The present matter concerns an award rendered by this Tribunal on 2 August 2019 (the "Award")1 and an Application for Revision of the Award dated 22 July 2020 (the "Application for Revision")2 brought by Respondent under Article 51 of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (the "ICSID Convention").
- Defeating Claimants’ expectation of stability arising from a specific commitment of regulatory stability that Spain tendered to CSP producers;
- Defeating Claimants’ expectation of regulatory consistency by enacting a new regulatory framework that allegedly abrogated the fundamental tenets of the Original Regulatory Framework upon which Claimants relied when they tendered their investment.
"335. The technical experts seem largely in agreement with respect to the technical concepts at issue. In particular, both experts seem to agree on the definition of "gross installed capacity," which is measured at the terminals of the generator inside the plant, and of "installed capacity," which is measured at the nodes where the plant connects to the electricity grid. Both experts also seem to agree that the net installed capacity is generally lower than the gross installed capacity as a result of power used by the equipment inside the plant, which draws its electricity directly from the turbine.
336. The available evidence suggests that the net output - i.e. the power as measured at the point of connection of the Morón and Olivenza plants to the grid - was 50 MWe or less. The reports by the Red Eléctrica de España confirms as much. In cross-examination, Respondent’s expert attempted to cast doubt on whether those measures were actually taken before or after the commissioning of the plants. But he did not deny that the figure listed in those reports "measures the electricity going into the grid. So (...) what is useful for actually the bill, is actually the electricity that goes into the network, not the actual power." In his own report, Mr. Casanova appears to admit that the net output of the plants (i.e. "the electricity that goes into the network") is lower than 50 MW, stating it is "generally around 49.8 MWe."
337. On the evidence, the Tribunal cannot but accept that the net output of the plants is less than 50 MW. Claimants do not contest that the gross output (measured at the terminals of the generator) is slightly higher than 50 MW.
338. The question to be decided is whether the term "installed capacity" at Article 27(1) of the EPA of 1997 is properly interpreted as the net output or the gross output of the plants.
339. As did the tribunal in Eiser, the Tribunal relies on the capacity listed on the nameplate of the respective generators and on the CNMC’s own confirmation that the plants’ installed capacity is equal to or under 50 MW.
340. Even if the Tribunal were to engage in a textual and purposive interpretation of the term "installed capacity" at Article 27(1) of the EPA 1997, the result would be the same, considering, among others, the following factors:
- The plants are remunerated for their net output. Article 20 of RD 661/2007 is unequivocal in that regard;
- For the operator of the grid, the "net output" is the most relevant and important variable, far more so than the "gross output" measured at the terminals of the generator. In this regard, both experts were at unison. Mr. Casanova, Respondent’s expert testified as follows:
"A. (Professor Casanova) Yes, the grid operator has to know what is the power being delivered to the grid by each plant. In the case of thermosolar plant, he would have to know whether, if a turbo-generator generates 50, and the final transformer of connection with the grid may be delivering 45/46, depending on the case, obviously he would have to know what that value is, because he has to organise his grid and he would have to know how far he can go tapping into the energy delivered from that particular plant.
So the answer: yes. he has to know what is the energy per unit of time that is being delivered to the grid: 45 or 46, depending on the case."
341. The Tribunal accords little weight to the excerpts of the Garrigues report and of the turnkey contracts invoked by Respondent for the following reasons:
- The fact that the service provider guarantees a "nominal power" of 55 MW does not lead inexorably to the conclusion that the actual installed capacity is 55 MW, especially if "installed capacity" is to be interpreted as the net output of the plant measured at the nodes of connection to the grid. In this regard, both experts were in agreement that the power that the plant is able to generate must - in all cases -be higher than the measurement at the connection nod to satisfy the plant’s "ancillary consumption." On this matter, Mr. Casanova testified as follows:
"THE PRESIDENT: It the net power of a CSP plant at the interconnection point of the grid is 50 megawatts, does it follow necessarily that the generator is able to generate between 10% and 15% more power than the megawatts of power delivered to the grid?
A. (Professor Casanova): Yes. I would say that it would have to generate more than 50 in order to overcome that ancillary consumption in the plant, yes."
342. The excerpt of the Garrigues report cited by Respondent seems to be based on an equivocation of the terms "installed capacity," "gross output" and "nominal capacity." It seems at best a speculation of a possible legal interpretation of the term "installed capacity" which - it is suggested -is not binding upon the Tribunal."19
[References omitted; Emphasis in the original]
(1) Either party may request revision of the award by an application in writing addressed to the Secretary-General on the ground of discovery of some fact of such a nature as decisively to affect the award, provided that when the award was rendered that fact was unknown to the Tribunal and to the applicant and that the applicant’s ignorance of that fact was not due to negligence.
"28. Had the Tribunal [known] that the Eiser Award was issued by a Tribunal unduly constituted and with a serious departure of the essential rules of the procedure, the InfraRed Tribunal would have undoubtedly reached a different conclusion.
34. The impact that this Application should produce and the change that the Application is seeking in the Award is clear: once the Eiser Award has been annulled the InfraRed Award Section VI.A must be dramatically changed. After the revision procedure a decision has to be taken revising the InfraRed Award. That revision of the Section VI.A will imply that the Tribunal will decide on the installed capacity on the basis of the evidence on the record without sidelining any of them and not on the basis of the Eiser Award.
35. With this new assessment of the evidence without considering the Eiser Award, gained improperly as we currently know, the outcome will be clear: through a misrepresentation on the installed capacity InfraRed benefitted of a privileged regime of subsidies it was not legally entitled to.
36. As a result of this outcome on the Section VI.A, the rest of the Award must be modified: in accordance with the general principles of law of the civilized nations, no protection may be given to InfraRed and, subsidiarily, no entitlement and no legitimate expectations they may have when they unduly acceded to the privileged regime of subsidies they were not legally entitled to.’’25 [sic]
[References omitted; Emphasis added]
(5) Unless the parties have agreed to another expedited procedure for making preliminary objections, a party may, no later than 30 days after the constitution of the Tribunal, and in any event before the first session of the Tribunal, file an objection that a claim is manifestly without legal merit. (...)’’
"86. In accordance with all the aforementioned, the Kingdom of Spain respectfully requests the Tribunal:
(c) The Award be revised under Article 51 of the ICSID Convention as its Section VI.A was exclusively or mainly based on the annulled Eiser Award;’’39
i. Is it manifest that the Tribunal’s determination of the installed capacity issue was not"exclusively" or "mainly" based on the Eiser Award?
ii. Is it manifest that, in the absence of the Eiser Award, - the Tribunal would have reached the same conclusion as it did on the issue of installed capacity?
iii. Are the conclusions sought by Respondent pursuant to its Application for Revision of the Award manifestly inadmissible?
(i) consideration of the inscription on the nameplates of the CSP Plants’ generators and of the CNMC’s own conclusions regarding the plants’ installed capacity; and
(ii) a purposive and textual interpretation of Article 27 of the EPA 1997 that is shaped by a variety of considerations, such as the method of remuneration under the Special Regime, the importance that the Kingdom’s grid operator accords to the question of gross vs. net output, and the many factors addressed in the evidence of the Parties’ technical experts.
(a) Arbitrators’ fees and expenses US$ 41,980.00
(b) Assistant to the Tribunal US$ 5,018.00
(c) ICSID’s administrative fees US$ 42,000.00
(d) Direct expenses US$ 9,362.15
TOTAL : US$ 98,360.15
(1) Respondent’s Application for Revision is dismissed in limine litis for being manifestly without legal merit;
(2) Respondent shall pay the entirety of the costs, fees and expenses of ICSID and of the members of the Tribunal in relation to the revision proceedings, and shall accordingly reimburse Claimants the sum of US$ 49,180.08 within 30 days of the date hereof.
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