On 2 May 2016, in accordance with Rule 6(1) of the ICSID Arbitration Rules, the Secretary-General 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.

In accordance with ICSID Arbitration Rule 13(1), the Arbitral Tribunal held a first session with the Parties on 20 July 2016 via teleconference.

On 11 June 2018, the Tribunal issued Procedural Order No. 4 on the withdrawal of Eurus Energy Europe B.V.’s claims. In its Procedural Order No. 4, the Tribunal, after reciting the positions of the Parties, noted that ICSID Rule 44, under which Eurus Europe had requested the withdrawal of its claims, deals with the ‘discontinuance of the proceeding’, but that Rule 44 is silent about partial discontinuance, such as when one party wishes to withdraw all its claims, while the proceeding continues between the remaining parties in relation to the remaining claims. The Tribunal held that it had discretion to allow partial discontinuance, based on the authority that ICSID Convention Article 44 gives to tribunals to decide questions that are not covered by the Arbitration Rules or any rules agreed by the parties.¹⁰ As to the exercise of that discretion, the Tribunal considered that late withdrawal of a party should not be permitted if the respondent objects and can demonstrate prejudice, including the potential loss of a res judicata against the withdrawing party. On the other hand, the late timing of Eurus Europe’s withdrawal had been explained by the Claimants and by recent developments, in particular, the Achmea judgment of the CJEU and the ruling of the Dutch tax authorities. Taking into account that allowing the withdrawal of Eurus Europe’s claims would simplify the proceedings, saving time and some costs, and that any prejudice to the Respondent was largely notional because, in any event, the Claimants had stated that they would not seek damages in favour of Eurus Europe, the Tribunal decided to allow Eurus Europe’s withdrawal, subject to Eurus Japan’s undertaking to comply with any order for the costs attributable to Eurus Europe’s involvement in this arbitration.¹¹

On 12 July 2018, the Claimant submitted two awards as new legal authorities: Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V. v. Kingdom of Spain (ICSID Case No. ARB/13/31), Award, 15 June 2018 (‘Antin’) (CL-0114) and Antaris GmbH and Dr. Michael Göde v. Czech Republic (PCA Case No. 2014-01), Award, 2 May 2018 (‘Antaris’) (CL-0115).¹²

Tribunal :
Judge James Crawford President
Mr. Oscar M. Garibaldi Arbitrator
Professor Andrea Giardina Arbitrator

ICSID Secretariat :
Ms. Celeste Salinas Quero Secretary of the Tribunal

For Claimant :
Counsel:
Mr. Peter J. Turner QC Freshfields Bruckhaus Deringer
Mr. Nicholas Lingard Freshfields Bruckhaus Deringer
Mr. Ignacio Borrego Freshfields Bruckhaus Deringer
Mr. Joaquin Terceño Freshfields Bruckhaus Deringer
Mr. Daniel Allen Freshfields Bruckhaus Deringer
Ms. Claire Pauly Freshfields Bruckhaus Deringer
Mr. Yuri Mantilla Freshfields Bruckhaus Deringer
Mr. David Perrett Freshfields Bruckhaus Deringer

Parties:
Mr. Hidenori Mitsuoka Eurus Energy Holdings Corporation
Ms. Masako Takahata Eurus Energy Holdings Corporation
Mr. Yoshito Inagaki Eurus Energy Holdings Corporation
Mr. Jesse Harman Eurus Energy Holdings Corporation

Witnesses:
Mr. Masaaki Matsuoka Green Power Investment Corporation
Mr. Tetsuya Suwabe Eurus Energy Holdings Corporation

Experts:
Mr. Carlos Lapuerta The Brattle Group
Mr. José Antonio García The Brattle Group
Mr. Richard Caldwell The Brattle Group
Mr. Jack Stirzaker The Brattle Group

For Respondent :
Counsel:
Mr. Diego Santacruz Descartín Abogacía del Estado
Mr. Antolín Fernandez Antuña Abogacía del Estado
Ms. Mónica Moraleda Saceda Abogacía del Estado
Ms. Elena Oñoro Sainz Abogacía del Estado
Ms. Amaia Rivas Kortazar Abogacía del Estado
Ms. Irene Bonet Tous Abogacía del Estado

Party:
Ms. Carmen María Roa IDAE

Witness:
Mr. Juan Ramón Ayuso IDAE

Experts:
Mr. David Mitchell BDO
Mr. Gervase MacGregor BDO
Mr. Eduardo Pérez BDO
Mr. Javier Espel BDO
Ms. Susana Campos BDO
Mr. Tse Chen Choi BDO
Ms. Susan Blower BDO

Court Reporters :
Mr. Trevor McGowan The Court Reporter
Mr. Rodolfo Rinaldi D-R Esteno
Mr. Leandro Iezzi D-R Esteno

Interpreters :
Mr. Jesus Getan Bornn English-Spanish interpreter
Ms. Amalia Thaler de Klemm English-Spanish interpreter
Ms. Anna Sophia Chapman English-Spanish interpreter
Ms. Ryoko Okamoto Japanese-English interpreter
Ms. Mariko Higuchi Japanese-English interpreter

From the Claimant

• Claimant’s Opening Submissions (not numbered); Brattle Quantum Presentation (not numbered); Brattle Regulatory Presentation (not numbered); Claimant’s Closing Submissions (not numbered); Supplementary slide 28(a) to Claimant’s closing submissions (not numbered).

• C-0486 (Draft RD 661/2007 of 19 March 2007).

From the Respondent

• Fundamental fact issues of the arbitration (not numbered); Preliminary objections on jurisdiction and admissibility (not numbered); Merits of the case (not numbered); Quantum (not numbered); BDO Presentation (not numbered); Respondent’s Closing Statement (not numbered)

• R-0340 (Table in Vol. II tab 11 used in cross-examination of Mr. Caldwell); R-0341 (Table in Vol. II tab 13 used in cross-examination Mr. Caldwell); R-0342 (Table in Vol. II tab 15 cross-examination Mr. Caldwell); R-0341 (Proposal of Royal Decree regulating the activity of electricity production under the special regime and certain facilities of comparable technologies under the ordinary regime - Draft RD 661/2007 of 19 March 2007) (ENG and SPA).

On 5 November 2018, the European Commission filed an Application for Leave to intervene as a Non-Disputing Party pursuant to Rule 37(2) dated 29 October 2018 (the ‘European Commission’s Application’). The Commission sought leave to intervene on the applicability of Article 26 of the ECT to intra-EU disputes and on EU law on state aid as applicable law to the merits precluding an award on damages against Spain.

On 29 April 2019, the Claimant requested that the Tribunal admit into the record the award of the tribunal in Foresight Luxembourg Solar 1 S.à r.l. and others v. Kingdom of Spain (SCC Case V(2015/150), dated 14 November 2018 (‘Greentech’) and to exempt the Parties from submitting any comments. The Claimant also requested that the Tribunal direct the Respondent to submit existing awards from arbitrations related to its renewable energy regime and to continue to submit such awards until the Tribunal should indicate otherwise. The Claimant indicated that it was aware of further awards and decisions issued in such cases that had not been made public.¹⁴ On 3 May 2019, the Tribunal admitted the Greentech award into the record and issued a decision on the filing of awards and decisions. A number of other more recent awards and decisions were also submitted, and the Parties made short presentations on many of these. Those awards and decisions are indicated further below.

On 17 June 2020, the Respondent requested leave to submit without comments the Decision on the Kingdom of Spain’s Application for Annulment rendered on 11 June 2020 in the ICSID Case No. ARB/13/36 Eiser Infrastructure Limited and Energía Solar Luxembourg S.á r.l. v. Kingdom of Spain. The Claimant did not oppose this decision being added to the record. Thus, the Tribunal admitted the Annulment Decision into the record without comments. Spain submitted the Decision on 25 June 2020.²⁴

On 20 October 2020, the Respondent submitted the decision in Cavalum SGPS, S.A. v. Kingdom of Spain (ICSID Case No. ARB/15/34), Decision on Jurisdiction, Liability and Directions on Quantum, 31 August 2020 (‘Cavalum’) (RL-0102)²⁵ (dissenting opinion submitted as RL-0103)²⁶ along with its comments thereon. On 3 November 2020, the Claimant submitted its comments.

3. During the year 2010, on sight of the results of the monitoring reports on the degree of fulfilment of the Renewable Energies Plan (PER) 2005-2010, and of the Energy Efficiency and Savings Strategy in Spain (E4), together with such new targets as may be included in the subsequent Renewable Energies Plan 2011-2020, 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.⁵²

[To] [t]ransfer to the system through the electricity distribution company their output or surpluses of electricity provided that it is technically possible for them to be absorbed into the network and to receive for it the wholesale market price plus the incentives provided for in the economic arrangements made under this Royal Decree.⁵⁵

• Eos Pax IIa SL (projects Paxareiras I and IIA, both approved on 7 March 1997),

• Parque Eólico de Barbanza SA (project Barbanza, approved on 7 March 1997),

• Parque Eólico de Vicedo SL (project Vicedo, approved on 5 September 1997),

• Parque Eólico de A Ruña SL (project Paxareiras II F, approved on 17 July 1998),

• Parque Eólico de Virxe do Monte SL (project Paxareiras II C, approved on 17 July 1998),

• Parque Eólico de Ameixenda Filgueira SL (Paxareiras II D & E, approved on 10 August 2000),

• Parque Eólico de Adraño SL (project Paxareiras II B, approved on 9 May 2001),

• Parque Eólico de Currás SL (Paxareiras II F+, approved on 9 May 2001),

• Parque Eólico de la Bobia y San Isidro SL (project BSI, approved on 25 July 2001),

• Parque Eólico de Deva SL (project Deva, approved on 18 February 2002),

• Parque Eólico de Tea SL (project Tea, approved on 18 February 2002),

• Parques Eólicos de Buio SL (projects Buio, Rioboo, Gamoide, all approved on 25 February 2005, projects Fonteavia and Bidueiros, both approved on 26 December 2005), and

• Parque Eólico de Abara SL (projects Alto de Abara, approved on 24 May 2006, and Grallas, approved on 22 February 2008).

Claimant’s indirect shareholding in the SPCs is shared with the Spanish conglomerate Acciona S.A. (‘Acciona’).⁸⁸

4. For wind technology facilities on land, the number of benchmark equivalent hours will be 2,589 hours/year when, in a calendar year, the median annual operational hours of all the wind technology facilities on land with a definitive registration […] exceed 2,350 hours/year.

For facilities registered definitively in the administrative Register of production facilities operating under the special system […] on 7 May 2009 […] the benchmark values for annual equivalent hours, 2,350 and 2,589 hours/year, cannot be revised during their operational life.

• Judgment of 15 December 2005,¹²⁷ rejecting an appeal brought by an association of RE producers against RD 436/2004, for not providing an updating mechanism for the Fixed Tariff. The Court held that there were no legal obstacles for the Government, in the exercise of its regulatory power, to modify the compensation system, provided that it remained within the framework set out in Law 54/1997.

• Judgment of 25 October 2006,¹²⁸ rejecting an appeal brought against amendments made by RD 2351/2004 to RD 436/2004 which changed the system for calculating the Special Regime premiums. The Court rejected the appellant’s argument that the changes violated their legitimate expectations and confirmed that Special Regime scheme seeks to encourage the use of RE through incentives and cannot be guaranteed to remain unchanged in the future.

• Judgment of 20 March 2007,¹²⁹ rejecting an appeal brought against further amendments made to RD 436/2004. The Court noted that the appellants were invoking against RD 2351/2004 the same grounds rejected by its 2006 Judgment. The Court confirmed that Special Regime producers are not guaranteed the intangibility of a given benefit or income regime in relation to those obtained in the past, nor are they guaranteed the indefinite permanence of the formulas used to fix premiums.

• Judgment of 3 December 2009,¹³⁰ the Court rejected an appeal brought by photovoltaic energy producers against RD 661/2007. They sought to annul the first transitory provision of RD 661/2007 that excluded them from the possibility of receiving a remuneration pursuant to the pool price plus premium. The producers argued, inter alia, that such exclusion violated the alleged guarantee of non-retroactivity set out in Article 40(3) of RD 436/2004. The Court held that neither the freezing of the Special Regime remuneration system nor a right to the immutability of such system follows from Law 54/1997.

• Judgment No. 270/2015 of the Spanish Constitutional Court and Decision No. 1260/2016 of the Supreme Court (Contentious-Administrative Division)¹³¹ which elaborated on the specific issue of the retrospectivity of the Disputed Measures, both concluding that the Disputed Measures did not infringe Article 9.3 of the Spanish Constitution prohibiting retroactivity.

431. Eurus seeks the following relief:

(a) a declaration that Spain has breached the ECT;

(b) a declaration that each such breach by Spain has caused harm to Eurus by diminishing the value of its wind power investment in Spain’s territory;

(c) an award of damages (including appropriate interest and gross-up for taxes) to compensate Eurus for the loss it has suffered as a result of Spain’s breaches of the ECT;

(d) an award of its costs of the arbitration, on a full indemnity basis;

(e) an award of interest on sums awarded up to the date of payment; and

(f) such other relief as the Tribunal determines to be appropriate.

432. Eurus reserves the right to amend and/or supplement the relief sought. Eurus also reserves the right to apply for interim or interlocutory relief should it consider such action necessary.¹³²

896. In view of the arguments set forth in this Memorial, the Kingdom of Spain respectfully requests the Arbitral Tribunal to:

a) Declare that there is no jurisdiction to hear the complaints of the Claimant or, where appropriate, the inadmissibility thereof, in accordance with what is stated in section III of this Memorial, related to Preliminary Objections;

b) In the alternative, in the event that the Arbitral Tribunal decides that it does have jurisdiction to hear the present dispute, that it dismiss all the Claimant’s claims on the merits, due to the fact that the Kingdom of Spain has not breached in any way the ECT, in accordance with what is stated in sections IV and V of this Memorial, referring to the Facts and the Merits of the Case, respectively;

c) Furthermore, all claims for compensation of the Claimant should be dismissed as they are not entitled to compensation in accordance with section VI of this Memorial; and

d) Orders the Claimant to pay all costs and expenses derived from this arbitration, including ICSID administrative expenses, arbitrators’ fees, and the fees of the legal representatives of the Kingdom of Spain, their experts and advisors, as well as any other cost or expense that has been incurred, all of this including a reasonable interest rate from the date on which those costs are incurred and the date of their actual payment.

897. The Kingdom of Spain reserves the right to supplement, modify or add to these claims and to present any additional arguments required under the ICSID Convention, the ICSID Arbitration Rules, the Procedural Orders and the Arbitral Tribunal’s directives in order to respond to all claims made by the Claimant with regard to this matter.¹³³

The Respondent argues that it has not consented to arbitrate disputes deriving from tax measures such as the TVPEE. Under Article 26(3) of the ECT, Spain only consented to arbitrate disputes arising out of alleged breaches of Part III of the ECT. While Article 10(1) of the ECT is included in Part III, the TVPEE – the introduction of which allegedly breaches Spain’s obligations under Article 10(1) – is a taxation measure. Taxation measures are exempt from the scope of protection of Article 10(1) by virtue of Article 21(1) of the ECT, which provides that ‘nothing in this Treaty shall create rights or impose obligations with respect to Taxation Measures of the Contracting Parties.’ Article 21(5) reapplies Article 13 to taxation measures, subject to a process of preliminary referral to ‘the relevant Competent Tax Authority’, a matter to which the Tribunal will return. But Article 10(1) is not reapplied.

Finally, the Respondent relies on the awards of the tribunals in Isolux Infrastructure Netherlands, B.V. v. Kingdom of Spain (SCC Case No. V2013/153)¹⁴⁸ and Eiser Infrastructure Limited and Energia Solar Luxembourg S.à.r.l. v. Kingdom of Spain (ICSID Case No. ARB/13/36).¹⁴⁹ Those tribunals declared that they lacked jurisdiction to decide the claim for alleged breach of Article 10(1) of the ECT through the introduction of the TVPEE by Law 15/2012.¹⁵⁰

Except as otherwise provided in this Article, nothing in this Treaty shall create rights or impose obligations with respect to Taxation Measures of the Contracting Parties. In the event of any inconsistency between this Article and any other provision of the Treaty, this Article shall prevail to the extent of the inconsistency.¹⁶⁴

The ECT does not define the term ‘taxation measure’, although Article 21(7)(a) includes within the scope of this term ‘any provision relating to taxes of the domestic law of the Contracting Party or of a political subdivision thereof or a local authority therein’ as well as ‘any provision relating to taxes of any convention for the avoidance of double taxation or of any other international agreement or arrangement by which the Contracting Party is bound.’¹⁶⁵

To interpret Article 21, the Tribunal will apply the general rule of treaty interpretation as found in Article 31(1) of the VCLT, which provides that ‘[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.’

The question whether something is a tax measure is primarily a question of its legal operation, not its economic effect. A taxation law is one which imposes a liability on classes of persons to pay money to the State for public purposes. The economic impacts or effects of tax measures may be unclear and debatable; nonetheless a measure is a taxation measure if it is part of the regime for the imposition of a tax. A measure providing relief from taxation is a taxation measure just as much as a measure imposing the tax in the first place.¹⁶⁶

[T]he carve-out of Article 21(1) can apply only to bona fide taxation actions, i.e., actions that are motivated by the purpose of raising general revenue for the State. By contrast, actions that are taken only under the guise of taxation, but in reality aim to achieve an entirely unrelated purpose (such as the destruction of a company or the elimination of a political opponent) cannot qualify for exemption from the protection standards of the ECT under the taxation carve-out in Article 21(1).¹⁶⁷

The Yukos tribunal, like the tribunal in Hulley, distinguished between bona fide taxation measures and measures aimed at unrelated purposes such as destroying a company or a political opponent.¹⁶⁸

The Claimant alleges (paragraph 161 above) that the TVPEE applies unequally to its SPCs because all but two of them are unable to claim back amounts of tax paid because they are ineligible for subsidies. This allegedly unequal incidence of the TVPEE does not, by itself, constitute evidence of bad faith. Nor does any such unequal incidence change the character of the TVPEE as a tax. A tax does not cease to be a tax because it applies unequally or disproportionately to particular taxpayers or categories of taxpayers, and no such equality or proportionality of incidence is required by the ECT for a measure to qualify as a taxation measure. If the TVPEE is a tax measure for the purposes of ECT Article 21(1), Article 10(1) simply does not apply to it.

Spain argues that its position is consistent with Article 2 of the ILC Articles on State Responsibility, whereby a state’s conduct is an internationally wrongful act giving rise to international responsibility if it is ‘attributable to the State under international law’ and if it constitutes a breach of an international obligation of that state.¹⁹⁰ This position is arguably also consistent with the decision of the tribunal in Rusoro v. Venezuela, according to which tax liability derived from tax laws of a country other than the investor’s host country is not a consequential loss arising from the host country’s breach of the treaty and does not engage the home country’s liability.¹⁹¹ Therefore, Spain cannot be held liable to pay for tax measures implemented by Japan for which Spain is not responsible.¹⁹²

Yet Article 21(1) is not applicable in terms. Article 21(1) excludes from the jurisdiction of the Tribunal claims relating to a breach of a provision of the ECT that creates rights or imposes obligations through a taxation measure.

(5) (a) Article 13 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. Where non-discrimination issues are concerned, the Competent Tax Authorities shall apply the non-discrimination provisions of the relevant tax convention or, if there is no non-discrimination provision in the relevant tax convention applicable to the tax or no such tax convention is in force between the Contracting Parties concerned, they shall apply the non-discrimination principles under the Model Tax Convention on Income and Capital of the Organisation for Economic Cooperation and Development;

(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.

Therefore, the Respondent maintains, the carve-out for taxation measures effected by Article 21 of the ECT does not apply to expropriation claims under Article 13.²⁰² (Article 13 does not contain a free-standing prohibition of discrimination, although discrimination is one of the indicia of an expropriatory tax measure.) Article 21(5)(b)(i) of the ECT sets out a procedure which must be followed whenever an issue arises under Article 13.

Finally, the Claimant contends that the use of the singular ‘Authority’ in Article 21(5)(b)(i) was deliberate. The Tribunal already has the benefit of the conclusions of the Spanish authority, without needing further referral, and may assign them whatever weight it deems appropriate.²¹⁰

The first point to make is that Article 21(5), which is carefully drafted, does not say that failure by a claimant to notify the competent tax authority renders a claim inadmissible. The sole consequence of such failure is that the tribunal hearing the claim is called on to notify the competent tax authorities itself. The sole further consequence of such a referral (provided the competent tax authorities can agree that the tax measure is expropriatory or discriminatory) is that the tribunal should take any such agreement into account. If the Article 13 claim were inadmissible by reason of the claimant’s failure to notify the competent tax authority, there would be no point in the tribunal doing so, because the claim would already be barred. Hence a claimant’s failure to act is not in itself a ground of inadmissibility.

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

[…] (b) a company or business enterprise, or shares, stock, or other forms of equity participation in a company or business enterprise

[…]

(e) Returns; […]²¹²

(a) with respect to a Contracting Party:

[…]

(ii) a company or other organisation organised in accordance with the law applicable in that Contracting Party; […]²¹³

the amounts derived from or associated with an Investment, irrespective of the form in which they are paid, including profits, dividends, interest, capital gains, royalty payments, management, technical assistance or other fees and payments in kind.²¹⁴

MS. MORALEDA SACEDA: This dispute concerns EU law from the beginning point to the end one. You cannot decide this dispute without EU law; that’s the problem. And that’s the conflict with the principle of autonomy of EU law, which is a question of public order, acknowledged by the ECT itself.

MR. GARIBALDI: So what are we supposed to do?

MS. MORALEDA SACEDA: Declare that the Tribunal does not have jurisdiction ratione materiae.²¹⁹

Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States, such as Article 8 of the Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Czech and Slovak Federative Republic, under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept.²²¹

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.

Where two or more Contracting Parties have entered into a prior international agreement, or enter into a subsequent international agreement, whose terms in either case concern the subject matter of Part III or V of this Treaty,

(1) nothing in Part III or V of this Treaty shall be construed to derogate from any provision of such terms of the other agreement or from any right to dispute resolution with respect thereto under that agreement; and

(2) nothing in such terms of the other agreement shall be construed to derogate from any provision of Part III or V of this Treaty or from any right to dispute resolution with respect thereto under this Treaty, where any such provision is more favourable to the Investor or Investment.

(emphasis added)

In fact, there are no prior or subsequent international agreements between Japan and Spain the terms of which concern the subject matter of Parts III or V of the ECT, so that the rule of priority expressed in the final (italicized) phrase of Article 16 has no application here. But Article 16 remains indirectly relevant as concerns the relation between the ECT and the TFEU, in that by clear implication the ECT prevails over the TFEU to the extent that the ECT provision ‘is more favourable to the Investor or Investment’. One would not expect a non-EU member state, or the nationals of such a state, to be treated less well.

On this issue, the decisions of earlier tribunals have been markedly inconsistent:

• AES Summit, CL-0050 : The parties agreed that EU law is to be taken into account as a relevant fact,²⁵¹ and the tribunal ruled that it would consider the Community competition law regime as a fact.²⁵²

• Electrabel, CL-0018 : The tribunal stated that EU law is to be treated as a ‘fact’²⁵³ and is also to be classified as international law.²⁵⁴ But in intra-EU disputes, ‘EU law would prevail over the ECT in case of any material inconsistency’.²⁵⁵

• Eureko v. Slovak Republic (Jurisdiction), CL-0096 : The tribunal decided that it ‘can consider and apply EU law, if required, both as a matter of international law and as a matter of German law’.²⁵⁶ It further noted, however, that it ‘does not have jurisdiction to rule on alleged breaches of EU law as such’.²⁵⁷

• Micula, CL-0023 : The parties seemed ‘to agree that EU law forms part of the "factual matrix" of the case’ and ‘that the question of EU law may be relevant to determining whether Romania acted fairly and equitably with respect to the Claimants’ investments […]’.²⁵⁸ The tribunal concurred as the ‘overall context of EU accession in general and the pertinent provisions of EU law in particular may be relevant to the determination of whether, inter alia, Romania’s actions were reasonable in light of all the circumstances, or whether Claimants’ expectations were legitimate’.²⁵⁹ However, it decided that EU law, and state aid law in particular, was irrelevant to the tribunal and solely a matter for the enforcing court.²⁶⁰

• Charanne, RL-0049 : The tribunal did not decide on whether the dispute concerned the interpretation or application of the European treaties in the sense of Article 344 TFEU, since it took the view that Article 344 does not apply to investor-state arbitrations.²⁶¹

• RREEF (Jurisdiction), CL-0006; RREEF (Merits), RL-0088 : The tribunal observed that public international law prevails in case of conflict between the ECT and EU law. ‘EU law does not and cannot "trump" public international law.’²⁶² The tribunal awarded substantially reduced damages to the claimants solely in relation to the allegedly ‘retrospective’ aspects of the 2013-14 regime. That aspect of the decision is discussed in more detail below.²⁶³

• Wirtgen, CL-0097 : The tribunal concluded that international law encompasses EU law,²⁶⁴ but it did not find any relevant conflict, thus the issue of primacy did not arise.²⁶⁵ Finally, there was no need to discuss state aid issues since the claims failed on other grounds.²⁶⁶

• Novenergia II, CL-0112 : The tribunal decided that EU law is not applicable and irrelevant to the determination of the jurisdiction of the tribunal.²⁶⁷

• Masdar, CL-0113 : The tribunal admitted neither the Achmea judgment,²⁶⁸ nor the EC’s decision of 10 November 2017.²⁶⁹

• Antin, CL-0114 : The tribunal did not admit the Achmea judgment,²⁷⁰ noting that EU law is substantively irrelevant to the issue of jurisdiction.²⁷¹ However, it held that Spain did not properly analyse the impact of EU law on the legitimate expectations of the investor.²⁷²

• Antaris, CL-0115 : The tribunal did not admit the Achmea decision on the basis of the Respondent’s earlier waiver of objections on the EU jurisdictional point.²⁷³ It did not need to discuss the state aid issue since the application failed on other grounds.

• Greentech, CL-0116 : The tribunal considered that EU law and the Achmea judgment were irrelevant to its decision on jurisdiction, finding Article 26(6) of the ECT applicable to the merits only.²⁷⁴ The majority of the tribunal noted that the EC decision of 10 November 2017 did not assess the RD 661/2007 incentives scheme under which the claimants had invested and hence had no bearing on the claimants’ legitimate expectations of regulatory stability at the time of their investment.²⁷⁵

• Cube, RL-0090 : The tribunal found that, while EU rules against state aid are part of EU law, they ‘plainly cannot be "principles of international law" within the meaning of Article 26(6) ECT.’²⁷⁶ The tribunal considered Spanish law and EU law relevant only as facts to determine how claimants could expect their investments in Spain to be treated, but did not to apply the provisions on EU law concerning state aid.²⁷⁷

• NextEra, RL-0091 : The tribunal rejected the intra-EU objection but noted that while the Achmea judgment dealt with an intra-EU BIT dispute, the Achmea judgment was also discussed in the context of investor-state arbitration under the ECT.²⁷⁸ The tribunal decided that the applicable law was the ECT and any rules of international law relevant to its interpretation and application, adding that it would refer to provisions of Spanish and EU law, if appropriate.²⁷⁹ No reference was made to EU law concerning the merits.

• 9REN, CL-0117 or RL-0092 : On jurisdiction, the tribunal found that EU law was not materially incompatible with investor-state arbitration under Article 26 of the ECT and the ICSID Convention, while the Achmea decision ‘[did] not extend to the ECT.’²⁸⁰ After upholding jurisdiction, the tribunal considered that it was ‘within that jurisdiction to consider EU law to the extent necessary for the resolution of the dispute under international law.’²⁸¹ (emphasis in the original)

• Landesbank, CL-0118 : This decision concerned only Spain’s intra-EU objection. The tribunal concluded that by operation of Article 16 of the ECT, EU law did not prevail over the ECT, as the basis for the tribunal’s jurisdiction. No issues of state aid were addressed.²⁸²

• OperaFund, RL-0093 : The tribunal considered that the distinction between the applicable substantive law and the law applicable to jurisdiction must be respected. The tribunal concluded that all substantive provisions of the ECT applied and that EU law was not part of the applicable substantive law of that case.²⁸³

• BayWa, RL-0095 : The tribunal considered that ‘[o]nly if and to the extent that the claims made are valid under the ECT do the substantive EU law issues arise.’²⁸⁴

• Stadtwerke, RL-0097 : The tribunal considered that EU law did not govern the tribunal’s jurisdiction by virtue of Article 26(6) of the ECT. On applicable law, the tribunal considered that Spanish law, as the host State’s national law, was not extraneous to the determination that the tribunal must make in respect of the issues in dispute. The tribunal considered that the issue of claimants’ legitimate expectations could be resolved without an assessment of the national law that created and implemented the legal and regulatory framework applicable to the investment.²⁸⁵

In the Tribunal’s view, EU law is part of international law, being established by a series of treaties as interpreted by courts (notably the CJEU) to whose jurisdiction EU member states have consented.²⁸⁶ It is correct that Japan is a third party to the EU treaties and is not bound by them as such. But the EU treaties have established legal regimes for regulating matters such as state aid, which are furthermore directly applicable as part of the law of the member states. To the extent that Japanese or other third-state corporations establish activities in the EU that are regulated by those regimes, they may be affected by them.

[T]he [EU] judicial system […] has as its keystone the preliminary ruling procedure provided for in Article 267 TFEU, which […] has the object of securing uniform interpretation of EU law, thereby serving to ensure its consistency, its full effect and its autonomy as well as, ultimately, the particular nature of the law established by the Treaties.²⁸⁸

57. It is true that, according to settled case-law of the Court, an international agreement providing for the establishment of a court responsible for the interpretation of its provisions and whose decisions are binding on the institutions, including the Court of Justice, is not in principle incompatible with EU law. The competence of the EU in the field of international relations and its capacity to conclude international agreements necessarily entail the power to submit to the decisions of a court which is created or designated by such agreements as regards the interpretation and application of their provisions, provided that the autonomy of the EU and its legal order is respected […].

58. In the present case, however, apart from the fact that the disputes falling within the jurisdiction of the arbitral tribunal referred to in Article 8 of the BIT may relate to the interpretation both of that agreement and of EU law, the possibility of submitting those disputes to a body which is not part of the judicial system of the EU is provided for by an agreement which was concluded not by the EU but by Member States. Article 8 of the BIT is such as to call into question not only the principle of mutual trust between the Member States but also the preservation of the particular nature of the law established by the Treaties, ensured by the preliminary ruling procedure provided for in Article 267 TFEU, and is not therefore compatible with the principle of sincere cooperation referred to in paragraph 34 above.

59. In those circumstances, Article 8 of the BIT has an adverse effect on the autonomy of EU law.²⁸⁹

The Claimant alleges three causes of action arising under the ECT:

(A) indirect expropriation (Article 13);

(B) breach of fair and equitable treatment (Article 10(1), first and second sentences);

(C) breach of the obligation of most constant protection, which refers also to impairment with unreasonable or discriminatory measures (Article 10(1), third sentence).

The Respondent also argues that the Disputed Measures are not expropriatory because they were not retroactive, either under international law or under Spanish law. Relying on Nations Energy v. Panama,³⁰⁸ the Respondent maintains that regulations which are applied in the future, but do not affect rights already acquired, are not retroactive from an international law perspective.³⁰⁹ Here, the payment of the new remuneration was deployed to the future, taking into account as a relevant fact payments made before the entry into force of RD-Law 2/2013.³¹⁰

(1) Investments of Investors of a Contracting Party in the Area of any other Contracting Party shall not be nationalized, expropriated or subjected to a measure or measures having effect equivalent to nationalization or expropriation (hereinafter referred to as ‘Expropriation’) except where such Expropriation is:

(a) for a purpose which is in the public interest;

(b) not discriminatory;

(c) carried out under due process of law; and

(d) accompanied by the payment of prompt, adequate and effective compensation.³¹⁶

First, it is necessary to distinguish between the claim for expropriation under Article 13 of the ECT and claims made under Article 10, 1st–3rd sentences, whether based on instability, frustration of reasonable or legitimate expectations or unreasonable or discriminatory measures. Article 13 of the ECT, like other expropriation guarantees, is concerned with the protection of property interests, including certain legal rights to money or benefits, from seizure or taking, or with conduct equivalent thereto. It is not intended to protect the wider range of interests associated with the idea of reasonable or legitimate expectations. Such expectations can be frustrated or denied, but they cannot be expropriated.

For an expropriation to occur, it is necessary for the investor to be deprived, in whole or significant part, of the property in or effective control of its investment: or for its investment to be deprived, in whole or significant part, of its value.³¹⁷

There are many other decisions to similar effect.³¹⁸

1. For the purpose of adequately monitoring energy planning, in terms of both installed power and evolution of produced energy and primary energy used, a General Registry of Special Regime Production Facilities is hereby created within the General Energy Agency of the Ministry of Industry and Energy […].³²¹

Article 21(4). An Administrative Register of Electricity Generation Installations is hereby created in the Ministry of Industry and Energy in which all those electricity generation installations that have been authorised must be entered together with their conditions and especially the capacity of the installation.

Article 31. Electricity installations falling under the special regime must be entered in the Administrative Register of Electricity Generation Installations referred to in point 4 of article 21 of this Act. In each case, the entry shall specify the remunerative arrangements that apply.³²²

[T]he Respondent has convincingly proved that, under Spanish law, registration with the RAIPRE was a mere administrative requirement in order to be able to sell energy, and by no means implied that registered facilities had a vested right to a certain remuneration.³²⁴

There is no legal obstacle that exists to prevent the Government in the exercise of the regulatory powers and of the broad entitlements it has in a strongly regulated issue such as electricity, from modifying a specific system of remuneration as long as [the Government stays] within the framework set out by the ELS [1999 Electricity Law]³²⁵

Until it is replaced by another, [Article 30 of the Electricity Law] allows the respective companies to expect that the fixing of the premiums can be included as a factor relevant to their obtaining "reasonable rates of return with reference the cost of money in the capital market" or, to put it again in the words of the preamble to Royal Decree 436/2004, "reasonable compensation for their investments." However the payment regime under examination does not guarantee to special regime electricity producers that a certain level of profits or revenues will be unchanged relative to those obtained in previous years, or that the formulas for fixing the premiums will stay unchanged.³²⁶

What article 30 of the [1997 Act] allows companies is to aspire that the premiums would include […] reasonable return rates in relation to the cost of money in the capital market; that is, a reasonable return on their investments. Owners of facilities under a Special Regime are not guaranteed the intangibility of a given benefit or income regime in relation to those obtained in previous years, nor are they guaranteed the indefinite permanence of the formulas used to fix premiums. Changes should be made within the legal limits.³²⁷

Nor can recognition of the right of producers under the special regime to the immutability of this regime be understood, since the Government, according to the intent of the Legislator, holds a margin of assessment to determine the energy outputs offered, in line with clear targets inherent in the execution of the economic, energy and environmental policies, and taking into consideration in the exercising of its regulatory power the obvious and essential general interests involved in the correct operation of the electricity production and distribution system and, in particular, the rights of the users.³²⁹

It may be recalled that no ECT tribunal has yet upheld an Article 13 claim in relation to the Disputed Measures. Such claims have either been avoided on the ground that the dispute was covered by Article 10 or rejected outright.³³¹

(1) The Preamble of RD 2366/1994 states that renewable energies reduce the consumption of conventional primary energy with a positive impact on environmental protection.³⁴⁷ Article 7 of RD 2366/1994 stated that Special Producers, such as all of the Claimant’s projects, had the right to ‘transfer their excess energy to the electricity distribution company, provided it [was] possible for such energy to be absorbed by the grid and to receive in exchange the price resulting from the provisions of this Royal Decree.’ Spain did not include language to limit the duration of such right.³⁴⁸ Also, in setting out the formula to calculate the additional compensation above the market price (‘coefficient’) that Special Procedures would receive, Article 18 of RD 2366/1994 stated that after a period of five years, the value of the coefficient shall ‘remain constant,’ without including any language to contradict the message that it would continue so long as the facilities of Special Producers were able to produce power.³⁴⁹

(2) The preamble of Law 54/1997 placed the promotion of renewable energies above all considerations in Spain’s energy policy. Further, the Eighth transitory provision of Law 54/1997 provided that in the case that premiums were revised in the future, existing Special Producers would be entitled to choose to be covered by whatever economic arrangements were applicable to them under Law 54/1997.³⁵⁰

(3) The preamble of RD 2818/1998 expressly stated that there was ‘no time limit’ for the incentives granted to Special Producers, and explained the economic logic behind that decision, as the inability of renewable energy facilities to compete in a free market due to their characteristics, technologies and higher costs. Article 32 of RD 2818/1998 established that Special Producers could continue to be subject to the previous remuneration schemes, even in case of revision of the premiums set in RD 2818/1998, by reference to the eighth transitory provision of Law 54/1997.³⁵¹

(4) The preamble of RD 436/2004 referred to the ‘security and stability’ of the calculation method of the remuneration under the special regime to ‘foster investment in this kind of plants.’³⁵² Article 1(b) of RD 436/2004 stated that the purpose of the decree was to establish a lasting economic regime for plants eligible to be under the special regime, based on an objective, transparent methodology to calculate the remuneration. Article 34 set out a timeline for wind power facilities to receive a certain tariff from the 15th year onwards (emphasis added), i.e. on an indefinite basis.³⁵³ Article 40 provided explicitly that future revisions to incentive rates would not apply to existing facilities.³⁵⁴

(5) Article 36 of RD 661/2007 set out that wind power facilities would be entitled to receive certain financial incentives the first 15 years and then, certain incentives thereafter (emphasis added), i.e. indefinitely in time.³⁵⁵

Even if the Tribunal found that the Claimant was diligent in its investment decisions, the Disputed Measures did not violate Claimant’s legitimate expectations. Relying inter alia on Charanne v. Spain, Electrabel v. Hungary, and Blusun v. Italy,³⁸³ Spain contends that in the absence of specific commitments by a state, an investor cannot legitimately expect that a certain regulatory framework will remain unchanged.³⁸⁴ As Spain made no specific commitments to the Claimant that it would not change the Special Regime, the Claimant could not legitimately expect that the Spanish regulatory framework would remain unchanged.³⁸⁵ The Claimant’s lack of diligence rendered its expectations unrealistic and lacking any objectivity. Therefore, a claim based on alleged breach of such expectations must be dismissed.³⁸⁶

(i) The competence to set the regulatory regime of the remuneration of electricity production lies with the state, not the Autonomous Communities, as provided by Article 3(1)(c) of Law 54/1997. Therefore, neither an administrative act from the Autonomous Communities of Galicia and Asturias nor any alleged guarantee from their President could generate a legitimate expectation that the regulatory regime would remain unchanged.³⁹⁰

(ii) The certificates for registration in the RAIPRE did not shield the plants from being subject to the changes introduced by RD 2818/1998, RD 436/2004, RD-Law 7/2006 or RD 661/2007. Such registration was an administrative step required from ordinary and special regime producers, to control their participation in the SES. The tribunal in Charanne confirmed the view that such registration did not give producers an acquired right to a rate so as to establish the expectation that such rate would not be changed.³⁹¹

(iii) The contracts that the Claimant signed with Spanish distributors cannot be characterized as PPAs. These contracts simply established the settlement of the subsidies that distributors paid to producers, for which the distributors were later reimbursed by the regulator. The amounts paid under those contracts were determined by the applicable regulations, and not by the distributor and the producer. In any case, RD 661/2007 modified those contracts (the CNE taking over the distributors’ settlement functions) and the contracts expressly contemplated the possibility of the regulatory framework being modified.³⁹²

As noted in paragraph 240 above, the Tribunal will first consider Eurus’s claim under Article 10(1) of the ECT, first and second sentence, on its merits, without reference to EU state aid law. The analysis and conclusions set forth in this subsection (¶¶ 311-369) are adopted by majority. Arbitrator Garibaldi dissents in respect of the overall conclusion and most aspects of the supporting reasoning. The extent of the dissent and the reasons therefor are stated in a Partially Dissenting Opinion, appended hereto.

Each Contracting Party shall, in accordance with the provisions of this Treaty, encourage and create stable, equitable, favourable and transparent conditions for Investors of other Contracting Parties to make Investments in its Area. Such conditions shall include a commitment to accord at all times to Investments of Investors of other Contracting Parties fair and equitable treatment. Such Investments shall also enjoy the most constant protection and security and no Contracting Party shall in any way impair by unreasonable or discriminatory measures their management, maintenance, use, enjoyment or disposal.

These provisions have been extensively discussed in successive arbitral decisions,⁴¹⁴ and there is little point in the Tribunal going over the same ground. But some general points can be made.

The Claimant laid emphasis on the phrase ‘stable, equitable, favourable and transparent’ (Article 10(1) of the ECT, first sentence).⁴¹⁵ But, as several tribunals have noted, the first sentence of Article 10(1) cannot be interpreted in isolation from the second sentence.⁴¹⁶ It does not give a general mandate to ECT tribunals to decide whether government decisions affecting investments are ‘equitable’ or ‘favourable’, any more than the FET standard gives a general discretion to BIT tribunals to impose their own views as to ‘fairness’ and ‘equity’. The legal standard embodied in the first and second sentences of Article 10(1) takes into account the prerogatives and responsibilities of governments as well as the rights and interests of investors, including their interest in stability.

In the absence of a specific commitment, the state has no obligation to grant subsidies such as feed-in tariffs, or to maintain them unchanged once granted. But if they are lawfully granted, and if it becomes necessary to modify them, this should be done in a manner which is not disproportionate to the aim of the legislative amendment, and should have due regard to the reasonable reliance interests of recipients who may have committed substantial resources on the basis of the earlier regime.⁴¹⁷

The tribunal went on to add:

These considerations apply even more strongly when the context is subsidies or the payment of special benefits for particular economic sectors.⁴¹⁸

It is […] true that a representation as to future conduct of the state could be made in the form of a law, sufficiently clearly expressed. But there is still a clear distinction between a law, i.e. a norm of greater or lesser generality creating rights and obligations while it remains in force, and a promise or contractual commitment. There is a further distinction between contractual commitments and expectations underlying a given relationship: however legitimate, the latter are more matters to be taken into account in applying other norms than they are norms in their own right. International law does not make binding that which was not binding in the first place, nor render perpetual what was temporary only.⁴¹⁹

The Tribunal has already dealt with and rejected the argument that RAIPRE registration itself implied a commitment to the Special Regime.⁴²¹ The Claimant expressly accepted that there was no specific commitment made as to the immutability of the FIT regime under RD 661/2007.⁴²² In the Tribunal’s view, this is correct. Not only is it consistent with the position taken by the Spanish courts in relation both to RD 436/2004⁴²³ and RD 661/2007;⁴²⁴ it is also consistent with the conclusions reached by most of the tribunals which have considered the matter.⁴²⁵

In fact, all but one of the Claimant’s wind farms was commissioned before the entry into force of RD 661/2007, the first three of them before even the enactment of the 1997 Law.⁴²⁹ In the Tribunal’s view, as a matter of general principle, a legitimate expectation is a form of reliance interest which must relate to facts or circumstances in existence at the time the investment is made.⁴³⁰ The Claimant argued that it is possible for expectations to be enhanced by subsequent developments: for example, an investor could be seen as relying on a new decree if the investment was maintained (as distinct from being sold) after the decree was passed.⁴³¹ Any such construction would imply that investors’ expectations simply track the state of the law from time to time, and the idea of a reliance interest would lose all autonomy. Moreover, the continuous updating of legitimate expectations that such a theory would seem to imply cannot explain why expectations should always be enhanced as distinct from being impaired by subsequent developments. If they can be as easily destroyed as created, they would lose much of their value as a conduit of stability.

The tariffs, premiums, incentives and supplements resulting from any of the revisions provided for in this section shall apply solely to the plants that commence operating subsequent to the date of the entry into force referred to in the paragraph above and shall not have a backdated effect on any previous tariffs and premiums.⁴³³ (RD 436/2004, Article 40(3))

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.⁴³⁴ (RD 661/2007, Article 44(3), 3rd sub-paragraph)

Every four years, the premiums set in this chapter of this Royal Decree and the values stipulated for the facilities covered by Royal Decree 2366/1994 shall be revised, without prejudice to the stipulations of the eighth transitory provision of [Law 54/1997], by taking into account the evolution of the price of electric power on the market, the participation of these facilities of demand and their impact on the technical management of the system.⁴³⁵

Notwithstanding that established by this Royal Decree, for wind technology facilities that come under Royal Decree 661/2007, of 25 May, revisions of tariffs and premiums, both upper and lower, referred to by article 44.3 of the aforementioned Royal Decree will not affect facilities entered definitively in the administrative Register for production facilities operating under the special system and reporting to the Directorate General of Energy Policy and Mines on 7 May 2009 […].⁴³⁶

The remuneration arrangements for electric power generation installations operating under the special regime shall be supplemented by the payment of a premium under statutory terms set out in regulations and in the following cases:

[…]

To work out the premiums, the voltage level on delivery of the power to the network, the effective contribution to environmental improvement, to primary energy saving and energy efficiency, […] and the investment costs incurred shall all be taken into account so as to achieve reasonable profitability rates with reference to the cost of money on capital markets.⁴³⁷ (emphasis added)

Turning to the question of breach, it follows from the analysis of legitimate expectations in paragraphs 323-334 above that it is not sufficient for the Claimant to show that certain expectations were impaired or affected by the measures complained of. To recall the point made specifically with regard to subsidies in Blusun :

[I]f it becomes necessary to modify them, this should be done in a manner which is not disproportionate to the aim of the legislative amendment, and should have due regard to the reasonable reliance interests of recipients who may have committed substantial resources on the basis of the earlier regime.⁴⁴³

MS. RIVAS KORTAZAR: Do you recall that, as we have seen at the beginning, those 20 years of useful life was the same reference as used by the Renewable Energy Plan from the year 2005-2010?

DR. GARCÍA: No, I wouldn’t agree with that general statement. I would say that it was the regulatory life defined in the Renewable Energy Plans, not necessarily the useful life of the plant. There’s a distinction between the regulatory life and the useful life.

MS. RIVAS KORTAZAR: I agree with that point. Indeed, the disputed measures refer as well to the regulatory life of the plants; do you agree on that? To a regulatory life of 20 years for wind farms?

DR. GARCÍA: Yes.⁴⁵⁴

• In Antin, the tribunal noticed that the evidence submitted was inconsistent and the assumed lifetime spanned from 20 to up to 40 years. In particular, the Tribunal noted that substantial repairs to the plants had to be made after 25 years, which would affect the subsidy according to Article 4.3 of RD 661/2007. Based on the evidence submitted, the tribunal decided that the useful life of the plants is 25 years.⁴⁶¹

• In Eiser, the tribunal was not convinced by the documentary record submitted to it, which was limited and inconsistent. However, the primary document used, an expert due diligence report, was supportive of a 25-year life. Therefore, the tribunal rejected the claim that the plants were designed for a 40-year life.⁴⁶²

• In the same vein, the Masdar tribunal assumed a life of 25 years rejecting the claimant’s claim as to a 40-year operational life based on the weight of the evidence, which contradicted the claimant’s assertion.⁴⁶³

• Finally, the RREEF tribunal agreed with other tribunals that have faced this issue and decided that the useful life of CSP plants should be considered to be 25 years, which corresponds to the claimant’s initial assessments before the dispute arose.⁴⁶⁴

Our view is that the New Regulatory Regime reduces the remuneration to those installations that were already operating under the Original Regulatory Regime. Although technically the installations do not have to ‘pay back any amount’, reducing the future remuneration based on past gains is tantamount to asking to reimburse these gains, since the investors are being forced to offset what they have already earned against the remuneration due under the New Regulatory Regime.⁴⁶⁸

[T]he Claimant has never had an ‘acquired right’ to a remuneration in the future, sine die, by means of a fixed and unchanging FIT, not subject to possible macroeconomic control measures or reforms of the SES. As shown above, the reform contained in RD-Act 9/2013 is only effective in the future, without affecting acquired rights.⁴⁶⁹

Different tribunals in Spanish RE cases have reached different conclusions on the retrospectivity point. In Charanne, which concerned only the 2010 regulations, the tribunal rejected the retrospectivity argument, which the claimant there had presented in the form of a claim to a vested right that the regulatory framework could not be altered ‘in any way’. The tribunal formulated the question as being ‘to what extent the State can modify, with immediate effect, generally applicable regulatory provisions.’⁴⁷² But although the claimant may have put it in these terms, that is not the question. The Tribunal agrees that there was no contractual right or legitimate expectation to an unchanging subsidy in any form, and it agrees that (subject to considerations of proportionality) Article 10(1) did not preclude new regulations from having immediate effect. But it is one thing to give new regulatory measures immediate effect for existing installations, and quite another to eliminate future subsidies otherwise payable by reference to amounts lawfully paid and received in earlier years on a quite different basis.

The matter was central to the decision in RREEF. The tribunal there emphasized that the claimants acquired a right to a ‘general regime guaranteeing the essential advantages they could reasonably expect when they made their investments.’⁴⁷⁴ Furthermore, the tribunal had ‘no hesitation to find that the Respondent acted in breach of its obligation to respect the principle of stability’ by applying the Disputed Measures retroactively.⁴⁷⁵ More precisely, according to the tribunal, the Disputed Measures took into account past remuneration under the previous regime and deducted them from future payments. This has the effect of clawing back remuneration to which the investor had a right at the time the payment was made.⁴⁷⁶