these and other changes were not in compliance with Spain's obligations under the ECT, and "requests negotiations pursuant to Article 26(1) of the ECT, with a view to reaching an amicable settlement of the dispute."339
302.
Claimants did not receive a substantive reply to this request for negotiations. Instead, a letter from the Ministry of Industry, Energy and Tourism dated 7 May 2013 informed them that:

[I]n accordance with the provisions of article 71.1 of Law 30/1992 of 26 November on the Legal System applicable to Public Administrations and the Common Administrative Procedure, you are required to correct the submission within 10 days in accordance with article 36 of the aforementioned law, by submitting the document written in Spanish.

In the event that this is not rectified by the deadline specified, it will be presumed that you have withdrawn your request and your file will not be processed any further.340

303.
While noting that the ECT does not require that requests for negotiations be submitted in the manner required by Respondent, Claimants did as directed on 15 May 2013, renewing their request for negotiations and transmitting a Spanish-language translation of their 26 April 2013 letter.341
304.

On 30 July 2013, Claimants wrote a further letter in English and Spanish to HisExcellency Mariano Rajoy Brey, noting that since their earlier letter, RDL 9/2013 had been adopted, further changing the CSP regulatory framework. This letter reiterated Claimants' request for a meeting for purposes of reaching an amicable resolution of the dispute.342

305.
Claimants aver that they have never received responses to their requests for negotiations.343
306.
The Claimants' Request for Arbitration is dated 9 December 2013, more than three months after Claimants' 30 July 2013 letter again requesting negotiations. The Request notes that it is lodged at a time when further adverse changes in the CSP regulatory regime are likely.344 The measures effecting the most significant changes to the regime for CSP plants (Law 24/2013 of 26 December 2013, RD 413/2014 of 6 June 2014, and Ministerial Order IET/1045/2014 of 16June 2014) were all adopted after the Request for Arbitration. These are the measures at issue in this objection to jurisdiction.

(2) The Parties' Positions

a. Respondent's Position

307.
Respondent contends that under Article 26 of the ECT, its consent to jurisdiction over Claimants' claims involving these three measures is conditional upon compliance with Article 26(2)'s requirements of a request for amicable settlement and a subsequent three-month "cooling off" period. Under Article 26(3)(a), Contracting Parties consent to arbitration "in accordance with the provisions of this Article." In Respondent's view, this includes a request for negotiations and the three-month cooling-off period under Article 26(2). If these requirements are notmet, there is no consent to jurisdiction.345
308.
In support of its view that jurisdiction depends upon compliance with Article 26's request and cooling off period requirements, Respondent cites the Oxford Handbook of International Investment Law and the views of two tribunals acting under the U.S. bilateral investment treaties with, respectively, Argentina and Bolivia, Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic,346 and the UK's treaty with Bolivia, Guaracachi America, Inc. and Rurelec PLC v. Plurinational State of Bolivia.347
309.
Respondent observes that each of these three measures was adopted after the Claimants' 30 July 2013 letter informing Spain of the dispute and communicating their wish to seek an amicable settlement, and that Claimants sent no further letters proposing amicable settlement of a further dispute regarding these measures.348
310.
Accordingly, in Spain's submission, "[in] this case the circumstances under which the Kingdom of Spain has consented and offered to resort to arbitration under the ECT have not been observed. As a consequence, the breach of these requirements means that the Arbitral Tribunal cannot have jurisdiction, according to Law 24/2013, Royal Decree 413/2014, and Ministerial Order IET/1045/2014."349

b. Claimants' Position

311.
Claimants dispute Respondent's objection, contending that the three cited measures -Law 24/2013, RD 413/2014, and Order IET/1045/2014 - are elements of a single on-going dispute related to Spain's actions to progressively alter the RD 661/2007regime.350 "[T]he dispute between the Parties relates to Spain's failure to honour its commitments to the Claimants under RD 661/2007. That this forms a single dispute which was clearly notified to Spain cannot seriously be disputed."351
312.
In support of their view that the three measures are part of the same on-going dispute, Claimants refer to cases such as Pope & Talbot v Canada,352Ethyl Corp. v. Canada,353 and Enron Corp. v. Argentina.354
313.
Claimants also contend that interpreting Article 26 to require a further request for negotiations regarding Spain's measures introduced after the arbitration began would be futile, as shown by Respondent's failure to reply to their earlier requests for negotiations.355 Claimants find support for this position in arbitral decisions finding that failure to observe cooling off periods in comparable situations does not justify refusal to hear claims, citing Biwater Gauff v. Tanzania356 and Alps Finance and Trade AG v. Slovak Republic,357 as well as in the writings of Professors Dolzer and Schreuer.
314.
Finally, Claimants maintain that Respondent's objection involves a question of admissibility and not of jurisdiction. They contend in this regard that the majority of tribunals have rejected Respondent's claim that compliance with a cooling-off period goes to jurisdiction,358 citing in this regard Bayindir v Pakistan359 and many other investment cases, as well as decisions of the International Court of Justice. Claimants distinguish the cases relied upon by Respondent, urging, for example, that the cited provisions in Enron v. Argentina are obiter that the tribunal itself appreciated reflected a minority view.360

(3) The Tribunal's Analysis

315.

Claimants' letter of 26 April 2013 lists several changes to the legal regime for CSP plants, stating that "[t]hese and other measures" substantially alter the legal framework for CSP investments. It recites that "Spain's actions are not in compliance with its obligations under the Energy Charter Treaty," and requests negotiations under Article 26(1) "with a view to reaching an amicable resolution of the dispute. "361 Claimants' subsequent letter of 15 May 2013 again refers to " the dispute."362 Their letter of 30 July 2013 again recalls changes to the regime "including but not limited to" specified measures, contends that the changes do not comply with the ECT, and renews the request "to discuss possible amicable solutions to this dispute."363

316.
As clearly described in the letters, the dispute did not center on any specific measure, and instead concerned the broader issue of Spain's alleged non-compliance with its obligations under the ECT. These three letters satisfy Articles 26(1) and (2)'s requirement to seek amicable settlement of "the dispute." They clearly informed Respondent of the existence of a dispute and of Claimants' wish to seek its amicable settlement, as required by Article 26.
320.
Accordingly, the Tribunal finds that Claimants' April, May, and July 2013 notifications and requests for negotiations, and their observance of the subsequent three-month cooling-off period before filing their request for arbitration, satisfy ECT Article 26(2). Respondent's sixth jurisdictional objection is denied.
321.
In light of this finding, the Tribunal need not decide whether compliance with the requirements of Article 26 is jurisdictional, as Respondent would have it, or poses a question of admissibility, as Claimants contend.

VI. LIABILITY

A. Applicable Law

322.
This arbitration is being conducted in the framework of the ICSID Convention. Article 42(1) of the ICSID Convention provides:

(1) The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.

323.
As a Contracting Party to the ECT, Respondent has given its unconditional consent to arbitration of disputes with an Investor of another Contracting Party as provided in ECT Article 26(3)(a). By exercising the option available to them under ECT Article 26(2)(c) and choosing to bring this arbitration, Claimants have likewise agreed to resolution of their dispute "in accordance with the following paragraphs of" Article 26.
324.
ECT Article 26(6) provides:

(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.365

325.
The Parties have thus agreed on the application of the rules of law specified in Article 26(6) to govern resolution of the issues in dispute. Accordingly, the Tribunal will decide the issues on the basis of the terms of the ECT and the applicable rules and principles of international law.

B. Respondent's New Defense

326.
In its 27 November 2015 Rejoinder on the Merits and Reply on Jurisdiction, filed after Claimants' last written submission on the merits under the established briefing schedule, Respondent introduced an entirely new defense. Claimants sought and were given leave to file an additional submission on this new defense, and did so in January 2016.
327.

Claimants' additional submission sets out relevant background:

[T]he 1997 Electricity Law distinguished between two separate regimes: (i) the Ordinary Regime, for conventional power-generation facilities, selling electricity in the wholesale electricity market at pool prices; and (ii) the Special Regime, for qualifying [Renewable Energy] installations of an installed capacity of less than or equal to 50 [Megawatts]. RD 661/2007 put in place the remuneration for installations qualifying under the Special Regime. RD 661/2007 also set out the requirements for the registration of a plant under the Special Regime. In order to enjoy the economic incentives under RD 661/2007, each installation had to register with the Special Regime's Registry or 'Registro Administrativo de Instalaciones de Production en Regimen Especial' (the RAIPRE) administered by the Ministry. By registering with the RAIPRE, the installation was deemed to qualify under the RD 661/2007 economic regime.366

(1) The Parties' Positions

a. Respondent's Position

328.
As clarified in subsequent correspondence, Respondent's contended in their new defense that the CSP plants in which Claimants had invested had an installed capacity exceeding 50 Megawatts ("MW") and therefore did not qualify under the Special Regime.367 Hence, in Respondent's submission, this "denies that an investment even exists" and shows that Claimants could not have had a legitimate expectation that their investment was entitled to the remuneration regime under Article 36 of RD 661/2007.368
329.

The principal evidence offered in support of Respondent's new defense consisted of:

• Information provided to Respondent in May 2015 by Red Electrica de Espana ("REE"), the national system operator, regarding the amount of electricity the three CSP plants provided to the electrical grid, showing, inter alia, "peak hours of maximum energy measured for each thermosolar plant for each month."369

• Information derived from annexes to the three plants' Operation and Maintenance ("O&M") contracts said to indicate the amounts of power produced for internal self-consumption to operate the plants.370

• The Statement of Mr. Alfonso Olivas, Director of the Board of Renewable Energies in IDAE, the Institute for Conservation and Diversification of Energy, which Mr. Olivas described as "a public business entity belonging to the Ministry of Industry, Energy and Tourism [...] through the Secretary of State [for] Energy [,..]."371

Mr. Olivas took the maximum power delivered to the grid by each plant at the single peak hour shown in the REE data372 and added his estimate of each plant's production for internal consumption as derived from the O&M contracts. The resulting sums in his opinion showed that the three plants had "real power installed" of 53,930 MW, 54,080 MW, and 57,480 MW, in each case greater than 50 MW.373 In cross-examination at the Hearing, Mr. Olivas indicated that in his view for each plant, the "gross capacity of the whole installation"374 was 55 MW.375

330.
At the Hearing, in response to Claimants' arguments that under Article 3.1 of RD 661/2007 "the nominal power shall be that specified on the specifications plate of the generator or alternator" Respondent's counsel questioned Claimants' expert Dr. Mancini as to the possibility of collusion between Claimants and the manufacturers of the equipment at issue, all well-known international heavy equipment manufacturers, to install an incorrect specifications plate.376 Respondent offered no evidence in support of this suggestion. In cross-examination Mr. Olivas also made a veiled allusion to this possibility, but again offered no evidence.377

b. Claimants' Position

331.
Claimants contended that Spain should be estopped from raising its new defense, as the plants at issue had been registered with the RAIPRE, had received official documents confirming their registration and their eligibility for the RD 661/2007 regime, and had received remuneration under the regime. Further, the three plants had been inspected by the competent regulatory authorities and found to have installed capacity at or below 50 MW.378
332.
Claimants next urged that determining whether the plants complied with the Special Regime under Spanish law was a matter for the competent Spanish authorities following the specific procedures for cancelling registrations in the Special Regime established by law. Spain has not contested that the plants have been registered in the Special Regime, and has taken no domestic legal action to contest that registration.379 "In these circumstances, the Tribunal must accept as established the fact that the CSP Plants were effectively registered as Special Regime installations at all relevant times."380
333.
Claimants also contended that the new defense failed on the merits, for multiple reasons. First, in Claimants' view, Respondent's position had "no basis under Spanish regulations."381 Instead, Article 3.1 of RD 661/2007 specifies that for purposes of eligibility for the Special Regime, "the nominal power shall be that specified on the specifications plate of the generator or alternator" corrected as appropriate by several factors.382 The specifications plates of the equipment at issue here all showed values close to, but less than, 50 MW. Claimants cited in this regard reports and regulatory actions by Spanish energy regulators confirming that the nominal power as indicated on the specifications plate, and not the effective power fed to the grid, is determinative.383
334.
Second, Claimants emphasized that the inspections of all three plants in 2013 and 2014 by Spain's energy regulator CNE and its successor agency CNMC confirmed that the plants' equipment met the technical requirements for registration in the Special Regime.384
335.
Finally, Claimants criticized Mr. Olivas' calculations and conclusions on multiple technical grounds.385 Drawing on an expert opinion by Dr. Thomas Mancini, they contended that the nominal (or nameplate) capacity of steam turbines or generators is the average output over varying operating conditions, analogizing to a 12-volt battery, which may produce between 10 and 14 volts but is still considered a 12-volt battery.386` Claimants' also disputed Mr. Olivas' calculation of the power required for internal operating purposes on multiple grounds, contending, inter alia, that his calculations were based on screenshots of production estimates, rather than actual production data.387 They also criticized his use of a single peak hour of production over an approximately 12,000-hour range of data in his calculations.388

(2) The Tribunal's Analysis

C. The Claims

(1) Overview

346.
The Tribunal has considered the Parties' positions as summarized below, as well as many other detailed arguments made in their written submissions and at the Hearing. Insofar as particular arguments are not discussed explicitly here, the Tribunal nevertheless has considered them.
347.
The key elements of Claimants' position may be briefly summarized as follows: they invested approximately €126.2 million to develop three concentrated solar power (CSP) plantsin Spain.407 In doing so, they reasonably relied upon inducements and promises by Respondent, and in particular on the regime established in RD661/2007, which conferred immutable economic rights protected by the ECT.408 In deciding whether to proceed with their investment, Claimants consulted with and relied upon the advice of prominent Spanish counsel and other experts.409 Spain's conduct at the time of Claimants initial decision to invest in 2007 and their subsequent decision to restructure and broaden their investment in 2011, including presentations to investors hailing Spain's support for solar power and commitments made by State authorities as the investment progressed, show that their expectations of a stable regulatory regime when they made their investment were reasonable.410
348.
Claimants and their co-investors leveraged their investments and loans with substantial non-recourse borrowings by the operating companies, and built high-grade facilities capable of high production, including provisions for future storage to allow increased production. They did so because the RD 661/2007 regime based incentives on production.411 Banks were prepared to provide the non-recourse funding required because, like Claimants, they had confidence in the stability of Respondent's regulatory regime.412 But, during 2012-2014, Spain took a series of measures drastically altering the regulatory regime, culminating in elimination of the RD 661/2007 regime and substitution with a totally different and arbitrary regime.413 This dramatically reduced the cash flows necessary to sustain the investment, and that Respondent had offered to long-term investors through the RD 661/2007 regime. These changes left the plants with revenues barely sufficient to cover operations and maintenance and financing costs after rescheduling. Claimants have thus been substantially deprived of their investment of €126.2million.414
349.
Claimants contend that Respondent's actions in entirely eliminating and replacing the RD 661/2007 regime violated Spain's obligations under the ECT by (1) expropriating their investment contrary to Article 13; (2) denying fair and equitable treatment contrary to Article 10(1); (3) subjecting Claimants' investments to unreasonable measures, contrary to Article 10(1); and (4) failing to honor undertakings entered into with Claimants' investments, again contrary to Article 10(1).415
350.
Respondent disputes this narrative. In Respondent's view, Claimants have not been denied fair and equitable treatment, and there has been no expropriation or any other violation of the ECT.416 Claimants retain their minority shareholdings in the Spanish companies that own operating solar plants that receive substantial revenues from energy sales and subsidies.417 They had no legal right under Spanish law to treatment different than that which they receive.418 Claimants were entitled to receive only a reasonable return on their investment, which the present regime assures them.419 Proper due diligence would have shown them this, and that they have no right to a subsidy regime frozen for 40 years, as they claim.420 They have no property right to receive the RD 661/2007 regime, which overcompensated CSP plants.421
351.
In Respondent's contention, like any State, Spain is entitled to change its regulatory regime to meet compelling economic challenges, such as Spain's tariff deficit, in order to serve the public welfare.422 The current regime is fair and assures the operators of efficient solar plants a reasonable return.423 However, Claimants invested in overpriced and overleveraged plants. If the substantial remuneration available under the current regime does not give Claimants a satisfactory return on their investment, this results from their unsound decisions in structuring and financing their investment.

(2) The Issue of Judicial Economy

(3) The Guarantee of Fair and Equitable Treatment

a. The Parties' Positions

(i) Claimants' Position

357.
Claimants maintain that fair and equitable treatment under the ECT is an autonomous standard,426 and that Respondent's conduct manifestly was not fair or equitable. For Claimants, the obligation to extend fair and equitable treatment must be construed in light of the ECT's object and purpose, which is to assure stable and transparent conditions for investment.427 Stability is particularly necessary in the capital-intensive energy sector.428 Claimants invested in Spain because of the RD 661/2007 regime, which was designed to attract investment, contains a stabilization clause in Article 44(3) and was crucial to their decisions to invest.429
358.
The drastic changes adopted by Respondent defeated Claimants' legitimate expectations of stability of the RD 661/2007 regime and of its promised characteristics and advantages.430 These expectations were legitimate for multiple reasons.431 Investors' legitimate expectations can be predicated upon aState's legal framework,432 and changing that framework can lead to liability.433 Spain's "road shows" promoting solar investments in Spain, the adoption of RD 1614/2010 implementing a July 2010 Agreement between renewables producers and the government, and other efforts to promote investment in renewables, all confirm that Claimants' expectations were legitimate,434 as do the 2011 resolutions and other official actions confirmingthat the plants would receive the favorable regulatory regime established by RD 661/2007.435

(ii) Respondent's Position

359.
In Respondent's view, Claimants' expectations were not legitimate and were not protected by the ECT. Claimants could not reasonably expect the freezing or "unmodifiablity" of the RD 661/2007 regime for forty years, as they claim.436 Respondent made no promises or commitments in this regard,437 and Spanish law provides no stabilization clause freezing regulatory regimes.438 Case law and doctrine are now less prepared to recognize commitments on basis of legislative frameworks;439 the rigidity of arbitration cases such as Tecmed v. Mexico has been "adjusted and corrected"440 by more recent jurisprudence that recognizes the need for legislative evolution as circumstances change.
360.
With proper due diligence (which Claimants' lawyers did not conduct),441 Claimants would have known that RD 661/2007 is an implementing regulation that could be changed.442 Even their lawyer's defective due diligence report noted that similar prior measures had been changed.443 Indeed, Claimants and their co-investors recognized the possibility of changes being made even as their project progressed.444 They and their lenders and partners could have no legitimate expectation that the regime could not be modified.445 The parts of certain 2011 Resolutions invoked by Claimants as evidence of a commitment are purely informative statements of facts that were true at the time, not binding commitments.446
361.
Claimants were only entitled to a reasonable return,447 which the new regime provides.448 Claimants would receive the legislatively determined reasonable return had they properly designed and financed their plants. That is the central issue - did Spain's regulatory measures provide for a reasonable return? According to Respondent, they did.449

b. The Tribunal's Analysis