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Decision on Annulment

Table of Selected Abbreviations

Application for Annulment Kingdom of Spain's Application for Annulment, dated 25 February 2020
Applicant Kingdom of Spain
Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings 2006
Award Award rendered on 6 September 2019 in the arbitration proceeding captioned OperaFund Eco-Invest SICAV PLC and Schwab Holding AG v. Kingdom of Spain, ICSID Case No. ARB/15/36, as rectified by the Tribunal's Decision on Rectification of the Award dated 28 October 2019
CJEU Court of Justice of the European Union
C-[#] OperaFund and Schwab's Exhibit
CL-[#] OperaFund and Schwab's Legal Authority
C-Mem. Ann. OperaFund and Schwab's Counter-Memorial on Annulment, dated 22 January 2021
C-Mem. Stay OperaFund and Schwab's Counter-Memorial in Opposition to the Request for the Continuation of the Stay of Enforcement of the Award, dated 31 July 2020
Committee Ad Hoc Committee constituted on 17 June 2020
EC European Commission
EC Application European Commission's Application for Leave to Intervene as a Non-Disputing Party, dated 3 December 2020
EC Submission European Commission's Written Submission, dated 12 March 2021
ECT Energy Charter Treaty
EU European Union
FET Fair and Equitable Treatment
ICJ International Court of Justice
ICSID Convention Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March 1965
ICSID or the Centre International Centre for Settlement of Investment Disputes
Mem. Ann. Kingdom of Spain's Memorial on Annulment, dated 23 October 2020
Mem. Stay Kingdom of Spain's Memorial in Support of the Continuation of the Stay of Enforcement of the Award, dated 16 July 2020
OperaFund OperaFund Eco-Invest SICAV PLC
RD Royal Decree
RDL Royal Decree-Law
REIO Regional Economic Integration Organization
R-[#] Kingdom of Spain's Exhibit
RL-[#] Kingdom of Spain's Legal Authority
Rej. Ann. OperaFund and Schwab's Rejoinder on Annulment, dated 1 June 2021
Rej. Stay OperaFund and Schwab's Rejoinder in Opposition to the Request for the Continuation of the Stay of Enforcement of the Award, dated 30 September 2020
Reply Ann. Kingdom of Spain's Reply on Annulment, dated 29 March 2021
Reply Stay Kingdom of Spain's Reply in Support of the Continuation of the Stay of Enforcement of the Award, dated 15 September 2020
Respondents on Annulment OperaFund Eco-Invest SICAV PLC and Schwab Holding AG
Schwab Schwab Holding AG
Spain Kingdom of Spain
TFEU Treaty on the Functioning of the European Union
Tr. Ann., Day [#] (ENG/SPA), [page:line] [Speaker(s)] Transcript of the Hearing on Annulment (as jointly revised by the Parties on 30 July 2021)
Tribunal Arbitral Tribunal in the original arbitration proceeding composed of Professor Dr. Karl-Heinz Böckstiegel (President), Professor MMag. Dr. August Reinisch and Professor Philippe Sands, Q.C.
TVPEE Tax on the Value of the Production of Electrical Energy
VCLT Vienna Convention on the Law of Treaties

I. INTRODUCTION AND PARTIES

1.

This proceeding concerns the application by the Kingdom of Spain for the annulment of the award rendered on 6 September 2019 in the arbitration proceeding captioned OperaFund Eco-Invest SICAV PLC and Schwab Holding AG v. Kingdom of Spain, ICSID Case No. ARB/15/36, as rectified by the Tribunal's Decision on Rectification of the Award dated 28 October 2019 (the "Award"). The Award was rendered by the Arbitral Tribunal composed of Professor Dr. Karl-Heinz Böckstiegel (President), Professor MMag. Dr. August Reinisch and Professor Philippe Sands, Q.C. (the "Tribunal"). Professor Philippe Sands issued a Dissent on Liability and Quantum.

2.
The Award resulted from a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Energy Charter Treaty ("ECT"), which entered into force for Spain and the Swiss Confederation on 16 April 1998 and for the Republic of Malta on 28 August 2001, and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force for Spain on 17 September 1994, for the Republic of Malta on 3 December 2003, and for the Swiss Confederation on 14 June 1968 (the "ICSID Convention").
3.
The Applicant on Annulment is the Kingdom of Spain (the "Applicant on Annulment," the "Applicant" or "Spain").
4.
The Respondents on Annulment are OperaFund Eco-Invest SICAV PLC ("OperaFund"), a company incorporated under the laws of the Republic of Malta, and Schwab Holding AG ("Schwab"), a company incorporated under the laws of the Swiss Confederation (together the "Respondents on Annulment").
5.
The Applicant and the Respondents on Annulment are collectively referred to as the "Parties," and the term "Party" is used to refer to either the Applicant or the Respondents on Annulment. The Parties' representatives and their addresses are listed above on page (i), supra.
6.

The dispute in the underlying arbitration related to an investment in the photovoltaic sector in Spain.1 The dispute arose out of regulatory measures implemented by Spain modifying the economic regime for renewable energy investments in Spain. On jurisdiction, the Tribunal concluded that it had jurisdiction over the claims submitted by OperaFund and Schwab, except for the claim concerning the Tax on the Value of the Production of Electrical Energy ("TVPEE").2 On liability, the majority of the Tribunal found Spain liable for breach of the fair and equitable treatment standard ("FET") in Article 10(1) of the ECT,3 and ordered Spain to pay OperaFund and Schwab damages assessed at EUR 29.3 million, together with pre-Award and post-Award interest.4 Professor Philippe Sands appended a Dissent on Liability and Quantum.

7.

On 8 October 2019, OperaFund and Schwab filed a Request for Rectification of the Award, which was registered on 10 October 2019. They requested the Tribunal to rectify a clerical error concerning the currency of the compensation awarded. Without objection from Spain, on 28 October 2019, the Tribunal issued its Decision and rectified the clerical error.

8.

Spain seeks the annulment of the Award under Article 52(1)(b), (d) and (e) of the ICSID Convention.

II. PROCEDURAL HISTORY

9.

On 25 February 2020, Spain submitted an Application for Annulment of the Award ("Application for Annulment"), accompanied by Annexes 1 to 24. In its Application for Annulment, Spain requested, among other things: (i) a provisional stay of enforcement of the Award in accordance with Article 52(5) of the ICSID Convention and Rule 54(2) of the ICSID Rules of Procedure for Arbitration Proceedings ("ICSID Arbitration Rules"); and (ii) the continuation of the stay of enforcement of the Award until the Committee renders its Decision on the Application for Annulment.5

10.

On 3 March 2020, the Secretary General of ICSID registered the Application for Annulment and notified the Parties of the registration, in accordance with ICSID Arbitration Rule 50(2)(a) and (b); and informed the Parties of the provisional stay of enforcement of the Award pursuant to ICSID Arbitration Rule 54(2).

11.

The ad hoc Committee was constituted in accordance with Article 52(3) of the ICSID Convention. Its members are Mr. Timothy J. Feighery, a U.S. and Irish national, President; Mr. Milton Estuardo Argueta Pinto, a Guatemalan national; and Professor Fausto de Quadros, a Portuguese national, (the "Committee"), all appointed by the Chairman of the ICSID Administrative Council.

12.

On 17 June 2020, in accordance with ICSID Arbitration Rules 6(1) and 53, the Secretary General notified the Parties that all three members of the Committee had accepted their appointments and that the Committee 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 Committee.

13.
On 1 July 2020, the Parties informed the Committee of their agreed Procedural Calendar for submissions concerning the stay of enforcement of the Award. The Parties further agreed to extend the deadline in ICSID Arbitration Rule 54(2) until 45 days after conclusion of the Parties' written submissions on the stay of enforcement.6 On 2 July 2020, the Committee confirmed the Procedural Calendar agreed by the Parties.
14.
On 16 July 2020, Spain filed its Memorial in Support of the Continuation of the Stay of Enforcement of the Award, accompanied with Annexes 25 to 39 ("Memorial on Stay").
15.
On 23 July 2020, the Committee held the First Session with the Parties by video conference.
16.
On 27 July 2020, the Committee issued Procedural Order No. 1, which embodied the Parties' agreements on procedural matters and the Committee's decisions on the disputed issues. It established, inter alia, that the applicable Arbitration Rules would be those in effect from 10 April 2006, that the procedural languages would be English and Spanish, and that the place of proceeding would be Washington, DC, as the seat of the Centre. It also issued the Procedural Calendar for this annulment proceeding.
17.
On 31 July 2020, OperaFund and Schwab submitted their Counter-Memorial in Opposition to the Request for the Continuation of the Stay of Enforcement of the Award, accompanied by Legal Authorities CL-0248 to CL-0273, and RL-0080 ("Counter-Memorial on Stay").
18.
On 15 September 2020, Spain filed its Reply in Support of the Continuation of the Stay of Enforcement of the Award, together with Exhibits BQR-0013 to BQR-0014, R-0364 to R-0371, and Legal Authorities RL-0150 to RL-0162 ("Reply on Stay").7
19.
On 30 September 2020, OperaFund and Schwab filed their Rejoinder in Opposition to the Request for the Continuation of the Stay of Enforcement of the Award, together with Legal Authorities CL-0274 to CL-0275 ("Rejoinder on Stay").
20.
On 23 October 2020, Spain filed its Memorial on Annulment, together with Exhibits R-0372 to R-0389, Legal Authorities RL-0163 to RL-0199, selected Exhibits and Legal Authorities from the original arbitration proceeding, and an Expert Report by Professor Ricardo Gosalbo Bono, accompanied by Exhibits RGB-0001 to RGB-0028 ("Memorial on Annulment").
21.
On 6 November 2020, Spain requested an extension to submit the English translation of the Memorial on Annulment. On the same day, the Committee invited OperaFund and Schwab to submit their observations, which they provided on 9 November 2020.
22.
On 9 November 2020, the Committee issued a revised Procedural Calendar ("Calendar Revision No. 1") which reflected the amendments resulting from the Parties' communications of 6 and 9 November 2020, respectively.
23.
On 16 November 2020, the Committee issued its Decision on Stay of Enforcement of the Award. The Committee decided as follows:

"For the reasons set forth above, the Committee unanimously decides to:

(1) Reject Spain's request for a continuation of the stay of enforcement of the Award;

(2) Orders that the stay of enforcement of the Award currently in place be lifted;

(3) Reserves the right to modify this Decision if requested by either Party upon a modification of the prevailing circumstances; and

(4) Reserves the decision on costs for a later stage of the proceedings."

24.
On 3 December 2020, the European Commission ("EC") filed an Application for Leave to Intervene as a Non-Disputing Party, pursuant to ICSID Arbitration Rule 37(2), together with Annex 1 ("EC Application"). The EC Application was communicated to the Parties and the Committee on the same day.
25.

On 8 December 2020, pursuant to ICSID Arbitration Rules 37(2) and 53, the Committee invited the Parties to provide their observations on the EC Application.

26.
On 8 January 2021, OperaFund and Schwab filed their observations on the EC Application, together with Exhibits C-0355 to C-0357 and Legal Authorities CL-0276 to CL-0294, as well as certain Legal Authorities from the original arbitration proceeding. On the same date, Spain filed its observations on the EC Application, together with Legal Authority RL-0200, as well as certain Legal Authorities from the original arbitration proceeding.
27.

On 13 January 2021, the Committee invited the Parties to provide a second-round of submissions regarding the EC Application. In making these second-round submissions, the Committee invited the Parties to address "the question of whether the points on which the EC seeks to intervene (identified in the EC Application) fall within the scope of the grounds for annulment in Article 52(1) of the ICSID Convention."

28.
On 22 January 2021, OperaFund and Schwab filed their Counter-Memorial on Annulment, together with Exhibits C-0358 to C-0361 and Legal Authorities CL-0295 to CL-0319, as well as certain Exhibits, Legal Authorities and an Expert Report (CER-5 Brattle Rebuttal Expert Report dated 2 October 2018 with Annexes 1 to 3) from the original arbitration proceeding ("Counter-Memorial on Annulment").
29.
In their Counter-Memorial on Annulment, OperaFund and Schwab requested that the Committee declare in a Procedural Order that the First Gosalbo Report was inadmissible "and that Spain [was] barred from filing new expert reports or new evidence with its second memorial unless there are exceptional circumstances that could justify it and the Committee so approves it beforehand."8
30.
On 29 January 2021, Spain submitted its Reply Observations on the EC Application, together with Legal Authorities RL-0201 to RL-0203. On the same date, OperaFund and Schwab submitted their Reply Observations on the EC Application.
31.
On 27 February 2021, the Committee issued Procedural Order No. 2 concerning the EC Application for Leave to Intervene as a Non-Disputing Party pursuant to ICSID Arbitration Rule 37(2). The Committee granted the EC Application in part as follows:

"For the reasons stated above, the Committee hereby:

a) Allows the EC to file a written submission as a non-disputing party, in accordance with ICSID Arbitration Rule 37(2), on whether the Tribunal manifestly exceeded its powers by finding jurisdiction, and/or by failing to apply the proper law;

b) Decides that the EC shall file its submission no later than 12 March 2021, with a translation into Spanish to follow no later than 15 March 2021, and that the submission shall be limited to 25 pages, with no exhibits or annexes;

c) Rejects the EC's request to have access to the documents filed in the case;

d) Rejects the EC's request to attend the hearing;

e) Rejects OperaFund and Schwab's request to condition the EC's intervention on the provision of an undertaking or on the provision of a guarantee or security for any costs of this proceeding;

f) Decides that the Parties shall present their observations on the EC written submission in the course of their currently scheduled second round submissions (Reply on Annulment and Rejoinder on Annulment, respectively);

g) Decides that this Procedural Order shall be communicated to the European Commission, which shall not communicate it to third parties or use it outside of this annulment proceeding."

32.
On 12 March 2021, the EC filed its written submission pursuant to ICSID Arbitration Rule 37(2) ("EC Submission"). The EC Submission was communicated to the Parties and the Committee on the same day. On 15 March 2021, the EC filed the translation of its written submission, which was also communicated to the Parties on the same day.
33.
On 29 March 2021, Spain filed its Reply on Annulment, together with Exhibits R-0390 to R-0391, Legal Authorities RL-0204 to RL-0267, selected Exhibits and Legal Authorities from the original arbitration proceeding, and a Second Expert Report of Professor Ricardo Gosalbo Bono, accompanied by Exhibits RGB-0029 to RGB-0049 ("Reply on Annulment").
34.
As part of its Reply on Annulment, Spain opposed OperaFund and Schwab's request to declare inadmissible the First Gosalbo Report, arguing that "Professor Gosalbo's Report does not constitute any violation of PO No. 1 […], paragraph 15 […] which exempts the need to request express authorisation from the ad hoc Committee with respect to the legal authorities."9
35.
On 20 May 2021, the Committee invited the Parties to confer concerning the format of the Hearing on Annulment scheduled for 19-20 July 2021 (with 21 July 2021 in reserve) (the "Hearing on Annulment"), including the possibility of convening the Hearing remotely by video conference with reference to the provisions of Sections 10.2 and 18.2 of Procedural Order No. 1 in that regard. Each Party provided its observations concerning the subject on 27 May 2021, with Spain agreeing to the remote format, and OperaFund and Schwab arguing that the Hearing could be disposed of, but agreeing to the remote format, if held.
36.
On 1 June 2021, having heard the Parties, the Committee ruled as follows:

"The Committee has taken note of the Parties communications of 27 May 2021. It observes that pursuant to ICSID Arbitration Rule 29 '[e]xcept if the parties otherwise agree, the proceeding shall comprise two distinct phases: a written procedure followed by an oral one.' As there is no agreement between the Parties to dispose of the oral Hearing, the Committee confirms that the Hearing will take place on the scheduled dates 19‐20 July 2021 (with 21 July 2021 in reserve), as established in Procedural Order No. 1, Annex A (REV 1). The Committee further notes the Parties' agreement as to the virtual format, and it thus confirms that the Hearing will be virtual. […].

Finally, the Committee observes that it will revert to the Parties separately on the issue of the admissibility of expert submissions, prior to the Pre‐Hearing Conference."

37.
On 1 June 2021, OperaFund and Schwab filed their Rejoinder on Annulment, together with Exhibits C-0362 to C-0365, Legal Authorities CL-0320 to CL-0336, as well as certain Exhibits, Legal Authorities and an Expert Report (CER-2 Brattle Quantum Report dated 26 October 2016, and CER-1-BRR-47, CER-2-BQR-75) from the original proceeding ("Rejoinder on Annulment").
38.
As part of their Rejoinder on Annulment, OperaFund and Schwab reiterated the request that the Committee "[i]ssue a Procedural Order whereby it declares that Gosalbo's Reports cannot be admitted."10
39.
On 3 June 2021, the Committee invited the Parties to provide further briefing on the procedural question of admissibility of the Gosalbo Reports. Pursuant to the Committee's invitation: (i) on 10 June 2021, Spain filed further observations, together with Legal Authority RL-0268; (ii) on 14 June 2021, OperaFund and Schwab filed reply observations, together with Legal Authorities CL-0337 and CL-0338; and (iii) on 16 June 2021, Spain filed rejoinder observations (and later submitted a revised version with a clerical correction on 17 June 2021).
40.
On 23 June 2021, the Committee issued Procedural Order No. 3, where it ruled on the admissibility of expert submissions, as follows:

"For the reasons stated above, the Committee hereby:

(a) determines that the Gosalbo Reports are inadmissible;

(b) determines that the Eeckhout Expert Declaration and the Bermann Expert Declaration are inadmissible;

(c) rejects Spain's request that Prof. Gosalbo attend the hearing;

(d) without prejudice to the above decisions, permits the Parties to rely on the entirety of their written submissions made during the written procedure, including excerpts taken from and footnotes referencing the Gosalbo Reports, the Eeckhout Expert Declaration and the Bermann Expert Declaration, in the remainder of this procedure;

(e) determines to assess costs at the conclusion of the Annulment Proceeding."

41.
The purpose of the Committee's decision was to preserve intact the written submissions of both Parties while rejecting the Gosalbo Reports, the Eeckhout Expert Declaration and the Bermann Expert Declaration. As underlined by the Committee at Section IV.B. infra, one of its important roles is to ensure the integrity of the process, which includes applying the principle that an annulment proceeding concerns the record before the Tribunal, and that it is not an opportunity to raise new evidence or new arguments on the merits. Consistent with this principle, the Committee will not assess the probative value of evidence or argument that was not before the Tribunal.
42.
On 23 June 2021, the Committee circulated a draft procedural order concerning the organization of the Hearing on Annulment in preparation for the Pre‐Hearing Organizational Conference ("Pre-Hearing Conference"). The Parties submitted their comments on the draft procedural order on 28 June 2021.
43.
On 29 June 2021, pursuant to Section 17.1 of Procedural Order No. 1, the Committee held the Pre-Hearing Conference with the Parties by video conference.
44.
On 30 June 2021, the Committee issued Procedural Order No. 4 concerning the organization of the Hearing on Annulment.
45.
On 13 July 2021, the Parties jointly submitted the Electronic Hearing Bundle for the Hearing on Annulment.
46.
The Hearing on Annulment was held by video conference on 19 July 2021. The following persons were present:

Committee:

Mr. Timothy J. Feighery President
Prof. Milton E. Argueta Pinto Member
Prof. Fausto de Quadros Member

ICSID Secretariat:

Ms. Luisa Fernanda Torres Secretary of the Committee

OperaFund and Schwab:

Mr. Alberto Fortún Cuatrecasas, Gonçalves Pereira
Mr. José Ángel Rueda García Cuatrecasas, Gonçalves Pereira
Mr. Borja Álvarez Sanz Cuatrecasas, Gonçalves Pereira
Mr. Gustavo Mata Morreo Cuatrecasas, Gonçalves Pereira
Mr. José Ángel Sánchez Villegas Cuatrecasas, Gonçalves Pereira
Ms. Ana Martínez Valls Cuatrecasas, Gonçalves Pereira
Ms. Lucía Pérez-Manglano Villalonga Cuatrecasas, Gonçalves Pereira
Ms. Elisa Salcedo Sánchez Cuatrecasas, Gonçalves Pereira, Paralegal
Ms. Inmaculada Romero Vázquez Cuatrecasas, Gonçalves Pereira, Assistant
Mr. Gonzalo Arnejo Meijueiro Cuatrecasas, Gonçalves Pereira, IT
Mr. Alex Boss Party Representative
Mr. Dominik Milani Party Representative
Mr. Jorge Frey Party Representative

Kingdom of Spain:

Ms. Socorro Garrido Moreno Abogacía General del Estado, Ministerio de Justicia
Ms. Ana Fernández Daza Abogacía General del Estado, Ministerio de Justicia
Ms. Gabriela Cerdeiras Megías Abogacía General del Estado, Ministerio de Justicia
Mr. José Manuel Gutiérrez Delgado Abogacía General del Estado, Ministerio de Justicia
Mr. Juan Quesada Navarro Abogacía General del Estado, Ministerio de Justicia
Mr. Javier Comerón Herrero Abogacía General del Estado, Ministerio de Justicia

Court Reporters:

Mr. Trevor McGowan Caerus Reporting Ltd. (English)
Ms. Georgina Vaughn Caerus Reporting Ltd. (English)
Mr. Paul Pelissier D-R Esteno (Spanish)
Ms. Marta Rinaldi D-R Esteno (Spanish)

Interpreters:

Mr. Jesús Getan Bornn Interpreter
Ms. Anna Sophia Chapman Interpreter
Ms. Amalia de Klemm Interpreter

Technical Support:

Mr. Mike Young Sparq
Ms. Marisela Vázquez Marrero ICSID, Paralegal

47.
During the Hearing on Annulment, the Parties submitted various demonstrative exhibits, as follows:

• Spain: AD-001 (Opening Statement).

• OperaFund and Schwab: OD-001 (Opening Statement).

48.
During its opening argument at the Hearing on Annulment, Spain requested "in line with EU Commission requests" that the Committee suspend the proceeding until the CJEU rendered an opinion requested by Belgium on the compatibility of intra-EU arbitration under the ECT with EU law.11 OperaFund and Schwab opposed.12
49.
On 20 July 2021, the Committee declined the request for suspension.
50.
On 30 July 2021, the Parties submitted their agreed corrections to the transcript of the Hearing on Annulment.
51.
On 3 August 2021, OperaFund and Schwab filed a request to submit a new legal authority, pursuant to Section 15.6 of Procedural Order No. 1. On 4 August 2021, the Committee invited Spain to provide its observations on this application. Spain filed its observations on 11 August 2021, opposing the application.
52.
On 18 August 2021, having considered both Parties' arguments, the Committee rejected OperaFund and Schwab's request to submit a new legal authority.
53.
On 10 September 2021, Spain filed a request to submit a new legal authority, pursuant to Section 15.6 of Procedural Order No. 1. On the same day, the Committee invited OperaFund and Schwab to provide their observations on this application. OperaFund and Schwab filed their observations on 17 September 2021, opposing the application.
54.
On 20 October 2021, having considered both Parties' arguments, the Committee rejected Spain's request to submit a new legal authority.
55.
On 10 May 2022, Spain filed a request to submit six new documents, pursuant to Section 15.6 of Procedural Order No. 1. On 12 May 2022, the Committee invited OperaFund and Schwab to provide their observations on this application. OperaFund and Schwab filed their observations on 23 May 2022, opposing the application.
56.
On 31 May 2022, having considered both Parties' arguments, the Committee rejected Spain's request of 10 May 2022.
57.
On 24 June 2022, Spain filed a request to submit two new documents, pursuant to Section 15.6 of Procedural Order No. 1, and further asking the Committee to reconsider its previous decisions of 20 October 2021 and 31 May 2022. On 27 June 2022, the Committee invited OperaFund and Schwab to provide their observations on this application. OperaFund and Schwab filed their observations on 6 July 2022.
58.
On 18 July 2022, having considered both Parties' arguments, the Committee rejected Spain's requests of 24 June 2022.
59.
On 7 November 2022, the Parties filed their respective Statements of Costs. OperaFund and Schwab's Statement of Costs was accompanied with Legal Authorities CL-0339 to CL-0343.
60.
The proceeding was closed on 14 February 2023.

III. THE PARTIES' REQUESTS FOR RELIEF

61.
In the Reply on Annulment, Spain ultimately formulates its request for relief as follows:

"502. By virtue of the foregoing, the Kingdom of Spain respectfully requests the ad hoc Committee to annul the Award on the basis of the grounds and arguments set out in this Memorial and, in particular, that:

a) Annul the Award in its entirety under Article 52(1)(b) of the ICSID Convention, on the grounds that the Tribunal manifestly exceeded its powers by entering into the case and improperly declaring its jurisdiction over an intra-EU dispute;

b) [A]nnul the Award in its entirety under Article 52(1)(b) of the ICSID Convention, on the grounds that the Tribunal manifestly exceeded its powers by disregarding the application of applicable international law, including the ECT itself, and totally disregarding the application of all EU law;

c) Annul the Award in its entirety under Article 52(1)(b) of the ICSID Convention on the grounds that the Tribunal manifestly exceeded its powers by manifestly misapplying the applicable law to be taken into account in assessing legitimate expectations;

d) Annul the Award in its entirety under Article 52(1)(d) of the ICSID Convention for serious breach of essential procedural requirements insofar as the Tribunal committed multiple procedural breaches in relation to the evidentiary activity and the evaluation of evidence in the Arbitration;

e) Annul the Award in its entirety under Article 52(1)(d) of the ICSID Convention, for serious breach of essential procedural requirements insofar as the Tribunal committed multiple procedural violations relating to the treatment of the European Commission's amicus curiae;

f) Annul the Award in its entirety under Article 52(1)(d) of the ICSID Convention, for serious breach of essential procedural requirements insofar as the Tribunal committed multiple procedural breaches involving a lack of impartiality and unequal treatment of the parties in violation of the Kingdom of Spain's rights of defence and right to be heard;

g) Annul the Award in its entirety under Article 52(1)(d) of the ICSID Convention, for serious breach of essential procedural requirements insofar as the Tribunal committed multiple procedural breaches relating to the burden and evaluation of evidence developed in relation to the method of quantification of Damages and its application;

h) [A]nnul the Award in its entirety under Article 52(1)(e) of the ICSID Convention for failure to state reasons why it disregards the application of applicable international law, including the ECT itself, and why it disregards the application of all EU law altogether;

i) Annul the Award in its entirety under Article 52(1)(e) of the ICSID Convention for failure to state reasons in the findings on liability which determines that there are serious deficiencies in the Award as to the interpretation of how Article 10(1) of the ECT is to be applied;

j) Annul the Award in its entirety under Article 52(1)(e) of the ICSID Convention, for repeated [f]ailure to state reasons in relation to the evidentiary activity and the evaluation of the evidence developed in the Arbitration;

k) Annul the Award in its entirety under Article 52(1)(e) of the ICSID Convention, for [f]ailure to state reasons concerning the Claimants' expectations regarding the immutability of the regulatory framework under which they made their investment and the alleged breach thereof;

l) Annul the Award under Article 52(1)(e) of the ICSID Convention, insofar as it relates to the determination of Damages, insofar as there is a clear failure to state reasons for the Tribunal's assessment;

m) Orders the OperaFund parties to pay all the costs of the proceedings.

503. In the event that the Annulment Committee considers that the facts described above constitute a ground for annulment on a ground of Article 52(1) of the ICSID Convention other than those alleged, the Kingdom of Spain requests the Committee to proceed to annul the Award on that ground as well. […]."13

62.
In their Rejoinder on Annulment, OperaFund and Schwab formulate their request for relief as follows:

"271. In light of the foregoing, OperaFund respectfully requests that the Committee:

(i) […]

(ii) Render a Final Decision

a. dismissing Spain's request for annulment of the Award; and

b. ordering Spain to pay OperaFund's legal fees and all annulment costs (including Committee members' fees, ICSID fees and all related expenses) incurred in these proceedings."14

IV. THE GROUNDS FOR ANNULMENT

A. Overview

63.
Spain submits that the Award must be annulled on three grounds: (i) manifest excess of powers (Article 52(1)(b) of the ICSID Convention); (ii) serious departure from a fundamental rule of procedure (Article 52(1)(d) of the ICSID Convention); and (iii) failure to state reasons (Article 52(1)(e) of the ICSID Convention).15 Spain takes the view, however, that "the categorisation of the various facts within a given ground for annulment is not restrictive, and does not preclude the ad hoc Committee from finding that those facts fit within a different ground for annulment under Article 52 of the ICSID Convention."16
64.
Spain denies that its annulment application amounts to an appeal, or that it has raised "new issues."17 Spain agrees that an annulment proceeding is not an appeal, and that it does not constitute "a way to proceed to a review of the case already adjudicated."18 The disagreement lies, Spain submits, on "the scope that should be given to the grounds for annulment" in Article 52 of the ICSID Convention.19 In its view, the grounds for annulment are to be interpreted "not broadly, but also not narrowly."20 According to Spain, Professor Philippe Sands' dissent underscores the force of this annulment application.21
65.
For their part, OperaFund and Schwab argue that Spain has not established any valid ground for annulment.22 For OperaFund and Schwab, the "frivolity" of Spain's application is demonstrated by the fact that Spain has sought to annul all 20 awards in which it has been held liable.23
66.
OperaFund and Schwab's position is that Spain has used this annulment proceeding to "re-litigate […] a series of jurisdictional objections, factual conclusions, and arguments on the merits that were fully briefed before, settled, and squarely rejected by the Tribunal."24 For example, Spain has reiterated allegations already rejected on the intra-EU objection, EU law on State Aid, and legitimate expectations that "the Tribunal squarely rejected."25 In their view, Spain has not accepted that it lost, and it seeks a "de novo review" of the intra-EU objection and of the merits.26
67.
OperaFund and Schwab submit that an annulment proceeding is not an appeal,27 and that it is strictly limited to the grounds set forth in Article 52(1) of the Convention, which must be narrowly interpreted.28 They contend that by contrast with an appeal, an ad hoc committee may not amend or replace an award (as to jurisdiction or the merits), and that annulment is concerned with the "legitimacy of the process," not with its "substantive correctness."29
68.
Moreover, OperaFund and Schwab argue that Spain bases its arguments on a "biased and incorrect version of the facts of the case," and "most of the time" fails to advance specific references to the Award or the file in the arbitration.30 Furthermore, Spain introduces new evidence (e.g. the Gosalbo Reports), new arguments (e.g. on valuation date), and new claims (e.g. on State aid), which is not permissible under the ICSID Convention.31
69.
Instead, they argue that this Committee "should primarily focus on the Award and materials submitted during the Arbitration […]."32 An annulment process must "take as their premise the record before the Tribunal;"33 and the Committee "should only analyze the dispute as presented in the pleadings before the tribunal."34 New defenses on jurisdiction are not admissible at the annulment stage.35
70.
The Parties' respective positions on the grounds for annulment are summarized in the different sections that follow. The Committee notes, however, that it has considered the Parties' arguments in their written and oral submissions in their entirety, irrespective of whether an argument is referred to expressly in the summaries of the Parties' positions in this Decision.

B. The Role of the Committee

71.
Having read and heard the Parties' extensive written and oral submissions, the Committee begins its analysis by setting forth its role as an ad hoc annulment committee under the ICSID Convention. The Committee is in agreement with Spain that "annulment under the ICSID Convention is an exceptional remedy that is delimited by the specific grounds provided for in the Convention, and that annulment is not and appeal."36
72.
ICSID's Background Paper on Annulment further develops these principles noting that the drafting history of the article, "confirmed by ICSID Secretary-Generals in Reports to the Administrative Council of ICSID," and decisions of ad hoc committees have "clearly established that: (1) the grounds listed in Article 52(1) are the only grounds on which an award may be annulled; (2) annulment is an exceptional and narrowly circumscribed remedy and the role of an ad hoc Committee is limited; [and] (3) ad hoc Committees are not courts of appeal, annulment is not a remedy against an incorrect decision, and an ad hoc Committee cannot substitute the Tribunal's determination on the merits for its own […]."37
73.
With respect to the principle that ad hoc committees are not courts of appeal, the Committee agrees with OperaFund and Schwab when they cite Professor Schreuer's commentaries to the ICSID Convention submitting that an implication of this principle is that an annulment proceeding is only "concerned with the legitimacy of the process of the decision, it is not concerned with its substantive correctness."38
74.
As noted supra, ¶ 41 the Committee also agrees with the further implication that an annulment proceeding concerns "the record before the Tribunal;"39 it is not an opportunity to raise new evidence or new arguments on the merits.40 It is incumbent upon the Committee to ensure the integrity of the process in this regard, and therefore it will not rely on evidence or arguments that were not part of the record before the Tribunal.
75.
The Committee also recognizes that, as Spain articulated in its oral submission, "annulment under the ICSID Convention is ultimately the last remedy to ensure the integrity of the arbitral process."41 This fact is further reason for the Committee's careful assessment of the alleged grounds of annulment.
76.
The Committee will be guided by these principles in undertaking its analysis and rendering its decision.

C. First Ground: Manifest Excess of Powers

1. The Parties' Positions

a. Spain's Position

77.
Spain submits that the Tribunal manifestly exceeded its powers in two ways: (i) by acting beyond its jurisdiction in contravention of European Union ("EU") law; and (ii) by failing to apply EU law as the substantive law of the case.42
78.
More specifically, Spain submits that a manifest excess of powers occurred because:

• "the Tribunal had no jurisdiction over a claim brought by intra-European Union […] corporations against an EU Member State;"43

• "under Article 10(1) of the [ECT] the Tribunal's determination of liability for breach of the fair and equitable treatment ('FET') obligation was inconsistent and contradictory, unreasonable and without foundation, and failed to apply the appropriate law, in particular the EU State Aid Act;"44 and

• "even if EU law [was] understood to have been applied (quod non) there [was] an incorrect use of the applicable law" because (i) "the assessment of legitimate expectations must include whether a subsidy is lawful under the law applicable to the investment in question and under domestic law," and (ii) under EU law "there could be no expectation of subsidy petrification" in a situation "when EU law qualifies such subsidies as State aid and EU law itself indicates that individuals are not entitled to claim State Aid."45

(i) The Standard

79.
Spain submits that a tribunal exceeds its powers when it acts contrary to the Parties' consent.46 The "powers" to which Article 52(1)(b) of the ICSID Convention refers are those relating to jurisdiction and applicable law.47 Thus, a manifest excess of powers may take place, inter alia, when a tribunal (i) lacks jurisdiction, exceeds its jurisdiction or decides on matters not raised by the Parties;48 or (ii) "does not apply the appropriate law,"49 "manifestly errs in determining the applicable law," or "manifestly errs in interpreting the law applicable to the dispute."50
80.
Spain observes that ad hoc committees have taken different approaches to the interpretation of the elements of the standard. Relying on the Updated Background Paper on Annulment, Spain notes that:

"The 'manifest' nature of the excess of powers has been interpreted by most ad hoc Committees to mean an excess that is obvious, clear or self-evident, and which is discernable without the need for an elaborate analysis of the award. However, some ad hoc Committees have interpreted the meaning of 'manifest' to require that the excess be serious or material to the outcome of the case."51

"[…] ad hoc Committees have taken different approaches to whether an error in the application of the proper law may effectively amount to non-application of the proper law. Some ad hoc Committees have concluded that gross or egregious misapplication or misinterpretation of the law may lead to annulment, while others have found that such an approach comes too close to an appeal."52

81.
Spain takes issue with the contention that the views of some ad hoc committees should prevail over others, and submits that, instead, this ad hoc Committee "has to form its own opinion on the […] Award bearing in mind all the approaches of the different applicable precedents."53 In arbitration there is no "doctrine of case law precedent."54
82.
Relying on Occidental, Spain submits that "manifest excess of powers" is a "polysemic concept" that refers both to (i) situations in which "a tribunal adjudicates disputes not included in the powers granted by the parties;" and (ii) situations in which "a tribunal having jurisdiction adopts an erroneous decision that exceeds its powers."55 According to Spain, "an excess of powers will be manifest even if it may require some analysis,"56 or "extensive argumentation when it is material to the outcome of the case."57
83.
For Spain, failure to apply the applicable law takes place when a tribunal (i) ignores the applicable law; or (ii) when "its erroneous interpretation or misapplication of the law is 'so gross or egregious as substantially to amount to failure to apply the proper law.'"58 Relying on Soufraki, Spain submits that "gross and consequential misinterpretation or misapplication of the proper law which no reasonable person […] could accept needs to be distinguished from simple error – even a serious error – in the interpretation of the law […]."59 However, Spain also puts forward the proposition that numerous decisions of annulment committees "openly maintain that an inadequate understanding of the applicable law may lead to an error in the determination of the applicable law, which may constitute a ground for annulment […]."60
84.
Spain further submits that a tribunal manifestly exceeds its powers when it fails to apply the proper treaty provision and instead applies standards not included in that provision.61 Spain adds that even if a tribunal has correctly identified the applicable law, a manifest excess of powers may still take place if the tribunal "did not effectively apply the principles it had recognized."62 Therefore, Spain says, an ad hoc committee must consider not only what the tribunal claims to have done, but what the tribunal actually did.63

(ii) Manifest Excess of Powers by Declaring Jurisdiction

85.
While there is a significant amount of overlap, Spain organizes its positive arguments concerning the intra-EU objection and the Tribunal's alleged excess of powers by going beyond its jurisdiction around four main themes in its Memorial on Annulment, as follows: (i) the ECT does not apply to intra-EU disputes; (ii) EU law and its primacy; (iii) the Achmea Judgment; and (iv) EU law and the ECT.64
86.
Spain's Reply on Annulment follows these themes (although not in the same order), as does Spain's oral submission at the Hearing on Annulment. Spain's rebuttal arguments and critique to the Award concerning the intra-EU jurisdictional objection are summarized in the fifth section of its Memorial on Annulment ("The OperaFund Decision fails when analyzing the lack of jurisdiction") (Section IV.A.(2)(2.5)) and mostly throughout its Reply on Annulment and in the Hearing on Annulment.
87.
The Committee will proceed to summarize Spain's positive arguments first, followed by its rebuttal arguments beginning with the paragraphs immediately below that address several overarching points and issues.
88.
According to Spain, the dispute in the underlying arbitration was an intra-EU dispute because OperaFund is incorporated in Malta, which, like Spain, is an EU Member State.65 Thus, for Spain, the dispute "concerns relations purely within the EU, at least as regards the Claimant OperaFund […], based in Malta […]."66 Recognizing, however, that this proceeding involves a joint claim on the part of a Maltese company in addition to a Swiss company, Spain remarked at the Hearing on Annulment that it was "not against the Arbitral Tribunal hearing the Swiss case, but not Malta. So it would be a partial hearing of the case."67
89.
In Spain's submission, the Tribunal manifestly exceeded its powers "in declaring its jurisdiction over an intra-EU dispute" while committing "numerous and serious errors […] concern[ing] the determination and interpretation of jurisdiction and applicable law […]."68 For Spain, the Award addressed its intra-EU jurisdictional objection in an "incorrect way;"69 and the "Tribunal should have declared its lack of jurisdiction and by not doing so it incurred a manifest excess in the exercise of its powers."70
90.
Spain observes that underlying this ground for annulment is its "understanding that EU law [was] applicable to the dispute" and that "the elements of the dispute must necessarily include the delimitation of the Arbitral Tribunal's jurisdiction."71
91.
Spain denies that this ground amounts to an appeal, and submits that it only asks this Committee to find that the "Tribunal declared its jurisdiction beyond what it was entitled to under the applicable rules."72 That said, Spain requests that the Committee undertake its analysis "with open eyes" and that it reaches its "own conclusions in an independent manner,"73 keeping in mind the opinion of the EC and the Court of Justice of the European Union ("CJEU").74
92.
Spain also submits that OperaFund and Schwab's attempt to oppose the annulment by reference to other arbitral decisions that have rejected the intra-EU objection must fail, because those other decisions "cannot alter the terms on which a Treaty attributes jurisdiction to an Arbitral Tribunal."75 In any event, Spain highlights that its position is supported by the dissenting opinion of Professor Marcelo G. Kohen in Adamakopoulos,76 and invites this ad hoc Committee to have "the courage […] to critically analyse whether the arbitration system under the ICSID Convention and the ECT is really intended to resolve purely internal EU disputes."77

(a) The ECT Does not Apply to Intra-EU disputes

93.
Spain submits that the "the proper application of customary rules of International Law" on treaty interpretation mandates the conclusion that the ECT (including its Article 26) does not apply intra-EU,78 and asserts that the Tribunal failed to "carr[y] out an analysis of all of the rules of interpretation provided for in Article 31 of the Vienna Convention on the [Law] of Treaties."79
94.
For Spain, a "literal, historical and teleological" interpretation of the ECT shows that it was not conceived for intra-EU arbitration.80 This interpretation of Article 26 of the ECT is the only one that harmonizes the ECT with EU law, and "is also consistent with Articles 30 and 59 of the VCLT."81
95.
Spain argues that: (i) the text of Article 26 of the ECT excludes intra-EU disputes because it requires a dispute between a "Contracting Party" and an "investor of another Contracting Party," and such diversity is not present in an intra-EU scenario;82 (ii) the ECT specifically recognizes the EU as a Regional Economic Integration Organization ("REIO");83 and (iii) the object and purpose of the ECT show that EU Member States neither wanted, and could not in any event, consent to intra-EU arbitration because "the ECT shows that it was driven, precisely by the EU, to promote energy development in the former Soviet republics, not among EU Member States," and the EU Member States had "ceded sovereign competences in the internal market […] and in the judicial system when they acceded to the [EU]."84 Thus, neither the EU Member States, nor the EU "were able to assume rights or obligations contrary to EU law when signing the ECT."85

(b) EU Law and Its Primacy

96.
Spain contends that "EU Law applies in the territory of the Union, in each Member State" and that "[i]n the event of a conflict between the rules of a Member State and European Union law, the principle of primacy gives preference to EU law."86 For Spain, it appears that while "EU law applies in the territory of the Union," because the EU Member States bind themselves via international treaties, the rules contained in those treaties are subject to the principle of primacy: "[i]n what matters here, the principle of primacy of EU law also applies to the rules that Member States endow themselves through international agreements or treaties, that is, it applies in the context of Public International Law."87
97.
Spain asserts that the CJEU has exclusive jurisdiction to determine the scope and content of EU law.88 According to Spain, this exclusivity seeks to guarantee the uniform interpretation of EU law, and it falls from two provisions of the Treaty on the Functioning of the European Union ("TFEU"): (i) Article 267, which authorizes the highest court of a EU Member State to submit preliminary questions on EU law to the CJEU, with such rulings being binding on the courts of that Member State;89 and (ii) Article 344 of the TFEU which "prohibits Member States from submitting a dispute that affects the interpretation or application of the EU Treaties to a method of dispute resolution other than their national courts."90 Therefore, Spain says, EU Member States cannot submit to arbitration "disputes that may require arbitral tribunals to interpret or apply EU law."91

(c) The Achmea Judgment

98.
For Spain, the Achmea Judgment confirms that the EU Treaties have always prohibited intra-EU arbitration in view of Articles 267 and 344 of the TFEU,92 both in BITs and multilateral treaties.93 The CJEU rulings are part of EU law, and as such, are also international law.94 In particular, Spain emphasizes that in the Achmea Judgment, the CJEU held that:

"Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States, such as Article 8 of the Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Czech and Slovak Federative Republic, under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept."95

99.
Spain submits that the CJEU reasoned that: (i) the EU Treaties had established a judicial system designed to guarantee a coherent and uniform interpretation of EU law; (ii) it was up to the local courts and the CJEU to guarantee the application of EU law in all EU Member States; (iii) the cornerstone of this judicial system was the preliminary ruling procedure contemplated in Article 267 of the TFEU which established a dialogue between the CJEU and EU Member States, and (iv) EU law was part of the legislation in force in each EU Member State and derived from an international agreement between the EU Member States.96
100.
Furthermore, Spain argues, the CJEU concluded that: (i) an arbitral tribunal was not part of the EU judicial system, nor could it submit a preliminary question to the CJEU; (ii) disputes "regarding investment protection may affect the application or interpretation of EU Law and, therefore, should be subject to the EU judicial system;" (iii) an arbitration clause deviates from the EU system and therefore provides "no guarantee that disputes submitted to arbitration will be resolved in such a way as to ensure the full effectiveness of EU Law;" and (iv) pursuant to Article 8(7) of the BIT at issue in Achmea, the decision of that tribunal was final and judicial review by national courts could only be exercised "to the extent permitted by national law."97 According to Spain, the CJEU stressed that to be contrary to EU law "it is not necessary that an arbitral tribunal actually applies and interprets EU law; it suffices that such a tribunal may do so."98
101.
Spain submits that the Achmea Judgment is applicable both to intra-EU BITs and to multilateral treaties such as the ECT, and contends that its position is supported by the EC and by the EU Member States Declarations of January 2019.99 While recognizing that these declarations were issued after the underlying arbitration proceeding had begun, Spain submits that they still constitute evidence of excess of jurisdiction, pursuant to Articles 31 and 33 of the VCLT.100 Further, Spain adds that other EU actors (such as the Advocate General) also support the view that the conclusions in the Achmea Judgment also apply to ECT cases.101
102.
More particularly, Spain submits that the Achmea Judgment applies to the present case because: (i) this case involves the application of EU law; and (ii) the Award cannot be reviewed by the EU judicial system.102 This is so because: (i) pursuant to Article 42 of the ICSID Convention, ICSID tribunals "are called upon to resolve the dispute by applying the rules agreed by the parties;"103 (ii) Article 26(6) of the ECT requires that the dispute be resolved "in accordance with the ECT and the applicable rules and principles of International Law;"104 and (iii) EU law is international law.105 Moreover, the present dispute involves a basic institution of EU law (State Aid) and as such involves the application of EU law.106 Thus, Spain argues, EU law was applicable law to the dispute in the underlying arbitration.107

(d) EU Law and the ECT

103.
Spain's fundamental position is that Article 26 of the ECT does not apply intra-EU, but even if it did (quod non), intra-EU application would violate the EU Treaties and the conflict should be resolved in favor of EU law.108 Thus, for Spain, a conflict between the ECT and EU law must be resolved in accordance with the principle of primacy of EU law, which is a "special conflict rule" agreed upon among EU Member States.109 For Spain, "[t]he principle of the primacy of EU law applies equally to domestic law and international treaties within the EU, even when third countries are also parties to those treaties."110 Spain also argues that under Article 351 of the TFEU any international agreement contrary to EU law is inapplicable to EU Member States.111
104.
Spain further explains that the principle of primacy "also applies to the rules that Member States endow themselves through international agreements or treaties, that is, it applies in the context of Public International Law."112
105.
Spain thus concludes that, because EU law is part of international law and is binding on all EU Member States, the inapplicability of Article 26 of the ECT as a matter of EU law means that neither Spain, nor the investors' home State "at least as far as Malta is concerned" made a valid offer of arbitration to investors from other EU Member States.113

(e) Spain's Rebuttal Arguments: The OperaFund Award Fails When Analyzing the Lack of Jurisdiction

106.
As noted above, Spain's rebuttal arguments and critique concerning the Tribunal's findings on the intra-EU jurisdictional objection begin in the fifth section (Section IV.A.(2)(2.5)) of its Memorial on Annulment ("The OperaFund Decision fails when analyzing the lack of jurisdiction") and more thoroughly throughout its Reply on Annulment, as well as in its oral submissions at the Hearing on Annulment. A careful review of Spain's pleadings reveals that Spain centers its critique of the Award on the following arguments: (i) the Tribunal's failure to apply rules of treaty interpretation; (ii) the Tribunal's dismissal of the Achmea Judgment and EU law; (iii) the Tribunal's failure to apply the principle of primacy of EU law; and (iv) the manifest nature of the Tribunal's excess of powers. Spain's arguments are summarized in the following paragraphs.

(1) The Tribunal's Failure to Apply Rules of Treaty Interpretation

107.
In Spain's submission, the Tribunal failed to carry out an analysis pursuant to "all the rules" of interpretation provided for in Article 31 of the VCLT, and instead, asserted:

"[…] there is no need to 're-invent the wheel' and start a new examination of all the details regarding the intra-EU objection. The Tribunal agrees with all the recent conclusions of other tribunals to the effect that, also after the Achmea Judgment of the Court of Justice of the EU, the intra-EU objection is not justified, and the Tribunal has indeed jurisdiction in the present case. […]"114

108.
For Spain, the above statement is enough to annul the Award, as it is unacceptable for a Tribunal resolve such a significant objection "without a detailed and brief analysis of the peculiarities of this issue."115
109.
Spain submits that the Tribunal only focused on the absence of an explicit disconnection clause, failing to recognize that the reference to REIO in Articles 1(3) and 1(10) of the ECT renders such a disconnection clause superfluous.116 The REIO clause "implies" that international obligations are only created vis-à-vis third countries.117 Moreover, Spain says, the Tribunal also failed to recognize "the lack of jurisdiction of the EU Member States to enter into obligations between themselves as a result of the transfer of competences to the EU, […] acknowledged in Article 1(3) of the ECT."118
110.
Furthermore, Spain asserts that the Tribunal also failed to take into account the context and purpose of the ECT, in particular, that the EU and its Member States had acted as a single unit when negotiating the ECT.119 International treaties are to be interpreted in good faith, and taking into account their historical context – which in the case of the ECT reveals that at the time of signing the ECT the EU Member States "had no intention of binding each other" and "reveals the existence of" an "implicit" disconnection clause in the ECT, made "more notorious" after the signing of the Lisbon Treaty.120 In Spain's view, the Award "hardly provided an answer" with respect to the arguments relating to the ECT's object and purpose.121
111.
According to Spain, the Tribunal's conclusion that the lack of a disconnection clause shows no real intention to exclude intra-EU disputes from the ECT is "wrong and false."122 It "was based on an erroneous premise" as it was limited to the text of the ECT and the conclusions in Vattenfall, without referring to EU law.123 Moreover, Spain says, because OperaFund and Schwab have not refuted the arguments on the existence of an "implied" disconnection clause in the ECT, there is a "tacit admission" of this ground for annulment.124
112.
Furthermore, for Spain, the Award's conclusion that the text of the ECT did not establish a differentiated treatment for the EU Member States failed to recognize that such distinction followed both from (i) the EU treaties (which prevail over the ECT under the principle of primacy); and from (ii) the literal application of the ECT, "if the reference to the 'Regional Economic Integration Organisation'(REIO) is taken into account."125
113.
According to Spain, on a literal interpretation, when two disputing parties belong to the same REIO, it cannot be said that the dispute involves a State and an investor of "another Contracting Party."126 Furthermore, Spain states that it argued in the arbitration that Article 36(7) of the ECT granted the EU a "special status" as an REIO, allowing it to act as a "single bloc," and that Article 1(3) and the EU Declaration pursuant to Article 26(3)(b)(iii) of the ECT, recognized the EU power to make decisions binding on EU Member States, thereby demonstrating that the ECT was not intended to regulate intra-EU relations.127
114.
Spain refutes OperaFund and Schwab's contention that Spain's interpretation of Article 26 of the ECT in accordance with its text, object and purpose (i) introduces new arguments and (ii) reargues points raised in the arbitration.128 For Spain, OperaFund and Schwab do not even identify the alleged "new" arguments introduced in the annulment phase.129 Spain submits that in the arbitration it argued that the literal, historical and teleological interpretation of the ECT supports the conclusion that it does not apply to intra-EU arbitration, and that the same reasoning was reiterated in the Memorial on Annulment.130
115.
Instead of addressing these arguments, Spain says, OperaFund and Schwab limit their contentions to giving prevalence to the contents of the Award.131 But the Award, Spain says, "barely addresses" the issue; and it fails to analyze the ECT according to its text, object and purpose.132 Instead, Spain says, the Award simply ignores that "EU Member States were neither able nor willing to submit intra-EU disputes to arbitration through the ECT."133
116.
Spain observes that, to the extent OperaFund and Schwab's grievance related to "new" arguments concerns the references to the 2018 EC communication,134 or to the 2019 EU Member States Declarations,135 the 2018 EC Communication says nothing different from one issued in 2015, and the 2019 declarations are simply one element to allow the Committee to determine the "authentic interpretation" of Article 26 of the ECT pursuant to Article 31 of the VCLT.136

(2) The Tribunal's Dismissal of the Achmea Judgment and EU Law

117.
Spain submits that the Tribunal "totally ignore[d]" the conclusions of the Achmea Judgment without providing any reasoning of its own; rather, the Award made general references to other arbitral decisions, which "reveals the excess of jurisdiction" as the Tribunal upheld "jurisdiction without a specific analysis of such a fundamental issue."137
118.
According to Spain, the Tribunal dismissed the intra-EU objection on the grounds that: (i) the Achmea Judgment did not apply to this case which was based on the ECT (and not on an intra-EU BIT); and (ii) the underlying arbitration in Achmea was not comparable to the arbitration here, with the latter being situated in a public international law context and not in the national or regional context.138 In Spain's view, the Tribunal focused the distinctions on the fact that the Achmea tribunal had to take into account the German Procedural Code as applicable regulations, and on the place of arbitration (noting that the OperaFund case was "based" in Washington DC).139
119.
Spain contends that neither of these elements was relevant to the applicable analysis: what was relevant to the Achmea analysis, Spain asserts, was (i) whether the Tribunal was required to interpret EU law – which was the case here as "the tribunal had to analyse the norms on State Aid and, specifically, Articles 107 and 108 TFEU;"140 and (ii) whether the arbitral decision could be reviewed by the CJEU – a review not possible in the case at hand "as the arbitral tribunals are unable to raise any question for a preliminary ruling."141 Spain contends that the Tribunal further ignored that the dividing line between the national/regional context and the public international law context was "extremely thin" and that the "former should […] be considered to be included in the latter."142
120.
Spain further adds that the Tribunal also misinterpreted Article 344 of the TFEU as encompassing only disputes between two or more EU Member States, an error demonstrated by the Achmea Judgment in which the CJEU applied this provision in the context of an arbitration initiated by an investor against a State.143
121.
According to Spain, OperaFund and Schwab's efforts to deny the relevance of the Achmea Judgment are "vain."144 For Spain, the application of the Achmea Judgment to ECT cases is "unquestionable," and the issue is of great relevance here, as the Tribunal focused almost exclusively on this point to dismiss the application of the Achmea Judgment to the case.145 Spain argues that, contrary to OperaFund and Schwab's contentions: (i) the Achmea Judgment is based on general principles (in particular on Article 267 and 344 of the TFEU), not on the specific terms of the underlying BIT; and (ii) the multilateral nature of the ECT does not alter the analysis.146
122.
Contrary to OperaFund and Schwab's suggestion, Spain denies that its position is that the "OperaFund [Tribunal] lacked jurisdiction as of Achmea."147 Spain argues that its position has been that the Tribunal always lacked jurisdiction over intra-EU disputes, and does not contend that the arbitration agreement was "retroactively" rendered ineffective by the Achmea Judgment.148 Instead, in Spain's view, it has long been held by the CJEU that judgments resolving "preliminary rulings" apply to facts taking place prior to the judgment; and in any event, the Achmea Judgment does nothing new.149
123.
Spain also submits that the Award concludes more generally and without any reasoning that EU law is irrelevant to the determination of jurisdiction, holding that "it is clear that EU law does not prevail over any of the provisions of the ECT relevant to the present arbitration;"150 as if having rejected the applicability of the Achmea Judgment relieved the Tribunal from analyzing other questions regarding the applicability of EU law to this proceeding.151 Furthermore, Spain says, the Tribunal further erred in its analysis of Article 16(2) of the ECT to conclude that EU law "does not form part of the substantive law applicable to this case."152
124.
In this regard, Spain takes issue with OperaFund and Schwab's contention that EU law is irrelevant to jurisdiction, and that the principle of primacy of EU law is not binding on an ECT tribunal. According to Spain, despite OperaFund and Schwab's allegations that these conclusions are correct and supported by the reasoning in the Award (paragraphs 381-383), in fact, the Tribunal declined to apply EU law to the jurisdictional issues without offering any reasoning.153
125.
Thus, Spain contends that in the Award, the Tribunal both (i) erred in its determination of jurisdiction "by disregarding in absolute terms the relevance and applicability of [EU] law;"154 and (ii) made an "erroneous and biased" interpretation of EU law that led it to uphold jurisdiction.155 According to Spain, the Tribunal:

"[…] manifestly exceeded its powers because it did not apply EU law (which led, in turn, to erroneously assert its jurisdiction) and in the very few partial and tangential mentions it made of EU law, it made ostentatious errors whose seriousness should be grounds for annulment because they affect a vital element of the arbitration system, namely the jurisdiction of the Tribunal."156

126.
Spain submits that the applicable law to this case is determined by application of Article 26(6) of the ECT, which provides that the Tribunal "shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law;" thereby referring to "questions of jurisdiction, merits and quantum."157 Therefore, Spain says, given that jurisdiction was an "issue in dispute," it should have been resolved pursuant to Article 26(6) of the ECT.158 Moreover, Spain argues, the applicable law provision in Article 26(6) refers not only to the ECT, but also to "applicable rules and principles of international law," and EU law is international law.159

(3) The Tribunal's Failure to Apply the Principle of Primacy of EU Law

127.
For Spain, even if Article 26 of the ECT could be interpreted as encompassing intra-EU disputes (quod non), there would then be a conflict with EU law, and such conflict must be resolved in favor of EU law.160 According to Spain, this "conflict is not addressed at all in the Award."161
128.
Spain submits that the principles of "mutual trust," "autonomy and uniform application of EU Law" guaranteed by the powers conferred to the CJEU are violated if intra-EU arbitration is allowed.162 This conflict between intra-EU arbitration and EU law is recognized by the CJEU, the EC and the "Member States of the [EU] involved in the underlying dispute."163
129.
According to Spain, the Award also errs when it relies on Article 16 of the ECT to dismiss the proposition that EU law prevails in case of conflict.164 Spain denies that the conflict between the ECT and EU law should be resolved by application of Article 16 of the ECT, arguing that this provision does not establish a conflict resolution rule.165 For Spain, the Tribunal "contradicted itself in a flagrant way" in its analysis under Article 16 of the ECT, the right understanding of which would have led to the conclusion that the Tribunal lacked jurisdiction.166
130.
Spain submits that the Tribunal ignored that EU Member States have endorsed a "specific conflict rule" that prevails in intra-EU relations, namely, the principle of primacy of EU law;167 which confirms that the Tribunal "did not show interest in even studying the grounds of EU Law."168 For Spain, the principle of primacy compels the conclusion that EU law prevails "over other international obligations of Member States to each other," and "applies equally to domestic law and international treaties within the EU, even when third countries are also parties to those treaties."169 As a result, "Article 26 of the ECT cannot be applied in intra-community relations."170
131.
According to Spain, contrary to OperaFund and Schwab's contention, the "Tribunal does not expressly and directly address the applicability, meaning and relevance of the principle of primacy […] much less does it refer […] to the evidence provided" by Spain.171
132.
Spain insists that any international agreement entered into by a EU Member State must be interpreted in accordance with the EU Treaties (including Article 267 and 344 of the TFEU), and if such harmonious interpretation is not possible, the international agreement must be disapplied.172 For Spain, both Article 267 and Article 344 of the TFEU demonstrate the conflict between intra-EU arbitration and EU law.173 Thus, if Article 26(3) of the ECT is interpreted as encompassing intra-EU arbitration, it would conflict with EU law, and such conflict must be resolved in favor of EU law, in accordance with the principle of primacy of EU law.174 In the alternative, Spain says, if the conflict is to be resolved under the principles of Article 30 of the VCLT, EU law would also prevail as lex posterior as the principle of primacy of EU law was codified in 2007 in Declaration 17 to the Lisbon Treaty.175

(4) The Manifest Nature of the Tribunal's Excess of Powers

133.
Finally, Spain argues that the Tribunal's excess of powers is "manifest," for at least the following reasons: (i) the Tribunal could have observed that it was faced with an intra-EU dispute since the Request for Arbitration, which was a "notorious" fact;176 (ii) Spain invoked the intra-EU objection since the onset of the original arbitration, and therefore, the matter was contested since the start and intensely disputed by the Parties;177 and (iii) the EC, which is the "highest guarantor of the application of the EU Treaties" also questions the Tribunal's jurisdiction.178
134.
Towards the end of its Reply on Annulment, Spain summarizes the specific ways in which it alleges that the Tribunal "manifestly exceeded its jurisdiction," arguing that the Tribunal did so:179

• "by failing to clarify and reason why it did not apply EU law;"

• "by failing to give a literal interpretation of Article 26 of the ECT, in accordance with the object and purpose of the Treaty;"

• "by failing to give a systematic interpretation of Articles 1, 10, 16, 25, 26 and 36 of the ECT, in accordance with the object and purpose of the Treaty;"

• "by failing to assess, in view of the interpretation of the above Articles;"

• "by failing to apply the principles of the primacy and autonomy of EU law, the EU Treaties and the interpretation made of them by the CJEU, thereby ignoring […] that a clause such as […] Article 26 of the ECT cannot be applied to […] [EU] Member States […] in intra-EU disputes, as such an interpretation is contrary to EU law;"

• "[…] by rendering an Award whose award of compensation is contrary to European State Aid law."

(iii) Manifest Excess of Powers by Failure to Apply the Applicable Law: EU Law

135.
Spain submits that EU law was the applicable law, the Tribunal failed to apply it, and as a result, it committed a manifest excess of powers.180
136.
More particularly, according to Spain, the Tribunal in the present case: (i) failed to apply EU law to Article 26 of the ECT, and therefore improperly found it had jurisdiction; (ii) based its decision on the merits on Article 10(1) of the ECT, but "it did not apply the international standard correctly;"181 and (iii) "committed a manifest excess of powers by wil[l]fully refusing to apply and disregarding EU law on State Aid to a dispute over subsidies granted by a Member State to investors."182
137.
At the Hearing on Annulment, Spain clarified that, while it was contesting jurisdiction only vis-à-vis the investor incorporated in Malta (an EU Member State), it was maintaining that "EU law must be applied" to the case.183 Put another way, according to Spain, even for the Swiss investor, "when solving the dispute, [the Tribunal] would have had to take into account the EU law on the merits, because of the application of Article 26(6)."184
138.
Spain recalls that annulment committees have concluded that there is an excess of powers when a "tribunal manifestly fails to determine the applicable law;"185 or when the tribunal "does not apply the appropriate law."186 In its view, in this case the Tribunal did "not correctly identify the law applicable to the dispute and when interpreting this law, it manifestly fail[ed]" thereby incurring an "excess of powers."187
139.
Spain opposes OperaFund and Schwab's contention that the alleged excess of powers cannot be manifest because it is based on arguments and evidence not presented in the arbitration.188 According to Spain, during the arbitration it invoked EU law (i) as the applicable law to the dispute and (ii) as determinative of the Tribunal's lack of jurisdiction.189 Spain observes that the Award recorded Spain's allegation that:

"Since the Tribunal must resolve disputes in accordance with the ECT and other principles and rules of international law in accordance with Article 26 (6) of the ECT, the Tribunal must apply EU Law and the ECT under equal conditions. By virtue of the principle of primacy, EU Law and not the ECT is the international law that must be applied to resolve this dispute."190

(a) EU Law is the Applicable Law

140.
According to Spain, EU law was the applicable law not only for the question of jurisdiction, but also for the assessment of the facts and the merits of the case.191 Spain submits that EU law is international law, and the principle of primacy of EU law is a long-standing principle of EU law.192 Further, given its status in international law, and with reference to Article 38 of the Statute of the International Court of Justice ("ICJ"), Spain asserts that the Award "failed to respect and properly apply any of the sources of international law to the dispute."193
141.
First, Spain argues that pursuant to the law of treaties, EU law (including the EU Treaties and the rules derived from them) is international law.194 Those EU Treaties have established the primacy of EU law; and the law of treaties allows treaties to establish primacy over others.195 Therefore, EU law was not only applicable international law, but also "international law applicable to the dispute with primacy over the ECT."196 This is also supported by the principle of lex posterior in the VCLT (as the Lisbon Treaty is posterior to the ECT),197 as well as by the terms of Article 26(6) of the ECT.198 This is so because Article 26(6) of the ECT provides that "[a] tribunal established under paragraph (4) shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law," and the principles of autonomy and primacy of EU law are "applicable rules and principles of international law."199
142.
Spain takes the view that the question of the applicability of EU law under Article 26(6) of the ECT has been "settled" by the decision in Eurus, which in its view recognizes that EU law is international law and part of the applicable law under Article 26(6).200
143.
Second, Spain argues that bilateral and regional custom are also sources of international law pursuant to Article 38 of the ICJ Statute.201 Specifically, Spain contends that the autonomy and primacy of EU law are customary international law.202 According to Spain, it is an "international custom" that, in intra-EU matters, EU law applies with primacy over international treaties, even if such other treaties do not contain a disconnection clause.203 Spain submits that this is a practice accepted by all EU Member States and also third States.204 It follows, Spain argues, that "the EU can dissociate itself from international conventions and apply EU law with primacy to these conventions," whether this conventions are "past or future international conventions."205 For Spain, "[d]isconnection is inherent to the process of regional integration and does not require the acceptance […] of any member state or third state," nor does it require another convention, community law or declaration.206 It results simply from "the fact that the EU has a legal system in the area to which the convention refers" which must be given priority.207
144.
Third, Spain submits that EU Member States committed to respecting the State Aid regime, which is part of the core of the EU;208 suggesting that ignoring this regime amounts to a failure to apply "General Principles of Law."209

(b) The Tribunal Failed to Apply EU Law

145.
Spain asserts that the Tribunal failed to apply EU law to the merits.210 According to Spain, the Tribunal concluded that there was a distinction between the applicable law to jurisdiction and to the substance, and held that "all substantive provisions of the ECT remain fully applicable and EU Law is not part of the applicable substantive law in this case."211
146.
For Spain, this conclusion lacks "justified and sufficient reasoning;" is inconsistent with other arbitral decisions that have accepted that EU law is part of the applicable international law; and "is manifestly wrong."212 The Award refuses to apply applicable law, "does not give reasons," and is contradictory when it refuses to apply EU law considering it "purely national law."213
147.
According to Spain, the Tribunal reached the conclusion that EU law was not applicable law on the basis of two "false" and "wrong" premises: (i) a "narrow approach contained in the Vattenfall decision" by tribunals who "have opted for arguing that EU law is a special regime of international law" that did not fit within the concept of "applicable rules and principles of international law" in Article 26(6) of the ECT; and (ii) the notion that Article 16 of the ECT was the only applicable conflict rule.214
148.
In response, Spain argues these are not a "unanimous" view, nor is it the one espoused by Spain, who considers that in the context of a multilateral treaty "it is sufficient that the other treaty is binding on [the] disputing parties."215 According to Spain, pursuant to Article 26(6) of the ECT, EU law applies because it is a "source of international law."216 Under Article 38 of the ICJ Statute, EU law (the EU Treaties and derived rules) is treaty law;217 the autonomy and primacy of EU law is "international customary law;"218 and EU law qualifies even under "general principles of law," as the principle of pacta sunt servanda supports the view that State Aid law should have been applied.219
149.
Spain submits that the Tribunal contradicted itself because on the one hand it considered that there was an identity of subject matter between the EU Treaties and the ECT to apply Article 16(2) of the ECT as the conflict rule (Award, paragraph 328), while elsewhere it expressly stated that such identity of subject matter did not exist (Award, paragraph 383).220 Moreover, even if Article 16 of the ECT applied, the Tribunal erred by ignoring the final clause of the article; namely, "where any such provision is more favourable to the Investor or [the] Investment."221 According to Spain, a comparison between the ECT and the EU legal system shows that the latter is more favourable to the investment and the investor.222
150.
Furthermore, according to Spain, prior to concluding that EU law was inapplicable, the Tribunal was required (and failed) to examine why an "integrated interpretation" of the ECT in accordance with EU law was not possible. Instead, Spain says, the Tribunal merely relied on the fact that the ECT was signed by the EU and the EU Member States to displace the applicability of EU law.223
151.
Spain further emphasizes that even with the dismissal of the intra-EU jurisdictional objection, EU law remained applicable to the merits, and in particular to the assessment of the investor's legitimate expectations in connection with the State Aid nature of the renewable energy incentives at issue and EU environmental law.224 Spain asserts that the Award failed to apply EU State Aid law to the analysis of the facts and to the merits, and "did so without even arguing properly why."225 Instead, the Tribunal omitted the analysis of the State Aid rules and "decisively and erroneously resolve[d] the issue" on the basis that EU law was not part of the applicable substantive law.226
152.
Spain submits that the application of the entire EU legal framework on State Aid (which is also international law)227 "was […] mandatory."228 For Spain (i) "there is no distinction between the rules of EU Law and International Law, depending on whether or not they appear in the Constitutive Treaties of the European Union;" and EU law is "as a whole and in its entirety, International Law;"229 (ii) the Tribunal's reasoning "disregard[s] that the primacy of EU Law extends to the rules of International Law,"230 which results from Article 351 of the TFEU;231 and (iii) the Tribunal "disregarded the fact that the rules on State Aid are included in the [TFEU], specifically in its Articles 107 and 108," that is, they derive from an international treaty and are therefore international law.232
153.
Furthermore, Spain contends that the application of EU law had "fundamental consequences" to the merits.233 In Spain's submission, "if the State Aid regulations had been taken into consideration, the conclusions reached by the Tribunal would have been different."234
154.
In short, Spain submits that under EU law, State Aid is in principle illegal unless expressly authorized, and therefore, absent such authorization, there is no right to State Aid. As the Spanish subsidy scheme at issue in the underlying arbitration constituted State Aid, but was not notified to or authorized by the EC, it was "illegal" and there could be no expectation "to consolidate a result that was not authorized by law at the time of the investment."235
155.
Spain relies on Baywa for the proposition that "[i]n principle, an investor cannot have a legitimate expectation of treatment which is unlawful under the law of the host State, provided that the host State law itself is not inconsistent with the treaty under which the tribunal exercises its jurisdiction […]."236 Therefore, Spain says, "if EU Law had been applied […] the Tribunal […] would have had to consider, among other questions (i) whether RD 661/2007 had been notified to the European Commission and (ii) what impact such lack of notification would have on the legitimate expectations of investors."237
156.
For Spain, the ECT cannot be interpreted in the sense that "respect for European regulations as a whole (and in the matter of State Aid in particular)" constitutes a violation of that treaty, because EU law is part of the applicable international law.238 And even if EU law were to be considered domestic law, no "expectation of fair and equitable treatment" could be based on a breach of the mandatory rules of State Aid law, as recognized by the EC State Aid Decision of 10 November 2017.239
157.
This issue is "especially serious," Spain argues, because the Tribunal had before it the EC's assessment to the effect that the measures at issue constituted State Aid, and that application of the ECT "would create the risk of a substantive conflict" between the ECT and EU law.240 The EC State Aid Decision was "res judicata" and was "binding under the ECT,"241 and the Tribunal ignored it.242 Indeed, the Tribunal failed to address both the EC's assessment and Spain's arguments.243
158.
Spain takes issue with OperaFund and Schwab's allegation that numerous other awards or decisions ruled in a similar fashion as the Award at issue here.244 Spain notes that other arbitral decisions are "not binding;" that there is no rule of temporal preference among arbitral awards; and that the cases relied upon "lack similarity" to the case at hand.245 In any event, Spain adds, in recent years a number of awards or decisions have partially or totally rejected claims against Spain.246 Spain therefore submits that should the Committee conclude that indeed there was "an error in the determination of the applicable law," the annulment should succeed.247

(iv) Manifest Excess of Powers by Misapplication of the Applicable Law

159.
In the alternative, Spain submits that there was a "gross misapplication of EU law" which qualifies as a ground for annulment under Article 52(1)(b) of the ICSID Convention.248 Spain reiterates that the EU State Aid regime derives from the TFEU, and its character of "international law" is undisputable.249 Referring to Articles 107 and 108 of the TFEU, Spain contends that under EU law there is a general prohibition of State Aid, and that, while State Aid can be authorized, absent such express authorization State Aid is "in principle, illegal."250 It follows, Spain says, that it is not possible to claim the existence of a right to State Aid.251
160.
Even though this issue was extensively debated in the arbitration, including by introducing the EC State Aid Decision, the Award failed to consider this matter.252 Instead, Spain says, the Award "completely ignored the importance of the State Aid legal regime,"253 and failed to consider it in the analysis on legitimate expectations.254
161.
Spain argues that the subsidy regime that OperaFund and Schwab invoked in the arbitration was established under Directive 2001/77, and, in accordance with the State Aid guidelines and Article 4 of this Directive, those grants constituted State Aid that had to be communicated to and approved by the EC.255 According to Spain, it was a matter of record that the notification to the EC was not made.256 It follows, Spain says, that the regime in RD 661/2007 was illegal because it was not notified to the EC, and "no one can expect to consolidate a result that was not authori[z]ed by law at the time of the investment."257 Put another way, for Spain, "legitimate expectations" to that regime were "excluded."258
162.
Spain contends that the EC State Aid Decision was part of EU law, and as such, constituted "international law applicable" between the investor's home-State and the host-State, and its conclusions were binding on the Tribunal.259 However, Spain claims, the Tribunal dismissed EU law in its entirety (including State Aid law) as "highly irrelevant," and determined that this issue was a matter to be resolved internally between the EU and its Member States.260 Moreover, Spain asserts, the Tribunal did not consider any of the reasoning of the EC when deciding on the matter of legitimate expectations.261
163.
Furthermore, although Spain's main position is that EU law on State Aid was part of the applicable international law, it also argues that "even if it were to be considered as a fact, the Award completely disregard[ed] the legality of the investment in accordance with the law applicable in Spain in order to assess legitimate expectations" and failed to give any explanation in that regard.262 Put another way, "even if EU law were to be considered as national law," the Tribunal could not "consider alleged expectations of fair and equitable treatment […] potentially based on a breach of applicable mandatory rules such as the State Aid rules."263
164.
In sum, according to Spain "by manifestly misapplying EU law in both respects, the Tribunal has manifestly exceeded its powers for the purposes of Article 52(1)(b) of the ICSID Convention […]."264
165.
Spain denies OperaFund and Schwab's contention that it is contradictory to submit on the one hand that EU law has been disregarded, and on the other that it has been wrongly applied. Spain submits that because EU law was applicable to "multiple issues," on certain occasions it was "completely ignored" (e.g., in the dismissal of the intra-EU objection); and on others it was "not properly interpreted" (e.g., by failing to recognize the State Aid nature of the incentives at issue).265
166.
Spain further denies that in presenting its arguments on this ground it has reformulated its original case in the underlying arbitration, arguing that: (i) in its memorials it submitted that the EU State Aid regime was applicable, and introduced the EC State Aid Decision on the record; (ii) Spain emphatically invoked EU law as applicable to the dispute;266 and (iii) since the start of the underlying arbitration, it submitted that the claim constituted a "disguised attempt to obtain State Aid in a manner that does not comply with EU law."267
167.
Lastly, elsewhere in the pleadings, Spain also appears to criticize the Tribunal for "not apply[ing] the international standard [of Article 10(1) of the ECT] correctly," in that it recognized that the ECT did not preclude a sovereign State right to regulate, yet it penalized the exercise of such right.268

b. Opera Fund and Schwab's Position

168.
OperaFund and Schwab submit that there are no grounds to annul the Award on the basis of a manifest excess of powers.269 They argue that Spain has not met its burden to show that the Tribunal acted "manifestly outside the scope of its mandate" in the jurisdictional analysis and in its determination of the applicable law.270
169.
For OperaFund and Schwab, Spain's contentions on this ground are "either (i) irrelevant because they were already presented during the Arbitration and soundly dismissed by the Tribunal; (ii) unrelated to the Tribunal's jurisdiction or to any failure to apply the law (i.e., the only proper grounds for annulment under Article 52(1)(b) of the ICSID Convention); or (iii) inadmissible at the annulment stage because Spain did not present them beforehand in the arbitration."271 In their view, the ad hoc Committee should only review the record before the Tribunal.272
170.
Addressing the hybrid nature of the facts here, which involve an EU investor and a non-EU investor, OperaFund and Schwab agree with Spain that the jurisdictional objection has only been raised with respect to the Maltese investor (not against the Swiss), but they submit that Spain has also claimed that EU law overrides all provisions of the ECT (including Article 26), and that proposition is "wrong."273 As to the applicable law ground, OperaFund and Schwab submit that Spain's position that EU law applies to both the intra-EU and the non-intra-EU portions of the dispute is "wrong" as well, because "[EU] law cannot be applied to a third party," as Switzerland is not a EU Member State.274 Spain's contention would lead to a situation in which the Tribunal would have to resolve the merits applying EU law as a fact to the Swiss investor and as applicable law to the Maltese investor, which is "not possible under international law," would contravene Article 46 of the ECT, and "would be totally absurd."275

(i) The Standard

171.
OperaFund and Schwab contend that the ground expressed in Article 52(1)(b) of the ICSID Convention "encompasses situations where a tribunal (i) exceeds (or fails) to exercise its jurisdiction; or (ii) fails to identify and apply the law applicable to the dispute, and (iii) it does so in a manifest manner."276 The requirement that the excess be "manifest," they argue, applies equally to findings of jurisdiction, liability or damages.277 In OperaFund and Schwab's view, significantly, the Parties are in agreement on these points.278
172.
However, according to OperaFund and Schwab, Spain mischaracterizes the applicable legal standard under Article 52(1)(b) of the ICSID Convention.279 They take the view that: (i) "the excess of power must be self-evident rather than the product of elaborate interpretation,"280 and (ii) "an error in the application of the proper law, even if it leads to a manifestly incorrect application of the law, is not a ground for annulment."281
173.
OperaFund and Schwab submit that the word "'manifest' has been found to set the height of the applicable legal standard,"282 and that according to most ad hoc committees that term "should at once be textually obvious and substantially serious."283 According to OperaFund and Schwab, the first condition requires that the excess of powers "can be discerned with little effort and without deeper analysis."284 As to the second, in connection with a misinterpretation or misapplication of the proper law, the defect has to be "so gross or egregious as substantially to amount to a failure to apply the proper law," and it must be "[s]uch gross and consequential misinterpretation or misapplication of the proper law which no reasonable person […] could accept needs to be distinguished from simple error - even a serious error - in the interpretation of the law […]."285 Moreover, "a manifest excess of power will only exist 'where the action in question is clearly capable of making a difference to the result of the case.'"286
174.
While OperaFund and Schwab agree that a decision on jurisdiction may trigger the annulment of an award, they argue that this can only do so "where it is obvious that a tribunal lacked or exceeded its jurisdiction;" that is, "if its decision was unreasonable,"287 or "'manifestly' wrong or arbitrary."288 Recalling that the Tribunal is the judge of its own competence, OperaFund and Schwab submit that the Committee "cannot revise the Tribunal's competence over its competence."289 Moreover, relying on Fraport and UAB, they argue that the reasonability of the Tribunal's approach to jurisdiction must be determined "in light of the evidence and submissions which were before the Tribunal and not on the basis of new evidence."290
175.
Concerning a failure to apply the proper law, OperaFund and Schwab submit that, contrary to Spain's view, "the incorrect application or interpretation of the law cannot give rise to annulment."291 While in some "exceptional circumstances" some "isolated decisions" have held that "gross or egregious misapplication of the law" may lead to annulment, such "exceptional circumstances" do not exist here.292
176.
According to OperaFund and Schwab, Spain's submissions overlook: (i) that "an error in the application of the proper law, even if it leads to a manifestly incorrect application of the law, is not a ground for annulment;"293 and there is a difference between failure to apply the law and misinterpreting the law;294 (ii) that all the decisions relied upon by Spain are distinguishable from the present one;295 (iii) that a "tribunal's failure to identify or describe the rules of treaty interpretation that it applied to a question of law is not a ground for annulment under Article 52(1)(b)."296
177.
More broadly, OperaFund and Schwab submit that, while their interpretation of the standard is largely favored by most ad hoc committees, Spain's is based on cherry-picked isolated decisions that Spain twists and misinterprets.297 Moreover, they contend that, while Spain relies on some decisions that have led to an annulment, it fails to explain why the circumstances of those cases are similar to the present one.298 Instead, according to OperaFund and Schwab, the reality is that most applications for annulment on the "manifest excess of powers" ground fail, as shown by the fact that as of 2016, out of 52 annulment decisions, only 2 had upheld the ground of "lack or excess of jurisdiction," and only 4 upheld "failure to apply the proper law."299
178.
Finally, OperaFund and Schwab contend that it is Spain's burden to demonstrate that the ground has been met.300

(ii) There is No Manifest Excess of Jurisdiction

179.
OperaFund and Schwab submit that Spain has not demonstrated any manifest excess of power in connection with the intra-EU objection, and that the attempt to relitigate the objection should fail.301 They argue that Spain has not proven "beyond 'uncertainty' or 'doubt'" that the Tribunal exceeded its jurisdiction;302 nor has Spain shown that the "Tribunal's decision regarding the intra-EU objection was unreasonable, manifestly wrong, or arbitrary as required under Article 52(1)(b)."303
180.
Instead, OperaFund and Schwab contend that the Tribunal's dismissal of the intra-EU jurisdictional objection was "completely reasonable and grounded of the facts and the law."304 According to OperaFund and Schwab, the Tribunal reached the conclusion that Article 26 of the ECT allows arbitration of intra-EU disputes and does not conflict with EU law after a review and assessment of both Parties' arguments and the most recent arbitral decisions at the time.305 The Tribunal (and other 32 tribunals as well) "explicitly rejected" Spain's contentions that: (i) under Article 26 of the ECT jurisdiction is to be determined on the basis of EU law, and that (ii) even if Article 26 could be understood as encompassing intra-EU disputes there would be a conflict with EU law to be resolved in favor of the latter.306 They further remark that the intra-EU objection has been dismissed in "every" case.307 This shows, they say, that the Tribunal's conclusions were "entirely reasonable" and that no "manifest" excess of powers is present here.308
181.
In addition, OperaFund and Schwab remark, the case at hand is "not a pure intra-EU dispute as Schwab is a Swiss investor,"309 and the "intra-EU discussion is alien for a Swiss investor like Schwab."310
182.
OperaFund and Schwab contend that Spain, rather than presenting a ground for annulment, simply contests the Tribunal's decision, but "a disagreement does not prove any manifest excess of powers."311
183.
Finally, according to OperaFund and Schwab, Spain's allegations under this ground rely on certain materials that were not available in the underlying arbitration proceeding, when the only "relevant parameter" to evaluate the ground under Article 52(1)(b) of the ICSID Convention should be the "the Award itself and the conduct of the arbitrators," and "new evidence is not admissible."312

(a) No Showing of "Unreasonableness"

184.
OperaFund and Schwab argue that Spain has failed to show that that the dismissal of the intra-EU objection was "unreasonable."313 This is demonstrated, they say, by (i) the other 28 Spain cases that had rejected the same objection as of the date of the Counter-Memorial on Annulment;314 (ii) the fact that at the time of the Award, the objection had already been dismissed by the tribunals in 6 Spain cases (Charanne, RREEF, Isolux, Eiser, Masdar, and Novenergia) on similar grounds (e.g. inapplicability of the Achmea Judgment);315 (iii) a review of the Award which refutes Spain's contention that the Tribunal did not perform an analysis of the intra-EU objection and merely referred to other cases without analysis.316 For OperaFund and Schwab, the Tribunal "was humble" and "did not need to delve into creative theories because the issue was settled."317 Furthermore, according to OperaFund and Schwab, Spain had several opportunities during the arbitration to comment on all the awards that had dealt with the intra-EU objection issued before the Award in this case, and the Tribunal carefully analyzed those awards and showed "continuous interest in understanding the Parties' view on such decisions."318
185.
OperaFund and Schwab add that even if the reasons to dismiss the intra-EU objection are considered "insufficient," that is not enough in itself to annul the Award under Article 52(1) of the ICSID Convention.319
186.
Furthermore, OperaFund and Schwab contend, the fact that the Tribunal did not agree with Spain's position on the intra-EU objection while "at least 33 tribunals" did, does not make the decision a "manifestly arbitrary or unreasonable decision."320
187.
While remarking that Spain has failed to present the "different matters related to the Tribunal's reasoning on jurisdiction," OperaFund and Schwab go on to submit that the Tribunal's ruling on the following points was "entirely reasonable": (i) the validity of the arbitration agreement perfected by the Parties under Article 26(1) of the ECT; (ii) that in an ECT dispute, EU law does not prevail to exclude intra-EU jurisdiction; and (iii) that the Achmea Judgment did not deprive the Tribunal of jurisdiction under the ECT.321
188.
As to point (i), the validity of the arbitration agreement under Article 26(1) of the ECT, OperaFund and Schwab submit that:

First, contrary to Spain's submissions, the Tribunal did interpret Article 26 of the ECT under the VCLT, explicitly mentioning that Articles 31-33 of the VCLT were "applicable to the construction of the ECT and the ICSID Convention,"322 and was not required to repeat each time it analyzed an ECT provision that it was doing so under the VCLT.323

Second, the Tribunal provided a "reasonable and sound interpretation" of Article 26(1) of the ECT as it carefully analyzed the previous decisions in other 5 Spain cases on the issue, and the Parties' arguments (including remarks on those decisions);324 and "processed" the Parties' and the EU Commission's arguments on the interpretation of Article 26(1).325 Only after "careful analysis of Article 26" the Tribunal concluded that it agreed with the prior decisions and that "there was no need to list again all the arguments" made in those decisions.326

Third, contrary to Spain's submissions, the January 2019 communication is simply a declaration by some EU Member States, and not a source of EU law, as the Tribunal itself noted in a letter of 11 February 2019.327 Thus, it was not "manifestly unreasonable" to conclude that this communication cannot have an interpretive effect "on the scope and content of EU law regarding investment protection and treaties concluded, inter alia, between EU member states."328 Notably, Malta did not subscribe to this declaration.329 And even if had been signed by all the EU Member States or if it were a source of EU law, it would still not be a joint interpretation issued by all the ECT Contracting Parties (only ones empowered to do so).330

Fourth, the Tribunal concluded (as many others) that the absence of an explicit disconnection clause confirmed the ECT Contracting Parties' intention to apply Article 26 of the ECT intra-EU; and Spain's allegation that international custom supports the conclusion that the ECT has an implicit disconnection clause is "wrong."331

Fifth, the Tribunal rejected Spain's contention that the definitions in Article 1(2) and 1(3) of the ECT prevented the intra-EU application of the ECT, simply following jurisprudence constante.332

189.
As to point (ii), on the non-application of EU law, OperaFund and Schwab argue that the "Tribunal conducted a thorough analysis that took into consideration all the evidence on record and the Parties' arguments regarding the relationship between the ECT and EU law."333 More particularly, they submit that:

First, the Tribunal respected the difference between applicable substantive law (governed by Article 26(6) of the ECT), and the law to be applied to jurisdiction (governed by Article 26(3) and 26(4) of the ECT, and Article 25 of the ICSID Convention); and thus concluded that Article 26(6) of the ECT would not be applicable to the jurisdictional objection.334

Second, while Spain "wrongly" – according to OperaFund and Schwab – submitted that Article 267 and Article 344 of the TFEU prevented intra-EU arbitration, the Tribunal concluded that those provisions did not conflict with Article 26 of the ECT because they do not share the same subject matter.335

Third, the Tribunal explained that the principle of primacy of EU law is not binding on an ECT tribunal, and does not exclude the intra-EU application of the ECT, with reasoning that was "sound and reasonable": (i) the Achmea Judgment makes no mention of the ECT, and its reasoning does not extend to ECT arbitrations;336 (ii) there was no basis for the contention that by virtue of the accession of Malta the EU Treaties superseded the ECT, because the ECT and TFEU are two very different treaties;337 (iii) the lack of a disconnection clause implies that the ECT provides jurisdiction in this case;338 and (iv) per Articles 53 and 54 of the ICSID Convention Spain is bound by the Award with no appeal option outside the ICSID system.339

Fourth, the Tribunal disagreed with Spain's contention that in case of conflict between EU law and the ECT the former would prevail, highlighting that: (i) the principle of primacy of EU law was not lex posterior; and (ii) Article 16 of the ECT would be the lex applicable to resolve the conflict, and its application would result in favor of intra-EU arbitration.340

Fifth, Spain has failed to show that the Tribunal's conclusion that there is no incompatibility between EU law and the ECT is "manifestly wrong or unreasonable," and in any event, pursuant to Article 16 of the ECT, the ECT would prevail over EU law.341

190.
As to point (iii), on the Achmea Judgment, OperaFund and Schwab submit that:

First, the Award "makes clear" that the Achmea Judgment does not prevent the intra-EU application of Article 26(1) of the ECT,342 and remarks that this judgment makes no mention of the ECT and its reasoning does not extend to ECT arbitrations, as the case arose under a BIT and the UNCITRAL rules.343

• The Tribunal clearly outlined the distinctions between the Achmea case and the present one, including that, unlike in the present case, in Achmea (i) the BIT called for application of national law; (ii) the local courts had competence to review the validity of the award; and (iii) it was in the course of that review process that the German courts had submitted the preliminary question to the CJEU.344 It follows, OperaFund and Schwab argue, that the BIT at issue in Achmea was a "completely different type of treaty," applying a different body of law, and applying only to EU Member States;345 and that Spain mischaracterizes the Award in saying that it totally ignored the Achmea Judgment.346 Instead, the Tribunal "carefully scrutinized the Achmea decision" and concluded that it did not prevent intra-EU application of Article 26(1) of the ECT.347

Second, the Tribunal ruled that EU law was not relevant to the arbitration given that the Tribunal was "placed in a public international law context and not in a national or regional context;" and therefore, it cannot be said that the Tribunal denied any relevance to the Achmea Judgment.348

Third, even if EU law were relevant (which the Tribunal denied) and even if the Achmea Judgment applied to intra-EU ECT arbitrations, Spain has not explained how the Achmea Judgment could apply retroactively to an arbitration agreement entered into before that judgment was rendered.349

Fourth, Spain has failed to explain why the Tribunal's conclusion that the Achmea Judgment has no bearing on ECT arbitrations was "unclear" or "unreasonable;"350 and recently an ad hoc committee has confirmed an intra-EU BIT award even in light of the Achmea Judgment, which further confirms that the OperaFund Tribunal's conclusion in the Award was not "manifestly wrong or arbitrary."351

191.
OperaFund and Schwab repeatedly assert that whether the Tribunal's conclusions on the issues above were right or wrong is "irrelevant" because an annulment under Article 52(1)(b) is only concerned with whether they are "manifestly unreasonable" which they352 were not.
192.
That said, while recalling that it is not a matter for discussion in an annulment, OperaFund and Schwab also submit that Spain's contentions on EU law are "wrong" or at least "controversial," as demonstrated by the decisions of every other tribunal facing the intra-EU objection and the opinions of scholars and experts on the field of EU law.353

(b) No Showing of "Manifest"

193.
For OperaFund and Schwab, Spain has also failed to show that the alleged excess of power was "manifest,"354 as demonstrated by the amount of pages Spain devoted in its Memorial on Annulment to the alleged excess, which is incompatible with the proposition that the excess is "self-evident."355 Instead, OperaFund and Schwab argue that "the Tribunal's finding on jurisdiction is reasonable and sound (what really matters under Article 52 of the ICSID Convention) and also fully correct (as demonstrated by the solid corpus of jurisprudence […]."356

(c) The Tribunal's Decision Should Receive Deference

194.
Lastly, OperaFund and Schwab contend that the Tribunal's decision on jurisdiction should receive deference.357 They emphasize that this ad hoc Committee is not a court of appeal, and "it does not have the authority to substitute its judgment on jurisdictional requirements, the interpretation of law, and/or the assessment of facts, for that of the Tribunal."358 It is their view that even if this ad hoc Committee finds that the Tribunal's answers "are not convincing, as far as they are tenable and not arbitrary […] in case of doubt the question of jurisdiction shall be resolved in favorem valitatis sententiae."359
195.
Moreover, OperaFund and Schwab submit, Spain's opinions are not more authorized than those of the Tribunal (or of other tribunals and scholars).360 Spain is not empowered to provide an authentic interpretation of EU law.361 The Tribunal was constituted under the ECT and the ICSID Convention, and Spain's allegations on the intra-EU objection are the minority view.362

(iii) There is No Manifest Excess of Powers in Applying International Law to the Dispute

196.
OperaFund and Schwab submit that Spain has not established a manifest excess of powers in connection with the applicable law,363 and that the Tribunal's decision to apply international law to the dispute does not constitute an excess of powers.364 For OperaFund and Schwab, the applicable law in this case was the ECT, not EU law, and therefore, an Award holding Spain liable for breach of Article 10 of the ECT cannot be annulled on grounds of failure to apply the proper law.365
197.
According to OperaFund and Schwab, Spain's partisan view that EU law was the applicable law and should prevail over the ECT is "irrelevant."366 It is also "irrelevant" whether the Tribunal's conclusion on this point was correct (or not), because Article 52(1)(b) is concerned only with "whether the disregard or misapplication of the applicable law was manifestly unreasonable (quod non)."367 Put another way, it is enough to establish that the Tribunal's conclusions were "reasonable," and the Committee should not and cannot decide who is right or wrong.368
198.
Moreover, even if Spain's allegations on the applicability of EU law were correct, that would not lead to an annulment as "a wrong application of the law would not be a valid ground for annulment."369

(a) The Tribunal Identified the Applicable Law and Explained that EU Law was Not Relevant

199.
OperaFund and Schwab argue that the Tribunal devoted an entire section of the Award to identifying the applicable law, and clearly explained that EU law was not relevant to the issue of legitimate expectations.370 The Tribunal reasoned that: (i) Article 26(6) of the ECT was the key provision in establishing the applicable law, which required application of the "ECT and the applicable rules and principles of international law;"371 (ii) the Parties were in agreement that domestic law was to be regarded as fact, with the only issue in dispute being the role of EU law as international law (Spain's contention) or domestic law (OperaFund and Schwab's contention);372 (iii) there was a distinction between jurisdictional matters and matters pertaining to the merits to be respected also in connection with EU law;373 (iv) Article 16 of the ECT was the critical provision to resolve any eventual conflict between the ECT and EU law;374 and even if EU law were applicable it would not prevail over the ECT;375 and (v) as a result of the above, "all substantive provisions of the ECT remain fully applicable and EU law is not part of the applicable substantive law in this case."376
200.
It follows, OperaFund and Schwab argue, that the Tribunal "carefully assessed Spain's invocation of EU law and dismissed it by applying Articles 26(6) and 16(2) of the ECT," which cannot amount to a manifest excess of powers.377 The "Tribunal's holding that EU law did not prevail over the ECT and was not relevant to assess OperaFund's legitimate expectations is fully reasonable."378 Moreover, OperaFund and Schwab submit that, a fortiori, for a Swiss investor like Schwab, EU law is by no means international law because Switzerland is not an EU Member State.379
201.
OperaFund and Schwab further take issue with Spain's allegations that the Tribunal contradicted itself by denying that EU law was applicable and by considering it purely domestic law.380 In their view, the Tribunal's finding – that even if EU law were applicable under Article 26(6) of the ECT as "applicable rules and principles of international law" it would not prevail over the ECT in light of Article 16(2) of the ECT – "is perfectly consistent with the fact that the application of the ECT is sufficient to adjudicate the dispute."381

(b) Spain's Allegations Do not Meet the Relevant Standard

202.
OperaFund and Schwab submit that, under the relevant standard, what would be required is "(i) [a] manifest disregard of [sic] misapplication of the rule of conflict that an international tribunal is called upon to apply when different legal systems interact; or (ii) a manifest disregard or misapplication of rule of law pointed by the rule of conflict;" and only an "obvious and egregious disregard or misapplication of those rules" could lead to annulment under Article 52(1)(b).382 On the basis of this standard, they argue, Spain's allegations lack merit.383
203.
According to OperaFund and Schwab (i) the Tribunal identified the conflict rule in the ECT (Article 16), and on that basis rejected the contention that EU law prevailed over the ECT;384 (ii) over 20 arbitral tribunals in similar cases against Spain did not apply EU law to the merits of the dispute,385 which demonstrates that, if this were an error, it would not be "manifest" but only a "mere disagreement;"386 and (iii) the Tribunal's decision not to apply EU law does not infringe on the autonomy of the EU legal order, because the ECT is an international agreement and therefore "a Member State's law cannot be determinative of the Tribunal's assessment of the application of the ECT and international law to the facts of the case."387
204.
OperaFund and Schwab observe that the relevant standard is not whether the Tribunal's applicable law determination was right or wrong, but whether it was "reasonable."388 For OperaFund and Schwab, the Award's conclusion that under Article 26(6) of the ECT, the provisions of the ECT remained fully applicable, and that EU law (including EU State Aid law) was not part of the applicable law was "not manifestly arbitrary or unreasonable."389 They explain that:

• Although Spain submits that EU law qualifies as "principles and rules of international law" under Article 26(6) of the ECT, the Committee should not forget that one of the Claimants in the arbitration was Swiss.390

• Many other arbitral tribunals do not consider EU law as part of the "rules and principles of international law" including, for example, Eskosol.391

• If anything, EU law should be considered as a fact, and that is what the Tribunal did.392

• The central question in the arbitration was whether Spain had breached its obligations under the ECT, and the Claimants never asked for compensation under EU law.393

• A State cannot invoke its internal law or domestic decisions to justify a breach of international law.394

205.
OperaFund and Schwab take issue with Spain's contention that the applicability of EU law (as international law) under Article 26(6) of the ECT was "clearly settled" by the Eurus award, observing that the findings of the Eurus tribunal "are non-determinative for this annulment proceeding and do not prove that the Tribunal exceeded its powers when deciding not to apply the applicable law to the merits of the dispute."395
206.
OperaFund and Schwab argue further that: (i) other 20 tribunals have reached the conclusion that EU law did not apply to the merits; (ii) the Eurus tribunal disregarded the CJEU's finding in Opinion 1/17 of 30 April 2019 that Chapter 8 of CETA was compatible with EU law because the CETA tribunals would treat EU law as a fact; and (iii) in any event, the Eurus tribunal's applicable law finding had no impact on the conclusion on liability, which was based on Article 10(1) of the ECT and arbitral case law (not EU law).396
207.
OperaFund and Schwab's position is that the Tribunal "did not fail to apply the applicable law" but instead, "dismissed Spain's defenses or found them irrelevant after careful consideration."397 They remark, for example, that:

• The Tribunal considered Spain's allegations on State Aid, and did not find any specific provision of EU law dispositive of the merits.398 The Award considered those arguments as "a fact," and indeed Spain itself and the EC treated EU law as a fact when arguing why the challenged measures were proportional.399

• The Tribunal rejected Spain's allegation that had the Claimants correctly analyzed EU State Aid law, they would have concluded that the incentives were "illegal state aid" and should not have had legitimate expectations.400

• The Tribunal also rejected Spain's proportionality defense, based on the EC State Aid Decision of November 2017.401

208.
OperaFund and Schwab further argue that, contrary to Spain's contentions, the Tribunal did not disregard that the rules on State Aid are included in the TFEU, but instead, concluded that EU law did not apply to the merits.402 They further submit that the ad hoc Committee should not consider the new arguments on State Aid that Spain incorporated through the Gosalbo Expert Report.403
209.
Moreover, according to OperaFund and Schwab, Spain misleads the ad hoc Committee in arguing that the Baywa tribunal held that the subsidies at issue here constitute State Aid, which that tribunal did not do.404 Nor did that tribunal find that "EU law prevented or excused in any manner Spain's liability," and instead, "it declared Spain's violation of the ECT."405
210.
Finally, OperaFund and Schwab also note that the annulment decisions relied upon by Spain in favor of this ground for annulment do not assist (Amco I, Klöckner, Sempra and Venezuela Holdings), as the scenarios in those cases are distinguishable from the case at hand.406

(c) Spain's Arguments on the Applicability of EU Law Are Wrong

211.
While recalling that it is not a matter for the annulment stage, OperaFund and Schwab further submit that Spain's arguments on EU law are "wrong" or at least "controversial," and therefore do not amount to a "manifest excess of powers."407 EU law is either "irrelevant or not applicable" in an ECT case, a conclusion shared by almost every tribunal that has analyzed the issue.408 The proper applicable law to the claim was the ECT (not EU law).409
212.
According to OperaFund and Schwab, Spain's reliance on Article 38 of the ICJ Statute, State practice and the principle of primacy of EU law, as well as Articles 107 and 108 of the TFEU is "irrelevant" in the context of a claim under the ECT.410 Moreover, they argue that it is "highly doubtful" that the principles of autonomy and primacy of EU law constitute "international custom;" and that it is "utterly wrong" to allege that EU law on State Aid constitutes international custom.411 In any event, OperaFund and Schwab submit, Spain has failed to demonstrate "why and how" an international custom could "reverse the application and interpretation" of Articles 10, 16 and 26 of the ECT by the Tribunal.412
213.
For OperaFund and Schwab, Spain's allegation that there is a "uniform and consistent practice" favoring the primacy of EU law is "wrong," contravenes Article 16 of the ECT, and was in any event already considered and dismissed in the Award.413 Pursuant to Article 16 of the ECT, they argue, should there be a conflict between EU law and the ECT, it would be resolved in favor of the ECT and the "highest protection to the investor."414
214.
In sum, the contention that EU law is the applicable law is the "minority and wrong," and "if anything, EU law should be treated as a fact."415

(d) The ECT is Binding on Spain and the EU and in Case of Conflict the ECT Prevails

215.
According to OperaFund and Schwab, on the question of applicable law, two more issues further confirm the conclusion that the Award is valid: (i) the ECT is a multilateral treaty binding on Spain and the EU; and (ii) in case of conflict, the ECT prevails.416
216.
First, OperaFund and Schwab contend that Spain cannot unilaterally decide not to comply with its obligations under the ECT or propose an interpretation that would lead to fragmentation of the treaty, in light of the principle in Article 27 of the VCLT pursuant to which neither Spain nor the EU could impose its internal laws to justify a treaty violation.417
217.
OperaFund and Schwab argue, moreover, that it is wrong to suggest that Articles 107 and 108 of the TFEU (which only impose obligations between EU Member States) prevail over the investment protection standards in Article 10 of the ECT.418