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Lawyers, other representatives, expert(s), tribunal’s secretary

Award

TABLE OF SELECTED ABBREVIATIONS/DEFINED TERMS
Accuracy First Quantum ER Accuracy Asesores de Empresa S.A.U. ("Accuracy") Expert Report, titled "Economic Report on the Claimant and Its Quantum Valuation," dated 15 September 2015
Accuracy First Regulatory ER Accuracy Expert Report, titled "Economic Report on the Incentives to the Solar Thermal Sector in Spain," dated 15 September 2015
Accuracy Second Quantum ER Accuracy Expert Report, titled "Second Economic Report on the Claimant and Its Claim," dated 9 June 2016
Accuracy Second Regulatory ER Accuracy Expert Report, titled "Second Report on Incentives in the Solar Thermal Sector in Spain," dated 9 June 2016
Al Jaber WS Witness Statement of Dr. Sultan Al Jaber, dated 20 January 2015
Al Ramahi First WS First Witness Statement of Mr. Mohamed Al Ramahi, dated 20 January 2015
Al Ramahi Second WS Second Witness Statement of Mr. Mohamed Al Ramahi, dated 29 February 2016
Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings 2006
Brattle First Quantum ER Brattle Group Expert Report, titled "Financial Damages to Masdar," dated 21 January 2015
Brattle First Regulatory ER Brattle Group Expert Report, titled "Changes to the Regulation of Concentrated Solar Power Installations in Spain," dated 21 January 2015
Brattle Second Quantum ER Brattle Group Expert Report, titled "Rebuttal Report: Financial Damages to Masdar," dated March 2016
Brattle Second Regulatory ER Brattle Group Expert Report, titled "Rebuttal Report: Changes to the Regulation of Concentrated Solar Power Installations in Spain," dated 1 March 2016

 

C-[#] Claimant's Exhibit
CL-[#] Claimant's Legal Authority
Cl. Bif. Claimant's Observations on Respondent' s Request for Bifurcation, dated 24 March 2015
Cl. Mem. Claimant's Memorial on the Merits, dated 22 January 2015
Cl. Obs. EC Claimant's Observations on the European Commission's Written Amicus Curiae Submission, dated 8 April 2015
CSP Concentrated Solar Power
Cl. Rej. Jur. Claimant's Rejoinder on Jurisdiction, dated 24 July 2016
Cl. Reply Claimant's Reply on the Merits and CounterMemorial on Jurisdiction, dated 3 March 2016
Cl. RfA Request for Arbitration, dated 30 January 2014
ECT Energy Charter Treaty
Evans First WS First Witness Statement of Mr. Jonathan Evans, dated 21 January 2015
Evans Second WS Second Witness Statement of Mr. Jonathan Evans, dated 1 March 2016
FIT Feed-in tariff mechanism introduced in Spain on 25 May 2007 by Royal Decree No. 661/2007
Garcia WS Witness Statement of Mr. Raul Garda, dated 21 January 2015 (withdrawn)
Hearing Hearing on Jurisdiction and Merits held on 1923 September 2016
ICSID or the Centre International Centre for Settlement of Investment Disputes
ICSID Convention Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, dated 18 March 1965

 

 

JVA Joint Venture Agreement, dated 12 March 2008, entered between Abu Dhabi Future Energy Company and Sener Grupo de Ingenieria, S.A. for the creation of Torresol Energy Investments S.A.
Montoya First WS First Witness Statement of Mr. Carlos Montoya, dated 15 September 2015
Montoya Second WS Second Witness Statement of Mr. Carlos Montoya, dated 6 June 2016
PER Renewable Energy Plan 2005-2010 (in Spanish, '"Plan de Acción Nacional de Energías Renovables")
R-[#] Respondent's Exhibit
RAIPRE "Registro Administrativo de Instalaciones de Producción en Régimen Especial"
RL-[#] Respondent's Legal Authority
Resp. Bif. Respondent's Request for Bifurcation, dated 3 March 2015
Resp. C-Mem. Respondent's Counter-Memorial on the Merits and Memorial on Jurisdiction, dated 16 September 2015
Resp. Obs. EC Respondent's Observations on the European Commission's Written Amicus Curiae Submission, dated 8 April 2015
Resp. Rej. Respondent's Rejoinder on the Merits and Reply on Jurisdiction, dated 10 June 2016
Servert Gemasolar ER Expert Report of Dr. Jorge Servert, titled "GEMASOLAR Solar Tower CSP Plant -Lifetime Analysis," dated 8 June 2016
Servert Valle ER Expert Report of Dr. Jorge Servert, titled "Valle I & II Parabolic Trough CSP Plant - Lifetime Analysis," dated 8 July 2016
Tassabehji WS Witness Statement of Mr. Ziad Tassabehji, dated 21 January 2015

 

 

Tr. Day [#], [Speaker(s)], page [_], line [_]. Transcript of the Hearing (English)
Tribunal Arbitral Tribunal constituted on 18 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 The Netherlands and the Kingdom of Spain (the "ECT" or the "Treaty"), 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.
Claimant is Masdar Solar & Wind Cooperatief U.A. ("Claimant"), a private limited liability company incorporated under the laws of The Netherlands.
3.
Respondent is the Kingdom of Spain ("Spain" or "Respondent").
4.
Claimant and Respondent are collectively referred to as the "Parties..." The Parties' representatives and their addresses are listed above on page (i).
5.
Claimant's claims arise out of investments made by Claimant in November 2008 and July 2009 in three CSP Plants, Gemasolar (in 2008) and Arcosol and Termesol (both in 2009). The basis of the dispute between the Parties is the asserted impact upon those investments of measures implemented by Respondent, the effect of which, Claimant contends, was to modify the regulatory and economic regime of renewable energy projects in general and solar thermal power installations in particular, causing Claimant substantial damages.

II. PROCEDURAL HISTORY

6.
On 4 February 2014, ICSID received a request for arbitration dated 30 January 2014 from Claimant against Spain (the "Request for Arbitration").
7.
On 11 February 2014, 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. Failing an agreement of the Parties on the President of the Tribunal, pursuant to the Parties' agreed method of constitution, 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 Mr. John Beechey, a national of the United Kingdom, President, appointed by the Chairman of the ICSID Administrative Council pursuant to the Parties' agreement on the method of constitution; Mr. Gary Born, a national of the United States of America, appointed by Claimant; and Prof. Brigitte Stern, a national of France, appointed by Respondent.
10.
On 18 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.
11.
In accordance with ICSID Arbitration Rule 13(1), the Tribunal held a first session with the Parties on 15 October 2014 by videoconference.
12.
On 14 November 2014, the European Commission filed an application for leave to intervene as a non-disputing party pursuant to ICSID Arbitration Rule 37(2), dated 12 November 2014 (the "European Commission's Application").
13.
Following the first session, on 20 November 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 rulings on the disputed matters. Procedural Order No. 1 provides, inter alia, that the applicable ICSID 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 the proceeding would be Washington D.C., United States. Procedural Order No. 1 also set out the Procedural Calendar for this arbitration.
14.
Following an invitation from the Tribunal, on 3 December 2014, the Parties submitted their respective observations on the European Commission's Application. Respondent's observations were submitted with exhibit R-1.
15.
Following an invitation from the Tribunal, on 15 December 2014, the Parties submitted their second round of observations regarding the European Commission's Application.
16.
On 9 January 2015, the Tribunal notified its "Ruling on the European Commission's Application to Intervene as a Non-Disputing Party," dated 8 January 2015. The Tribunal granted the European Commission leave to file a written submission by 12 February 2015, subject to a number of conditions, including the requirement that the Commission provide a written undertaking that it would "bear any costs consequences arising from its intervention, including, but not limited to, reasonable institutional and tribunal costs, which the Tribunal, in the exercise of its discretion, deems appropriate." (the "Undertaking on Costs").
17.
On 16 January 2015, the European Commission requested an extension until 12 February 2015 to submit the above-mentioned Undertaking on Costs.
18.
On 20 January 2015, the Tribunal granted the European Commission the requested extension.
19.
On 22 January 2015, Claimant filed its Memorial on the Merits ("Memorial"), accompanied by exhibits C-1 to C-118; legal authorities CL-1 to CL-88; five (5) witness statements by Dr. Sultan Al Jaber, Mr. Mohamed Al Ramahi, Mr. Jonathan Evans, Mr. Raul García, and Mr. Ziad Tassabehji, respectively; and two (2) expert reports by the Brattle Group with exhibits BRR-1 to BRR-93 and BQR-1 to BQR-81.
20.
On 12 February 2015, the European Commission: (i) filed with the Tribunal a request to reconsider the imposition of the Undertaking on Costs required by the Tribunal's Ruling dated 8 January 2015 (the "European Commission's Request for Reconsideration"); and (ii) separately, filed with the ICSID Secretariat a "Written Amicus Curiae Submission" (the "European Commission's Written Submission").
21.
On 13 February 2015, the Parties were informed of the above-mentioned developments, including the decision, on instructions of the Tribunal, that the European Commission's Written Submission would not be incorporated into the record of the arbitration pending further instructions from the Tribunal. The Tribunal invited the Parties to provide their observations on the European Commission's Request for Reconsideration by 20 February 2015.
22.
On 19 and 20 February 2015, Claimant and Respondent, respectively, submitted their observations on the European Commission's Request for Reconsideration.
23.
On 3 March 2015, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 2, declining the European Commission's Request for Reconsideration and inviting the European Commission to file its Undertaking on Costs by 20 March 2015.
24.
On 3 March 2015, Respondent submitted a Request for Bifurcation, accompanied by exhibits R-2 to R-18 and legal authorities RL-1 to RL-17.
25.
On 19 March 2015, the European Commission submitted the Undertaking on Costs.
26.
On 20 March 2015, the Tribunal informed the Parties that it was satisfied with the terms of the undertaking provided by the European Commission. The Tribunal also informed the Parties that, absent any further observations, the European Commission's Written Submission would be incorporated into the record of the arbitration by 25 March 2015. The Parties were also invited to provide their observations on the European Commission's Written Submission by 8 April 2015.
27.
On 24 March 2015, Claimant submitted its observations on Respondent's Request for Bifurcation, accompanied by exhibits C-119 to C-123 and legal authorities CL-89 to CL-135.
28.
On 25 March 2015, the European Commission's Written Submission dated 12 February 2015 was incorporated into the record of the arbitration.
29.
On 8 April 2015, Claimant submitted its Observations on the European Commission's Written Submission, accompanied by exhibits C-124 to C-127 and legal authorities CL-136 to CL-160.
30.
Also on 8 April 2015, Respondent submitted its Observations on the European Commission's Written Submission.
31.
On 9 April 2015, the Parties were informed that the deadline for the Tribunal to render its decision on the Respondent's Request for Bifurcation was extended, pending receipt of translations of the Respondent's submission of 8 April 2015.
32.
On 21 April 2015, having received the pending translations, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 3 denying the Respondent's Request for Bifurcation.
33.
On 20 May 2015, the Tribunal invited the Parties to provide their views concerning the venue for the Hearing. On 24 and 25 May 2015, Claimant and Respondent, respectively, confirmed their preference to hold the Hearing in Paris, France.
34.
On 16 September 2015, Respondent filed its Counter-Memorial on the Merits and Memorial on Jurisdiction ("Counter-Memorial"), accompanied by exhibits R-19 to R-145; legal authorities RL-18 to RL-63; a witness statement by Mr. Carlos Montoya; and two (2) expert reports by Accuracy Asesores de Empresa, S.A.U. ("Accuracy") with exhibits ATR-1 to ATR-22 and AMR-1 to AMR-29.
35.
On 30 October 2015, following an agreement of the Parties, the Tribunal amended the Procedural Calendar.
36.
On 11 November 2015, the Parties submitted their respective applications to the Tribunal to decide on their requests for document production (the "Document Production Applications"), with their respective Redfern Schedules.
37.
On 12 November 2015, following consultations with, and the agreement of, the Parties, it was confirmed that the Hearing would be held in Paris, France.
38.
On 23 November 2015, the President of the Tribunal, with the approval of the coarbitrators, proposed to the Parties the appointment of Mr. Niccolo Landi as assistant to the President of the Tribunal.
39.
On 26 and 30 November 2015, Claimant and Respondent, respectively, confirmed their agreement to the appointment of Mr. Landi as assistant to the President of the Tribunal.
40.
On 1 December 2015, Mr. Niccolo Landi was appointed as assistant to the President of the Tribunal.
41.
On 3 December 2015, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 4 on the Parties' Document Production Applications.
42.
On 3 March 2016, Claimant submitted its Reply on the Merits and Counter-Memorial on Jurisdiction ("Reply"), accompanied by exhibits C-128 to C-209; legal authorities CL-161 to CL-238; two (2) second witness statements by Mr. Mohamed Al Ramahi and Mr. Jonathan Evans, respectively; and two (2) rebuttal expert reports by the Brattle Group, with exhibits BRR-94 to BRR-166 and BQR-83 to BQR-117.1
43.
On 10 June 2016, Respondent submitted its Rejoinder on the Merits and Reply on Jurisdiction ("Rejoinder"), accompanied by exhibits R-146 to R-296; legal authorities RL-64 to RL-74 and RL-76 to RL-98;2 a second witness statement by Mr. Carlos Montoya with exhibits; two (2) rebuttal expert reports by Accuracy, with exhibits ATR-23 to ATR-34 and AMR-30 to AMR-37; and two (2) expert reports by Dr. Jorge Servert with two sets of exhibits designated JSR-1 to JSR-10 and JSR-01 to JSR-11, respectively.
44.
On 29 June 2016, Claimant filed a request to add a number of new documents (designated exhibits C-210 to C-212 and legal authority CL-239) to the record.
45.
On 6 July 2016, Respondent submitted its observations on Claimant's request of 29 June 2016 to add new documents to the record and filed observations on the documents themselves. Respondent, in turn, filed a request to add new documents (designated exhibits R-297 to R-299) to the record.
46.
On 11 July 2016, following an agreement of the Parties, the Tribunal amended the Procedural Calendar.
47.
On 17 July 2016, Claimant submitted its observations on Respondent's request of 6 July 2016 to add new documents to the record.
48.
On 18 July 2016, the Tribunal admitted the new documents designated as exhibits C-210 to C-212, CL-239 and R-297 to R-299 into the record of the arbitration.
49.
On 24 July 2016, Claimant submitted its Rejoinder on Jurisdiction ("Rejoinder on Jurisdiction"), accompanied by exhibits C-213 to C-214; and legal authorities CL-240 to CL-248.
50.
On 25 July 2016, Claimant submitted its observations on Respondent's exhibits R-297 to R-299.
51.
On 28 July 2016, following an invitation from the Tribunal, the Parties submitted their observations on the agenda for the pre-hearing organisational call.
52.
On 29 July 2016, the Tribunal held a pre-hearing organisational telephone conference with the Parties.
53.
On 5 August 2016, the Parties made additional submissions in connection with matters pertaining to the organisation of the Hearing.
54.
On 11 August 2016, on behalf of the Tribunal, the President of the Tribunal issued Procedural Order No. 5 regarding the organisation of the Hearing.
55.
On 22 August 2016, the Parties submitted their respective list of witnesses and experts called for examination at the Hearing.
56.
On 30 August 2016, pursuant to the provisions of Procedural Order No. 5, the Parties jointly submitted for consideration of the Tribunal an agreed proposed detailed Agenda for the Hearing.
57.
On 5 September 2016, following an inquiry from the Tribunal, the Parties provided clarifications concerning the witnesses and experts called for examination at the Hearing. Claimant also informed the Tribunal that Mr. Raul García's witness statement was withdrawn from the record.
58.
On 9 September 2016, pursuant to the provisions of Procedural Order No. 5, the Parties dispatched to the Tribunal an agreed Hearing Consolidated Bundle in electronic format.
59.
On 13 and 14 September 2016, Respondent and Claimant, respectively, informed the Tribunal of certain agreements reached between the Parties in anticipation of the Hearing. These agreements included the introduction into the record of a number of new documents (i.e. documents not previously filed), corrected versions of documents previously filed and new translations of documents previously filed. The Parties informed the Tribunal that these materials had been included in the electronic Hearing Consolidated Bundle dispatched to the Tribunal, but they did not identify the materials specifically.
60.
On 15 September 2016, the Tribunal confirmed that, in light of the Parties' agreement, the new materials included in the Hearing Consolidated Bundle were admitted into the record, and could be used and referred to by the Parties during the Hearing. The Tribunal also asked the Parties to submit a joint statement specifying the new documents, the corrected documents and the new translations, for clarity of the record.
61.
On 16 September 2016, the Parties submitted the joint statement requested by the Tribunal. The new materials were identified and designated as follows:

From Claimant

• New documents: C-215 to C-229.

• Corrected documents: C-38; CL-21, CL-82; BRR-1, BRR-16, BRR-21, BRR-27, BRR-50, BRR-83, BRR-94.

From Respondent

• New documents: R-300 to R-304; RL-99; AMR-38.

• Corrected document: RL-8.

• Additional translations: R-98, R-107, R-253, R-255.

62.
A Hearing on Jurisdiction and Merits was held in Paris, France from 19 to 23 September 2016 (the "Hearing"). The following persons were present at the Hearing:

Tribunal:

Mr. John Beechey President

Mr. Gary Born Arbitrator

Prof. Brigitte Stern Arbitrator

ICSID Secretariat:

Ms. Luisa Fernanda Torres Secretary of the Tribunal

Assistant:

Mr. Niccolo Landi Assistant to the President of the Tribunal

For Claimant:

Ms. Judith Gill QC Allen & Overy LLP, Partner

Mr. Jeffrey Sullivan Allen & Overy LLP, Partner

Mr. Simon Roderick Allen & Overy LLP, Partner

Mr. Yacine Francis Allen & Overy LLP, Senior Associate

Ms. Stephanie Hawes Allen & Overy LLP, Associate

Mr. Tomasz Hara Allen & Overy LLP, Associate

Mr. Jack Busby Allen & Overy LLP, Trainee

Ms. Sara Maria Moreno Sanchez Allen & Overy LLP, Trainee

Mr. Craig Heschuk Masdar Solar & Wind Cooperatief, General Counsel

Mr. Marwan Naim Nijmeh Mubadala Legal

Mr. Mohamed Al Ramahi Witness

Mr. Jonathan Evans Witness

Mr. Ziad Tassabehji Witness

Mr. Richard Caldwell Expert, Brattle Group

Mr. Jose Garcia Expert, Brattle Group

Mr. Carlos Lapuerta Expert, Brattle Group

Mr. John (Jack) Stirzaker Expert, Brattle Group

For Respondent:

Mr. Diego Santacruz Abogacía General del Estado, Ministry of Justice

Mr. F. Javier Torres Abogacía General del Estado, Ministry of Justice

Ms. Mónica Moraleda Abogacía General del Estado, Ministry of Justice

Ms. Amaia Rivas Abogacía General del Estado, Ministry of Justice

Ms. Elena Oñoro Abogacía General del Estado, Ministry of Justice

Mr. Antolín Fernández Abogacía General del Estado, Ministry of Justice

Mr. Roberto Fernández Abogacía General del Estado, Ministry of Justice

Mr. Alfonso Olivas IDAE

Ms. Raquel Vázquez IDAE

Mr. Carlos Montoya Witness

Mr. Eduard Saura Expert, Accuracy

Mr. Christophe Schmit Expert, Accuracy

Mr. Alberto Fernández Expert, Accuracy

Ms. Laura Cózar Expert, Accuracy

Dr. Jorge Servert Expert

Court Reporters:

Mr. Paul Pelissier DR-ESTENO

Mr. Rodolfo Rinaldi DR-ESTENO

Mr. Trevor McGowan

Interpreters:

Mr. Jesús Getan Bornn Mr. Mark Viscovi Ms. Amalia Thaler de Klem

During the Hearing, the following persons were examined:

For Claimant:

Mr. Mohamed Al Ramahi Witness

Mr. Jonathan Evans Witness

Mr. Ziad Tassabehji Witness

Mr. Richard Caldwell Expert

Mr. Jose García Expert

Mr. Carlos Lapuerta Expert

For Respondent:

Mr. Carlos Montoya Witness

Mr. Eduard Saura Expert

Dr. Jorge Servert Expert

63.
During the Hearing, the Parties submitted the following demonstrative exhibits:

From Claimant

• C-230 to C-234; C-236.

• BRR-167 and BQR-118.

From Respondent

• R-305 to R-309.

• Servert Hearing Presentation (not numbered) and Accuracy Hearing Presentation (not numbered).

64.
On 22 November 2016, the Parties submitted agreed upon corrections to the Hearing transcripts in English and Spanish.
65.
On 24 November 2016, Respondent submitted a communication dated 18 November 2016, seeking authorisation from the Tribunal to add a new legal authority to the record, namely, the Final Award in Isolux Netherlands, BV v. Kingdom of Spain, SCC Case V2013/153, of 17 July 2016 (the "Isolux Award Application").
66.
Subsequently, the Tribunal received multiple communications from the Parties in connection with this matter, as follows: from Claimant on 26 and 29 November 2016, and 1 December 2016; and from Respondent on 28 and 29 November 2016.
67.
Having heard the Parties' observations, on 1 December 2016, the Tribunal ruled as follows:

"[...] The Tribunal notes that no direct answers have been forthcoming from Respondent to Claimant's request for specific confirmation that Isolux Netherlands, BV ('Isolux') has consented to the production of the Award in this proceeding. However, unless the Kingdom of Spain advises the Tribunal immediately to the contrary, the Tribunal will rely expressly on Respondent's representation that: 'there are no legal impediments for the Kingdom of Spain in order to submit such Award to the Arbitral Tribunal', on the basis that that representation is to be understood as encompassing the question of any necessary consent on the part of Isolux."

On this basis, the Tribunal has decided to authorize the introduction of the Award into the record. Each Party shall have 14 days from the date the Award is produced within which to submit observations to the Tribunal concerning the Award.

68.
On 7 December 2016, Claimant and Respondent, respectively, submitted further communications to the Tribunal in connection with the Isolux Award Application.
69.
Having received the Parties' further observations, on 7 December 2016, the Tribunal sent the following message to the Parties:

"[…] The Tribunal has nothing to add to the directions issued in the Secretariat's letter of 1 December 2016. As stated in that letter 'unless the Kingdom of Spain advises the Tribunal immediately to the contrary, the Tribunal will rely expressly on Respondent's representation that: 'there are no legal impediments for the Kingdom of Spain in order to submit such Award to the Arbitral Tribunal', on the basis that that representation is to be understood as encompassing the question of any necessary consent on the part of Isolux.' It is for the Respondent to decide whether it confirms that the Tribunal might continue to do so in light of the matters raised by Claimant."

70.
On 8 December 2016, Respondent submitted a further communication concerning the Isolux Award Application.
71.
On 12 December 2016, Respondent submitted an ex-parte communication to the ICSID Secretariat (not copying Claimant) attaching the Isolux Award, requesting that it be transmitted to the Tribunal, and asking the Tribunal to transmit the award to Claimant.
72.
On 14 December 2016, the Tribunal sent the following message to the Parties:

"The Tribunal has been informed that, on 12 December 2016, Respondent submitted a communication to the Secretary of the Tribunal only (without copying the Claimant) attaching the Isolux Award, and requesting that the Secretariat 'transmit the Award in the ISOLUX Case to the Arbitral Tribunal, with its unofficial English translation, in order for the Tribunal to transmit it to the Claimant declaring the confidentiality of said Award.' (English Translation.) On instructions of the Tribunal, the Secretariat has not yet transmitted the Isolux Award or its translation to the Members of the Tribunal.

The Tribunal considers that it has already made its position on this issue clear to the Parties. If, on that basis, Respondent wishes to introduce the Isolux Award into the record of this arbitration, it is for Respondent to do so following the regular form of communications established in Section 12.2 of Procedural Order No. 1, pursuant to which '[e]ach party's written communications shall be transmitted by email or other electronic means to the opposing party and to the Secretary of the Tribunal, who shall send them to the Tribunal."

73.
Thereafter, also on 14 December 2016, Respondent submitted a communication, copying Claimant, attaching the Isolux Award and introducing it into the record of the present arbitration.
74.
On 22 December 2016, the Parties submitted for consideration by the Tribunal an agreed extension of the deadline for submission of their respective observations on the Isolux Award until 5 January 2017. The agreement was approved by the Tribunal on that same day.
75.
On 5 January 2017, the Parties submitted to the Tribunal their observations on the Isolux Award.
76.
Pursuant to an agreement reached by the Parties, during Day 4 of the Hearing, the Parties had stated the intention (i) on the part of Claimant to submit into the record one new document (to be designated as exhibit C-235); (ii) on the part of Respondent to submit two new undefined documents and one corrected document; and (iii) to "provide [the Tribunal] with an updated USB stick with the hearing bundle [i]n due course, which will have those additional and replacement documents on it."3 In the event, however, neither matter was pursued by either Party.
77.
The Parties filed their submissions on costs on 2 March 2017.
78.
On 9 May 2017, Claimant submitted a communication seeking authorisation from the Tribunal to add a new legal authority to the record, namely the Award in Eiser Infrastructure Limited and Energia Solar Luxembourg S.a.r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/36. On 12 May 2017, Respondent provided observations indicating that it did not object to this addition to the record. On 12 May 2017, the Tribunal authorised Claimant to introduce the Eiser Award into the record. On 16 May 2017, Claimant introduced the Eiser Award into the record (designated as legal authority CL-249). Claimant and Respondent submitted their comments and observations on the Eiser Award respectively on 22 May 2017 and 5 June 2017.

III.FACTUAL BACKGROUND

81.
The following factual summary does not purport to be an exhaustive summary of all of the matters of fact upon which the Parties have placed reliance in the course of these proceedings. However, the Tribunal considers that it would be helpful to set out in chronological order certain salient events, which are of importance for the resolution of this case.
82.
Claimant, Masdar, is owned and controlled by Abu Dhabi Future Energy Company ("ADFEC"), which at all material times has owned 99% of the share capital of Claimant. ADFEC was founded in 2007 as part of the programme for the economic diversification of Abu Dhabi. ADFEC's principal object is investment in renewable energy and sustainable technology in Abu Dhabi and overseas.
83.
ADFEC is wholly controlled by Mubadala Development Company ("Mubadala"), which, in turn, is owned by the Government of Abu Dhabi.
84.
Although Respondent had had in place a regulatory framework intended to stimulate investment in renewable energy projects, a further iteration of its policy, considered to be more likely to attract investment and based upon a feed-in tariff ("FIT") mechanism, was introduced on 25 May 2007 by Royal Decree No. 661/2007 ("RD661/2007"). A fuller description of the relevant Spanish legislation is set out in Section IV below.
85.
Prior to the enactment of RD661/2007, ADFEC had already embarked on a fact-finding survey of the Spanish solar thermal technology market - and CSP in particular. In the course of a visit to Spain, Mr. Tassabehji, ADFEC's Chief Executive Officer, had met representatives of IDAE, the Spanish Institute for Energy Diversification and Saving. He was briefed on Spain's Renewable Energy Plan (2005-2010).
86.
The enactment of RD661/2007 gave added impetus to the fact-finding undertaken by Mr. Tassabehji and his team. In the latter part of 2007, they identified Sener Grupo de Ingeniería, S.A. ("Sener") as a prospective joint venture partner for investments in Spanish CSP projects and commissioned BNP to undertake a due diligence review of the RD661/2007 regime (the "BNP Report").4
87.
The results of Mr. Tassabehji's investigations were set forth in a document entitled "Draft Strategy Plan 2008-2012 for ADFEC to proceed with the investment in the CSP Plants through a JV with Sener" (the "Strategy Plan").5 The Strategy Plan constituted a proposal for consideration by ADFEC senior management (and, ultimately, the Mubadala investment committee) pursuant to which, the opportunities presented by the new RD661/2007 Special Regime for the development of solar energy in Spain in general, and Spanish CSP installations in particular, might be taken up by ADFEC in a joint venture with Sener. The Strategy Plan identified the risk inherent in the planned review of RD661/2007 in 2011 to any CSP installation that had not qualified for the RD661/2007 Special Regime within the prescribed deadline.
88.
The BNP Report was published on 24 January 2008. It confirmed ADFEC's understanding of the operation of the RD661/2007 Special Regime, the effect of which was to remove many of the risks associated with making capital investments in renewable energy electricity generation in Spain.
89.
Pursuant to the approval of ADFEC senior management and, subsequently, that of the Mubadala investment committee, ADFEC entered into a joint venture agreement (the "JV Agreement" or "JVA") with Sener for the creation of Torresol Energy Investments S.A. ("Torresol Energy") on 12 March 2008.6 Torresol Energy was to acquire the rights to the three CSP installations, which are at the centre of this dispute, Gemasolar, Termesol and Arcosol (the "Plants").
90.
Claimant was incorporated in The Netherlands on 19 March 2008. Dr. Sultan and Mr. Tassabehji, respectively ADFEC's Director of Innovations and Investments and ADFEC's Chief Executive Officer, were appointed as its founding directors.
91.
On 27 May 2008, the investment committee of Mubadala authorised ADFEC to fund an investment by Masdar in the CSP installations in the amount of EUR 79.37 million to enable Masdar to take up 40% of the equity of Torresol Energy.
96.
On 1 December 2010, Gemasolar 2006 S.A., Arcosol-50 S.A. and Termesol-50 S.A. waived their right to supply electricity into the grid until 1 May 2011 (for the Gemasolar Plant) and 1 January 2012 (for the Arcosol and Termesol Plants), and requested the Ministry of Industry, Tourism and Trade to confirm that the FIT would apply (subject to certain limitations) for the "operating life" of the installations.9
97.
On 28 December 2010, the Ministry of Industry, Tourism and Trade replied to the said communications dated 1 December 2010 by issuing a Resolution for each of the three Plants.10
98.
On 29 April 2011, the Gemasolar Plant was registered with the "Registro Administrativo de Instalaciones de Producción de Régimen Especial" (the "RAIPRE").
99.
On 23 December 2011, the Arcosol and Termesol Plants were registered with the RAIPRE.11
100.
Following the introduction of a number of legislative measures, starting with Law 15/2012 (see paragraphs 130 et seq. below), Claimant formally notified Spain of the dispute on 19 February 2013. It requested negotiations pursuant to Article 26(1) of the ECT with a view to reaching an amicable settlement of the dispute.12
101.
On 26 February 2013, Spain responded to Claimant, requesting that it submit its request for negotiations in Spanish.13
102.
On 12 March 2013, Claimant replied to Spain, stating that the ECT did not require Claimant to follow the procedure requested by Spain. It invited Spain to reconsider its position and to engage in negotiations.

IV. RELEVANT SPANISH LEGAL FRAMEWORK

103.
The beginnings of the development of a renewable energy sector in Spain go back to the 1992 United Nations Framework Convention on Climate Change, pursuant to which, Spain, in common with other industrialised nations, committed to a reduction in "greenhouse gases" and to the allocation of resources to tackle climate change. The European Union ("EU") made clear its intention to adhere to those aims.
104.
Pursuant to the subsequent Kyoto Protocol of 1997, the EU and other contracting parties were tasked with the achievement of ambitious targets to reduce greenhouse gases over the period 2008-2012. Part of the EU's proposal was to encourage the development of renewable energy technologies. It foresaw both an environmental and an economic benefit in that an investment in renewable energy projects would stimulate employment in the EU.
105.
By its Renewables Directive of 2001, the EU set forth binding targets for the consumption of renewable energy. The EU recognised that it would be necessary to put in place government-backed financial incentives to attract the necessary (private sector) investment. At about the time of the Kyoto Convention, Spain adopted a new Electricity Law, which reformed the electricity sector in Spain and anticipated the development of a regulatory regime applicable to renewables. Recognising that renewables projects involved pioneering technology and higher upfront capital costs, Law 54/1997 of 27 November 1997 on the electric power sector ("Law 54/1997")14 introduced two separate regulatory regimes, one for traditional generation plants (the "Ordinary Regime") and the other (the "Special Regime") for the generators of electricity from non-consumable renewable energies. Under the Ordinary Regime, remuneration derived solely from the wholesale market price of electricity. Under the Special Regime, generators benefitted from a premium set by the Spanish Government over and above the wholesale market price. The basis of remuneration for those generators benefitting from the Special Regime was the FIT, calculated in EUR/c per kWh of electricity produced. Law 54/1997 required the amount of that premium to be set out in statutory terms by a Government regulation, according to a general principle stated in Article 30.4 of the law:

"In order to determine the premiums, account shall be taken of the level of delivery voltage of the energy to the grid, effective contribution to improvement of the environment, saving in primary energy and energy efficiency, production of economically justifiable useful heat and the investment costs which have been incurred, in order to achieve reasonable rates of return by reference to the cost of money in the capital market."15

106.
Royal Decree 2818/1998 of 23 December 1998 on electricity production installations supplied by renewable energy, waste or cogeneration ("RD2818/1998")16 recognised that the elevated running costs of the renewable energy plants and the level of technology demanded by them would not allow for competition in a free market. Article 2.1 provided that:

"Electrical energy producing power plants with an installed power capacity equal or inferior to 50MW that meet the requirements outlined below may be registered for operation under the special regime defined herein."17

Generators qualified under the Special Regime had the right to be connected to, and supply electricity to, the national grid. Plants that used as a primary energy source any of the nonconsumable renewable energies, biomass or any kind of bio fuel were granted a premium to be reviewed by the Government on an annual basis, pursuant to Article 28.2 of the Royal Decree.

107.
The introduction of an annual review brought about an element of financial uncertainty for prospective investors, who were faced with significant commitments of upfront capital and who were looking for long term stability and predictability.
108.
Royal Decree 1432/2002 of 27 December 2002 ("RD1432/2002"), established a methodology for the approval or modification of the average, or reference, electricity tariff. It also amended a number of the provisions of Royal Decree 2017/1997 of 26 December 1997 ("RD2017/1997"), governing the organisation and regulation of the procedure for the settlement of transmission, distribution and tariff retailing costs, the permanent costs of the system and diversification and security of supply costs.18
109.
A new Government, which regarded the development of the renewable sector as a priority, was elected in Spain in early 2004.
110.
Royal Decree 436/2004 of 12 March 2004 ("RD436/2004") abolished RD2818/1998 and established a new methodology for the updating and systematisation of the legal and economic regime for electric power production in the Special Regime.19 Pursuant to RD436/2004, qualifying installations benefitted either from a regulated (fixed) tariff or else a premium payment over and above the wholesale market price per kWh of energy produced.20 The values of the regulated tariff and of the premium were to be calculated by reference to the "tarifa media de referencia" ("TMR"), fixed by the Government.21 Further, RD436/2004 remuneration continued to be based on the level of production of the plant, being paid in Euros per kWh. The more efficient the plant and the higher the level of production, the greater the remuneration (and the margin) that it would receive. Finally, and importantly, RD436/2004 provided greater stability than had RD2818/1988. Article 40.3 provided that:

"The tariffs, premiums, incentives and supplements resulting from any of the revisions provided in this section shall apply solely to the plants that commence operating subsequent to the date of the entry into force referred to […] above and shall not have a backdated effect on any previous tariffs and premiums."22 (Emphasis added)

The Explanatory Memorandum of RD436/2004 established that:

"[…] the Royal Decree guarantees operators of special regime installations fair remuneration for their investments and an equally fair allocation to electricity consumers of the costs that can be attributed to the electricity system […] ."23

The drawback remained, however, that the incentives were linked to the (variable) TMR, which was tied to general market energy prices. Nor were the incentives offered high enough in themselves to attract the necessary growth in investment, as the Government was to acknowledge in its Renewable Energy Plan ("PER", in Spanish, Plan de Acción Nacional de Energías Renovables) (see paragraph 112 below):

"[T]he incentives that have been established have not been sufficient to ensure the anticipated rate of growth. Although Royal Decree 436/2004 has, in some cases, brought about an improvement in returns on investment, it is necessary to provide further incentives if possible in particular technology areas in order to make them more attractive to future investors."24

111.
Royal Decree 2351/2004 of 23 December 2004 ("RD2351/2004") amended the previous resolution's procedure for technical restrictions and other regulatory standards of the electricity market.25
112.
In 2005, the Spanish Government published its PER. Particular attention was devoted to CSP installations for which Spain was ideally suited. In addition to the natural advantage of abundant solar resources, it had a body of existing CSP know-how and it was a sector in which developers were showing considerable interest. The PER made clear the importance that the Government attached to renewable energy as a key element in the development of a sustainable Spanish economy. Specifically, it recorded that renewables would contribute:

(i) decisively to guaranteeing the long-term supply of energy through independent and inexhaustible energy sources;

(ii) to job creation (particularly in rural areas) and improved industrial competitiveness and accordingly they should be encouraged in order to secure long-term economic growth;

(iii) to the increased use of renewables to provide electricity in cities, which would reduce emissions from fossil fuels; and

(iv) to the development of renewables in Spain, which would help to achieve binding EU carbon emission goals.

The PER acknowledged, too, that two factors would be critical, if the requisite levels of investment were to be attracted.

First, incentives would be essential:

"[I]t is essential to position different technologies in such a way that their economic profitability becomes attractive to investors, therefore facilitating access to bank finance."26

Second, a stable regulatory framework had to be in place:

"[T]he financial market continues to view return on investment within a stable regulatory framework as the decisive factor. This highlights once again the importance of public initiatives to facilitate and stimulate the fulfilment of the targets that have been defined."27

The PER made clear that the Spanish Government was estimating the level of debt finance likely to be tapped in the period 2005-2010 at some EUR 18,198 billion - or 77.1% of the total investment. The PER noted:

"It is therefore essential to place the various technologies in a position where they are sufficiently profitable to be attractive to investors and to facilitate access to bank loans."28

113.
Royal Decree Law 7/2006 of 23 June 2006 ("RDL7/2006"), on the adoption of urgent measures for the energy sector, was published on 24 June 2006.29 It amended Law 54/1997 by affording qualifying installations priority of access to the transmission and distribution network. Importantly, at Article 1, RDL7/2006 also removed temporarily the connection between future reviews of the TMR and renewable energy incentives:

"[…] A new paragraph b) is included in point 2 of Article 30 to the following effect: 'b) The energy thus generated will have priority access to transport and distribution networks, while respecting the continuing maintenance and safety of such networks.'"

"Until that which is foreseen in sections one to twelve of article 1 can be developed, in accordance with that established in the penultimate dispositions of this Royal Decree-law: 1. Electrical energy production installations with an installed power that is equal to or less than 50MW, that when Act 54/1997 entered in force, on November 27, were accepted by the scheme foreseen by Royal Decree 2366/1994 on December 4, on production of electrical energy by hydraulic installations, of cogeneration and others stored by renewable sources or resources, as well as those referred to in the second additional disposition to the mentioned Royal Decree, shall maintain the mentioned scheme. 2. The review of the average rate made by the Government shall not be applied to the prices, bonuses, incentives and rates that are part of the compensation for the electrical energy production activity in the special scheme."30

114.
It was clear to the Spanish authorities by 2007 that Spain and other EU Member States would not meet their renewables goals for 2010, prompting the European Commission to issue a new package of policy proposals intended to assist in the realisation of those goals. In its Energy Policy for Europe, issued on 10 January 2007, the European Commission stated that the purpose of its Strategic review was to:

" [...] set out a set of policies required to achieve the goals of sustainable, secure and competitive energy [...] [w]ere the EU to succeed […] [t]he EU would have set the pace for a new global industrial revolution."31

115.
In the case of Spain, that led to the enactment of new legislation in the form of Royal Decree 661/2007 ("RD661/2007", the "Decree"), which lies at the heart of this dispute.
116.
RD661/200732 came into force on 1 June 2007, replacing RD436/2004. It provided for increased installed capacity targets for the various renewables technologies consistent with the PER. So far as the CSP Plants were concerned, it set the target at 500 megawatts and, in order to reach that level of installed capacity, RD661/2007 offered investors enhanced incentives. The objectives of the new Spanish policy were set out in the Preamble to the Decree:

"Spanish society today, in the context of reducing dependence on foreign energy, better use of available energy sources and a greater awareness of the environment, is increasingly demanding the employment of renewable sources of energy and efficiency in the generation of electricity as basic principles in the achievement of sustainable development from an economic, social and environmental point of view.

[…]

[...] [A]lthough the growth seen overall in the special regime for electricity generation has been outstanding, in certain technologies the targets posed are still far from being reached.

[...] [T]he economic circumstances established by Royal Decree 436/2004 […] make it necessary to modify the compensation system and de-link it from the [TMR] , which has been used to date."33

Article 2.1 of RD661/2007 made clear that:

"Facilities for the production of electrical energy under Article 27.1 of Law 54/1997, of 27 November, may avail themselves of the special regime established under this Royal Decree."34

Article 9.1 provided for the registration of facilities producing electricity under the Special Regime:

"In order to ensure appropriate monitoring of the special regime and in particular in order to ensure the management and control of the receipt of the regulated tariffs, the premiums and supplements, both in respect of the categories, groups, and sub-groups, the installed power, and where applicable the date of entry into service, and in respect of the evolution of the electrical energy produced, the energy sold to the grid, the primary energy employed, the useful heat produced, and the primary energy saving achieved, facilities for the production of electrical energy under the special regime shall be subject to compulsory registration in Section Two of the Public Authority Register of facilities for the production of electrical energy indicated in Article 21.4 of Law 54/1997, which is a part of the Ministry of Industry, Tourism, and Trade. Section Two of the Public Authority Register indicated above shall hereinafter be known as the Public Authority Register for production facilities under the Special Regime [RAIPRE]."35

Its Explanatory Memorandum reiterates the principle of reasonable return in the following terms:

"The economic framework established in the present Royal Decree develops the principles provided in Law 54/1997 […] , guaranteeing the owners of facilities under the special regime a reasonable return on their investments, and the consumers of electricity an assignment of the costs attributable to the electricity system which is also reasonable […] ."36

Among the key features of RD661/2007 were the following:

(i) while the option of a fixed tariff or a premium was still offered, the tariffs were expressed in actual amounts per kWh and they were adjusted for inflation on a yearly basis in accordance with the consumer price index;

(ii) in the case of CSP, the fixed tariff was EUR 26.94/kWh for the first 25 years and thereafter EUR 21.55/kWh. Under the premium option, the premium was set at no less than 25.40 cents/kWh for the first 25 years and no less than 20.32 cents/kWh thereafter;

(iii) the CSP tariff was increased by 17%;

(iv) a floor (25.40 cents/kWh) and a ceiling (34.40 cents/kWh) were introduced to the premium option in order to ensure stability;

(v) Article 17 set out the rights to be enjoyed by producers under the Special Regime, among them:

"b) Transfer to the system their net production of electrical energy or energy sold, by way of the distribution or transport company upon condition that it is technically possible for it to be absorbed by the grid.

c) Receive, for the total or partial sale of their net electrical energy generated under any of the options appearing in Article 24.1, the compensation provided in the economic regime set out by this Royal Decree. The right to receive the regulated tariff, or if appropriate the premium, shall be subject to final registration of the facility in the Register of production facilities under the special regime of the General Directorate of Energy Policy and Mines, prior to the final date set out in Article 22. […]."37

(vi) the CSP producers continued to be permitted to produce energy using natural gas and receive the FITs, whether under the fixed tariff (up to 12% of total annual production attributable to gas usage) or the premium option (up to 15% of total annual production attributable to gas usage);38

(vii) pursuant to Article 22 of RD661/2007, once the CSP sector reached 85% of Spain's target capacity of 500 MW, a time limit of at least 12 months ("Tariff Window") would be fixed within which CSP installations would be required to register with the RAIPRE in order to have the benefit of RD661/2007's economic regime. Thereafter, new installations would be unable to access the tariffs and incentives established under RD661/2007, which remained available only to registered existing installations. The terms of Article 22.1 were as follows:

"1. As soon as 85% of the power target for any Group or Sub-Group as established in Articles 35-42 of the present Royal Decree has been reached, the maximum period during which such facilities as have been registered in the Public Authority Register of production facilities under the special regime prior to the date of the termination of such period shall have the right to a premium or if applicable the regulated tariff established in the present Royal Decree for such Group or Sub-Group, which shall be no less that twelve months, shall be established by Resolution of the General Secretariat for Energy.

To this effect, the National Energy Commission shall propose to the General Energy Secretariat a deadline taking into account the analysis of the data reflected in the information system indicated in Article 21 and taking into account the speed of implementation of new facilities and the average duration of the works for a standard project of any technology."39

Article 22.2 continued:

"2. Such facilities as have been given final registration in the Public Authority Register for production under the special regime of the Ministry of Industry, Tourism, and Trade, subsequent to the deadline for that technology, shall if they have elected option a) under Article 24.1, receive compensation for the energy sold equivalent to the final hourly price on the production market, and if they have elected option b), the price for the sale of the electricity shall be the price arising in the organized market or the price freely negotiated by the proprietor or the representative of the facility supplemented by the applicable market supplements if any:

Without prejudice to the above, such facilities shall be taken into account when determining the new power targets for the Renewable Energies Plan 2011-2020."40

(viii) options for the sale of net production of electrical energy produced by these facilities were set out in Article 24.1 of RD661/2007:

"In order to sell their net production of electrical energy in full or in part, the proprietors of facilities to which this Royal Decree is applicable should elect one of the following options:

a) Sell the electricity to the system through the transport or distribution grid, receiving for it a regulated tariff, which shall be the same for all scheduling periods expressed in Euro cents per kilowatt/hour.

b) Sell the electricity in the electrical energy production market. In this case the sale price of the electricity shall be the price obtained in the organised market or the price freely negotiated by the proprietor or the representative of the facility, supplemented where appropriate by a premium, in Eurocents [sic] per kilowatt/hour."41

(ix) Article 44.3 of RD661/2007 provided that the anticipated introduction of tariff revisions in 2010, on the expiration of the 2005-2010 PER planning period, would have no bearing upon installations, which had qualified for the RD661/2007 FITs prior to 1 January of the second year after the introduction of the revisions and which would continue to benefit from them:

"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 priorto 1 January of the second year folowing the year in which the revision shall have been performed."42 (Emphasis added)

117.
The Royal Decree 1578/2008 of 26 September 2008 ("RD1578/2008") - on the remuneration for the electric energy production activity using photovoltaic solar technology (Solar PV and not CSP installations) subsequent to the deadline for maintenance of the remuneration under RD661/2007 - established a regime for photovoltaic investors that had registered after the closing of the RD661/2007 "Tariff Window." Spain included in RD1578/2008 a mechanism for the centralised control and planning of PV installation development in the form of a Pre-Assignment Register.43 RD1578/2008 revised downwards the remuneration provided for in RD661/2007 for photovoltaic installations and opened the possibility to benefit from the Special Regime to installations that missed the deadline for registering in RAIPRE.
118.
Royal Decree Law 6/2009 of 30 April 2009 ("RDL6/2009"), introduced a register of preallocation pursuant to which, projects had to meet certain criteria in order to be registered and to qualify for the RD661/2007 tariffs.44 Once registered, projects had a maximum of 36 months within which to enter into commercial operation. (See Article 4.8). RDL6/2009, as did RD1578/2008, required qualifying installations to meet these criteria as a preliminary step towards full registration with RAIPRE and then obtaining the benefit of the RD661/2007 regime. While Spain faced a recognised tariff deficit, both RD1578/2008 and RDL6/2009 made explicit reference to the fact that in accordance with RD661/2007, there would be no change of economic regime once a plant was registered. The Preamble of RDL6/2009 provided that:

"In any event, the rights and expectations of the owners of the facilities are respected, with the necessary caution being exercised and the necessary transitional regime for adaptation being envisaged."45

Article 4.2 provided that:

"Registration in the […] Pre-Assignment Registry shall be a necessary condition to being awarded the right to the economic regime established in Royal Decree 661/2007 […] ."46

119.
In the course of 2009, the Ministry of Industry, Trade and Tourism issued Resolutions to each of Gemasolar, Termesol and Arcosol, confirming that:

"[…] the economic regimen for the facilities that are registered in the Pre-Allocation Registry for Compensation [as they were] [...] will be as foreseen in Royal Decree 661/2007 […] ."47

120.
In July 2010, the Spanish Government made public an agreement that it had reached with the CSP Plants and wind sectors. There was to be a limit on the number of production hours for CSP Plants, which enjoyed the tariff benefits, but it was set at sufficiently high a level that it was comfortably in excess of the production forecasts of each of the Claimant's installations. Further, new installations qualifying under RD661/2007 would be limited for the first twelve months of operation only to the fixed tariff option, but thereafter, they could elect between the fixed tariff and premium options. As a "quid pro quo," the use of gas in the production of electricity in the context of the fixed tariff option would be permitted up to 15% rather than 12%.48
121.
That agreement was formalised by Royal Decree 1614/2010 of 7 December 2010 ("RD1614/2010"), regulating and modifying certain aspects relating to the production of electricity based on thermoelectric and wind technologies.49 RD1614/2010 included a stabilisation provision in terms similar to Article 44.3 of RD661/2007 at Article 4:

Stabilisation commitments : "For solar thermoelectric technology facilities that fall under Royal Decree 661/2007 of 25 May, the revisions of tariffs, premiums and upper and lower limits referred to in article 44.3 of the aforementioned Royal Decree, shall not affect facilities registered definitively in the Administrative Registry of production facilities entitled to the special regime that is maintained by the Directorate-General for Energy and Mining Policy as of 7 May 2009, nor those that were to have been registered in the Remuneration Pre-assignment Registry under the fourth transitional provision of Royal Decree-Law 6/2009 of 30 April, and that meet the obligation envisaged in its article 4.8, extended until 31 December 2013 for those facilities associated to phase 4 envisaged in the Agreement of the Council of Ministers of 13 November 2009."50

122.
That "guarantee" was said by the Ministry of Industry Commerce and Tourism to be:

"[…] superior to the one provided by the current Article 44.3 of the Royal Decree 661/2007 […] ."51

123.
Just before the enactment of RD1614/2010, Claimant sought confirmation from the Directorate of Energy Policy and Mines of the compensation conditions applicable to the facilities throughout their operating life. The Directorate responded with three Resolutions, which, Claimant submits, confirmed in the case of each plant that the RD661/2007 regime would apply:

"[…] currently […] the retribution [sic] applicable to the installations consists of the tariffs, premiums, upper and lower limits and supplements established in Royal Decree 661/2007, dated 25 May, and which are updated on an annual basis by order of the Ministry of Industry, Tourism and Trade. The values to be effective as of 1 January 2011 are the following:

Term Regulated Reference Upper Limit Lower Limit tariff c€/kWh premium c€/kWh c€/kWh

c€/kWh

First 25 years 29.0916 27.4312 37.1483 27.4353

Thereinafter 23.2731 21.9449

Value of the reference supplement per reactive energy for the application of the bonus or malus percentage: 8.4681 c€/kWh."52

124.
Pursuant to Royal Decree Law 14/2010 of 23 December 2010 ("RDL14/2010") - on urgent measures to correct the tariff deficit in the electricity sector -, a cap was imposed on the hours of production eligible to receive the FITs.53 The tariff deficit issue is addressed further at paragraphs 128 and 129 below and in Sections VII.A(5) and VII.B(4) of this Award.
125.
Royal Decree 1565 of 19 November 2010 ("RD1565/2010") modified RD661/2007 by suppressing the right of solar photovoltaic installations to a lifetime FIT (limitation of FIT to 25 years).54
126.
RDL14/2010 established urgent measures to correct the tariff deficit: it applied (i) a maximum number of hours on operation hours on solar photovoltaic installations; and (ii) a fee for all those using the transport and distribution networks, which was also an implementation of Commission Regulation (EU) No. 838/2010 of 23 September 2010.55
127.
Royal Decree Law 1 of 27 January 2012 ("RDL1/2012") eliminated economic incentives for new production installations. In this RDL, the Spanish Government announced that "it has become necessary to design a new remuneration model for this type of technologies that takes into account the new economic scenario, promoting the efficient assignment of resources through market mechanisms."56
128.
On 7 March 2012, the National Energy Commission, in its "Report on the Spanish Energy Sector," pointed out the following:

"The insufficiency of fees is endangering the economic-financial sustainability of gas and electrical systems. Significantly, the fundamental problem in the electrical sector is that the lack of convergence between revenues and costs for activities regulated in the electrical sector in these last 10 years has created a growing debt in the electrical system. This imbalance between revenue and costs in the system is unsustainable due to the impact of the growing debt accumulated on access licenses, present and future, for consumers, and the temporal impact on the indebtedness of the companies that are obligated to finance the system's deficit."57

129.
On 27 April 2012, the Spanish Government approved the "2012 National Reforms Programme" in which it confirmed its intention to do away with the tariff deficit, specifying that:

"[I]t shall be equally distributed amongst consumers, the private sector and the public sector as part of a comprehensive reform of the electricity sector, which shall involve cost reduction measures for regulated activities, an increase of revenue from tolls, a review of energy planning and the establishment of a stable regulatory framework."58

130.
On 1 January 2013, Law 15/2012 of 27 December 2012 ("Law 15/2012") concerning tax measures to ensure energy sustainability59 came into effect. Law 15/2012 introduced three drastic changes in the economic regime applicable to existing installations. First, it abolished the right of the operating companies to use natural gas, whether for 15% or 12%, or any other percentage of annual production, while retaining the right to receive the FITs. Second, it eliminated an exemption provided for by Law 38/1992, exempting from the hydrocarbons levy the supply and import of natural gas to the extent it was used for any purposes other than engine fuel and heating fuel. Third, it imposed a 7% levy on all electricity produced (in other words, on production revenues rather than profits), which was fed into the national grid:

"The taxable event is the production of electricity and its incorporation into the electricity system measured at power station bus bars, including the peninsular electricity system and those of the insular and extra-peninsular territories, in any of the facilities referred to in Chapter IV of Law 54/1997, of 27 November, concerning the Electricity Industry."60 (Emphasis added)

131.
Royal Decree Law 2/2013 of 1 February 201361 ("RDL2/2013") reduced to zero the premium provided for by RD661/2007 and it amended the Inflation Adjustment Index. In effect, RDL2/2013 removed the premium FIT option, leaving only the fixed price option.

"Article 1. [...] As of 1 January 2013, in all methodologies which govern the updating of the remuneration, tariffs and premiums that apply to agents of the electricity system through the implementation of industry regulations and which are linked to the Consumer Price Index, this index will be replaced by the Consumer Price Index (CPI) at constant taxes excluding unprocessed foods or energy products."

"Article 2. […] Royal Decree 661/2007, of 25 May, regulating the production of electricity under a special regime, is hereby modified as follows:

One. In tables 1 and 2 of article 35, the value of the reference premium for all the subgroups is modified, and now has a value of 0 c€/kWh.

Two. In table 3 of article 36, the value of the reference premium for all the subgroups is modified, and now has a value of 0 c€/kWh. The values of the upper and lower limits are abolished. […]"62 (Emphasis added).

132.
Royal Decree Law 9/2013 of 12 July 201363 ("RDL9/2013") amended Article 30.4 of Law 54/1997. RDL9/2013 repealed the economic regime created by RD661/2007 and replaced it with a new remuneration model. Article 30.4 of RDL9/2013 provided that:

"4. Additionally, subject to the terms that the Council of Ministers might adopt pursuant to Royal Decrees, in relation to the remuneration for the generation of electricity calculated according to market price, installations may receive a specific remuneration [the Special Payment] composed of an amount per unit of installed capacity. Such amount shall cover, as appropriate, the investment costs of a standard installation that cannot be recovered through the sale of energy, as well as an amount for the operation of the installation to cover, as the case may be, the difference between exploitation costs and the revenues obtained from the participation of such a standard installation in the market.

For the calculation of that specific remuneration, the following elements shall be considered, based on the installation's regulatory useful life and by reference to the activities carried out by an efficient and well administered business:

a) The standard revenues for the sale of generated energy valued at market price of production;

b) The standard exploitation costs;

c) The standard value of the initial investment.

To that effect, the costs or investments determined by laws or administrative regulations that do not apply to the Spanish territory shall not be considered in any case. In the same manner, only those costs and investments related to the activity of electric energy generation can be taken into account.

As a result of the individual characteristics of the electricity system in the Spanish islands or the extra-peninsular territories, a standard installation for each of those electricity systems may be defined.

This remuneration regime shall not exceed the minimum required level to cover the costs that are necessary for installations to compete on an equal footing with the rest of the technologies in the market in order to allow those installations to obtain a reasonable return, by reference to the standard installation, as the case may be. Notwithstanding the above, exceptionally the remuneration regime might also include an incentive to investments and timely execution of an installation, if this was going to result in a significant cost reduction for the Spanish islands or the extra-peninsular territories' electricity systems.

Such reasonable return will be based on, before taxes, the average returns in the secondary market of the State's ten-year bonds plus the adequate differential.

The parameters of the remuneration regime can be revised every six years."64

RDL9/2013 changed the remuneration regime which previously was calculated based on production (rate per kW produced) to a regime based on efficiency criteria (investment costs, operating costs, revenues) and introduced a Special Payment.

133.
Law 24/2013 of 26 December 2013 ("Law 24/2013")65 superseded Law 54/1997. It confirmed and developed the principles set out in RDL9/2013 in that it eliminated the formal distinction between the Ordinary and Special Regimes. In Law 24/2013, the principle of economic and financial sustainability of the electricity system is given as a guiding principle for the actions of the public administration. Under this regime, renewables producers were put on the same footing as conventional power generators, save to the extent that express provision was made. While renewable installations would have priority of dispatch over non-renewable generators where electricity was offered at the same price, that priority was afforded on terms fixed by the Government and subject to requirements of the security of the system. Further, tariffs fixed for the lifetime of the installations were replaced by a mechanism whereby the Special Payment would be susceptible to revision every six years and the estimates of income derived from energy sales would be revised every three years.
134.
The Preamble to Law 24/2013 set out the reasons why it was deemed necessary to adopt a new regulatory framework. Citing a number of salient factors, including the "significant penetration of renewable electricity generation technologies," it stated that a "key element" in the decision to reform the system was the accumulation of a very substantial tariff deficit:

" [T]he accumulation, during the last decade, of annual income/expense imbalances of the electric system, […] has created a structural deficit.

The causes of this imbalance lie in the excessive growth of certain cost items due to energy policy decisions, without guaranteeing any corresponding income by the system. All this has then been worsened by the absence of growth in electricity demand, fundamentally a consequence of the economic crisis.

[…] This situation of imbalance has reached the point where the debt accumulated by the electric system presently exceeds twenty-six thousand million euros, the structural deficit of the system totals ten thousand million per year and the failure to correct the imbalance will generate a risk of bankruptcy for the entire electric system. […] ."66

135.
Royal Decree 413/2014 ("RD413/2014"), regulating the production of electricity from renewable energy sources, cogeneration and wastes, followed on 6 June 2014.67 It implemented the regime put in place by RDL9/2013 and Law 24/2013. On the basis of the new legislation, the fixed tariff and premium were scrapped and replaced by the Special Payment. Unlike the FITs, which were calculated solely by reference to production, the Special Payment is triggered only once a threshold production is reached and the amount of the remuneration is capped to that which would be received by a notional "standard installation" which was deemed to have a standard operational life of 25 years. Beyond that notional operational life of 25 years, there is no provision for any further Special Payment to be made. Furthermore, tariff payments received prior to the inception of the new regime are counted towards the total remuneration that an installation might receive over its deemed operational life.

"1. The value on which the reasonable return of the standard installation shall hinge will be calculated as the average yield of ten-year Treasury Bonds in the secondary market of the 24 months prior to the month of May of the year prior to the start of the regulatory period increased in a differential.

The reviews of the value on which reasonable return shall hinge will be applicable in what is left of the regulatory useful life of the standard installation.

2. Before 1 January of the last year of the corresponding regulatory period, the Ministry of Industry, Energy and Tourism shall present to the Council of Ministers a draft bill that will include a proposal for the value of the differential indicated in the previous section during the next regulatory period, pursuant to the criteria established in Article 14.4 of Act 24/2013 dated 26 December.

In order to set this value, the Ministry of Industry, Energy and Tourism may obtain a report from the National Commission on Markets and Competition, which shall be issued before 1 July of the second-to-last year of the corresponding regulatory system, in addition to obtaining the services of an independent specialized entity."68

136.
Ministerial Order IET/1045/2014 of 16 June 201469 approved the remuneration parameters of standard installations applicable to installations engaged in the production of electricity from renewable energy sources, co-generation and wastes.

"The aforementioned Act 24/2013, dated 26 December, thus provides in its additional tenth provision that the first regulatory period will begin on the date that Royal Decree-Law 9/2013, dated 12 July, enters into force, and will end on 31 December 2019, also setting the amount on which the return of sample reference projects is based. Moreover, in its third final provision for this first regulatory period, in line with what was already established in the first additional provision of the aforementioned Royal Decree-Law, it sets the value on which reasonable return will hinge throughout the regulatory life of installations that produce electricity from renewable energy sources, co-generation and wastes and for which premium remuneration was recognized when the aforementioned Royal Decree-Law entered into force.

This new legal and economic framework regulated under Act 24/2013, dated 26 December, was set forth, first of all, in Royal Decree 413/2014, dated 6 June, regulating the production of electricity from renewable energy sources, co-generation and wastes, while in Article 12, it establishes the procedure for granting the specific remuneration regime. Secondly, the new legal and economic framework is established through the approval of this order, which primarily approves the remuneration parameters for standard installations that apply to specific installations for the production of electricity from renewable energy sources, cogeneration and wastes.

This order finalizes the changes to the remuneration model for renewable energy, co-generation and wastes, granting financial stability to the system in a definitive manner, at the same time as it guarantees a reasonable return on the installations. These installations will continue to receive additional revenue over and above what they receive from the market until the end of their operational life, as long as they have not obtained this level of return. Furthermore, the importance of this order resides in the fact that it concerns the determination of useful operational life and the quantification of the initial value of the investment, insofar as it concerns parameters that may not be revised."70

137.
Order IET/1882/2014 of 14 October 2014,71 provided that any remuneration earned by the CSP plants from the production of energy with natural gas as from 1 January 2013 had to be repaid.

V. THE PARTIES' RELIEF SOUGHT

A. Claimant's Request for Relief

138.
Claimant requests the following relief:72

"(a) a declaration that the Respondent has breached Article 10(1) of the ECT;

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

(i) full restitution to the Claimant 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 Claimant compensation for all losses suffered as a result of Spain's breaches of the ECT; and

(iii) in any event:

A. pay the Claimant pre-award interest at a rate of 1.60% 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 Claimant the costs of this arbitration on a full indemnity basis, including all expenses that the Claimant 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.

Claimant reserves its rights to amend or supplement this relief and to request such additional, alternative or different relief as may be appropriate."73

139.
Subsequently, in its Reply, Claimant repeats its request for relief set out at paragraph 504 of the Memorial. It also asks the Tribunal to dismiss all of Spain's jurisdictional (and admissibility) objections, and adds:

"In addition to the reservation of rights contained at paragraph 505 of the Memorial, the Claimant also reserves its right to address any discrepancies that the Claimant subsequently discovers between the English and the Spanish versions of Spain's Counter-Memorial, the Claimant having relied on the English translation."74

140.
In its Rejoinder on Jurisdiction, Claimant seeks the following additional relief:

"Insofar as Spain's jurisdictional Objections are concerned (and in addition to the relief set out at paragraph 504 of the Claimant's Memorial and paragraphs 1032 to 1033 of the Claimant's Reply),

(a) the dismissal of all of Spain's jurisdictional Objections; and

(b) an order that Spain bear the cost of bringing its jurisdictional Objections."75

B. Respondent's Request for Relief

141.
Respondent seeks the following orders and relief:

"[...] in accordance with the principles of efficiency and procedural economy, [the bifurcation of] this proceeding, providing for a separate phase of jurisdiction and admissibility, so that the Preliminary Objections presented in this Document can be analysed and resolved by the Tribunal in a separate and previous manner.

This request for bifurcation should not be construed as a waiver of the Kingdom of Spain's right to raise other objections of jurisdiction or regarding the admissibility of the claims presented by the Claimants, at the appropriate time during the proceedings.

The Kingdom of Spain reserves the right to supplement, modify or complement the arguments outlined in this Request and to formulate, where appropriate, subsequent jurisdictional or admissibility objections as soon as these circumstances become apparent during the proceedings, in accordance with the provisions of Article 41 of the ICSID Convention, and with the rest of the ICSID Convention, the ICSID Rules, Procedural Order No. 1 and the decisions of the Arbitral Tribunal."76

142.
In its Counter-Memorial, Respondent further requests:

"a) a Declaration that the Tribunal has no jurisdiction over the Claimant's claims, or, as the case may be, its [sic] inadmissibility, referring to Jurisdictional Objections;

b) In the alternative, in case the Arbitral Tribunal decides it has jurisdiction over this dispute, the dismissal of all the Claimant's pretensions regarding to merits as the Kingdom of Spain has not breached the ECT in any way;

c) In the alternative, to dismiss all Claimant's claims for compensation; and

d) an Order that Claimant pay all the costs and expenses that arise from the present arbitration, including the administrative expenses incurred by ICSID, the fees of the arbitrators and the fees of the legal representation of the Kingdom of Spain, their experts and advisers, as well as any other cost or expense incurred, including interest at a reasonable interest rate from the date on which said costs were incurred until the date of its [sic] effective payment.

The Kingdom of Spain reserves the right to supplement, amend or complement these observations and to present any additional argument as needed, in accordance with the ICSID Convention, the ICSID Arbitration Rules, the Procedural Orders and the directives of the Arbitral Tribunal in order to respond to all allegations made by Claimant with regard to this matter."77

143.
In the Rejoinder, Respondent also requests the Tribunal:

"In light of the arguments expressed in this writ, […] :

a) To declare its lack of jurisdiction over the claims of the Claimants [sic] or, if applicable, their inadmissibility, in accordance with what is set forth in section III of this Document, referring to Jurisdictional Objections;

b) Subsidiarily, for the case that the Arbitral Tribunal decides that it has jurisdiction to hear this dispute, that it dismiss all the claims of the Claimants [sic] on the merits because the Kingdom of Spain has not breached in any way the ECT, in accordance with what is stated in paragraphs (A) and (B) of section IV of this Document, on the substance of the matter;

c) Subsidiarily, to dismiss all the Claimants' [sic] claims for damages as said claims are not entitled to compensation, in accordance with section V of this Document; and

d) Sentence the Claimants [sic] 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 rate of interest from the date on which these costs are incurred and the date of their actual payment.

The Kingdom of Spain reserves the right to supplement, modify or complement these pleadings and present any and all additional arguments that may be necessary in accordance with the ICSID Convention, the ICSID rules of arbitration, procedural orders and the directives of the Arbitral Tribunal in order to respond to all allegations made by the Claimant in regards to this matter."78

VI.JURISDICTION

144.
Respondent maintains the following objections to the jurisdiction of this Tribunal:

(i) lack of jurisdiction "ratione personae": Respondent contends that the dispute is, in reality, a dispute between two States, the UAE (and specifically Abu Dhabi) and the Kingdom of Spain; under international law, the conduct of Claimant must be attributed to the UAE, which is not a party to the ECT. Accordingly, neither the requirements of Article 26 of the ECT, nor those of Article 25 of the ICSID Convention have been met;

(ii) lack of jurisdiction "ratione materiae": Respondent contends that Claimant has no "investment" in Spain for the purposes of Article 1(6) of the ECT and Article 25 of the ICSID Convention;

(iii) lack of jurisdiction "ratione voluntatis": Respondent contends that it denied Claimant the benefits of Part III of the ECT in a timely fashion and in reliance upon the provisions of Article 17 of the ECT; it says that Claimant maintains no "substantial business activities" in The Netherlands (being the Area of the Contracting Party in which it is accepted that Claimant is organised);

(iv) lack of jurisdiction "ratione voluntatis" relating to tax measures, in light of the provisions of Articles 10(1) and 21 of the ECT, being a lack of jurisdiction to entertain the dispute arising out of the introduction, pursuant to Law 15/2012, of the TVPEE ("Levy") on the production and incorporation into the grid of electricity within the ambit of the Spanish electrical system; and

(v) the "intra-EU" objection: Respondent submits that the Tribunal has no jurisdiction to hear the claims, because it says that there is an:

"[A]bsence of any investor protected in accordance with the ECT. The Claimant does not come from the territory of another Contracting Party as the Netherlands, just like the Kingdom of Spain, are Member States of the European Union. The ECT does not apply to disputes pertaining to intra-EU investments."79

A. Objection Based on Lack of Jurisdiction "Ratione Personae"

(1) Respondent's Position

145.
Respondent maintains that, as a matter of international law, the conduct of Claimant is attributable to the UAE, and specifically to Abu Dhabi, which is not a party to the ECT.80 It says that, in reality, this is a dispute between two States, the UAE (Abu Dhabi) and Spain, rather than a dispute between a Contracting State and an investor, which is a national of another Contracting State. Since the dispute is between two States, the requirements of Article 26 of the ECT and of Article 25 of the ICSID Convention have not been met.
146.
Respondent points to two principles of attribution, which it says are recognised in case law and which are codified in the ILC Articles on the Responsibility of States for Internationally Wrongful Acts ("iLc Articles"), namely:

(i) the actions of a legal person must be considered actions performed by the State when such person acts in the exercise of elements of governmental authority; and

(ii) the actions of a legal person are considered actions of the State when such person acts under the control, direction or instructions of the State.

147.
While Respondent confirms that it does not assert that the ILC Articles are applicable for jurisdictional purposes,81 it says that they are evidence of the existence of principles of international customary law on attribution. That is relevant, it says, because:

(i) Article 26(6) of the ECT requires this Tribunal to:

"[…] decide the dispute in accordance with this Treaty and applicable rules and principles of international law"; and

(ii) there is authority in ICSID case law for the proposition that attribution is relevant to jurisdiction. Respondent relies upon Tulip82 and CSOB.83 In the former case, the tribunal had determined that:

"The issue of attribution relates both to the Tribunal's jurisdiction and to the merits of this dispute. Attribution is relevant […] for the purposes of the BIT and Art. 25 of the ICSID Convention."84

And in CSOB, the tribunal had concluded that:

"[…] for purposes of the Convention a mixed economy company or government-owned corporation should not be disqualified as a 'national of another Contracting State' unless it is acting as an agent for the government or is discharging an essentially government function."85

148.
In the event, Respondent concedes that it has found nothing to support the proposition that Claimant exercised any public function prerogative.86
149.
Respondent focusses instead upon what it says are indicia of control over Claimant by Abu Dhabi.
150.
Claimant, it is alleged, is under the "general control," direction or instructions of Abu Dhabi, because:

"[T]he key goals and functions of the Claimant have been determined/defined expressly by [Abu Dhabi] and those are the objectives of economic and social policy, objectives/goals of [Abu Dhabi] ."87

151.
Respondent maintains that it is clear from Abu Dhabi's policy agenda that it had established the Masdar initiative to fulfil "four key goals," namely:

"(i) [T]o contribute to the economic diversification of Abu Dhabi;

(ii) to maintain, and later expand, Abu Dhabi's position in evolving global energy markets; (iii) position Abu Dhabi as a developer of technology, rather than an importer; and (iv) to make a meaningful contribution towards sustainable human development."88

152.
All of these goals, it is submitted, are "very clearly goals and functions of the general economic and social policy of the government."89
153.
Control is manifest in the requirement that any investment made by Claimant has to be approved by the Abu Dhabi Government through Mubadala.
154.
Specific control on the part of Abu Dhabi is evidenced, says Respondent, by the fact that the Government of Abu Dhabi, through Mubadala, had commissioned BNP Paribas to conduct due diligence for the joint venture with Sener. Thereafter, and again through Mubadala, the Government had approved the investment, defined the requirements and the terms and conditions, approved the capital as well as the financing or funding or project finance and approved the EPC contracts and the like.90
155.
In essence, submits Respondent, Claimant is a special purpose vehicle to which Abu Dhabi provided funding and, through Mubadala, guarantees for the investments in issue in this arbitration.91
156.
Respondent contends that it is plain that Mubadala is an entity which identifies itself with Abu Dhabi and acts expressly on its behalf as its agent.

(2) Claimant's Position

157.
Claimant submits that the issue of control is the wrong legal test. It states that in none of the cases in which this issue has arisen has a tribunal declined jurisdiction.92
158.
The actual test is set out in CSOB - in fact in the very paragraph and the paragraph following to which Respondent had drawn attention. The tribunal stated that:

"[...] for purposes of the Convention, a mixed economy company or government owned corporation should not be disqualified as a 'national of another Contracting State' unless it is acting as an agent for the government or is discharging an essentially government function. [...]."

It continued:

" […] [the fact that] CSOB is a public sector rather than a private sector entity, does not address the here crucial issue […] For, as has been shown above, such ownership or control alone will not disqualify a company under the here relevant test from filing a claim with the Centre as 'a national of another Contracting State.'"93

159.
Claimant further submits that even if control were the test, Respondent has failed to meet it.
160.
Claimant and ADFEC are both subsidiaries of Mubadala. Each of them has a level of delegated authority to pursue investment plans. Above that level of authority, decisions are referred to the investment committee of Mubadala and if the proposed investment exceeds the investment committee's approval authority, the matter is referred to the Board of Mubadala, which exercises the highest level of approval authority for investment decisions.94 In the case of the investments in the Plants, which were an ADFEC initiative led by Dr. Sultan and Mr. Tassabehji, the investment decision had been made by the investment committee of Mubadala. Abu Dhabi itself was not involved in the decision to invest in the Plants and the proposal had not gone to the Board of Mubadala either, as the authority of the investment committee was sufficient for the purposes of approval.95
161.
At the time the investments were made, no Abu Dhabi Government officials sat on the boards/investment committees of either Claimant or ADFEC; Dr. Sultan became a Minister of State some four years after the investments in the Plants were made and his resignation from any role with Claimant.
162.
It is a primary objective of Masdar to be profitable.96 The investment in Spain was a commercial investment in partnership with Sener with a clear aim to profit. The Mubadala Group is not required to take on any investments proposed by the Government and only considers those which it believes will meet its financial criteria.97
163.
Claimant says that the decision to invest in the Plants was not taken pursuant to instructions from Abu Dhabi, but on the basis of considerations of financial, rather than socioeconomic, interests. The primary driver was economic return.98 Claimant sought:

"[T]o produce a commercially attractive rate of return by taking advantage of the financial incentives offered by the RD661/2007 special regime."99

164.
Further, the investment was to be financed by bank debt. One of the principal concerns of those responsible for the financial modelling and due diligence undertaken in connection with the investments in 2008 and 2009 was to ensure that the potential revenue streams from the Plants would be sufficient both to service the debt and produce an adequate rate of return.100
165.
Claimant maintains that the activities of the three Plants in which it invested are "quintessentially commercial": the Plants operate commercially, they sell electricity to the market and they are paid in Euros for each kWh sold. Claimant submits that it is a commercial entity. It made a commercial investment, which is now the subject of a dispute.101

(3) Analysis

166.
The Tribunal has little hesitation in dismissing this objection to its jurisdiction.
167.
The ILC Articles have been embodied in Resolution A/56/83 adopted by the General Assembly of the United Nations on 28 January 2002. This resolution is considered as a statement of customary international law on the question of attribution for purposes of asserting the responsibility of a State towards another State, which is applicable by analogy to the responsibility of States towards private parties.
168.
In order for an act to be attributed to a State, it must have a close link to the State. Such a link can result from the fact that the person performing the act is part of the State's organic structure (Article 4 of the ILC Articles), or exercises governmental powers specific to the State in relation to that act, even if it is a separate entity (Article 5 of the ILC Articles),102 or if it acts under the direct control (on the instructions of, or under the direction or control) of the State, even if it is a private party (Article 8 of the ILC Articles).103
169.
The question is therefore to examine whether the acts of Claimant, as a separate entity, can be attributed to the State of Abu Dhabi, either because it exercises governmental authority ("prérogatives de puissance publique") or because it is under the effective control of the State in its investment activities.
170.
First, the Tribunal adopts the reasoning of the tribunal in CSOB cited above. Masdar is plainly not disqualified on the ground that it was:

"[…] acting as an agent for the government or is discharging an essentially government function."104

Indeed, Respondent has expressly acknowledged that Masdar is not exercising any public function prerogative.

171.
Second, Respondent has not adduced any elements showing in a convincing manner that the State of Abu Dhabi was exercising both a general control over Claimant and a control on its investment decisions.
172.
On the basis of Respondent's concession recognising the absence of governmental powers of Claimant and its failure to adduce evidence supporting its control argument, Respondent's submission that this is a dispute between two States must fail.
173.
As Claimant cannot be equated to the State of Abu Dhabi, it has to be considered for what it is, i.e. a commercial company. The next step in order to verify the Tribunal's jurisdiction ratione personae, is thus to determine whether the company has the nationality of a State whose investors are protected under the ICSID Convention and the ECT.
174.
The ICSID Convention does not specify any particular test to determine the nationality of a juridical person.
175.
The standard test in international law (and ICSID case law) to determine the nationality of a juridical person is the place of incorporation. As the tribunal in Amco Asia observed, the concept of nationality in the ICSID Convention is:

"[…] a classical one, based on the law under which the juridical person has been incorporated […]."105

176.
The ECT, for its part, defines the investor in its Article 1:

"'Investor' means:

(a) with respect to a Contracting Party:

(i) a natural person having the citizenship or nationality of or who is permanently residing in that Contracting Party in accordance with its applicable law;

(ii) a company or other organization organized in accordance with the law applicable in that Contracting Party;"106

It is common ground between the Parties that Claimant is incorporated in The Netherlands and organized under the laws of that country, and that it satisfies therefore the nationality test under both the ICSID Convention and the ECT. In other words, the nationality of Claimant is that of The Netherlands, a Contracting State for the purposes of Article 25 of the ICSID Convention and a Contracting State of the ECT.

177.
The Tribunal is satisfied that on the plain language and interpretation of the ECT, as well as that of the ICSID Convention, the Claimant is an "investor" for the purposes of Article 1(7)(a)(ii) of the ECT and Article 25 of the ICSID Convention. Accordingly, Respondent's "ratione personae" objection fails.

B. Objection Based on Lack of Jurisdiction "Ratione Materiae"

(1) Respondent's Position

178.
Respondent contends that Claimant has no "investment" in Spain for the purposes of Article 1(6) of the ECT and Article 25 of the ICSID Convention.
179.
It says that Claimant has failed to make a qualifying "investment" in Spain for the purposes of either Article 25 of the ICSID Convention or Articles 26(1) and 1(6) of the ECT, because two "mandatory" criteria are not met by the investment:

(i) there had been no contribution of economic resources, because Claimant's equity investment in Torresol Energy was financed by Mubadala via ADFEC, and because bank financing provided by Spanish banks to Torresol was underwritten by shareholder guarantees from Mubadala and ADFEC, with the result that there had been no investment in the "objective or ordinary sense" of the term; and

(ii) there had been no assumption of risk by Claimant.

180.
In short, Respondent contends that it is clear from Claimant's own actions that it:

"[…] has not come up with any funds and has not assumed any risk for the investment, as Masdar is simply a shell company, a ghost company set up for purely tax purposes in order to be able to act as a channel for the investment of the Government of Abu Dhabi in the Kingdom of Spain."107

181.
Furthermore, when the investment was under consideration, Claimant did not even exist. Its creation:

"[W]as a mere eventuality, [it] could have existed or not, but that would not have changed the material investment."108

In any event, submits Respondent, ADFEC and Mubadala remained:

" [J]ointly obligated as concerns each and every single obligation subscribed to by Masdar ever since it was set up. In other words, Masdar is not carrying out any investment. The funds and the assumption of risk are always to be pinned on the shoulders of Mubadala."109

(2) Claimant's Position

182.
Claimant dismisses these objections, describing them as "hopeless."110 It says that its shareholding in Torresol Energy and the shareholder loans fall within the definition of an "investment" under Article 1(6) of the ECT and Claimant is the owner of, and has control over, those assets.
183.
Claimant submits that it appears to be accepted, or at least, it is not disputed by Respondent, that the term "investment" in Articles 1(6) and 26(1) of the ECT is to be given a broad interpretation, sufficient to include:

(i) shares in Torresol Energy, debt interests in the Operating Companies (through Torresol Energy) that own and operate the Plants and interests in those Plants (Article 1(6)(b));

(ii) claims to money (Article 1(6)(c));

(iii) returns (Article 1(6)(e)); and

(iv) rights conferred by law, including those conferred by RD661/2007 (Article 1(6)(f)).

184.
Claimant is the legal and beneficial owner of the shares in Torresol Energy and the creditor in respect of the shareholder loans to Torresol Energy.
185.
Claimant submits that:

(i) since Article 1(6) of the ECT must be regarded as an agreement between the Parties on the definition of "investment" for the purposes of protection under the ECT; and

(ii) since Article 26 of the ECT (and specifically Article 26(4)(a)(i)) must be regarded as an agreement between the Parties to refer disputes in respect of such investments to arbitration under the ICSID Convention,

it must follow that Claimant's assets and interests, which fall within the meaning of "investment" for the purposes of Article 1(6) of the ECT must also constitute "investments" for the purposes of Article 25(1) of the ICSID Convention.

186.
Accordingly, submits Claimant, the Tribunal need do no more than consider the definition of "investment" stated in Article 1(6) of the ECT in order to establish its jurisdiction - an express definition, which Respondent overlooks for the purposes of its objection. It says that there is no need to explore the cases, which turn on the various tribunals' interpretations of "investment" for the purposes of the ICSID Convention, which, itself contains no specific definition - notably the decision in Salini.111
187.
Claimant's submission is that even if an application of the "Salini test" were apposite, and it states very clearly that it does not believe that it is,112 its investment would satisfy the four criteria of:

(i) duration;

(ii) a contribution on the part of the investor;

(iii) a contribution to the development of the host State; and

(iv) some risk taking.

188.
In this regard, Claimant notes that:

(i) when it became a party to the JVA on 9 June 2008, Claimant, in its capacity as shareholder in Torresol Energy, assumed joint and several liability (with ADFEC) for the fulfilment of all obligations under the JVA rights and obligations, including:

- its subscription for and payment for the shares;

- its application of reasonable endeavours to promote, develop, grow and support Torresol Energy's business;

- its contributions to investment and funding provided in the business plan of Torresol Energy, including a commitment to provide "additional financing in the form of equity or shareholder loans";

(ii) it has contributed some EUR 119,028,669 in equity and shareholder loans to the investment in Torresol Energy and the Plants; and it is a full participant in the risk of the operation of the Plants as an equity investor in Torresol Energy and as a creditor pursuant to the shareholder loans.

189.
Critically, says Claimant, Respondent does not dispute any of these points.113

(3) Respondent's Further Objection

190.
Respondent raises a further objection; it says that Claimant's shareholding in, and its shareholder loans to, Torresol Energy cannot qualify as "investments" under either the ECT or the ICSID Convention, any more than can financing provided by Mubadala via ADFEC in respect of Claimant's equity investment in Torresol Energy and the shareholder guarantees in respect of the financing provided to Torresol Energy by the Spanish banks.
191.
Claimant rejects that argument. It submits that such a proposition would purport to introduce into the ECT an origin of capital requirement when the reality is that the origin of capital used to make an investment is immaterial for the purposes of jurisdiction under the ECT or the ICSID Convention. The sole criterion for the purposes of the ECT, so far as any company claiming the benefit of the Treaty's protection for its investment is concerned, is that it be incorporated in a signatory State to the Treaty; the source of the funding for the investment is immaterial.
192.
As to risk, the value of Claimant's shareholding in Torresol Energy is, and remains, at risk and as to duration, as is typically the case in renewable energy investments, the commitment made by Claimant is intended to be for the long term.

(4)Analysis

193.
Unlike the ICSID Convention, which contains no definition of "investment", and is therefore susceptible to the interpretative efforts of ICSID tribunals, notably in Salini, Article 1(6) of the ECT does contain a definition of investment. It provides that:

"'Investment' means every kind of asset, owned or controlled directly or indirectly by an Investor and includes:

(a) tangible and intangible, and movable and immovable, property, and any property rights such as leases, mortgages, liens, and pledges;

(b) a company or business enterprise, or shares, stock, or other forms of equity participation in a company or business enterprise, and bonds and other debt of a company or business enterprise;

(c) claims to money and claims to performance pursuant to contract having an economic value and associated with an Investment;

(d) Intellectual Property;

(e) Returns;

(f) any right conferred by law or contract or by virtue of any licences and permits granted pursuant to law to undertake any Economic Activity in the Energy Sector."114

194.
According to Claimant, it is sufficient for it to establish that its investment enters into the list of the assets adumbrated in Article 1(6) of the ECT, which it undoubtedly does.
195.
In the opinion of the Tribunal, Claimant's proposition that Article 1(6) of the ECT is an agreement between the Parties on the definition of "investment" for the purposes of the protections under the ECT is incontrovertible. Further, it is an extremely broad definition, as numerous tribunals have pointed out, for example Energoalliance :

" [...] [T]he definition of an 'Investment' in Article 1(6) of the ECT should be recognised as more broad compared to other acts on investment protection, namely: as a treaty covering maximum possible varieties of assets in the energy sector and optional operations therewith."115

196.
However, the Tribunal must also interpret the general meaning of the word "investment" in Article 1(6) of the ECT and in Article 25 of the ICSID Convention. It has to be noted that a substantial number of recent investor-State awards have considered that the term "investment" has an inherent meaning, which an alleged investment must meet in addition to falling into one of the categories of assets generally mentioned in BITs. Importantly, these awards have applied this so-called inherent, or objective, definition not only when applying the ICSID Convention, but also when interpreting BITs. An illustration of this approach can be found in GEA, where the tribunal found as follows: "[I]t is not so much the term 'investment' in the ICSID Convention than the term 'investment' per se that is often considered as having an objective meaning in itself, whether it is mentioned in the ICSID Convention or in a BIT."116
197.
In other words, in the Tribunal's view, elucidating the meaning of the term "investment" in Article 1(6) of the ECT is part of the interpretation of that provision. As decided in Romak, an UNCITRAL arbitration in which the ICSID Convention had no application, the starting point is the ordinary meaning of the term "investment," ascertained in its context and in light of the object and purpose of the Treaty in accordance with the rules of interpretation of Article 31 of the VCLT.117
198.
This is also the position adopted by the Isolux tribunal:

"683. The Arbitral Tribunal does not share Claimant's position that the definition of the concept of investment in the ECT is sufficient in and of itself. The list of assets listed in ECT Article 1(6) provides examples of investment but [it] does not define the concept. [...]

684. The Arbitral Tribunal shares the position of the Kingdom of Spain when it argues that this additional definition must be objective, in the absence of a subjective definition included in the ECT. It is not convinced by the Claimant's argument that the objective definition developed by many other courts faced with the absence of a definition in other bilateral or multilateral treaties, in particular but not exclusively within the ICSID arbitration, would be inapplicable. More than just the content of each treaty, what truly matters is the silence of each one regarding the definition of the concept of investment. This is the common feature of these treaties which justifies a definition of the concept of investment.

685. As noted by the Claimant, the source of this definition is the award of 2001 in the case Salini Construttori Spa and Italstrade Spa v. Kingdom of Morocco where the court considered that an investment: 'infers: contributions, a certain duration of performance of the contract and a participation in the risks of the transaction.' It added the condition of 'contribution to the economic development of the host State of the investment' (free translation). With the evolution of arbitral jurisprudence, the objective definition of the notion of investment now includes only: (i) a contribution, (ii) the receipt of returns and (iii) the assumption of risks."118

199.
In sum, the existence of an "investment" requires a commitment or allocation of resources for a duration and involving risk. For example, a one-time sale resulting in receivables would not qualify as an "investment," even if the receivables may be listed as "assets." In other words, as summarised in Postová banka, '"the definition of what constitutes an investment" implies "a contribution to an economic venture of a certain duration implying an operational risk."119
200.
Claimant also points out, rightly in the view of the Tribunal, that even if it were applicable, the Salini test has demonstrably been satisfied. In the present case, there can be no serious doubt that resources committed by Claimant fully correspond to the meaning of the term "investment" enshrined in Article 1(6) of the ECT and in Article 25 of the ICSID Convention and that the definition has been satisfied.
201.
Finally, the Tribunal addresses the "origin of capital" objection. It is satisfied that no such requirement is to be found in either the ECT or the ICSID Convention. Whether or not the finding of the Yukos tribunal that "the definition of investment in Article 1(6) of the ECT does not include any additional requirement with regard to the origin of capital or the necessity of an injection of foreign capital"120 is still persuasive per se, it articulates in that formulation precisely the position that this Tribunal would adopt. In any event, further support for the Tribunal's conclusion is to be found in Arif :121

" [...] [U]nder ICSID jurisprudence, Tribunals have generally found the origin of capital used in investments immaterial. According to doctrinal authorities, the origin of the funds is irrelevant for the purposes of jurisdiction. Whether investments are made from imported capital, from profits made locally, from payments received locally or from loans raised locally, makes no difference to the degree of protection enjoyed."

202.
The Tribunal is satisfied that on the plain language and the interpretation of the ICSID Convention and of the ECT, Claimant has made an "investment" within the meaning of Article 1(6) of the ECT and in accordance with the ICSID Convention. Accordingly, Respondent's "ratione materiae" objection fails.

C. Objection Based on Lack of Jurisdiction "Ratione Voluntatis’ (Denial of BENEFITS)

203.
Article 17 ("Non-Application of Part III in Certain Circumstances") provides that:

"Each Contracting Party reserves the right to deny the advantages of this Part to:

(1) a legal entity if citizens or nationals of a third state own or control such entity and if that entity has no substantial business activities in the Area of the Contracting Party in which it is organized […] ."122

(1) Respondent's Position

204.
Respondent maintains that there is nothing in the language of the provision to say how or when the right is to be exercised. It sets three requirements:

(i) the legal entity to which the advantages may be denied is legally incorporated in the territory of a Contracting Party;

(ii) the entity must be owned or controlled by nationals of a third State; and

(iii) the legal entity has no substantial business activities in the territory in which it is set up.

205.
Respondent accepts that there is no disagreement that Claimant was incorporated in The Netherlands, nor that it is ultimately owned and controlled by ADFEC. There is an issue, however, in respect of the extent of Claimant's business activities in The Netherlands. Respondent notes that in the Spanish language version of the ECT, reference is made to "actividades empresariales importantes" ("important business activities") and the Italian language version refers to "attivita commerciali rilevanti" ("relevant business activities"), but, says Respondent, in whichever language the ECT is read, what is intended is "many business activities."123
206.
According to Respondent, Claimant:

" [W]as not even paying for the rent of an office, nor does it have any permanently employed people in The Netherlands, nor does it give any instructions to invest in The Netherlands."

Rather, it was set up in a building, where

" [H]undreds of companies are being represented. It has no wor k ers at all there; they simply have two members on the board of directors that give them fiduciary services. They [...] submit [...] only shortened annual accounts. They didn't even submit the full accounts in 2014 […] they have [...] gone to the [UAE] in order to find a [law] firm to defend them [and not to The Netherlands] […] They are simply a mailbox, a shell company, set up for mere convenience and [which] carries out no substantial business activity in The Netherlands."124

207.
Respondent states that it gave timely and adequate notice of its intention to deny benefits pursuant to Article 17 at paragraph 49 of Respondent's Request for Bifurcation and in Respondent's Rejoinder paragraph 253, when the true nature of Claimant's standing had become apparent.125 Respondent maintains that not only had it exercised its right properly:

" [it] has exercised its rights to deny benefits wholly adequately at the opportune time […] ."126

208.
In any event, Claimant could hardly complain in circumstances in which the investment had always been seen as an investment from the UAE:

"Claimant did not configure its investment thinking of the protections under the ECT. Rather it placed itself in The Netherlands in order to seek tax advantages."127

209.
Respondent placed reliance upon:

(i) the decision of the UNCITRAL tribunal in Ulysseas128 for the proposition that a retrospective denial of the advantages of a BIT could not be excluded, because it was known to a putative investor from the time that it made its investment that the host State might not grant the protections offered by the Treaty during the life of the investment; and

(ii) the decision in Guaracachi & Rurelec,129 in which the tribunal had pointed out that:

"The very purpose of the denial of benefits is to give [a State] the possibility of withdrawing the benefits granted under the BIT to investors who invoke those benefits. As such, it is proper that the denial is 'activated' when the benefits are being claimed."

(2) Claimant's Position

210.
Claimant rejects the objection based on Article 17 of the ECT. It says that, first, Respondent failed to give Claimant, an investor covered by the Treaty, reasonable notice pursuant to Article 17 of any decision to deny it benefits; second, even if it had validly invoked Article 17, Respondent's notice could have prospective effect only, so far as any denial of benefits was concerned; and, in any event, Article 17 was inapplicable to Claimant, which engages in "substantial business activities" (properly construed) in The Netherlands.
211.
Claimant further submits that Respondent's purported jurisdictional objection based upon Article 17(1) of the ECT is misconceived. Article 17, on a proper reading, concerns only the benefits under Part III of the Treaty; it does not impact upon the right to submit claims to arbitration pursuant to Article 26, which is in Part V of the ECT.
212.
Claimant draws attention to the decision in Plama in which the tribunal stated:

"Article 26 provides a procedural remedy for a covered investor's claims: and it is not physically or juridically part of the ECT's substantive advantages enjoyed by that investor under Part III. As a matter of language, it would have been simple to exclude a class of investors completely from the scope of the ECT as a whole, as do certain other bilateral investment treaties; but that is self-evidently not the approach taken in the ECT. This limited exclusion from Part III for a covered investor, dependent upon certain specific criteria, requires a procedure to resolve a dispute as to whether that exclusion applies in any particular case; and the object and purpose of the ECT […] clearly requires Article 26 to be unaffected by the operation of Article 17(1) [...] ."130

213.
On the basis of that decision, Claimant argues that Respondent's contention that its consent to arbitrate this dispute is excluded by the application of Article 17(1) of the ECT is incorrect, and its objection that the Tribunal has no jurisdiction by reason of Respondent's purported notice of its intention to deny benefits is unsustainable.
214.
Be that as it may, Claimant says that the objection fails, because Respondent did not affirmatively exercise its right to deny benefits and the cumulative conditions (ownership and no substantial business activities) set out in Article 17(1) have not been met.
215.
Claimant submits that if Respondent wished to invoke Article 17(1) for the reasons advanced in this case (a Claimant allegedly owned or controlled by a national of a third State and having no substantial business activities in its country of incorporation), it must first have taken positive steps to exercise its right to deny benefits to Claimant - and to have done so publicly in such a manner that its decision was reasonably available to any affected investors in due and timely fashion if it was to apply to an existing investment dispute; the rights conferred upon States by Article 17(1) do not operate automatically.
216.
Claimant's position in this arbitration is that no such timely notice was given. It points out that Claimant gave Respondent formal notification of dispute on 19 February 2013 and it served its Request for Arbitration on 30 January 2014. The first suggestion by Respondent that it might seek to deny benefits in respect of the claims advanced in this arbitration was to be found in its Request for Bifurcation of 3 March 2015. It was not until the service of Respondent's Counter-Memorial on 16 September 2015 that Respondent confirmed that it was:

"[E]xercising its right at this time to deny the Claimant the application of the benefits of Part III of the ECT in concurrence with the circumstances of Article 17."131

217.
Claimant submits that it is not necessary that a Contracting Party knows whether a particular investor (or class of investor) meets the conditions of Article 17(1) in order to give notice; the validity of any such notice may be tested against the particular facts. But in any event, it says that Respondent knew, or had reason to know, that the conditions of Article 17(1) might be relevant in the case of Claimant.
218.
Claimant submits that a purported exercise by Respondent of its right to deny benefits nearly two years after the arbitration had commenced and the claim had been filed does not constitute reasonable notice of its intent to deny benefits under Article 17(1).
219.
Claimant says that, as a result of Respondent's failure to provide reasonable notice of its intent, it has not effectively exercised the right to deny benefits pursuant to Article 17(1). That is fatal to its denial of benefits objection. That being the case, there is no need to consider whether the substantive conditions for the application of Article 17(1) have been satisfied.
220.
But even if the statement contained in Respondent's Counter-Memorial were to be regarded as constituting valid notice, Claimant says that there is ample authority for the proposition that any such denial of benefits case could only operate prospectively under the ECT.
221.
Claimant's further submission is that even if this Tribunal were to determine that the right to exercise Article 17 had been properly invoked by Respondent, it would not be able to fulfil the cumulative conditions of Article 17(1), because it could not demonstrate that Claimant has no substantial business activities in The Netherlands.
222.
Claimant rejects the suggestion that it is a "mere mailbox or shell corporation," which does not engage in substantial business activity in The Netherlands and that the fact that it is registered at a "virtual office" and has no permanent employees is indicative of its shell company standing.132
223.
In Claimant's submission, "substantial" should be construed in a qualitative sense as meaning business activities of substance.133 Claimant drew attention to the decision of the tribunal in AMTO,134 which held that the decisive factor was the materiality of the business in question.
224.
Claimant is, in that sense, an entity of substance. It is a holding company, which owns major investments - and not only in Spain. In addition to the Plants, those assets include the London Array offshore wind farm and Dudgeon projects, both UK renewable energy projects, and the Tafila wind project in Jordan, all of which are high value capital-intensive projects. Claimant points out that similar structures, such as that adopted in this case for the investments in the Plants, are commonly used by international corporations investing abroad. It is asserted further by Claimant that Masdar is demonstrably a business that has grown in the period 2008-2014.135
225.
It is acknowledged that Claimant has its office in a corporate services company's (Vistra's) premises and that it has no employees in Amsterdam other than its two Dutch Directors. Mr. Al Ramahi explained that Claimant had four Directors: 2 'A' Directors (who are based in Abu Dhabi and hold directorships with other group companies) and 2 'B' Directors (who are Dutch nationals and Vistra company staff). Mr. Al Ramahi testified that the voting rights of the B Directors were not limited to administrative issues and that there was no weighting in favour of 'A' Director voting rights. The Tribunal was told that the Dutch 'B' Directors are active participants in Board meetings and that they have prior renewables experience. Mr. Al Ramahi told the Tribunal that the Masdar Board met at least four times a year in The Netherlands: that it oversaw the investments and the assets owned by Masdar and that it ensured that they were "well funded, well managed and, sometimes, we make decisions on capital contributions." He went on to say that not only were these Board meetings important to Claimant's business, they were required by law.136
226.
Meetings of Claimant's Board take place at the Claimant's registered office in Amsterdam. Claimant enjoys autonomy in the financial management of its investments, it assumes its own financial risk and it issues guarantees.137
227.
Claimant rejects Accuracy's assessment that its Financial Statements filed with the Dutch Commercial Registry show that Claimant is "without business activity." It says that such conclusion is premised in part on a comparison with Mubadala's financial statements and that it is inapposite, since Mubadala is an issuer of public bonds and therefore subject to enhanced financial reporting requirements.
228.
In fact, says Claimant, its Financial Statements are not the whole picture; in his evidence, Mr. Al Ramahi stated that Claimant takes advantage of the limited disclosure requirements available under The Netherlands small company regime. He explained that Claimant's full financial reports are audited and include income statements, detailed notes and management and directors' reports.138
229.
Upon questioning from the Tribunal, Claimant stated that it held bank accounts in The Netherlands with Royal Bank of Scotland BV and ING Bank NV.139
230.
It must be said that none of this cut much ice with Respondent. It insisted that Claimant was a mere "shell" or "mailbox," which had no economic activity, much less, substantial business activity in The Netherlands:140 the company address was at Schiphol Airport; the accounts were summary; the annual accounts themselves reflected the (uncontested) fact that the company was a holding company; it had no employees; and it was an entity wholly financially dependent upon Abu Dhabi. While reference had been made to a bank account at a branch of Royal Bank of Scotland, there was, it was suggested, "not a shred of evidence" that an account had actually been opened in The Netherlands. And to the extent that business was being conducted in The Netherlands, it was merely to ratify agreements taken in Abu Dhabi and funded entirely by Abu Dhabi money.141

(3) Analysis

231.
Article 17, "Non-Application of Part III in Certain Circumstances," provides as follows:

"Each Contracting Party reserves the right to deny the advantages of this Part to:

(1) a legal entity if citizens or nationals of a third state own or control such entity and if that entity has no substantial business activities in the Area of the Contracting Party in which it is organized; or

(2) an Investment, if the denying Contracting Party establishes that such Investment is an Investment of an Investor of a third state with or as to which the denying Contracting Party:

(a) does not maintain a diplomatic relationship; or

(b) adopts or maintains measures that:

(i) prohibit transactions with Investors of that state; or

(ii) would be violated or circumvented if the benefits of this Part were accorded to Investors of that state or to their Investments."142

a. The Timing of The Denial of Benefits

232.
Respondent has argued that "a right can only be denied when it is known that it is being invoked and claims to be exercised" and, furthermore, that "Spain has only been able to verify the concurrence of the circumstances established in Article 17 of the ECT" in the course of the litigation.143
233.
In essence, Respondent took the position that the denial can be made up to the moment an objection to jurisdiction may be raised (in the Statement of Defence under the UNCITRAL Rules or the Counter-Memorial under the ICSID Rules) and the possibility of a denial is clear on the face of the Treaty, if the conditions set out in Article 17(1) are met. That is a position with which one member of the Tribunal agrees.
234.
Claimant submits that the requirement to give affirmative notice before an exercise of the right to deny benefits pursuant to Article 17(1) is consistent with the object and purpose of the ECT, which, as Article 2 of the ECT makes clear, are to establish:

"[A] legal framework in order to promote long-term co-operation in the energy field, based on complementarities and mutual benefits, in accordance with the objectives and principles of the [European Energy] Charter."144

235.
That is a position with which a majority of the Tribunal concurs, noting the opinion of the tribunal in Khan. Khan took the view that a requirement to give notice would be meaningless, if Article 17(1) could be invoked after an arbitration has been started:

"It is difficult to imagine that any Contracting Party, whatever its general policy regarding mailbox companies, would refrain from exercising its right to deny the substantive protections of the ECT to an investor who has already commenced arbitration and is claiming a substantial sum of money. A good faith interpretation does not permit the Tribunal to choose a construction of Article 17 that would allow host states to lure investors by ostensibly extending to them the protections of the ECT, to then deny these protections when the investor attempts to invoke them in international arbitration."145

236.
The Khan tribunal concluded that:

"The Treaty seeks to create a predictable legal framework for investments in the energy field. This predictability materializes only if investors can know in advance whether they are entitled to the protections of the Treaty. If an investor such as Khan Netherlands, who falls within the definition of 'Investor' at Article 1(7) of the Treaty and is therefore entitled to the Treaty's protections in principle, could be denied the benefit of the Treaty at any moment after it has invested in the host country it would find itself in a highly unpredictable situation. This lack of certainty would impede the investor's ability to evaluate whether or not to make an investment in any particular state. This would be contrary to the Treaty's object and purpose."146

b. The Effect of The Denial

237.
In the course of its opening submissions, Respondent maintained that whether Article 17:

" […] has a retroactive effect or a prospective effect is not really germane. In this case, there is no reason why it couldn't have a retroactive effect […] ."147

238.
That was a proposition challenged by Claimant. It maintained that it was "absolutely germane,"148 because Respondent was seeking to deny the rights of the Treaty during the course of the arbitration.
240.
In Liman,149 the tribunal stated:

"With regard to the question of whether the right under Article 17(1) of the ECT can only be exercised prospectively, the Tribunal considers that the above-mentioned notification requirement […] can only lead to the conclusion that the notification has prospective but no retroactive effect. Accepting the option of a retroactive notification would not be compatible with the object and purpose of the ECT, which the Tribunal has to take into account according to Article 31(1) of the VCLT and which the ECT in its Article 2, expressly identifies as 'to promote long-term co-operation in the energy field.' Such long-term co-operation requires, and it also follows from the principle of legal certainty, that an investor must be able to rely on the advantages under the ECT, as long as the host state has not explicitly invoked the right to deny such advantages. Therefore the Tribunal finds that Article 17(1) of the ECT does not have retroactive effect."

241.
In Yukos,150 the tribunal held that:

"Retrospective application of a denial of rights would be inconsistent with such promotion and protection and constitute treatment at odds with those terms."

242.
The tribunal in Plama151 held that:

"[…] the object and purpose of the ECT suggests that the [exercise of Article 17] should not have retrospective effect. A putative investor, properly informed and advised of the potential effect of Article 17(1), could adjust its plans accordingly prior to making its investment. If, however, the right's exercise had retrospective effect, the consequences for the investor would be serious. The investor could not plan in the 'long term' for such an effect (if at all); and indeed such an unexercised right could lure putative investors with legitimate expectations only to have those expectations made retrospectively false at a much later date."

243.
In Stati,152 the tribunal stated that:

"Article 17 ECT, as clearly indicated by its introductory words 'of this part' only applies to Part III of the ECT, leaving unaffected the dispute resolution provision in Part V with Art.26 ECT (see tribunal in Plama v. Bulgaria). And further, Art. 17 ECT would only apply if a state invoked that provision to deny benefits to an investor before a dispute arose and Respondent did not exercise this right."

244.
The tribunal in Ulysseas153 has pointed out that:

"A further question is whether the denial of advantages should apply only prospectively, as argued by Claimant, or may also have retrospective effects, as contended by Respondent. The Tribunal sees no valid reasons to exclude retrospective effects. In reply to Claimant's argument that this would cause uncertainties as to the legal relations under the BIT, it may be noted that since the possibility for the host State to exercise the right in question is known to the investor from the time when it made its the investment, it may be concluded that the protection afforded by the BIT is subject during the life of the investment to the possibility of a denial of the BIT's advantages by the host State."

245.
Along the same lines, the tribunal pointed out in the Guaracachi case154 that:

"The same must be said in relation to the supposedly retroactive application of the clause. The Tribunal cannot agree with the Claimants when they argue that the Respondent is precluded from applying the denial of benefits clause retroactively. The very purpose of the denial of benefits is to give the Respondent the possibility of withdrawing the benefits granted under the BIT to investors who invoke those benefits. As such, it is proper that the denial is 'activated' when the benefits are being claimed."

246.
The question of the retrospective/prospective character of the denial of benefits has also been hotly debated in the Pac Rim case, a CAFTA case applying the ICSID Rules. Two Parties to CAFTA were clearly of the view that the denial of benefits only made sense if it was retrospective.
247.
This was the position of Costa Rica, as a non-disputing party:

"4.52. As to timing, Costa Rica observes that CAFTA Article 10.12.2 is silent on when a CAFTA Party may deny benefits; and it suggests that, consequently, 'denial of benefits may occur at any time, regardless even of the existence or not of an investment arbitration' (paragraph 6), particularly when a tribunal is examining its jurisdiction (paragraphs 8 & 9), although such a denial could not be legally effective after an award was made (paragraph 7)."155 (Emphasis added)

248.
The position of the United Sates, also as a non-disputing party, was similar:

"4.56. The USA observes (in common with Costa Rica) that a CAFTA Party is not required to invoke denial of benefits under CAFTA Article 10.12.2 before an arbitration commences; and that it may do so as part of a jurisdictional defence after a claim has been submitted to arbitration (paragraph 5). The USA likewise observes that this CAFTA provision contains no time-limit for its invocation; and that a contrary interpretation would place an untenable burden on a CAFTA Party, contrary to the purpose of CAFTA Article 10.12.2:

[...] It would require the respondent, in effect, to monitor the ever-changing business activities of all enterprises in the territories of each of the other six CAFTA-DR Parties that attempt to make, are making, or have made investments in the territory of the respondent [citing Ms. Kinnear's NAFTA Commentary] . This would include conducting, on a continuing basis, factual research, for all such enterprises, on their respective corporate structures and the extent of their business activities in those countries. To be effective, such monitoring would in many cases require foreign investors to provide business confidential and other types of non-public information for review. Requiring CAFTA-DR Parties to conduct this kind of continuous oversight in order to be able to invoke the denial of benefits provision under Article 10.12.2 before a claim is submitted to arbitration would undermine the purpose of the provision.' (paragraph 6)."156

249.
The tribunal adopted the same analysis:

"4.83. (iii) Timeliness: There is no express time-limit in CAFTA for the election by a CAFTA Party to deny benefits under CAFTA Article 10.12.2. […]

4.85. Second, this is an arbitration subject to the ICSID Convention and the ICSID Arbitration Rules, as chosen by the Claimant under CAFTA Article 10.16(3)(a). Under ICSID Arbitration Rule 41, any objection by a respondent that the dispute is not within the jurisdiction of the Centre, or, for other reasons, is not within the competence of the tribunal 'shall be made as early as possible' and 'no later than the expiration of the time limit fixed for the filing of the counter-memorial'. In the Tribunal's view, that is the time-limit in this case here incorporated by reference into CAFTA Article 10.12.2. Any earlier time-limit could not be justified on the wording of CAFTA Article 10.12.2; and further, it would create considerable practical difficulties for CAFTA Parties inconsistent with this provision's object and purpose, as observed by Costa Rica and the USA from their different perspectives as host and home States (as also by the Amicus Curiae more generally). In the Tribunal's view, the Respondent has respected the time-limit imposed by ICSID Arbitration Rule 41."157 (Emphasis added)

250.
Claimant has submitted that those decisions do not provide any basis upon which to depart from the "consistent line" of ECT precedent. First, the relevant treaties must be interpreted on their own terms, consistent with the requirements of the Vienna Convention. Second, and in any event, in Ulysseas, the contested reservation of right went to the denial of the benefits of the Treaty and thus included the right to refer disputes to arbitration; in Guaracachi, the investment had been made before the BIT entered into force and therefore could not have been made in reliance on its terms.
251.
In the circumstances of this case, however, these points give rise to a controversy that need not be resolved, because the Tribunal is unanimous in its view that the cumulative conditions of Article 17(1) have not been met, such that a denial may be triggered.

c. The Cumulative Conditions of Article 17(1)

252.
In this case, there is no dispute that Claimant fulfils the criterion of being a party owned or controlled by citizens or nationals of a third State. Nor is it in dispute that Claimant is organised in The Netherlands. Issue is joined over the third limb of the test, namely, as to whether Claimant has "substantial business activities" in The Netherlands.
253.
There is no definition in the ECT itself of "substantial business activities." The Tribunal has had regard, however, to the decision of the tribunal in AMTO in which it concluded that:

"[…] 'substantial' in this context means 'of substance and not merely of form'. It does not mean 'large', and the materiality, not the magnitude of the business activity is the decisive question."158

254.
The Tribunal adopts this analysis. It has taken note of all the reservations raised by the Respondent, but it concludes that the unchallenged evidence adduced by Claimant, notably as to its standing as a holding company with substantial international assets under its control (see paragraph 224 above) and the similarly unchallenged evidence of Mr. Al Ramahi,159 is persuasive of the true extent and materiality of the business conducted by Claimant in The Netherlands. Respondent has failed to demonstrate that Claimant has no substantial business activity in The Netherlands. Accordingly, there is no basis for a denial of benefits under Article 17(1) of the ECT.
255.
That conclusion is a complete answer to the objection, and the controversy that arises by reason of the timing of Respondent's purported notice is not a matter that need be resolved.
256.
For these reasons, Respondent's denial of benefits objection fails.

D. Objection Based on Lack of Jurisdiction "Ratione Voluntatis’ (The Levy)

(1) Respondent's Position

(2) Claimant's Position

(3) Analysis

E. The Intra-EU Objection

(1) The Diversity of Nationality Objection

a. Respondent's Position

296.
Despite a number of cases in which tribunals have considered and rejected this very objection raised by Respondent,197 Respondent still maintains that Article 26 of the ECT does not apply to an intra-EU dispute. It contends that the fact that Claimant is a national of a Member State of the EU and Respondent is a Member State of the EU means that it is impossible to meet:

"[T]he requirement […] that is foreseen on Article 26(1) of the ECT which states that to access arbitration the dispute must be between a Contracting Party and investors from different Contracting Parties."198

297.
Accordingly, Respondent says that the Tribunal has no jurisdiction over a dispute under the ECT relating to the rights of an EU Investor in the internal electricity market of the EU and a Member State of the EU. Respondent relies on, inter alia, the amicus curiae Submission of the European Commission (the "Commission") dated 12 February 2015.
298.
There seemed to be a suggestion on the part of Respondent that a number of previous decisions could be distinguished from the situation that obtains in this case, because they involved current Member States, which had signed the ECT before they became Member States, whereas in this case, both the Investor's Contracting State of incorporation, The Netherlands, and Respondent were already EU Member States when they acceded to the ECT .
299.
Respondent submits that the Tribunal has no jurisdiction to hear the claims, because it says that there is an:

"[A]bsence of any investor protected in accordance with the ECT. The Claimant does not come from the territory of another Contracting Party as the Netherlands, just like the Kingdom of Spain, are Member States of the European Union. The ECT does not apply to disputes pertaining to intra-EU investments."199

300.
In effect, Respondent suggests that since The Netherlands and Spain are both EU Member States, then Claimant, as an Investor incorporated in The Netherlands, has undertaken an Investment in the EU and on that basis, the condition that an Investment had to be undertaken in a different Area in order to come within Article 26(1) could not be met.

b. Claimant's Position

301.
As to the first ground of objection, Claimant's answer was that the plain and ordinary meaning of Article 26 of the ECT was clear; it applied to disputes between any Contracting Party to the ECT and an Investor of any other Contracting Party. It pointed out that there is no express disconnection clause in the ECT to the effect that the terms of Article 26 do not apply to the relationships inter se of EU Member States.
303.
As to the subsidiary points, Claimant submits that such a situation would amount to impermissible discrimination under both the ECT and EU law. In any event, there is nothing in the text of the ECT to support the suggestion of a two-tier categorisation of both Investors and Contracting Parties.

c. The Commission's Amicus Curiae Submission

304.
By its "amicus curiae" Submission, the Commission stated its view that the Tribunal lacked jurisdiction over this dispute and invited it to decline jurisdiction on the basis that:

" [A]t the time of signing of the ECT, none of the [C]ontracting [P]arties intended to confer the right to an EU investor to rely on investor-State arbitration against a Member State."201

305.
The Commission further stated:

(i) reliance by an EU investor on investor-State arbitration against another EU Member State would violate the EU Treaties; the ECT:

"[C]annot create new rights and obligations for EU investors vis-avis EU Member States, because the Treaties and EU legislation adopted in the field of energy contain a complete set of rules, including on judicial protection, for the protection of investments of nationals of a Member State when investing in another Member State."202

(ii) a general principle had emerged, based upon Article 344 of the Treaty on the Functioning of the European Union ("TFEU") and the judgment of the ECJ in Commission v. Ireland (C-459/03), to the effect that:

"EU Member States cannot agree that intra-EU disputes concerning the interpretation or application of EU law can be subject to a method of dispute settlement different from those provided in the treaties on which the Union is founded."203

(iii) since Respondent had notified the disputed measure to the Commission under Article 108(3) TFEU, the Tribunal was invited to suspend the arbitration pursuant to its case-management authority and the principle of comity, to the extent that it considered that it would be necessary to establish whether the national support scheme constituted State aid in order to decide the dispute.204

d. Analysis

(2) The "Primacy of EU Law" Objection

a. Respondent's Position

325.
As the Tribunal understands it, Respondent's objection is predicated on the basis that EU law applies to inter-community relations "in preference to or prevailing over any other law, displacing any other national or international provision. The preference given to community law does not admit comparisons with other laws. It does not demand that it be proven that other laws are more or less favourable. Simply put, EU Law is given preference over any other dealing with regulating internal EU relations."217

b. Claimant's Position

326.
Even if ECT and EU law covered the same subject matter, Claimant says that Respondent's submission could not be right, because Article 16 of the ECT provides that:

"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 Part V of this Treaty,

(1) nothing in Part III or Part 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 Part 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."218 (Emphasis added)

c. Analysis

342.
In summary, and save for the objection based upon the Levy, the Tribunal declines to uphold any of the jurisdictional objections raised by Respondent and it will proceed to consider the substantive claims and defences raised in this case.

VII. LIABILITY

A. Overview of Claimant's Claims

343.
As noted in the factual summary, Masdar was incorporated in The Netherlands in March 2008. It is a holding company. Claimant says that, typically, it invests in assets operating in regulated sectors where a host State provides a stable and predictable revenue stream for the lifetime of the asset.
345.
These investments were made through a joint venture project company, Torresol Energy, in which Masdar has a 40% interest and Sener, which was responsible for the provision and sourcing of the development costs, holds 60%.
346.
Claimant is 100% owned by Abu Dhabi Future Energy Company ("ADFEC"), which was founded in 2007 to make investments in renewable energy and sustainable technology in Abu Dhabi and internationally.
347.
ADFEC is a private joint stock company formed by Decree in Abu Dhabi. It, in turn, is owned by Mubadala, a public joint stock company formed by Decree.228

(1) The Regulatory Regime Ensured Stability

348.
According to Claimant, RD661/2007 was the measure by which, after a couple of less successful prior initiatives described above, Spain embarked in May 2007 upon a concerted strategy to attract renewable energy investment into Spain by offering FITs above normal market rates for electricity for each kWh produced, together with other significant benefits, including priority of dispatch to the grid over conventional generators.
349.
RD661/2007 guaranteed investors in installations such as the CSP an inflation-linked FIT for the lifetime of the installation by way of what Claimant maintains is a stability commitment (Article 44.3) to the effect that no future changes to the tariff regime would affect CSP plants that had been commissioned by 1 January in the second year after any such change had been introduced. In other words, any anticipated tariff review carried out in 2010 would not affect any plant, which had been registered and commissioned by 1 January 2012 within the "Tariff Window."
350.
That was the basis upon which Masdar maintains that it invested and met the commissioning date in order to secure the RD661/2007 tariffs. But having gained a world leading renewable energy sector, and in violation of investors' legitimate expectations, by the series of measures introduced between 2012 and 2014 and described above, Claimant contends that Respondent abolished the RD661/2007 regime and introduced a much less favourable regime, which applied to both new installations and those commissioned under the RD661/2007 regime alike. Masdar questions why Respondent would have introduced the concept of a "Tariff Window" in RD661/2007 if, thereafter, it were simply to treat RD661/2007 as any other legislative enactment that it could amend or dispense with at will. The effect of the wholesale repeal of RD661/2007 was that any of the protections afforded to registered installations would be lost and they would be subject to the new tariffs along with new installations which had previously been denied access to the RD661/2007 regime by the operation of the "Tariff Window."229
351.
Masdar draws attention to the fact that in an earlier draft iteration of RD661/2007, what it describes as the stability commitment subsequently provided for at Article 44.3 of RD661/2007 had been omitted. That had prompted criticism from the regulator, the CNE. In its Report 3 of 2007 (the "2007 CNE Report"), CNE had pointed out that the arrangements contemplated by the proposed RD661/2007 regime would be transitory and of four years duration only until new tariffs were introduced and, accordingly, less attractive than those already offered under the RD436/2004 regime, which:

"[M]inimises the regulatory risk by granting stability and predictability to the economic incentives during the service life of the facilities. This is done by establishing a transparent annual adjustment mechanism, associating incentives to trends in a robust index such as the average or reference tariff (TMR), and by exempting existing facilities from the four-year review because only new incentives affect the new facilities.

[…]

The guarantees covered in Royal Decree 436/2004 have allowed cheaper financing, with lower project costs and a lower impact on the electricity tariff ultimately paid by the consumer."230

352.
Masdar relies upon the CNE Report in support of its contention that the importance of the retention in the new Decree of the stability provision for which provision had been made in RD436/2004 was well understood.
353.
While Respondent argues that it was always open to the Spanish Government to change the stability commitment, Claimant says that such an approach "completely ignores the commercial reality that the stability commitment is about ensuring that a generator is not subsequently made worse off by the introduction of changes." Should the Government elect to do it nonetheless, it could, but it could not avoid the consequences.231
354.
Masdar points to the CNE Report:

" [A]lthough it is difficult to defend the petrification of regulations, it is necessary to try to achieve sufficient legal certainty to counteract regulatory uncertainty and risk as much as possible […] .

[…] The constitutional doctrine admits that if its need is sufficiently justified, it is possible to retroactively enforce a regulation provided that, in exchange, an adequate transition period is established and investors are compensated.

In the opinion of the majority of the [CNE] Managing Board, the need to retroactively enforce the proposed Royal Decree is not sufficiently justified, the proposed transition period is not adequate […] and […] investors are not sufficiently compensated."232

(2) Claimant's Expectations

355.
Two investment decisions are central to this case. Claimant's decisions:

(i) in March 2008 to invest in the Gemasolar Plant; and

(ii) in June 2009 to invest in Arcosol (Valle 1) and Termesol (Valle 2).

356.
Claimant submits that it invested in the reasonable expectation that the installations would benefit from the RD661/2007 regime for their lifetimes and that once they had been qualified pursuant to the "Tariff Window" requirements, there would be no retroactive changes.

a. Due Diligence

357.
In the course of 2006, ADFEC undertook a fact-finding mission in Spain with a view to possible investments in renewables, particularly in CSP plants. Mr. Tassabehji held a series of meetings with Spanish officials, including representatives of IDAE. Claimant maintains that the existing regime under RD436/2004 was thought to provide insufficient stability and predictability, but ADFEC had become aware of the proposal to implement a new regime with FITs and a stable regulatory environment - the proposed RD661/2007.
358.
Discussions were held with Sener, which had three CSP Plants in the pipeline, all of which would be operational in time to qualify for the RD661/2007 tariffs. At the same time, parallel discussions took place with Spanish banks, which regarded the projects as low risk with a predictable and secure revenue stream. They were prepared to offer funding, which would become non-recourse once the installations were registered under the RD661/2007 regime and an 80/20 debt/equity ratio was implemented.
359.
In terms of project specific due diligence, BNP Paribas was commissioned to prepare a report on Gemasolar and Termesol. It submitted its Investment Analysis on SENER CSP projects named Solar Tres and Termesol 50, the BNP Report, on 24 January 2008.233 In terms of risk factors, and in addition to the "Tariff Window," BNP considered construction and revenues risk (that is to say, the need to ensure that the works would be completed in time to qualify for the RD661/2007 regime) and regulatory risk in respect of which, it concluded that "the legal framework governing renewable energies in Spain is very stable."234 BNP's considered view was that, provided a CSP installation was commissioned within the "Tariff Window," it would be locked into the RD661/2007 regime. BNP, no more than had ADFEC, did not contemplate that any subsequent changes to the RD661/2007 regime would have a retroactive impact upon qualifying CSP installations.
360.
A proposal for a joint venture with Sener was put, first, to ADFEC senior management and then, in March 2008, to the Mubadala investment committee for approval.235 The committee initially approved an equity contribution to cover developmental and promotional costs. Subsequently, it approved the JV Agreement with Sener, signed on 12 March 2008, which anticipated the development of the three Plants.
361.
Thereafter, in May 2008, the investment committee approved an investment of EUR 79.37 million by Masdar in the CSP sector through the acquisition of a 40% interest in Torresol Energy. Torresol Energy was to enter into the construction contracts for the three Plants.
363.
Claimant submits that the fact that a "Tariff Window" had been introduced in the RD661/2007 regime was indicative of the fact that Respondent, while making clear the likelihood of reviews resulting in the implementation of tariff changes in the future, would respect the rights of a qualifying class of investors to the protection of having come within the "Tariff Window," irrespective of any subsequent change.236
364.
Arcosol and Termesol were the subject of further due diligence as part of Claimant's assessment of the viability of these projects.
365.
One report upon which Claimant places considerable weight is the Poyry Report, commissioned in 2009.237 Claimant maintains that this Report confirmed the view that the outlook for CSP development in Spain was very positive and that the "main risk" was the need to complete the project within the "Tariff Window."238
366.
Claimant rejects the contention made by Spain that Poyry was seeking to draw attention to the fact that the primary aim of the regulatory framework introduced by Spain was to ensure a reasonable level of profitability. That, says Claimant, takes out of context the Poyry findings, which, in respect of the then current state of affairs rather than in anticipation of any future scenario, were that:

"[R]ecent history tells us that even though renewable technologies are expensive, the Government is willing to provide a reasonable return for investors by keeping the subsidies, even in the event of tariff deficits being generated over time."239

367.
In Claimant's submission, there is no suggestion in the Poyry Report, and certainly none to be inferred from that citation, that the concept of "reasonable profitability" was to be deployed as a limit or cap on an investor's return.
368.
A further due diligence report in respect of the Arcosol and Termesol investments was produced by Mr. Tassabehji and his team in June 2009.240 The report concluded that both installations were expected to qualify for the RD661/2007 tariff regime and it also took note of the Pre-Allocation Registry contemplated by RDL6/2009.
369.
On 16 June 2009, the Mubadala investment committee granted approval to Masdar to invest in Arcosol and Termesol and to enter into project financing - as it did in July 2009.

b. The Process of Registration

370.
Subsequently, the registration of all three Plants in the Pre-Allocation Registry was confirmed, as was the fact that the "economic regimen for the facilities that are registered in the Pre-Allocation Registry […] will be as foreseen in Royal Decree 661/2007." Claimant relies upon the fact that such confirmation came in the form of three Resolutions issued by the Ministry of Industry, Tourism and Trade, one in respect of each installation.241
371.
Meantime, in the wake of rumours of a change to the tariff system, a Government press release issued on 2 July 2010 recorded an agreement between the Government and the CSP and wind sectors, stating:

"This agreement […] assumes the reinforcement of the visibility and stability of the regulation of these technologies in the future, guaranteeing the current subsidies and rates of RD661/2007 for the facilities in operation (and for those included in the preregistration) starting in 2013 […] ."242

372.
Claimant says that the agreement introduced two changes: first, it contemplated a limit on the number of production hours to which the tariff benefits would be applied, although the limit was set sufficiently high that it exceeded by a margin the production forecasts for all three of the Masdar installations. Second, new installations qualifying under the RD661/2007 regime would be limited to the fixed tariff option for the first twelve months of operation, but they would then be free to choose between the fixed and premium options. The use of gas to generate electricity previously capped at 12% of production was increased to 15%. These measures were then formalised in RD1614/2010, the Preamble to which recorded that Spain's pre-eminence in the field of renewables technology was:

"[T]hanks to the existence of a solid, stable and predictable economic and legal support regime […] ."243

373.
Following the promulgation of RD1614/2010, the Directorate of Energy Policy and Mines issued three Resolutions on 28 December 2010 pursuant to enquiries made by Claimant on 1 December 2010. As the Tribunal has already noted at paragraph 123 above, the Resolutions, issued in respect of each of the Gemasolar, Termesol and Arcosol installations, stated that:

"[…] currently and by virtue of […] Royal Decree Law 6/2009 […] the retribution [sic] applicable to the installations consists of the tariffs, premiums, upper and lower limits and supplements established in Royal Decree 661/2007 […] updated on an annual basis [...]" [The values effective as of 1 January 2011 for (a) the first 25 years and (b) thereafter were then set out.]244

374.
Claimant rejects Respondent's submission that these statements did not amount to a commitment on Spain's part and that, rather, (a) it could continue to amend the provisions; and (b) the possibility of extraordinary revisions was not excluded. Claimant insists that such a reading of a response directed to an enquiry seeking specific confirmation that the RD661/2007 regime would apply for the lifetime of the three installations in respect of which the Resolutions were issued defies common sense.
375.
Claimant rejects, too, the suggestion that the Resolutions were mere "Communications" on the part of the Spanish Government. It is Claimant's position that Spanish law provides for two sorts of legal instrument through which the Government can act: rules and regulations, such as the Royal Decrees, and administrative acts or "resolutions," which are of specific, rather than generic, application. It says that Spanish law recognises no category of administrative act identified as a "communication."
376.
It is Claimant's submission that the 28 December 2010 Resolutions constituted binding commitments toward Masdar's investments until they were declared void, which was not the case here.245
377.
On 28 April 2011, the Gemasolar Plant was registered with RAIPRE. The Arcosol and Termesol installations followed on 22 December 2011.
378.
Claimant says that all three installations thereby qualified for the RD661/2007 regime for their operational lifetimes.

c. The Disputed Measures

379.
By reason of what are called the Disputed Measures (see paragraph 464 below and which have been described in more detail in Section IV above), which were promulgated between 2012 and 2014, Claimant says that by the time the last of these measures was introduced in 2014:

"[N]othing was left of the 661 economic regime. The foundation on which Masdar had invested had been completely abolished and replaced by something very different."246

380.
In support of that proposition, Claimant submits that the Disputed Measures had the following effects:

(i) Law 15/2012 stripped away the right of the installations to use natural gas for any part of their annual production and still receive FITs;

(ii) the 7% Levy, likewise introduced by Law 15/2012, was applied to production revenues and not to profits. It amounted to a thinly disguised tariff cut for renewable installations and a limit to the rights under the economic regime that Law 15/2012 purportedly applied to Ordinary and Special Regimes producers alike. In reality, however, it did not; whereas ordinary generators could pass on the extra cost to consumers, the Special Regime generators operated in a regulated environment and received a guaranteed price for energy produced. A 7% charge on revenues constitutes a 7% reduction in revenues. To the argument advanced by Respondent that the effect of the Levy was cost neutral, because an amount equivalent to the Levy was used to finance the cost of the Spanish electricity system earmarked for developing renewables and its offset was paid back to the plants through their remuneration package, Claimant answers that this is a circular argument; the moneys raised by the Levy were not given back; they were being used to fund the Government's obligation to pay incentives. Furthermore, under the regime introduced by the 2013 legislation, any entitlement to incentives was limited. If the threshold benchmark for full production hours was not met, for whatever reason, the full operational element of the incentives payment, which included the reimbursement of the 7% Levy, would not be recovered;

(iii) RDL2/2013 reduced the RD661/2007 premium to zero, with the effect that the premium FIT option disappeared, leaving only the fixed tariff option. Incentives were no longer adjusted by reference to the consumer price index, but to a variant of the same index, at constant taxes and excluding unprocessed foods or energy products;

(iv) within a matter of weeks, that system was scrapped by the enactment on 12 July 2013 of RDL9/2013. RD661/2007 was repealed and the FIT regime was replaced by a form of remuneration described as a "Special Payment;"

(v) on 26 December 2013, Law 54/1997 itself was supplanted by Law 24/2013. The formal distinction between the Ordinary and Special Regimes was abolished and, save for express exceptions, renewables producers and conventional generators were to be treated alike. Priority of dispatch for renewables producers was subject to the determination of the Spanish Government. The Special Payment itself and estimates of income derived from energy sales were to be reviewed every six and three years respectively;

(vi) the effect of RD413/2014, which was followed almost immediately by the Ministerial Order of 16 June 2014, was to eradicate any vestiges of the RD661/2007 regime. Not only was the new regime applied to installations which had qualified for protection from any change to the RD661/2007 regime, but there was a clawback of incentives paid prior to the introduction of the new regime. Stability and predictability had been swept away; Claimant says that if an installation is to receive any incentive payments at all, it is only to the extent that there are sufficient funds in the system, leaving an investor with no assurance that a Special Payment will be received when due, as opposed to being paid at some point in the five-year period following the year in which there was a funding shortfall.

(3) On Spain's Own View of RD661/2007, Masdar's Expectations Were Objectively Well-Founded and Reasonable

381.
Claimant submits that Respondent was very well aware of the need to minimise regulatory uncertainty. It draws attention once again to the 2007 CNE Report, in which the criteria necessary to inform the regulation of the Special Regime were set out:

"The regulation must offer sufficient guarantees to ensure that the economic incentives are stable and predictable throughout the service life of the facility."247

382.
Moreover, the CNE had noted with disfavour any suggestion that the proposed new legislation should have retrospective effect on facilities operating on 1 January 2008. On that basis, it had issued "an unfavourable ruling" on the then draft proposal.248
383.
In a press release coinciding with the date of enactment of RD661/2007, Respondent, through the Ministry of Industry, Energy and Tourism, stated:

"The Government prioritises profitability and stability in the new Royal Decree."

It anticipated a rise to 8% profitability for facilities choosing to supply distributors and between 7 and 11% for those participating in the wholesale market.249 Claimant draws attention to the fact that the Ministry's own review of the then draft legislation anticipated:

"For the market option, a premium is proposed that ensures a project IRR of 9.5% for the typical 25-year case, with a minimum of 7.6% and a maximum of 11% in the band limits."250

Claimant points out that Respondent's position now is that 7.3% is a reasonable return.

384.
Respondent's press release continued:

"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."251

385.
Claimant submits that:

"[I]f you've got those stability provisions in, yes you can change the rules, you can change the tariffs; but you cannot backdate it for facilities that had already sunk their capital on a different regulatory regime basis because they cannot change what they have already spent, they cannot change the debt finance arrangements that they have already entered into."252

386.
Claimant says that certainly the message that Respondent sought to promote through its international presentations in the course of 2007, 2008 and up to 2010 was that the new RD661/2007 regime guaranteed the premium system over the lifespan of the installations and made no provision for retroactive benefits for past investments.253
387.
To the extent that Spain seeks to apply the 2005-2010 PER to changes implemented in 2012-2013, Claimant points to what it says is a logical flaw: in the period when that PER was in effect, there were no tariff changes and the plan had run its course in 2010.
388.
According to Masdar's experts, the effect of the new regime on the cash flows and the fair market value of the CSP Plants is of the order of EUR 132 or 179 million, depending on the useful life adopted for modelling purposes.
389.
Claimant says that RD661/2007 was part of a bigger picture. It constituted a clear strategic decision to induce investment, earlier initiatives having failed to produce the level of investment sought by Respondent.

(4) Claimant's Claims for Breach of the ECT

390.
Claimant maintains three specific claims for breach of Article 10(1) of the ECT:

(i) breach of the fair and equitable treatment ("FET") provision, in that:

(a) Claimant's legitimate expectations have been frustrated;

(b) Spain has not been transparent in its conduct;

(c) the measures Spain has taken are unreasonable and disproportionate; and

(d) Spain has failed to offer a stable legal framework pursuant to Article 10(1).

Claimant contends that these breaches are non-cumulative and that the breach of any one of them amounts to a breach of the FET provision;

(ii) breach of the non-impairment standard; and

(iii) breach of the "umbrella clause," including the obligations undertaken by Spain in RD661/2007 and the 28 December 2010 ministerial Resolutions.

391.
Claimant notes that it is common ground between the Parties that the Tribunal should apply Articles 31 and 32 of the Vienna Convention in its interpretation of the ECT, that is to say:

"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 t