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Source(s) of the information:

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

Award

FREQUENTLY USED ABBREVIATIONS AND ACRONYMS

Short Form Long Title
§ / §§ paragraph / paragraphs
ABV Asset Based Valuation
Act 2/2011 Act 2/2011, of 4 March, on Sustainable Economy [C-0115] / [R-0045]
Act 3/2013 Act 3/2013, of 4 June, on the creation of the CNMC, BOE, 5 June 2013 [C-0043] / [R-0046]
Act 14/2000 Act 14/2000, of 29 December, on fiscal, administrative and social order measures [C-0062]
Act 15/2012 Act 15/2012, of 27 December, on Fiscal Measures for Energetic Sustainability [C-0112] / [R-0003]
Act 17/2007 Act 17/2007, of 4 July 2007, modifying Act 54/1997 for adaptation thereof in accordance with the provisions of Directive 2003/54/EC, of the European Parliament and of the Council, of 26 June 2003, concerning common rules for the internal market in electricity [C-0299]
Act 17/2012 Act 17/2012, of 27 December, on the General State Budgets for 2013, Fifth Additional Provision [R-0023] / [R-0246]
Act 19/2013 Act 19/2013, of 9 December, of transparency, access to public information and good governance, BOE, 10 December 2013 [C-0152]
Act 24/2013 Act 24/2013, of 26 December, on the Electric Power Sector [C-0116] / [R-0047] (also referred to as "EPA 2013" in pleadings)
Act 40/1994 Act 40/1994, of 30 December, on the Organization of the National Electric System [C-0053] / [R-0037]
Act 47/2003 Act 47/2003, of 26 November, on General Budgets [R-0024]
Act 54/1997 Act 54/1997, of 27 November, on the Electricity Sector ("Electrical Power Act") [C-0055bis] / [R-0059] (also referred to as "EPA 1997" and "LSE 1997" in pleadings)
Act 58/2003 Act 58/2003, of 17 December, on General Taxation [R-0006]
AEE Asociación Empresarial Eólica
APPA Association of Renewable Energy Producers
Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings of 10 April 2006
ASIF Photovoltaic Industry Association
BCG Boston Consulting Group
BIT Bilateral Investment Treaty
C.Costs-I Claimants' Statement of Costs (18 October 2018)
C.Costs-II Claimants' Reply Submission on Costs (25 October 2018)
C-# Claimants' Exhibit
C-I Claimants' Memorial on the Merits (27 October 2016)
C-II Claimants' Counter-Memorial on Jurisdictional Objections (30 November 2017)
C-III Claimants' Reply on the Merits (Corrected Version) (19 December 2017)
C-IV Claimants' Rejoinder on Jurisdiction (27 April 2018)
CER-# Claimants' Expert Report
CLA-# Claimants' Legal Exhibit
CNE Spain's National Energy Commission (Until June 2013)
CNMC National Markets and Competition Commission, successor entity to CNE
CPHB-I Claimants' Post-Hearing Brief (27 August 2018)
CPHB-II Claimants' Rebuttal Post-Hearing Brief (4 October 2018)
CPI Consumer Price Index
CWS-# Claimants' Witness Statement
DBAFL Deutsche Bank AG, Asset Finance & Leasing Renewable Energies
EC European Commission
EC Amicus European Commission Amicus Curiae Brief (29 September 2017)
EC Application European Commission's Application for Leave to Intervene as a Non-Disputing Party (16 January 2017)
ECO 3 Ecoinversión en Extremadura 3, S.L.
EU European Union
FIT Feed-in Tariff
FMV Fair Market Value
IDAE Institute for Energy Diversification and Savings
IFIC International Feed-in Cooperation
ILC Draft Articles ILC's Draft Articles on Responsibility of States for Internationally Wrongful Acts
kWh Kilowatt-hour
LSE Act 54/1997
Majorca SPVs Paso-Palma Sol's 24 wholly-owned operating subsidiaries
MCPS Most Constant Protection and Security
MINETUR Ministry of Industry, Energy, Tourism
MO HAP/703/2013 Ministerial Order HAP/703/2013, of 29 April, which approves Form 583 "Tax on the value of the production of electrical energy. Self-assessment and Installment Payments", and establishes the form and procedure for its submission [R-0008]
MO IET/221/2013 Ministerial Order IET/221/2013 of 14 February, BOE, 16 February 2013 [C-0169]
MO IET/843/2012 Ministrial Order IET/843/2012, of 25 April, by the Ministry of Industry, Energy and Tourism, establishing the access tolls applicable as of 1 April 2012 and certain tariffs and premiums applicable to special-regime power generation plants [R-0084]
MO IET/1045/2014 Ministerial Order IET/1045/2014, of 16 June, approving the remuneration parameters for standard plants applicable to certain facilities that produce power from renewable sources of energy, cogeneration and waste [R-0086] / [C-0126] / [C-0126bis]
MoU Memorandum of Understanding
MST International Minimum Standard of Treatment
MWh Megawatt-hour
Order ITC/914/2006 Order ITC/914/2006, of 30 March, establishing the methodology for calculating power guarantee remuneration for the ordinary regime facilities of island and extra-peninsular electricity systems [R-0103]
PANER Spain's National Renewable Energy Action Plan 2011 - 2020 [C-0044] / [R-0093] (also referred to as "2011 - 2020 Renewable Energies Plan / Plan de Energías Renovables - PER" in pleadings)
Paso-Palma Sol Paso-Palma Sol Gestión de Proyectos, S.L., Claimants' wholly owned subsidiary
PER 1989 Plan for the Promotion of Renewable Energies 1989 [R-0244]
PER 2000 - 2010 Renewable Energy Promotion Plan in Spain 2000-2010 [C-0050] / [R-0090] (also referred to as "2000 RPP" and "PFER 2000-2010" in pleadings).
PER 2005 - 2010 Renewable Energy Promotion Plan in Spain 2005 - 2010 [C-0066] / [R-0092] (also referred to as "PER 2005" or "2005-2010 RPP" in pleadings)
PHB Post-Hearing Brief
PO-# Procedural Order No. #
PV Photovoltaic
R.Costs-I Respondent's Submission on Costs (18 October 2018)
R.Costs-II Respondent's Comments on the Allocation of Costs and on Claimants' Submission on Costs (25 October 2018)
R-# Respondent's Exhibit
R-I Respondent's Counter-Memorial on the Merits on Memorial on Jurisdiction (10 March 2017)
R-II Respondent's Rejoinder on the Merits and Reply on Jurisdiction (9 March 2018)
RAIPRE Registro administrativo de instalaciones de producción en regimen especial (meaning "Register of Production Installations under the Special Regime" (Claimants) or "Administrative Registry of electricity production facilities (Respondent)
RB Roland Berger
RD 325/2008 Royal Decree 325/2008, of 29 February, establishing the remuneration of the electricity transmission activity for installations commissioned after 1 January 2008 [R-0183]
RD 344/2012 Royal Decree 344/2012, of 10 February, which regulates the basic organic structure of the Ministry of Industry, Energy and Tourism [C-0041]
RD 359/2017 Royal Decree 359/2017, of 31 March, establishing a call for granting the specific remuneration regime to new facilities producing electricity from renewable energy sources in the peninsular electricity system [R-0234]
RD 413/2014 Royal Decree 413/2014, of 6 June, regulating the activity of power production from renewable sources of energy, cogeneration and waste [C-0131] / [R-0080]
RD 436/2004 Royal Decree 436/2004, of 12 March, establishing the methodology for updating and systematizing the legal and economic regime governing electric power production under the special regime [C-0065] / [R-0069]
RD 661/2007 Royal Decree 661/2007, of 25 May, which regulates the activity of electric energy production under the special regime [R-0071] / [C-0046]
RD 1047/2013 Royal Decree 1047/2013, of 27 December, which establishes the methodology for calculating the remuneration for the activity of electricity transport [R-0078]
RD 1048/2013 Royal Decree 1048/2013, of 27 December, which establishes the methodology for calculating the remuneration for the activity of electricity distribution and other regulations [R-0079]
RD 1432/2002 Royal Decree 1432/2002, of 27 December, establishing the Methodology for the approval or modification of the average or reference electricity tariff and amending a number of articles in RD 2017/1997 of 26 December, governing the organization and regulation of the procedure of the settlement of transmission, distribution and tariff retailing costs, the permanent costs of the system, and diversification and security of supply costs [C-0063] / [R-0068]
RD 1544/2011 Royal Decree 1544/2011, of 31 October, establishing tolls for access to transmission and distribution networks to be satisfied by electricity producers [C-0118]
RD 1565/2010 Royal Decree 1565/2010, of 19 November, which regulates and modifies given aspects relative to the activity for the production of electric power on the special regime [C-0110] / [R-0074]
RD 1578/2008 Royal Decree 1578/2008, of 26 September, on the payment for the electric production activity from solar photovoltaic technology for facilities built after the deadline until which the remuneration under Royal Decree 661/2007 of 25 May, was maintained for said technology [R-0072] / [C-0070]
RD 1614/2010 Royal Decree 1614/2010, of 7 December, regulating and modifying certain aspects related to electric energy production using thermoelectric solar and wind power technologies [R-0075]
RD 2366/1994 Royal Decree 2366/1994, of 9 December, on the Production of Electrical Energy by Hydraulic Facilities, Cogeneration Facilities, and Other Facilities supplied by renewable Energy Sources or Resources [C-0052] / [R-0055]
RD 2818/1998 Decree 2818/1998, of 23 December on Production of Electricity by Facilities Supplied with Renewable Energy, Waste or Cogeneration Sources or Resources [C-0059] / [R-0067]
RD-Law Royal Decree-Law
RD-Law 1/2012 Royal Decree-Law 1/2012, of 27 January, proceeding to the suspension of the remuneration pre-assignment procedures and the elimination of the economic incentives for new electric energy production plans using cogeneration, renewable energy sources, and waste [R-0060] / [C-0301]
RD-Law 2/2013 Royal Decree-Law 2/2013, of 1 February, on urgent measures in the electricity sector and the financial sector [C-0113] / [R-0063]
RD-Law 6/2009 Royal Decree-Law 6/2009, of 30 April, which adopts certain measures in the energetic sector and passes the discount tariff, published in the Official Gazette of the Kingdom of Spain on 7 May 2009 [C-0268] / [R-0057]
RD-Law 7/2006 Royal Decree-Law 7/2006, of 23 June, on the adoption of urgent measures in the energy sector [R-0056]
RD-Law 9/2013 Royal Decree-Law 9/2013, of 12 July, which sets forth urgent measures to ensure the financial stability of the electricity system [R-0064] / [C-0128]
RD-Law 9/2015 Royal Decree-Law 9/2015, of 10 July, on urgent measures to reduce fiscal burden by taxpayers of [income tax] and other measures of economic content [C-0295]
RD-Law 13/2012 Royal Decree-Law 13/2012, of 30 March, that transposes directives relating to the internal electricity and gas markets, electronic communication-related matters and adopts measures for correcting deviations due to imbalances between costs and revenues in the electricity and gas sectors [R-0061]
RD-Law 14/2010 Royal Decree-Law 14/2010, of 23 December, on the establishment of urgent measures for the correction of the tariff deficit in the electricity sector [C-0111] / [R-0058]
RD-Law 20/2012 Royal Decree-Law 20/2012, of 13 July, on measures to guarantee budgetary stability and promotion of competitiveness [R-0062]
REIO Regional Economic Integration Organisation (Article 1(3) ECT)
REN Renewable Energy Policy Network for the 21st Century
REX-# Respondent's Expert Report
RfA Claimants' Request for Arbitration (31 July 2015)
RLA-# Respondent's Legal Exhibit
RPHB-I Respondent's Post-Hearing Brief (27 August 2018)
RPHB-II Respondent's Second Post-Hearing Brief (4 October 2018)
RWS-# Respondent's Witness Statement
SES Spanish Electricity System
SPV Special Purpose Vehicles
TEU Treaty on European Union [RL-0001]
TFEU Treaty on the Functioning of the European Union [RL-0001]
TMR Average Reference Electricity Tariff (by Spanish Acronym) [R-0242]
TVPEE Tax on the Value of the Production of Electrical Energy, introduced by Act 15/2012
VCLT Vienna Convention on the Law of Treaties (23 May 1969)

I. INTRODUCTION

A. THE DISPUTE AND THE PARTIES

1.
This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") pursuant to 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 2001,1 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").2
2.
Claimants in these proceedings are OperaFund Eco-Invest SICAV PLC ("OperaFund"), a public limited company incorporated on 24 January 2005 and existing under the laws of the Republic of Malta,3 and Schwab Holding AG ("Schwab"), a public limited company incorporated on 28 February 1975 and existing under the laws of the Swiss Confederation,4 (collectively "Claimants").
3.
Respondent is the Kingdom of Spain ("Respondent"), a sovereign state.

B. THE TRIBUNAL'S TERMINOLOGY AND REASONING

4.
The Tribunal has carefully examined all the arguments and evidence presented by the Parties throughout these proceedings. The Tribunal does not consider it necessary to reiterate in this Award all such arguments or evidence, which are well-known to the Parties. Further, insofar as any matter has not been specifically identified or recorded in the body of this Award, this does not mean that it has not been taken into full consideration. The Tribunal discusses only those submissions which it considers most relevant for its decisions. The Tribunal's reasons, without repeating all the arguments advanced by the Parties, address what the Tribunal considers to be the determinative factors required to decide on the Requests of the Parties.
5.
The Tribunal's use of one Party's terminology is without prejudice and in no way reflects the Tribunal's understanding of a particular issue. Rather, effort has been made to use consistent terminology throughout this Award to facilitate understanding. Likewise, the order in which the references are presented is not a reflection of a source's value in the eyes of the Tribunal. Instead, effort has been made to format the footnotes consistently and to cite all documents referenced by the Parties.

II. THE ARBITRAL TRIBUNAL

6.
On 23 October 2015, Claimants proposed the appointment of Prof. Dr. August Reinisch as arbitrator. He accepted the appointment on 30 October 2015 and ICSID notified the Parties of his acceptance of this appointment on 2 November 2015. His contact details are as follows:

Prof. MMag. Dr. August Reinisch, LL.M.
Department of European, International and Comparative Law
Section of International Law and International Relations
University of Vienna
Schottenbastei 10-16
A-1010 Vienna
Austria
Tel.: +43 1-4277/35307
Fax: +43 1-4277/9353
Email: august.reinisch@univie.ac.at

7.
On 23 October 2015, Claimants informed the ICSID Secretariat that, since more than 60 days had elapsed since the date of registration of the Request for Arbitration ("RfA"), Claimants confirmed that they opt for the formula provided in Article 37(2)(b) of the ICSID Convention to have the Tribunal constituted as soon as possible. Claimants proposed the appointment of Mr. Gary B. Born as President of the Tribunal. ICSID invited Respondent's response to this proposal on the same day.
8.
On 13 November 2015, Respondent opposed the appointment of Mr. Born as President of the Tribunal and proposed the appointment of Prof. Philippe Sands QC (British / French) as arbitrator. ICSID notified the Parties of Prof. Sands's acceptance of this appointment on 25 November 2015. Prof. Sands's contact details are as follows:

Prof. Philippe Sands QC
Matrix Chambers
Griffin Building
Gray's Inn
London, WC1R 5LN
United Kingdom
Phone: +44 20 7404 3447
Fax: +44 20 7404 3448
Email: philippesands@matrixlaw.co.uk

9.
On 18 December 2015, Counsel for the Parties sent the ICSID Secretariat the Parties' agreed method of appointment of the Presiding Arbitrator. On 21 and 22 December 2015, Claimants and Respondent respectively agreed to the ballot procedure proposed by ICSID to select a Tribunal President. On 4 February 2016, Claimants informed the Tribunal that the Parties had not agreed on a Tribunal President and requested the ICSID Secretary General to appoint the presiding arbitrator in accordance with sections 2(b) and 2(c) of the Parties' Agreement on the Constitution of the Arbitral Tribunal. On 10 March 2016, ICSID proposed a ballot of five (5) candidates for appointment as President of the Tribunal. On 17 March 2016, after receiving ballots from the Parties, ICSID informed the Parties of the results of the Parties' ballot procedure to elect a President. The Parties elected Prof. Karl-Heinz Böckstiegel (German). Prof. Böckstiegel's contact details are as follows:

Prof. Dr. Karl-Heinz Böckstiegel
Parkstr. 38
D-51427 Bergisch Gladbach, Germany
Tel.: +49 (0)2204 66268
Fax: +49 (0)2204 21812
Email: kh@khboeckstiegel.com

III. PROCEDURAL HISTORY

10.
Claimants filed their RfA against the Kingdom of Spain on 31 July 2015. This was supplemented by a further communication on 10 August 2015.
11.
ICSID registered the RfA, as supplemented, in accordance with Article 36(3) of the ICSID Convention on 11 August 2015.
12.
On 4 August 2015, ICSID confirmed receipt of the RfA and transmitted the same, together with all accompanying exhibits and authorities, to Respondent.
13.
On 23 October 2015, ICSID informed the Parties that Mr. Francisco Grob, a Chilean lawyer who joined the ICSID Secretariat in April 2015, would be assisting in this case. ICSID informed the Parties that, although Mr. Grob assisted the law firm Herbert Smith Freehills in a non-ICSID arbitration against the Kingdom of Spain during his August 2014 – February 2015 internship, Mr. Grob's role, access to the file, and participation was limited. ICSID informed the Parties that it has no concerns about Mr. Grob's impartiality and independence.
14.
On 1 April 2016, the ICSID Secretariat requested that the Parties make their advance payments, pursuant to ICSID Administrative and Financial Regulation 14(3).
15.
On 6 April 2016, the Tribunal proposed that the First Session be held by teleconference.
16.
On 14 April 2016, following the Parties' respective communications of 13 and 14 April and after confirming the availability of the Parties, the Tribunal decided to schedule its first session for 24 May 2016. The Tribunal provided the Parties a draft of Procedural Order No. 1 ("PO-1") and invited them to liaise regarding the draft and to submit their proposals by 2 May 2016.
17.
After the Tribunal invited the Parties to liaise regarding draft PO-1, including the timetable, the Parties agreed to amendments to the draft and submitted these to the Tribunal on 29 April 2016.
18.
On 29 April 2016, the Parties informed the Tribunal that they had reached agreement on some parts of PO-1, but that their discussions regarding the procedural calendar were ongoing.
19.
On 9 May 2016, the Parties informed the Tribunal that they reached agreement on the procedural calendar contained in PO-1, Annex A.
20.
On 19 May 2016, the Tribunal circulated an agenda for this meeting and a list of attendees to the Parties. The first session of the Tribunal with representatives of the Parties was held on 24 May 2016, by way of teleconference that was recorded. The Parties confirmed that the Tribunal was properly constituted and that they had no objection to the appointment of any member of the Tribunal.
21.
On 27 May 2016, Claimants reported to the Tribunal that the Parties have agreed that non-disputing parties (1) shall be subject to the Tribunal's determination as to costs and (2) shall bear their own costs in any case, but that disagreement as to the proposed Article 9.5 regarding the payment of a costs advance by a non-disputing party remained. Claimants also alleged that Respondent and the European Commission ("EC") were coordinating in this and other proceedings and, thus, the EC cannot be considered a true amicus curiae or non-disputing party.
22.
On 2 June 2016, Respondents rejected the allegation of coordination between Respondent and the EC. Respondent also objected to a requirement to require amicus to pay any advance.
23.
On 7 June 2016, the Tribunal invited the Parties to comment on the Tribunal draft of PO-1 by 13 June 2016.
24.
On 13 June 2016, Claimants submitted that the Draft PO-1 is in conformity with the points discussed at the First Session of 24 May 2016. In addition, Claimants forwarded the EC's Decision of 13 April 2016 to the Tribunal, which Claimants alleged served as further evidence that the EC had already decided to intervene in the present case. Respondent did not submit further comments on the draft.
25.
On 14 June 2016, the ICSID Secretariat transmitted Claimants' comments (13 June 2016) regarding the Draft PO-1 to the Tribunal.
26.
On 20 June 2016, the Tribunal issued Procedural Order No. 1 ("PO-1") and transmitted the same to the Parties.
27.
On 27 October 2016, Claimants submitted (1) their Memorial on the Merits ("C-I"), (2) Exhibits C-0041 – C-0214, (3) Legal Authorities CL-0001 to CL-0146, (4) Expert Reports from the Brattle Group with corresponding exhibits, and (5) the Witness Statement of Mr. Lars Bauermeister with corresponding exhibits, to the Tribunal. ICSID acknowledged their 8 November 2016 receipt of these on 11 November 2016.
28.
On 16 January 2017, the EC filed its Application for Leave to Intervene as a Non-Disputing Party ("EC Application"). ICSID confirmed receipt on 17 January 2017.
29.
On 23 January 2017, the Tribunal forwarded the EC's Application to the Parties. In accordance with ICSID Arbitration Rule 37(2), the Tribunal indicated that it would invite the Parties to provide their observations on the EC's Application following the Tribunal's receipt of the Respondent's Counter-Memorial.
30.
On 10 March 2017, Respondent submitted its (1) Counter-Memorial on the Merits and Memorial on Jurisdiction ("R-I"), (2) Witness Statement of Mr. Carlos Montoya (9 March 2017), (3) Expert Report of Accuracy (10 March 2017), and (4) Exhibits R-0001 – R-0232 to the Tribunal.
31.
On 8 May 2017, the Tribunal invited the Parties to provide their observations to the EC's Application, by 22 May 2017.
32.
On 18 May 2017 and without copying the Tribunal, the Parties exchanged their responses to the other side's objections to produce.
33.
On 22 May 2017, the Parties submitted their observations on the EC's Application.
34.
On 23 May 2017, the Parties wrote to the Tribunal to report their agreement that their Observations to the EC's Application would be submitted solely in English.
35.
On 13 June 2017, the Tribunal issued Procedural Order No. 2 ("PO-2") Regarding the EC Application to Intervene as a Non-Disputing Party, sending it to the Parties and the EC.
36.
On 13 June 2017, Respondent filed its Responses to Claimants' Objections to Respondent's Requests to Produce.
37.
On 13 June 2017, Claimants filed their Request to Produce, containing their Responses to the Objections raised by the Respondent, together with five additional exhibits.
38.
On 15 June 2017, Claimants wrote to the Tribunal and objected to Sections 8.7 – 8.9 of PO-2 and requested further elaboration on the Tribunal's decision to allow the EC to attend the Hearing, notwithstanding Claimants' objection.
39.
On 19 June 2017, the Tribunal acknowledged receipt of Claimants' 15 June 2017 letter and invited Respondent to submit any comments that it may have thereon by 22 June 2017.
40.
On 23 June 2017, Respondent offered its comments regarding the potential value of the EC's intervention as amicus curiae.
41.
On 26 June 2017, the Tribunal responded to the Parties and explained that, if the Tribunal considered that it would be assisted by the third party's attendance and availability to provide explanations and answers to questions of the Tribunal at the Hearing, the Tribunal was authorized to fulfill that purpose of Article 37(2).
42.
On 30 June 2017, the Parties, having not agreed on the documents to be disclosed to the EC to enable the EC to file its amicus submission, filed their respective comments with the Tribunal.
43.
On 10 July 2017, the Tribunal proposed the appointment of Dr. Katherine Simpson as Tribunal Assistant and sent her CV and Declaration of Independence to the Parties for their consideration. The Tribunal requested that the Parties submit any comments regarding Dr. Simpson's appointment by 13 July 2017.
44.
On 11 July 2017, the Tribunal, taking note of the comments received from the Parties regarding PO-2 § 8.3, ordered the disclosure to the EC of limited documents or paragraphs thereof to enable the EC to complete its amicus submission. This exception to the duty of confidentiality was justified to fulfill the purpose of Article 37(2) of the ICSID Arbitration Rules. Further, the Tribunal ordered the EC to file its submission electronically and in hard copy by 29 September 2017, so as to enable Claimants to comment on the EC's submission in their next memorial, due on 30 November 2017.
45.
On 18 July 2017, the Tribunal noted that the Parties had no objections and appointed Dr. Katherine Simpson as Tribunal Assistant. In response to Claimants' reference to the ICC Note on such appointments, the Tribunal indicated that, while it had no problem with the description of the function in that Note, it did not consider it appropriate to include such rules of another arbitration institution in its procedural provisions. The Tribunal explained that ICSID practice was capable and sufficient to assure that Tribunal Assistants were not authorized for activities that were exclusively reserved for the arbitrators.
46.
On 26 July 2017, the Tribunal issued Procedural Order No. 3 ("PO-3") Regarding Production of Documents, attaching the Redfern Schedules thereto as Annexes A and B.
47.
On 29 September 2017, the EC submitted its Amicus Curiae Brief to the Tribunal.
48.
On 13 November 2017, Claimants filed "Claimants' Application on Respondent's Non Compliance with Procedural Order No. 3" with the Tribunal.
49.
On 30 November 2017, Claimants filed their Counter-Memorial on Jurisdictional Objections ("C-II").
50.
On 14 December 2017, Claimants submitted their Reply on the Merits to the Tribunal.
51.
On 18 December 2017, the Parties informed the Tribunal that they had agreed to extend Claimants' deadline for submitting the Spanish translation of the Reply on the Merits and accompanying documents to 15 January 2018, and to extend Respondent's deadline for submitting its Rejoinder on the Merits until 2 March 2018.
52.
On 19 December 2017, Claimants submitted their corrected Reply on the Merits ("C-III"), together with an errata mark-up. On the same day, the Tribunal approved the Parties' agreement to extend the deadlines for the Claimants' submission of the Spanish translation of their Reply on the Merits and accompanying documents (to 15 January 2018) and for Respondent's submission of its Rejoinder on the Merits (to 2 March 2018).
53.
On 17 January 2018, the Parties informed the Tribunal that they had agreed to extend the deadlines for the submission of Respondent's Reply on Jurisdiction to 2 March 2018 and of Claimants' Rejoinder on Jurisdiction to 23 April 2018. The Tribunal agreed to this modification on 7 February 2018.
54.
On 20 February 2018, the Parties requested to extend the deadlines for the submission of Respondent's Rejoinder on the Merits and Reply on Jurisdiction to 9 March 2018, and on Claimants' Rejoinder on Jurisdiction to 30 April 2018. The Tribunal agreed to this further extension on 21 February 2018.
55.
On 27 February 2018, Claimants requested to place the Award rendered in the SCC Arbitration (2015/063) Novenergia II – Energy & Environment (SCA) (Grand Duchy of Luxembourg, SICAR v. The Kingdom of Spain dated 15 February 2018 ("Novenergia Award") in the record. On the same day, Respondent requested an additional 5 days to respond to Claimants' request. The Tribunal granted Respondent's request and invited Respondent to submit its comments by 7 March 2018.
56.
On 9 March 2018, Respondent submitted its Rejoinder on the Merits ("R-II"), in Spanish.
57.
On 10 March 2018, Claimants requested the opportunity to respond to Respondent's comments of 7 March 2018. The following day, the Tribunal granted the Claimants' request and invited their submission by 14 March 2018.
58.
On 12 March 2018, Claimants submitted their comments on Respondent's submission of 7 March 2018. Respondent requested the Tribunal's consent that Respondent briefly reply to them.
59.
On 12 March 2018, Respondents submitted corrections to the Rejoinder on the Merits (Spanish version) and requested permission to upload final versions of the exhibit lists to BOX.
60.
On 14 March 2018, Respondent submitted its comments on Claimants' request to introduce the Novenergia Award.
61.
On 17 March 2018, the Tribunal decided to admit the Novenergia Award, ordering Claimants to submit the Award with a new exhibit number to be admitted to the file in these proceedings. The Tribunal also invited the Parties to submit their Notifications of Witnesses and Experts they wish to examine at the Hearing by 11 May 2018.
62.
On 23 April 2018, the Tribunal invited the Respondent to correct clerical errors in its submission of 9 March 2018, such that they could be considered during Hearing preparation.
63.
On 25 April 2018, by simultaneous submission, the Parties informed the Tribunal that the Hearing could be held exclusively during the week starting 11 June 2018 and requested that the Tribunal cancel the booking of the World Bank's facilities in Paris for the second week (beginning 18 June 2018). The Tribunal informed the Parties of its agreement with the Parties' proposals on the following day. The Tribunal also advised that it would send the Parties a draft procedural order concerning the details of the Hearing.
64.
On 27 April 2018, Respondent replied to the Tribunal's letter of 23 April 2018 that it would send a revised pleading the following week.
65.
On 27 April 2018, Claimants filed their Rejoinder on Jurisdiction ("C-IV").
66.
On 4 May 2018, the Tribunal sent the Parties its draft of Procedural Order No. 4 Regarding the Details of the Hearing, for their review and comment by 11 May 2018.
67.
On 8 May 2018, the Parties jointly requested that the Tribunal accept Witness Notifications on 10 May, the responses to the draft PO-4 on 14 May, and to schedule the Pre-Hearing teleconference for 28 or 29 May.
68.
On 10 May 2018, the Parties submitted their Witness Notifications.
69.
On 14 May 2018, the Parties submitted their comments to the draft of PO-4 and their proposed Hearing agendas to the Tribunal.
70.
On 16 May 2018, the EC requested leave from the Tribunal to submit an update to its written observations, in light of the recent judgment of the CJEU in the Case C-284/16 Achmea v. Slovak Republic, and to set out its view on the consequences of that judgment for pending arbitration cases based on the ECT. The following day, the Tribunal invited the Parties' comments by close of business on 18 May 2018. The Parties agreed that it would not be necessary for the EC to provide updated written submissions.
71.
On 21 May 2018, the Tribunal informed the EC that there would be no need for it to update its submission and reminded the EC that, pursuant to PO-2, the EC may only be present during the Opening Statements of the Parties, on 11 June 2018.
72.
On 24 May 2018, the Tribunal issued Procedural Order No. 4 ("PO-4") Regarding the Details of the Hearing, together with a Hearing Agenda.
73.
On 25 May 2018, the Parties jointly proposed amendments to PO-4 and the Hearing Agenda. Respondent presented further proposals to increase the time allocation for Opening Statements and for the examination of experts.
74.
On 29 May 2018, the Tribunal issued Procedural Order No. 5 ("PO-5") Regarding the Hearing, wherein the Tribunal amended PO-4 and invited the Parties to liaise to create a new Hearing Agenda based on PO-5. On the same day, ICSID distributed information regarding the Hearing logistics to the Parties.
75.
The Parties submitted their proposed agreed Agenda to the Tribunal on 30 May 2018. On the following day, the Parties submitted their updated exhibit lists to the Tribunal.
76.
On 31 May 2018, Claimants requested authorization to submit new documents, prior to the Hearing. On 1 June, the Tribunal asked Respondent whether Respondent also had such an application. Respondent replied that, while it had no new documents, it wished nonetheless to respond to Claimants' request.
77.
On 2 June 2018, the Tribunal invited Respondent to respond to Claimants' request to introduce new documents.
78.
On 4 June 2018, Respondent submitted its corrected Rejoinder to the Tribunal.
79.
On 5 June 2018, Respondent sent its comments, together with 12 Annexes, to the Tribunal.
80.
On 6 June 2018, the Tribunal wrote to the Parties and rejected all of the new documents that the Parties applied to submit at this stage, but informed the Parties that this matter may be discussed further at the Hearing. The Tribunal also accepted Respondent's corrected Rejoinder, which the Tribunal requested on 23 April 2018.
81.
The Hearing was held from 11 – 15 June 2018 at the World Bank Hearing Centre in Paris. The following individuals attended the Hearing:
82.
TRIBUNAL
Prof. Dr. Karl-Heinz Böckstiegel President
Prof. MMag. Dr. August Reinisch, LL.M. Co-Arbitrator
Prof. Philippe Sands QC Co-Arbitrator
ICSID SECRETARIAT
Mr. Francisco Grob ICSID Secretariat
ASSISTANT TO THE TRIBUNAL
Dr. Katherine Simpson Simpson Dispute Resolution Inc
CLAIMANTS
Mr./Ms. First Name/ Last NameAffiliation
Counsel:
Mr. Alberto Fortún Costea Cuatrecasas Gonçalves Pereira, S.L.P.
Mr. Luis Pérez de Ayala Cuatrecasas Gonçalves Pereira, S.L.P.
Ms. Cani Fernández Vicién Cuatrecasas Gonçalves Pereira, S.L.P.
Ms. Maribel Rodríguez Vargas Cuatrecasas Gonçalves Pereira, S.L.P.
Mr. Antonio Delgado Camprubí Cuatrecasas Gonçalves Pereira, S.L.P.
Mr. José Ángel Rueda García Cuatrecasas Gonçalves Pereira, S.L.P.
Mr. Borja Álvarez Sanz Cuatrecasas Gonçalves Pereira, S.L.P.
Ms. Ana Martínez Valls Cuatrecasas Gonçalves Pereira, S.L.P.
Mr. Ignacio Frutos Blanco Cuatrecasas Gonçalves Pereira, S.L.P.
Parties:
Mr. Erik Schnider OperaFund Eco-Invest SICAV PLC
Witness:
Mr. Lars Bauermeister Ahead Wealth Solutions AG
Mr. Peter Kofmel Schwab Holdings AG
Experts:
Dr. José Antonio García The Brattle Group
Mr. Richard Caldwell The Brattle Group
Ms. Ying-Chin Chou The Brattle Group
Ms. Annika Opitz The Brattle Group
Mr. Álvaro Payán ATA Renewables
RESPONDENT
Mr./Ms. First Name/ Last NameAffiliation
Counsel:
Ms. Amaia Rivas Kortazar Abogacía General del Estado
Mr. Antolín Fernández Antuña Abogacía General del Estado
Ms. Patricia Fröhlingsdorf Nicolas Abogacía General del Estado
Ms. María José Ruiz Sánchez Abogacía General del Estado
Parties:
Ms. Raquel Vázquez IDAE
Witness:
Mr. Carlos Montoya IDAE
Experts:
Mr. Eduard Saura Accuracy
Mr. Nicolas Barsalou Accuracy
Ms. Laura Cozar Accuracy
Ms. Aurea Alvarez Accuracy
Mr. Alberto Fernandez Accuracy
Mr. Carlos Canga Accuracy
Mr. Jorge Servert Sta-Solar
NON-DISPUTING PARTIES (ONLY DAY 1)
Mr. Steven Noë EC
Ms. Petra Nemeckova EC
Mr. Nicolaj Kuplewatzky EC
INTERPRETERS
Mr. Jesus Getan Bornn English-Spanish Interpreter
Ms. Anna Sophia Chapman English-Spanish Interpreter
Mr. Marc Viscovi English-Spanish Interpreter
Ms. Barbara Bethausser-Conte English-German Interpreter (only Day 2)
Ms. Barbara Chisholm English-German Interpreter (only Day 2)
COURT REPORTERS
Mr. Trevor McGowan The Court Reporter Ltd.
Mr. Paul Pelissier DR-Esteno
Mrs. Luciana Sosa DR-Esteno
83.
At the beginning of the Hearing, the Chairman informed the Parties of his concerns regarding the exhibits submitted in this matter, as it appeared that there had been unannounced re-numbering and translation changes, among other potential issues. The Chairman invited the Parties' representatives to confer with Dr. Simpson and Mr. Grob regarding these issues, after Opening Statements. At this meeting, the Party representatives agreed to proceed with the Hearing, with Respondent agreeing to strike from the record any new document to which Claimants object, and Claimants agreeing to use the previously submitted joint USB while reserving the right to object to the use of any potentially new document contained therein in cross examination. The Parties further agreed to submit a new, corrected Joint USB to the Tribunal following the Hearing. This agreement was memorialized in Procedural Order No. 6.

On 18 June 2018, the Tribunal issued Procedural Order No. 6 ("PO-6") Regarding the Procedure After the Hearing. In addition to setting a timetable for the further submissions, PO-6 ruled as follows:

2.1 By 27 August, 2018, the Parties shall simultaneously submit the English-language version of their Post-Hearing Briefs, Limited to a maximum of 50 pages (double-spaced) in length and in font Times New Roman 12, containing the following: 2.1.1. Any comments they have regarding issues raised at the Hearing;

2.1.2. In separate sections of the brief, any comments the Parties have regarding each of the following questions of the Tribunal (which are without prejudice as to the final relevance given by the Tribunal to such questions and the comments received):

a) What, if any, is the application and effect in this case, situated as it is in the field of environmental protection, of the " margin of appreciation enjoyed by national regulatory agencies when dealing with public policy determinations " (ICSID Case No. ARB 10/7, Philip Morris v Uruguay, Award, 8 July 2016, § 388, [CL-0178]). [sic – RL-0088]

b) In a short chart, the Parties are invited to identify what they consider to be, in comparison to the present case, the common denominators and main differences of the factual and legal background in the following cases:

- Charanne B.V. and Construction Investments S.A.R.L. v. Kingdom of Spain (SCC Case 062/2012), Final Award, January 21, 2016, and dissenting opinion by Prof. Guido S. Tawil, 21 December 2015 [CL-0030 / RL-0049]

- Eiser Infrastructure Limited and Energia Solar Luxembourg S.Á R.I. vs. The Kingdom of Spain, ICSID Case No. ARB 13/36, Award of 4 May 2017 [CL-0148 / BQR-87 / RL-0077];

- Isolux Infrastructure Netherlands, B.V. v. the Kingdom of Spain, Arbitration SCC V2013/153, Award, 12 July 2016 [RL-0004];

- Novenergia II – Energy & Environment (SCA) (Grand Duchy of Luxembourg), SICAR v. The Kingdom of Spain (SCC Arbitration 2015/063), Final Award, 15 February 2018 [CL-0213]; and

- Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain, ICSID Case No. ARB/14/1, Award, 16 May 2018 [CL-0220].

c) What, if any, is the stand-alone impact of (1) Royal Decree 1565/2010 and Royal Decree Law 14/2010 (considered together), (2) Law 15/2012, and (3) the subsequent measures (taken together) on Claimants' overall damages claim?

84.
On 20 June 2018, Respondent proposed adding a further category to question (c) of PO-6 to single out the impact, if any, of RD-Law 2/2013 on Claimants' overall damages claim.
85.
On 21 June 2018, the Tribunal invited Claimants' response to Respondent's proposal. Claimants responded on 25 June 2018 that they had no objection to the proposed modification.
86.
On 26 June 2018, the Tribunal accepted Respondent's proposal to amend question (c) in PO-6.
87.
On 11 July 2018 and after the Parties and the Court Reporters revised them, the Tribunal issued the final transcripts of the Hearing.
88.
On 23 July 2018, Claimants requested leave to submit the Antin v. Spain Award (ICSID Case No. ARB/13/31) to the Tribunal. On 24 July 2018, the Tribunal invited Respondent's comments on Claimants' request. Respondent submitted these on 25 July 2018.
89.
On 30 July 2018, the Tribunal decided to authorize the introduction of the Antin Award and Respondent's Application for Rectification, no later than 3 August 2018, with comments thereto to be submitted along with the Parties' post-hearing briefs, by 27 August 2018. The Tribunal stated that it would not make a decision at this point regarding the decision on rectification of the Antin Award and Respondent's possible application for annulment.
90.
On 31 July 2018, Respondent submitted its Request for Rectification of the Antin Award (Exhibit R-0359) to the Tribunal.
91.
On 1 August 2018, Claimants submitted the Antin Award (CL-0222) to the Tribunal.
92.
On 17 and 18 August 2018, the Parties informed the Tribunal of their agreement to increase the length of their post-hearing briefs by 5 pages, to accommodate their comments on the Antin Award.
93.
On 22 August 2018, the Tribunal informed the Parties that it approved of the agreement to increase the page limit of the post-hearing briefs to 55 pages.
94.
On 27 August 2018, by simultaneous submission, the Parties provided their post-hearing briefs to the Tribunal. Respondent's brief was accompanied by two separate documents answering the Tribunal's questions regarding the "stand-alone" effect of measures, in response to the Tribunal's question. Respondent also inquired as to whether Spanish-language translations would be required of the post-hearing brief.
95.
On 28 August 2018, Respondent wrote to the Tribunal requesting consent to reply to Claimants' post-hearing brief or, in the alternative, that sections of Claimants' post-hearing brief be stricken from the record and that this be taken into consideration in a later costs award.
96.
On 29 August 2018, Claimants responded, alleging that Respondent submitted new evidence with their post-hearing submission and requested leave to submit their expert's report in response.
97.
On 6 September 2018, the Tribunal wrote to the Parties. It decided to admit the post-hearing briefs as submitted and to allow each Party to file a second post-hearing brief, but only in rebuttal to the other Party's first post-hearing brief, including any new documents as long as they are in rebuttal only. The Tribunal also noted the jurisdictional decision of 31 August 2018 in the Vattenfall AB and others v. Federal Republic of Germany case and offered the Parties the opportunity to comment thereon. The Tribunal clarified that it intends not to admit the introduction of any further awards, but rather to close the procedure and deliberate based on the file as it would stand after the second round of post-hearing briefs and the cost claims had been submitted by the Parties.
98.
On 11 September 2018, the Parties informed the Tribunal of their agreement to extend the deadline for the submission of their second-round post-hearing brief and the submissions on costs. The Tribunal approved the extension on the same day.
99.
On 18 September 2018, Respondent requested the Tribunal's directions on whether it would require that pleadings be submitted in Spanish. The Tribunal invited Claimants' response, and they stated that Spanish translations should be required. Thereafter, on 1 October 2018, the Tribunal decided that PO-1 § 11(4) should be followed and Respondent was, therefore, required to provide Spanish translations of its past and future submissions.
100.
On 4 October 2018, the Parties simultaneously submitted their second-round post-hearing briefs to the Tribunal, together with supporting documentation, to the Tribunal.
101.
On 18 October 2018, the Parties simultaneously submitted their statements of costs to the Tribunal.
102.
On 19 October 2018, again by simultaneous submission, the Parties informed the Tribunal that they had agreed to only submit their costs arguments in electronic format and to not require the translation of those submissions into Spanish. The Tribunal approved of the Parties' agreement on 25 October 2018.
103.
On 25 October 2018 the Parties simultaneously submitted their responses to the other side's statement of costs, together with supporting documentation, to the Tribunal. Claimants' submission included new legal exhibits numbered CL-0222 – CL-0244. Respondent's submission included a new exhibit, numbered RL-0113.
104.
On 28 January 2019, Respondent requested the Tribunal's leave to introduce into the record an additional legal authority, the "Declaration of the Representatives of the Governments of the Member States, of 15 January 2019 on the legal consequences of the Judgment of the Court of Justice in Achmea and on Investment Protection in the European Union" ("Declaration"), together with a written submission commenting exclusively on the relevance of said Declaration. On the same day, the Tribunal invited Claimants to comment on Respondent's Request, by 5 February 2019.
105.
On 5 February 2019, Claimants responded in opposition to Respondent's Request and asked that the Tribunal provide an estimate of the timing of an award.
106.
On 11 February 2019, the Tribunal decided to admit (1) the Declaration, (2) the other related declarations made by France, Finland (with other States), and Hungary of 16 January 2019, and (3) the opinion of 29 January 2019 by the ECJ's Advocate General Bot in Opinion 1/17 into the file. The Tribunal invited the Parties to present their brief written observations on these materials, not to exceed 10 pages, simultaneously by 26 February 2019. The Tribunal further stated that it expected to issue the Award before summer 2019.
107.
The Parties each submitted their written observations on 25 February 2019.
108.
On 26 February 2019, the Tribunal invited Claimants to respond to Respondent's comments as to costs. Claimants provided this timely response on 12 March 2019.
109.
On 5 June 2019, the Tribunal declared the proceeding closed in accordance with Rule 38(1) of the ICISD Arbitration Rules.

IV. THE PARTIES' REQUESTS

A. CLAIMANTS' REQUESTS

110.
The Prayer for Relief contained in Claimants' Reply Submission on Costs ("C.Costs-II") represents Claimants' complete Prayer for Relief, and repeats prior requests contained in Claimants' Post-Hearing Brief ("CPHB-I"), Claimants' Memorial on the Merits ("C-I"), Corrected Reply on the Merits5 ("C-III"), and their Rejoinder on Jurisdiction ("C-IV"). Claimants' Prayer for Relief has the same content as prior requests contained in Claimants' Request for Arbitration ("RfA") and Claimants' Counter-Memorial on Jurisdictional Objections ("C-II"):

50. For the foregoing reasons, the Claimants respectfully request that the Arbitral Tribunal (i) admit the present Reply Submission on Costs; and (ii) issue an Award as follows:

(i) DECLARING that the Arbitral Tribunal has jurisdiction to hear all claims submitted by OperaFund and Schwab under the Energy Charter Treaty and, consequently, rejecting each of the preliminary objections that the Respondent raised against the jurisdiction of the Arbitral Tribunal;

(ii) DECLARING that Respondent's actions and omissions with respect to OperaFund and Schwab's Investment in the PV subsector in Spain amount to breaches of Respondent's obligations under Part III of the Energy Charter Treaty, as well as under the applicable rules and principles of international law;

(iii) ORDERING Respondent to pay to OperaFund compensation in the amount of EUR 36,800,000 and to Schwab compensation in the amount of EUR 3,300,000 (amounts which may be increased to provide full compensation); or alternatively, an amount based on the alternative "But-for" scenario presented in Brattle Second Quantum Report of 13 December 2017, that is, to pay to OperaFund compensation in the amount of EUR 39,000,000 and to Schwab compensation in the amount of EUR 3,000,000;

(iv) ORDERING the Respondent to pay to the Claimants the entire costs of the arbitration and all costs incurred by the Claimants as detailed above in this Reply Submission on Costs, totaling EUR (Euro) 2,267,669.57, USD (United States Dollars) 525,000.00 and CHF (Swiss Francs) 26,850.15; and also including, in particular but without limitation, the legal costs incurred by the Claimants in order to address the jurisdictional objections raised by the Respondent and the related intervention of the European Commission as amicus curiae in the present proceedings [footnote: Petition (iv) updated with respect to the Prayer for Relief included in the Claimants' First PHB (which did not include the Claimants' incurred costs)]

(v) ORDERING Respondent to pay to OperaFund and Schwab pre- and post-award interest accrued on all amounts claimed, compounded monthly, until full payment thereof, at the rates specified by OperaFund and Schwab (1.59% compounded monthly for pre-award interest; and 3.59% compounded monthly for post-award interest);

(vi) DECLARING that the Arbitral Tribunal's Award is made net of all taxes and/or withholdings, and ORDERING Spain to indemnify Claimants for any tax liability or withholding that may be imposed in Spain, Malta or Switzerland, in relation to the compensation awarded in the Tribunal's Award; and

(vi) ORDERING any such further relief as the Arbitral Tribunal may deem appropriate.6

B. RESPONDENT'S REQUESTS

111.
Respondent's request for relief in its Counter-Memorial on the Merits and Memorial on Jurisdiction ("R-I")7 was restated in Respondent's Rejoinder on the Merits and Reply on Jurisdiction ("R-II") as follows:

1477. In light of the arguments expressed therein, the Kingdom of Spain respectfully requests the Arbitral Tribunal to:

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

b) Subsidiarily, in the event that the Arbitral Tribunal decides that it has jurisdiction to hear this dispute, to dismiss all the Claimants' claims regarding the Merits, as the Kingdom of Spain has not breached the ECT in any way, pursuant to Sections IV and V herein, referring to the Facts and the Merits, respectively;

c) Secondarily, to dismiss all the Claimants' claims for damages, as said Claimants are not entitled to compensation, in accordance with section VI of this Document; and

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

1478. The Kingdom of Spain reserves the right to supplement, modify or complement these pleadings and present any and all additional arguments that may be necessary in accordance with the ICSID rules of arbitration, procedural orders and the directives of the Arbitral Tribunal in order to respond to all allegations made by the Claimant in regards to this matter.

112.
Respondent made the following Request for Relief in its post-hearing submission ("RPHB-I")8:

223. In view of the arguments put forward, the Arbitral Tribunal is respectfully requested to:

a) Declare its lack of jurisdiction to hear the Claimants' claims;

b) Secondarily, dismiss the Claimants' claims on the merits, since the Kingdom of Spain has not violated the ECT;

c) Secondarily, dismiss all claims for compensation from the Claimants, as they do not have the right to any compensation; and

d) Order the Claimants to pay all costs and expenses derived from the arbitration, all updated at a reasonable interest rate, from the date on which the costs are incurred until the day on which they are paid.

113.
In its second costs submission ("R.Costs-II"), Respondent made the following Petitum, which is consistent with the Petitum contained in its first submission on costs ("R.Costs-I")9:

24. Accordingly, the Respondent respectfully requests that the Tribunal grant an award pursuant to Article 61(2) of the ICSID Convention ordering that the Claimants bear the costs of this arbitration, as well as the Respondent's costs for legal representation, in the amount of EUR 1,541,677.39. The Respondents [sic] reserves the right to seek additional costs arising subsequent to the filing of the Statement of Costs.

24.[sic] Further, the Respondent submits that it should not be liable for any of the Claimants' arbitration or representative costs.

25. Finally and in the alternative, should the Tribunal render an award condemning Spain to pay in whole or in part, the costs of this procedure, the Respondent respectfully requests that the Tribunal: i) excludes from Claimants' Submission of costs realted [sic] to "other expesnes[sic]" and ii) reduces Counsel for Claimants' fees to a reasonable amount.

26. The Respondent expreslly[sic] reserves its right to submit further arguments in this regard, if it deems it necessary according to the Procedural Orders, the ICSID Convention, and the Arbitration Rules applicable to this case.10

V. STATEMENT OF FACTS

114.
The following summary of facts is based on the Parties' submissions and is without prejudice to the relevance of these facts for the decisions of the Tribunal. While the events leading to this arbitration are largely not in dispute, where the characterization of many events described herein is, each Party's views are summarized, without prejudice.
115.
Claimants submitted that Respondent's international activities began in 2004 when, following the International Conference for Renewable Energies, Spain and Germany led the creation of an institutional framework known as the International Feed-In Cooperation ("IFIC") to promote the feed-in model.11 On 27 January 2005, Spain and 6 other EU Member States organized the first IFIC workshop at the Institute for Energy Diversification and Savings ("IDAE") premises in Madrid.12 IDAE is an agency of the Ministry of Energy, Tourism and Digital Agenda, through the Ministry of Energy, on which it is organically dependent.13 The Parties agree that IDAE's purpose is to help the Respondent improve energy efficiency and use of renewable energy and other low-carbon technologies and that IDAE has played an essential role in Respondent's energy policies.14 Claimants argue that, in addition, IDAE had a role in "promoting the regulatory framework applicable to renewable energy producers to attract investments."15
116.
On 6 October 2005, Respondent and Germany institutionalized IFIC by signing a Joint Declaration in Madrid.16 From 23 – 24 November 2006, the Third IFIC Workshop was held in Madrid.17 In late January 2007, IFIC was extended to Slovenia.18 The 6th IFIC Workshop was held in Brussels from 3 – 4 November 2008.19 There, Grupo Santander – Spain's largest banking institution – gave a presentation entitled "The Importance of Feed In Tariffs to Attract Financial Resources" and stated that "risk reduction makes easier the access to financing."20 On 18 – 19 November 2010, the 8th IFIC Workshop was held.21
117.
Claimants submitted that on 24 May 2005, IDAE published a brochure called "El Sol Puede Ser Suyo" ("The Sun Can be Yours").22 In a presentation on the same date, it was suggested that investing in a PV solar facility could generate returns of up to 15%.23 IDAE updated and re-issued its brochure on 6 June 2007,24 in November 2007, and April 2008.25 In November 2007 and 2008, Invest In Spain gave presentations entitled "Opportunities in Renewable Energy in Spain."26
118.
On 26 October 2009, Dr. Pedro Marín Uribe, Secretary of State for Energy, gave a speech in Los Angeles, California before US investors where he stated that "[f]eed-in tariff mechanisms have provided a reliable and stable regulatory environment."27 In November 2009, Dr. Miguel Sebastián Gascón emphasized Respondent's leadership in renewable energy, thanks to its regulatory policy represented by the feed-in model of its first regulatory framework.28 Claimants allege that in February 2010, Mr. Marti Scharfhausen, Vice Chairman of CNE, gave a presentation entitled "Renewable Energy Regulation in Spain", which explicitly referred to the idea that the incentives would be available during the entire lifespan of the installations and that there would not be any retroactive change to existing facilities. Mr. Scharfhausen stated that, to reach targets set in the indicative planning, economic incentives "enough to obtain a reasonable profitability" works as an energy and environmental policy tool.29 The presentation praised Spain's feed-in model as efficient and effective, and noted that it contributed to "improve the quality of the technology", and referred to the four criteria of RD 661/2007, including regulatory stability (no retroactive effect).30 Respondent, however, states that CNE's functions and competencies do not include either (1) promoting the Spanish regulatory framework to Spanish or foreign investors, or (2) organizing rounds of presentations to promote the investment regime to Spanish or foreign investors.31 The Parties dispute the role and responsibilities of the CNE. Claimants state that, under Regulatory Framework No. 1, the CNE was the advisory body in regulatory matters and the entity in charge of defining a methodology for FITs.32 Respondent states that CNE was the Regulatory Authority of the SES.33
119.
Following the Hearing, Claimants stated that Respondent's efforts to show that Claimants could not have been induced by an "attraction campaign" carried out by Respondent because they did not "see" a number of presentations "completely misses the point."34 Rather, Claimants explained that they "have pointed to such statements and representations to establish that Spain's contemporaneous interpretation of its own regulatory framework (essentially, RD 661/2007) coincides with the views on such legislation that the Claimants had before making the Investments: one of regulatory stability."35
120.
Respondent summarizes the sources of the Spanish legal system as follows:36

- The Spanish Constitution of 1978 : This is the supreme Act of the Spanish legal system, which establishes the organisation of the public authorities, their institutional and territorial structure, and regulates the essential aspects of the rights and duties of citizens.

- Act : is a written rule which emanates from legislative power. Two kinds of Acts can be distinguished:

Organic Acts : those reserved for the regulation of certain matters provided for in the Constitution (Fundamental Rights and Public Liberties, general electoral system, among others). An absolute majority of the Congress of Deputies is required for their approval.

Ordinary Acts : these regulate matters not reserved by the Constitution to an Organic Act. A simple majority of the Congress of Deputies is sufficient for their approval.

- Royal Decree-Act [Royal Decree-Law] this is a regulation with force of Law whereby the Government is authorised by the Constitution to approve them in situations of extraordinary need or urgency. The approval of a Royal Decree-Act is subject to strict conditions, controls and limits and its subsequent parliamentary validation.

- Royal Decree : a Royal Decree is a regulatory standard that emanates from the Government. It complements or implements the Acts and is hierarchically inferior to them. It can regulate within the authorisations granted by the Act and cannot breach the Law.

- The Ministerial Order : regulation emanating from one or several ministerial Departments. Within the energy framework, the most frequent type is a Ministerial Order emanating from the Ministry of Industry, Energy and Tourism.

[…] Resolutions, meanwhile, are not regulations but decisions with a lower rank than Ministerial Order which emanate from competent bodies of the Administration, involving technical content.37

121.
Respondent explains that the energy sector and the Spanish supportive scheme "is a highly regulated and subsidized sector paid by consumers and is governed by the principle of hierarchy of norms that determines (i) that the rights and obligations of the operators can never be contained in a law with the rank of a RD, but in an Act and (ii) any RD must always be consistent with the principles of the Act that it develops."38
122.
The Plan for the Promotion of Renewable Energies 1989 ("PER 1989") defined a standard facility based on "investment costs, operating costs, useful life which was set at 20 years, the facility's rated power, production and price of electricity on the market."39 Respondent explained that, based on these parameters and by deducting the price obtained from the sale of energy on the market, the amount of public aid could be determined as that which was required to cover the investment and operating costs while also achieving the target return set for these purposes, 10%.40
123.
Claimants state that Respondent began promoting renewable energy ("RE") in late 1994, through Royal Decree 2366/1994, of 9 December, on the Production of Electrical Energy by Hydraulic Facilities, Cogeneration Facilities, and Other Facilities supplied by renewable Energy Sources or Resources ("RD 2366/1994")41 and Act 40/1994, of 30 December, on the Organization of the National Electric System ("Act 40/1994").42 Act 40/1994 set up the "Ordinary Regime" for conventional energy production and the "Special Regime" for the generation of RE.43
124.
On 27 November 1997, Respondent approved the Electrical Power Act of 1997 ("Act 54/1997"),44 which replaced Act 40/1994.45 What Claimants call "Regulatory Framework No. 1" lasted from 1997 – 2010.46
125.
Article 30 of Act 54/1997 established essential general entitlements including "(i) the right to receive, in exchange for the energy produced, the wholesale pool price plus a supplementary payment to achieve a guaranteed remuneration above the pool price" and "(ii) the right to sell the net amount of energy produced by the renewable power installation."47 The Parties agree that, to benefit from the rights, facilities authorized under the Special Regime must be registered in the Registro administrativo de instalaciones de producción en regimen especial ("RAIPRE").48 The RAIPRE is managed by the Ministry of Energy, and coordinated with the local registers managed by each Autonomous Community in Spain, pursuant to Article 21(4) and 31 of Act 54/1997.49
126.
Shortly after enacting Act 54/1997, Respondent ratified the ECT,50 and signed the Kyoto Protocol.51
127.
On 30 December 1998, Respondent published Royal Decree 2818/1998, of 23 December on production of electricity by facilities supplied with renewable energy, waste or cogeneration sources or resources ("RD 2818/1998"), which Claimants state "implement[ed] the feed-in remuneration scheme that converted the [Act 54/1997] general entitlements into specific economic rights, designed to attract investment into Spanish renewable energy production."52
128.
One year later, on 30 December 1999, Respondent adopted the Renewable Energy Promotion Plan 2000 – 2010 ("PER 2000 – 2010").53 Claimants explain that, through the PER 2000 – 2010, Respondent committed to carry out a public policy aimed at promoting photovoltaic ("PV") technology to increase the share of renewables in its overall energy consumption to 12% by 2010.54 According to Respondent, the PER 2000 – 2010 set 7% as the reasonable return and placed two limits on the receipt of subsidies: (1) the number of years the subsidy would be maintained and (2) the number of hours with the right to the subsidy. The target return was to be attained through public subsidies.55
129.
On 30 December 2000, Respondent published Act 14/2000, of 29 December, on fiscal, administrative and social order measures ("Act 14/2000"), modifying the wording of Act 54/1997 to allow an increase in the incentives for PV installations.56
130.
On 27 September 2001, the European Union ("EU") adopted Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources in the internal electricity market.57
131.
On 31 December 2002, Respondent published Royal Decree 1432/2002, of 27 December, establishing the methodology for the approval or modification of the average or reference electricity tariff and amending a number of articles in RD 2017/1997 of 26 December, governing the organization and regulation of the procedure for the settlement of transmission, distribution and tariff retailing costs, the permanent costs of the system, and diversification and security of supply costs ("RD 1432/2002"),58 which Claimants state introduced the new methodology to calculate the average or reference electricity tariff.59
132.
On 27 March 2004, after the 22 January 2004 publication of CNE Report on the same,60 Respondent published Royal Decree 436/2004, of 12 March, establishing the methodology for updating and systematizing the legal and economic regime governing electric power production under the special regime ("RD 436/2004").61 This implementing regulation to Act 54/1997 was in force until 31 May 2007.62
133.
On 25 August 2004, there was a meeting between Juergen Frick, Roland Frick, and Gabriel Tschui regarding intentions of Bank Frick to launch a fund for renewable energy.63 This meeting led to the creation of OperaFund, on the initiative of Mr. Juergen Frick, on 24 January 2005. Claimants state that Mr. Frick conceived OperaFund as a dedicated investment company specializing in acquiring assets with an environmental focus.64
134.
Deutsche Bank began developing the PV Projects that now underlie Claimants' investments in 2004, when RD 436/2004 was in force. Claimants state that this "initial development" created only negligible costs related to permits. Claimants stated that Deutsche Bank did not commit substantial funds toward the development of the PV Plants until after 1 June 2007.65
135.
By the end of 2004, "the percentage of renewable energy contributed to primary energy consumption had only increased by a few tenths as compared to 1998, the reference year for the [PER 2000 – 2010]."66
136.
In August 2005, IDAE published PER 2005 – 2010, which revised PER 2000 – 2010,67 and which Respondent states abandoned the term "minimum rate of return" for the term "around 7%."68
137.
Paso-Palma began operations on 22 September 2005.69
138.
On 15 December 2005, the Spanish Supreme Court issued a judgment regarding RD 436/2004 and expressly refused the possible freezing of the remuneration system.70
139.
Claimants state that, in 2006, Deutsche Bank AG, Asset Finance & Leasing Renewable Energies ("DABFL") got involved with a local developer from Majorca in a renewable project to build four PV plans in four different municipalities on Majorca.71 Paso Palma and Deutsche Bank entered into a Cooperation Agreement on 6 March 2006.72
140.
On 30 March 2006, Order ITC/914/2006, which establishes the method for the calculation of the power guarantee compensation for generation facilities under the Ordinary Regime of electricity systems on the islands and outside the Iberian Peninsula, was issued.73
141.
On 24 June 2006, after the Ministry of Industry, Energy, and Tourism ("MINETUR") published a report in support of the same,74 Royal Decree-Law 7/2006, of 23 June, on the adoption of urgent measures in the energy sector ("RD-Law 7/2006") was published.75 Respondent states that RD-Law 7/2006 froze the Average Reference Electricity Tariff ("TMR") referred to in RD 436/2004 for reasons of general interest such as that of market distortion.76 Claimants argue this freeze was a temporary measure to enable the Government to correct an error in the Feed-in Tariff ("FIT") remuneration system created by RD 436/2004.77
142.
In response to RD-Law 7/2006, leading associations of the renewables sector requested "the immediate cessation of the ongoing regulatory process."78
143.
In July 2006, the law firm Cuatrecasas prepared a Report for Deutsche Bank.79 The Parties dispute whether this Report demonstrated that FITs applied for the total life of the PV Plant.80
144.
In August and September 2006, Paso-Palma Sol's 23 Operating subsidiaries (the "Majorca SPVs") and Paso-Palma Sol's non-operating subsidiary Photovoltaico Mediterráneo, S.L. began operations.81
145.
On 25 October 2006, the Supreme Court of the Kingdom of Spain indicated that "the remuneration regime […] does not guarantee, on the contrary, holders of facilities under special regime the inviolability of certain level of returns or income in relation to those obtained in past years, nor indefinite permanence of the formulas used for fixing premiums."82
146.
The final quarter of 2006 saw a variety of statements regarding the draft of what would become Royal Decree 661/2007, of 25 May, which regulates the activity of electric energy production under the special regime ("RD 661/2007"). On 26 October 2006, the Minister of Industry and Energy launched a message to operators regarding the proposed RD 661/2007.83 In November 2006, the Association of Renewable Energy Producers ("APPA") submitted pleadings in response to RD 661/2007 proposing that remuneration be based on standard facilities defined according to their capacity.84
147.
On 8 November 2006, Mr. Ignasi Nieto Magaldi, Secretary General of Energy, appeared before the Congress and objected to the over-remuneration of renewable energy producers.85 There were several published articles and statements related to changes and reductions to premiums for wind energy producers between November and December 2006.86
148.
In 2007, DBAFL teamed up with another local developer in the region of Extremadura to develop three PV installations with a nominal capacity under 10 MW.87
149.
On 10 January 2007, there was a Communication from the EC to the Council and the European Parliament entitled "Renewable Energy Road Map [-] Renewable Energies in the 21st Century: Building a More Sustainable Future,"88 wherein the EU recommended increasing RE consumption to 20% by 2020.89
150.
On 19 January 2007, AEE described the draft of RD 661/2007 as retroactive, because it would affect plants in operation.90
151.
On 9 February 2007, MINETUR issued a press release, stating that it had signed an agreement with "the Bank" to facilitate financing of renewable energy and cogeneration projects.91
152.
On 14 February 2007, CNE issued a report on the draft RD 661/2007 entitled "CNE's Report 3/2007 Concerning the Proposal for a Royal Decree Regulating Electric Power Production in the Special Regime and that of Certain Installations in the Ordinary Regime with Similar Technologies" ("CNE Report 3/2007")92
153.
On 20 March 2007, the Supreme Court confirmed that there is no vested right to receive a specific subsidy in the future.93
154.
On 23 March 2007, the Ministry of Industry, Tourism and Commerce issued its "Report on the Draft Royal Decree Regulating the Activity of Production of Electric Power under Special Regime and of Certain Facilities with Technologies Under Ordinary Regime."94 Claimants argue that this is contemporaneous evidence that Respondent offered investors grandfathered FITs to create a climate of price stability and low regulatory risk, incentivizing investments in the Spanish renewable sector.95
155.
On 3 April 2007, Mr. Jose Maria Gonzalez Valez, as the Chairman of APPA, provided testimony against the proposed RD 661/2007,96 which Respondent states shows that "APPA expressly warned that no rational investor could deduce a commitment to the future immutability of the remunerations of RD 661/2007 and that the remuneration for renewable facilities could be reduced in the future."97
156.
Respondent states that, on 1 May 2007, Cuatrecasas issued a due diligence Report to a redacted recipient, concluding that "the new methodology for calculating their retribution (…) would be directly applied to all installations", including those that had begun to operate when RD 436/2004 was in force. Cuatrecasas never stated that this infringed the Spanish legal system. Rather, Cuatrecasas pointed out that the draft of Royal Decree 661/2007 would annul the four-year revision system of RD 436/2004.98
157.
On 26 May 2007, the Kingdom of Spain published RD 661/2007, which replaced RD 436/2004 and came into force on 1 June 2007.99 The Parties dispute whether RD 661/2007 linked the reasonability of the subsidies to the reasonableness of the costs (Respondent argues) or guaranteed PV energy producers a fixed FIT, indexed to inflation, during the lifetime of a PV installation (Claimants argue).100 Respondent disputes Claimants' assertion that RD 661/2007 provided Claimants' PV Installations the following six rights:

(i) Right to receive a Regulated Tariff for an unlimited period of time (Article 24(1)).

(ii) Right to sell the full net amount of electricity produced (Article 17(b)).

(iii) Right to not be affected by future revisions of the regulatory framework (Article 44(3)).

(iv) Right to receive a feed-in remuneration scheme annually updated in accordance with general CPI less 0.25 % until the end of 2012 and less 0.50 % onwards (Article 44(1)).

(v) Right to priority access to the transmission and distribution grid and energy dispatch priority (Article 17(e) and Annex XI(3)).

(vi) Right to receive a reactive energy supplement for the maintenance of certain stipulated power factor values (which was established at 0.082954 Euro/kWh) (Article 29(1)).101

158.
A press release accompanied RD 661/2007. According to Claimants, Respondent's press release stated that "[a]ny revisions of tariffs to be carried out in the future shall not affect the plants already in operation. This guarantee provides legal certainty for the producer, providing stability for the sector and promoting its development […]"102 Respondent states that the press release contained obvious errors and did not guarantee that the rates of 661/2007 would continue in perpetuity or that there was a right of option between 2 systems of remuneration.103
159.
In July 2007, Pöyry issued a report on the RE market. While the report focused on wind energy technology, it also focused on economic sustainability and over-remuneration, noting Spain's concern about the remuneration regime.104
160.
On 5 July 2007, Act 17/2007, of 4 July, modifying Act 54/1997 for adaptation thereof in accordance with the provisions of Directive 2003/54/EC, of the European Parliament and of the Council, of 26 June 2003, concerning common rules for the internal market in electricity ("Act 17/2007") was published.105 Act 17/2007 contained the following text: "[t]hese tariffs of last resort will be established in such a way that the calculation thereof will respect the principle of sufficient revenue and not cause any distortion to competition."106
161.
On 26 July 2007, Ecoinversión en Extremadura 3 S.L. ("ECO 3") commenced operations.107
162.
In September 2007, the amount of PV installed capacity reached 85% of the installed capacity objective.108
163.
On 27 September 2007, the Ministry of Energy issued a resolution that "established a time limit of 12 months for maintaining the regulated tariff for photovoltaic technology."109 Claimants state that this resolution put Deutsche Bank under pressure to complete the PASO and ECO 3 Projects on time,110 because those PV projects failing to meet this deadline would not benefit from RD 661/2007 and would have to choose between completing their projects to operate under a different (and still unknown) to-be-enacted feed-in remuneration regime or lose their incurred project development costs.111
164.
After the Hearing, Claimants explained that:

a) El Paso was constructed (and always conceived) as a 100 kW facility. Thus, Deutsche bank always intended it to achieve the maximum remuneration for PV under the FIT regulations; and

b) ECO 3 was ultimately constructed as a 10MW facility (rather than as an aggregation of "smaller" 100 kW sub-facilities) (only) due to the fact that RD 661/2007 put an end to the difference in remuneration between "smaller" (≤ 100kW) and "not-small" (between 100 kW and 10 MW) PV plants. With RD 661/2007, there was no longer an economic incentive for "staggering" it into 100 kW sub-facilities.112

165.
In October 2007, Cuatrecasas issued a Legal Opinion analyzing the legal regime applicable to the PASO and ECO 3 Projects to Deutsche Bank.113 Claimants have not stated when Deutsche Bank shared this report with OperaFund.114
166.
On 9 October 2007, the Spanish Supreme Court confirmed that there is no vested right to receive a specific subsidy in the future.115
167.
Arthur D. Little published a report on behalf of ASIF and APPA entitled "The role of photovoltaic energy generation in Spain", which commented that 7% is a reasonable rate of return and that the useful life of a facility is 25 years.116
168.
The Parties agree that there was a dramatic fall in electricity demand in 2008, brought about by the international financial crisis.117
169.
On 23 January 2008, there was a Communication from the EC to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions entitled "20 20 by 2020 Europe's Climate Change Opportunity," which adopted the EU's 2006 recommendations for increasing RE consumption to 20% by 2020.118
170.
On 29 February 2008, Royal Decree 325/2008, of 29 February, establishing the remuneration of the electricity transmission activity for installations commissioned after 1 January 2008 ("RD 325/2008") set remuneration "in the Spanish 10-year bond plus 375 basis points."119
171.
On 1 April 2008, the EC published the Official Notice entitled "Community Guidelines on State Aid for Environmental Protection."120
172.
On 30 April 2008, Son Jordi achieved final RAIPRE registration under Article 12 of RD 661/2007.121
173.
The Parties agree that Claimants invested between July 2008 and July 2009. Claimant OperaFund's investment began in July 2008, and Schwab's in April 2009.122 Claimants state that they have invested in five PV facilities in Spain and that these investments consist of (1) shares in special purpose vehicles ("SPVs") which own PV Installations in Spain and (2) participative loans granted to these SPVs.123 These investments are held through (1) Claimants' wholly owned subsidiary Paso-Palma Sol Gestión de Proyectos, S.L. ("Paso-Palma Sol") and (2) Paso-Palma Sol's 24 wholly owned operating subsidiaries ("Majorca SPVs"), which own PV installations in 4 municipalities in Majorca.124 The share capital of Paso-Palma Sol is divided between OperaFund and Schwab on a 75% / 25% basis, as is the participative loan granted to Paso-Palma Sol.125 Claimants refer to the "going concern" underlying their investment in Majorca as the "PASO Project."126
174.
OperaFund owns 100% of the shares ECO 3. ECO 3 owns an installation located in Badajoz ("Badajoz Installation"). OperaFund's investment includes a participative loan to ECO 3.127 The "going concern" underlying OperaFund's investment in Badajoz is referred to as the "ECO 3 Project."128
175.
Claimants' PV projects were financed through the Public Deed of Private Financing Agreement, whereby HSH Nordbank AG provided financing to the Solar Parks of Extremadura, SL, Ecoinversión en Extremadura 1, 2, and 3 in the amount of EUR 229,850,000. This agreement to finance a solar farm in Extremadura with a total capacity of 30 MWp was signed on 2 July 2008 and executed on 10 July 2008.129
176.
On 16 July 2008, OperaFund acquired a 99% shareholding interest in Paso-Palma Sol,130 and granted a participative loan of EUR 10,000,000 to Paso-Palma Sol to enable it to lend that amount to the Majorca SPVs.131
177.
On 29 July 2008, CNE published "CNE Report 30/2008 in Relation to the Draft Royal Decree on Subsidising Electricity Production Activity Through Solar Photovoltaic Technology for Facilities Subsequent to the Maintenance Deadline of the Retribution of Royal Decree 661/2007, of 25 May, for This Technology" ("CNE Report 30/2008").132 According to Respondent, this Report upheld the applicability of the case law from 2005 and 2006, "to justify the possibility of reducing the premiums for existing wind farms."133
178.
On 30 July 2008, Vernissa Nou and Son Quatera achieved final RAIPRE registration.134
179.
On 8, 10, and 17 September 2008, the facilities within the Son Jordi PV Project, S'Estelrica, and Badajoz achieved RAIPRE registration, respectively.135
180.
On 27 September 2008, Royal Decree 1578/2008, of 26 September, on the payment for the electric production activity from solar photovoltaic technology for facilities built after the deadline until which the remuneration under Royal Decree 661/2007, of 25 May, was maintained for said technology ("RD 1578/2008") was published.136 Claimants argue that RD 1578/2008 introduced a new feed-in regime for PV installations registered with RAIPRE after the one-year window set by the Government (ending 29 September 2008).137 Respondent states that RD 1578/2008 warned that there could be a change to the remuneration of the production of electricity using solar PV technology, in 2012, depending on the sustainability of the remuneration regime.138
181.
Claimants state that all their facilities were registered in RAIPRE by 29 September 2008.139
182.
On 16 October 2008, the Secretary General for Energy appeared before Parliament and expressly referred to the need for economic sustainability of the remuneration system. At that point, the Tariff Deficit generated since 2000 was growing and increasingly unsustainable.140
183.
On 29 October 2008, Fernando Marti Scharfhausen, Vice President of CNE, gave a presentation entitled "The Legal and Regulatory Framework for Renewable Energies."141 According to Claimants, this reflects that Spain did not guarantee investors an "abstract" reasonable return, but rather a specific system of remuneration that enabled investors to plan their investments and incur substantial costs under conditions of certainty and predictability.142 Respondent, however, states that the CNE PowerPoint presentations were part of training courses given by CNE personnel and were not aimed at foreign investors or delivered as part of an campaign to capture foreign investors.143
184.
In November 2008, Pöyry published their Report, entitled "Current and Future Trends in the Spanish Solar Industry, An ILEX Energy Report to FPL, November 2008 Edition", where it explained that Spain had been unwilling to deal with the increasing TMR by raising tariffs to avoid the risk of inflation and that, instead, Spain (1) changed the renewable scheme from RD 436/2004 to RD 661/2007 and (2) reviewed the Solar PV tariffs under RD 661/2007 by publishing RD 1578/2008.144
185.
On 10 November 2008, OperaFund acquired the remaining 1% shareholding interest of Paso-Palma Sol which, on the same date, acquired the share capital of the Majorca SPVs.145 OperaFund approved a capital increase in Paso-Palma Sol and issued new shares.146
186.
On 1 December 2008, the Ministry of Energy issued a Certificate confirming the registration of the Facilities within the S'Estrelrica PV project with the RAIPRE.147
187.
On 3 December 2008, Cuatrecasas issued a report, entitled "Limited Legal Due Diligence Report 'Paso-Palma Sol Gestión De Proyectos, S.L.'", which Respondent states was limited to legal issues unrelated to the legal framework of the subsidies.148
188.
On 23 January 2009, the 16 July 2008 loan from OperaFund to Paso-Palma Sol was extended up to EUR 11,223,800 and Paso-Palma Sol extended its loans to the Majorca SPVs.149
189.
On 28 January 2009, Deutsche Bank and OperaFund signed a no-recourse long-term financing agreement.150
190.
On 9 and 13 February 2009, Messrs. Carlos Solé Martin and Luis Jesús Sánchez de Tembleque of CNE gave a presentation entitled "Economic Study of Renewable Energies" wherein they analyzed the economic profitability of renewables. The presentation stated that "[a]llowing a remuneration to investments with a profitability higher than the WACC implies that the business will be able to develop the project with profitability." They also discussed the financing of renewable projects through "project finance", mentioning a "financial leverage between 55% and 90% of the investment."151 Respondent states that these presentations took place within the framework of "training courses or meetings among regulatory authorities" rather than as an attempt to attract foreign investors.152
191.
On 1 March 2009, attorney Mr. Pedro Gómez Ibaguren published a legal report entitled "The new remuneration of photovoltaic solar energy after Royal Decree 1578/2008, of 26 September", wherein he concludes that "it does not fully end with legal uncertainty, […] due to the fact that the revision of tariffs continues to be determined by the Ministry of Industry through the Secretariat-General for Energy."153
192.
In April 2009, the State Association Attorneys' Association Journal no. 23 featured an article by Eduardo Soler Tappa, State Attorney Head in MINETUR entitled "Acquired Rights, Legitimate Expectations and Retroactivity of Regulations that Alter or Modify Recognized Economic Rights. Particular Case of Electricity Production Facilities: Different Regime of Bonuses in Royal Decree 661/2007 with Respect to Royal Decree 486/2004."154 Respondent explains that this Report examined the case-law of the Supreme Court from 2005, 2006, and 2007, which showed that future RD 661/2007 premiums were not an "acquired right", since that would imply a petrification of RD 661/2007.155 This article was re-published on 9 October 2009.156
193.
On 15 April 2009, Schwab acquired a 22.09% shareholding interest in Paso-Palma Sol from OperaFund, and was assigned a 22.09% share of OperaFund's participative loan to Paso-Palma Sol.157 At the Hearing, Mr. Kofmel of Schwab stated that he relied fully on the legal opinion of Cuatrecasas to inform his investment decision.158 He also stated that he invested relying on EU renewable policies.159
194.
On 23 April 2009, the EU promulgated Directive 2009/38/EC of the Parliament and of the Council "on the Promotion of the Use of Energy from Renewable Sources and Amending and Subsequently Repealing Directives 2001/77/EC and 2003/30/EC", which established individual binding targets for 2020 for EU Member States and reinforced the idea that "[t]he main purpose of mandatory national targets is to provide certainty for investors and to encourage[] continuous development of technologies which generate energy from all types of renewable sources. […]"160
195.
On 7 May 2009, Royal Decree-Law 6/2009, of 30 April, which adopts certain measures in the energy sector and passes the discount tariff ("RD-Law 6/2009"), was published.161 RD-Law 6/2009 imposed changes to RD 661/2007 that were not foreseen in the articles of RD 661/2007.162 The Parties dispute whether RD-Law 6/2009 modified RD 661/2007 to address the tariff deficit.163 Respondent explains that RD-Law 6/2009 was introduced to deal with the impact of the economic imbalance caused by the financial crisis and its preamble warned of the necessity of measures to tackle the Tariff Deficit and emphasized the link between the SES and its economic sustainability.164 Claimants state that RD-Law 6/2009 did not apply to PV technology and, therefore, does not support Respondent's arguments that this legislation brought "major modifications to RD 661/2007" in order to address the Tariff Deficit.165
196.
On 21 May 2009, APPA and Greenpeace, with the legal support of Cuatrecasas, submitted a "Draft Law on the Promotion of Renewable Energy" to Mr. Pedro Luis Marín Uribe, State Secretary of Energy.166 APPA quantified the return that could be attributable to RE assets "in that of the Spanish 10-year bond plus 300 basis points."167 Respondent states that this proposal is what it used to determine the remuneration chosen in 2013.168
197.
On 29 May 2009, APPA ran an editorial against the then-Minister of Industry, holding him responsible for the publication of RD-Law 6/2009.169
198.
On 12 June 2009, OperaFund acquired a 100% shareholding interest in ECO 3.170 On the same day, OperaFund and ECO 3 entered into a loan agreement, whereby OperaFund granted ECO 3 a loan of EUR 18,550,000 to be fully repaid by 31 December 2033.171
199.
On 15 June 2009, OperaFund increased ECO 3's share capital with a share premium.172
200.
On 30 June 2009, the EC issued the Commission Decision establishing a template for National Renewable Energy Action Plans under Directive 2009/28/EC of the European Parliament and of the Council.173
201.
On 14 July 2009, Schwab and OperaFund entered into a stock purchase and credit assignment agreement whereby Schwab acquired an additional 2.91% shareholding interest in Paso-Palma Sol and an additional 2.91% share of OperaFund's participative loan to Paso-Palma Sol.174
202.
According to Respondent, on 13 November 2009, the objectives of RD-Law 6/2009 of (1) creating the pre-assignment register and (2) giving the Government the power to scale the entry into operation of preregistered facilities whenever the economic and technical sustainability of the SES so required, was made effective by means of the Agreement of the Council of Ministers.175
203.
Respondent states that, on 20 November 2009, Gas Natural-Fenosa proposed that a sustainable and efficient energy policy be defined.176
204.
On 3 December 2009, the Spanish Supreme Court issued a judgment in a challenge against on the transition from the remuneration regime of RD 436/2004 to RD 661/2007.177 Claimants explain that the Supreme Court rejected the challenge, noting that "the retribution of PV installations under RD 436/2004 was essentially the same as under RD 661/2007[…]"178 Respondent states that this judgment (1) confirmed previous caselaw, (2) elaborated that the concept of a "reasonable return" is dynamic (not petrified or frozen by Act 54/1997), (3) explained why the "regime for facilities under the special regime [of RD 661/2007] cannot be considered arbitrary in the abstract", and (4) noted that RD 1578/2008 was delivered to provide a "reasonable rate of return" to facilities registered after 29 September 2008.179
205.
On 9 December 2009, the Spanish Supreme Court issued two decisions in two challenges against RD 661/2007.180 The Parties dispute the relevance of this judgment. Respondent states that the Supreme Court clarified to investors that there is no inalterable right to a specific compensation framework.181 Claimants state that the Supreme Court dismissed the appeal with reference to its judgment of 9 October 2007, noting that the amendments to RD 436/2004 were not carried out by RD 661/2007, but rather by RD 1454/2005.
206.
Respondent states that, on 19 February 2010, a study was published in Suelo Solar that analyzed the history of retroactivity in PV premiums.182
207.
According to Respondent, in Spring 2010, reform of the SR plan remuneration scheme was imminent and had been the subject of numerous headlines.183
208.
On 27 April 2010, APPA and Greenpeace presented their draft bill of 21 May 2009 on renewable energies at the 12th Sustainable Energy Forum.184
209.
On 29 April 2010, APPA published an article where it demonstrated its awareness of "(i) the relevance of the case-law, (ii) the dynamic nature of reasonable return and (iii) that the expectations of reasonable return could not even be 7% since it depended on the economic circumstances of the moment[…]"185
210.
On 8 May 2010, Respondent proposed to RE Associations the application of the remuneration system, involving linking it to the Spanish 10-year bond, plus a spread, thereby cutting the premiums of RE by EUR 2,500 million.186 On 13 May 2010, the Associations supported the idea that the adjustments should be shared among facilities and opposed only introducing them in new facilities,187 and the possibility of fee modification was criticized but accepted by the sector. ASIF requested that the reduction in remuneration be applied to other producers on the basis of remuneration that was higher than reasonable.188 In June 2010, Respondent proposed that the system of compensation would apply to all plants, including those in operation.189
211.
On 30 June 2010, Spain's National Renewable Energy Action Plan 2011 – 2020 ("PANER"), which was required by Directive 2009/38/EC of 23 April 2009, was published.190
212.
On 22 July 2010, the Council of State issued Opinion No. 1155/2010,191 the meaning of which is disputed. Claimants state that Opinion No. 1155/2010 confirms that, through mandatory RAIPRE registration, "investors acquired an economic right under Spanish law to earn a specific FIT for the electricity to feed into the grid in exchange for investing substantial amounts of money to conduct a renewable installation[…]"192 Respondent states that Opinion No. 1155/2010 recalled that the system of registration in the RAIPRE was a non-constitutive or declarative registration system, such that the registration did not confer any right.193
213.
On 29 August 2010, AEE responded to the "Royal Decree Proposal regulating and amending certain aspects relating to the special regime" that it had received from CNE and MINETUR.194 It noted the sensitive economic situation in Spain and the exceptional fall in the demand for electricity.195
214.
In September 2010, the Brattle Group published a Discussion Paper that Respondent states warned of the unsustainability of the SES, because subsidies for RE were overly generous.196
215.
On 24 September 2010, the EC published Regulation No 838/2010 of 23 September 2010 on laying down guidelines relating to the inter-transmission system operator compensation mechanism and a common regulatory approach to transmission charging.197
216.
On 4 November 2010, the Regulatory Impact Analysis Report of the Draft RD 1614/2010 revealed that the purpose of that regulation is to guarantee sustainability of the SES, by containing expenditure tied to the RE subsidy.198
217.
On 23 November 2010, Royal Decree 1565/2010, of 19 November, which regulates and modifies given aspects relative to the activity for the production of electric power on special regime ("RD 1565/2010"), was published.199 According to Claimants, this is among the first set of measures that retroactively modified RD 661/2007, undermining the stability of the legally warranted FIT.200 Article 10(1) of RD 1565/ 2010 suppressed the right of PV plants to receive the FIT from year 26 onwards, eliminating the right to FIT during the installation's entire lifetime, which Claimants state was granted by Article 36 of RD 661/2007.201 According to Respondent, RD 1565/2010 limited the rewarded production hours of facilities operating with PV technology.202 Claimants define the period of 2010 – 2013 as "Regulatory Framework No. 2."203
218.
On 29 November 2010, the Council of State issued Opinion 2408/2010 on the draft version of RD 1614/2010,204 which admitted the possibility of reducing remuneration for existing wind and solar thermal facilities based on Supreme Court Case law.205
219.
On 7 December 2010, the Government adopted Royal Decree 1614/2010, of 7 December, which regulates and modifies certain aspects of the activity of electricity production through solar thermoelectric and wind power technologies.206 Respondent states that the Preamble of RD 1614/2010 indicated that further measures would need to be adopted.207
220.
On 23 December 2010, the Ministry of Industry, Tourism and Commerce wrote a Regulatory Impact Report on the draft Royal Decree-Act 14/2010, of 23 December, on the establishment of urgent measures for the correction of the tariff deficit in the electricity sector ("RD-Law 14/2010").208
221.
On 24 December 2010, RD-Law 14/2010 was published.209 Claimants state that RD-Law 14/2010 included a cap on the hours of production (equivalent hours of operation) that could benefit from the FIT and extended the operational life of a PV plant to 28 years.210 Respondent states that the Government sought to correct the situation of over-remuneration and acted with the intention of guaranteeing the right to receive a reasonable return, as stated in the Preamble to RD-Law 14/2010.211 The maximum hours contained in RD-Law 14/2010 had already been contained in the PER 2005 – 2010, which also contained the methodology to determine a return of approximately 7%.212
222.
On 19 January 2011, Paso-Palma Sol and the SPVs notified the Lenders of RD-Law 14/2010, explaining that from thereon, the PASO Project would be subject to (1) a 1,250 cap on equivalent hours per year (10,302,375 kWh) and (2) an additional grid access fee of EUR 0.5 per MWh.213
223.
On 26 January 2011, Minister Sebastián stated in a session before Congress that further measures, in addition to those of 2009 and 2010, may be necessary.214
224.
On 5 March 2011, the Government published Act 2/2011, of 4 March, on Sustainable Economy ("Act 2/2011").215 The Parties agree that Act 2/2011 set out the legal criteria to be followed by the regulation on energy and on the incentives of the premium regime, underlining the link between planning and legislation mandating subsidies in order to achieve specific planning objectives.216 Act 2/2011 reaffirmed Act 40/1994 and explicitly established the need for any planning to be done on the basis of a sustainable system.217 Claimants state that Act 2/2011 (1) endorsed the principle of proportionality, (2) extended the 25-year operational life of a PV plant from 25 to 28-30 years and thereby represented an attempt to compensate PV producers, and (3) extended the "liquidity lines of credit" through the ICO for PV installations to adapt to the new regulatory framework under RD-Law 14/2010.218
225.
On 12 May 2011, Deutsche Bank wrote to Paso-Palma Sol expressing concerns about the effects of RD-Law 14/2010 on the borrower's ability to comply with their obligations under the Common Terms Agreement, in particular, to meet the financial covenants (Cover Ratios).219
226.
On 11 November 2011, the PANER was approved by the Council of Ministers.220
227.
On 16 November 2011, the Government published Royal Decree 1544/2011, of 31 October, establishing tolls for access to transmission and distribution networks to be satisfied by electricity producers ("RD 1544/2011").221 RD 1544/2011 established a 0.5 EUR / MWh access toll to address the impact the increase in the number of power producing installations that had been provisionally introduced by RD-Law 14/2010 had on transport and distribution networks.222
228.
On 19 December 2011, in his inaugural address as President of the Government to the Spanish Congress, Mr. Mariano Rajoy Brey announced that future measures could be taken in the energy sector to address (1) the annual deficit and (2) high electricity tariffs for domestic and industrial consumers.223
229.
On 28 December 2011, CNE announced the need to introduce immediately "proposals on the regulation of activities, targeted at removing the structural deficit of the system and mitigating the costs of financing the debt."224
230.
On 27 January 2012, the Government requested that CNE develop a report on regulatory adjustment measures that could be taken in the energy sector to address the Tariff Deficit.225 MINETUR also issued a press release regarding Royal Decree-Law 1/2012, of 27 January, proceeding to the suspension of the remuneration pre-assignment procedures and the elimination of the economic incentives for new electric energy production plans using cogeneration, renewable energy sources, and waste ("RD-Law 1/2012").226 Claimants state that RD-Law 1/2012 and the press release of the same day reflected the Spanish Government's intention to encourage investments in PV projects.227
231.
On 28 January 2012, the Government published RD-Law 1/2012.228
232.
On 2 February 2012, CNE opened a public consultation, during which it received 477 allegations from the affected companies and sectors. Among them, Protermosolar Association (a solar thermal industry association) presented pleadings proposing regulatory measures to be adopted in the electricity sector in view of the imbalance. Protermosolar requested the Principle of Reasonable Return be applied to other producers.229
233.
On 11 February 2012, the Government published Royal Decree 344/2012, of 10 February, which regulates the basic organic structure of the Ministry of Industry, Energy and Tourism ("RD 344/2012").230
234.
On 7 March 2012, HSH Nordbank sent a letter to ECO 3 waiving its right to claim an Event of Default under the Facilities Agreement in the event ECO 3 failed to meet its obligations as a borrower.231
235.
On 7 March 2012, CNE issued its "Report on the Spanish Energy Sector" 02/2012 ("CNE Report 02/2012").232 CNE's report noted that the tolls paid by Spanish consumers increased 70.7% from 2003 – 2012, leading to the price of the electricity paid by Spanish households and industries being among the highest in the EU.233 Claimants state that the CNE Report 02/2012 recognized that the debt in the electricity system was caused by the lack of convergence between revenue and costs and proposed a combination of amendments and tariff increases that would have resolved the Tariff Deficit issue without the adoption of the "2013 Disputed Measures."234 Respondent disputes this and states that the CNE Report found the over remuneration of the Solar Thermal Sector and the need for reforms to reduce such remuneration to the Plants already installed.235 Respondent states that it implemented the following legislation in response to CNE Report 02/2012: Royal Decree-Law 2/2013, of 1 February, on urgent measures in the electricity sector and the financial sector ("RD-Law 2/2013")236 and Act 15/2012, of 27 December, on Fiscal Measures for Energetic Sustainability ("Act 15/2012").237 CNE proposed extending RD 1565/2010 to all technologies.238 The CNE Report 02/2012 also used the "reasonable return" principle.239
236.
On 31 March 2012, Royal Decree-Law 13/2012, of 30 March, that transposes directives relating to the internal electricity and gas markets, electronic communication-related matters and adopts measures for correcting deviations due to imbalances between costs and revenues in the electricity and gas sectors ("RD-Law 13/2012") was published.240
237.
On 12 April 2012, the Supreme Court rendered its judgment in the case 59/2011, dismissing the appeal against RD 1565/2010 and establishing that a "reasonable rate of return" does not entail the right to receive a fee for each year of the entire lifespan of a facility.241
238.
On 26 April 2012, Ministerial Order IET/843/2012, of 25 April, by the MINETUR, establishing the access tolls applicable as of 1 April 2012 and certain tariffs and premiums applicable to special-regime power generation plants ("MO IET/843/2012"), was published.242 This increased the access tolls payable by the consumer.243
239.
On 27 April 2012, the Government approved the "National Reform Programme 2012."244 Respondent states that this restated its commitment to eliminating the Tariff Deficit.245 Claimants state that the 2012 National Reform Program suggested that economic rights of existing investments would remain safe.246
240.
On 30 April 2012, the Government submitted the 2012 National Reform Program to the Council of the EU.247
241.
On 14 June 2012, the IMF issued a statement on Spain's 2012 National Reform Program, appreciating Spain's commitment to eliminating the tariff deficit in the SES.248
242.
On 10 July 2012, after circulating a draft of the same on 6 July 2012, the Council of the EU issued its recommendations on the 2012 National Reform Program and delivered a Council opinion on the Stability Programme for Spain, 2012-2015.249
243.
On 14 July 2012, Royal Decree-Law 20/2012 of 13 July on measures to guarantee budgetary stability and promotion of competitiveness ("RD-Law 20/2012") was published.250 RD-Law 20/2012 contained cost reduction measures for the system that did not affect the renewable generation facilities. Respondent explains that "RD-Law 20/2012 reduced the spread of the Spanish 10-year bond + 300 base points to 200 base points in the remuneration of the production activity and the power guarantee for ordinary generation facilities of the mainland and island electricity systems."251
244.
On 20 July 2012, because of certain banks needed bailouts, Respondent signed a Memorandum of Understanding ("MoU") with the EU.252 The Parties dispute whether one line of text contained therein, "address the electricity tariff deficit in a comprehensive way", created a binding international commitment to do so.253
245.
Claimants state that, in an interview on 26 August 2012, the former Under-Secretary of State for Energy admitted that the Government decided to follow the "tax route", but could have reached the same result through a direct cut to the Feed-In Model remuneration.254
246.
In September 2012, the Government published "Reforms of the Government of Spain: Determination Against the Crisis", which included energy reform.255
247.
On 14 September 2012, following the approval of the bill of what became Act 15/2012, of 27 December, on Fiscal Measures for Energetic Sustainability ("Act 15/2012"), H.E. Mr. José Manuel Soria López stated that the purpose of Act 15/2012 would be to tackle and avoid further increases in the existing tariff imbalance in the SES.256
248.
On 8 October 2012, Deutsche Bank wrote to Paso Palma on behalf of Lenders.257
249.
On 30 October 2012, there was parliamentary debate on the bill of Act 15/2012 in the Lower House of the Parliament.258
250.
On 28 December 2012, Respondent published Act 15/2012, which created a new measure, the tax on the value of the production of electrical energy ("TVPEE"), levying 7% on all revenues obtained by energy producers, with effect from 1 January 2013.259 Act 15/2012 amended Article 15(2) of Act 54/1997 by its reference to the principle of self-sufficiency.260 Act 15/2012 is supported by the Fifth Additional Provision of Act 17/2012, of 27 December, on the General State Budgets for 2013 ("Act 17/2012"), pursuant to which an amount equivalent to the estimated annual collection deriving from the taxes included in Act 15/2012, including the TVPEE, will be allocated in the General State Budget Acts for each year to finance the electricity system costs related to the promotion of RE.261
251.
On 2 February 2013, Respondent published RD-Law 2/2013,262 which the Parties agree formally entered into force on 2 February 2013 but was given legal effect from 1 January 2013.263 RD-Law 2/2013 changed the FIT's inflation index from the general CPI to an amended CPI pre-tax.264 The Parties dispute whether this has harmed Claimants.265
252.
On 14 February 2013, the Minister of Energy passed Ministerial Order IET/221/2013 ("MO IET/221/2013"), which set out the new value for regulated tariffs to be perceived by RD 661/2007.266
253.
The self-assessment and payment of the TVPEE is made through Form 583, which was approved by Ministerial Order HAP/703/2013 ("MO HAP/703/2013") on 29 April 2013.267
254.
On 7 May 2013, Deutsche Bank sent a letter informing of the continuation of the "Event of Default" and the "Senior Lock-Up Event." Consequently, distributions continued to be blocked in the Senior Lock-Up Account.268
255.
On 4 June 2013, the National Markets and Competition Commission ("CNMC") was created through Act 3/2013.269 Respondent states that the CNMC is the successor entity of the CNE and summarizes the CNMC's functions as follows:

a) To act as an advisory body of the Administration in energy matters by issuing non-binding reports.

b) To participate, through proposals or non-binding reports, in the process of drafting general provisions on energy matters

c) To issue Notices on the development and implementation of Royal Decrees and Orders of the Ministry of Industry and Energy issued on energy matters, provided that these provisions authorise it to do so. These Notices on implementation are mandatory for the subjects affected by the scope thereof, once published in the Official State Gazette.

d) To manage the settlements of the Electrical System. It delivers 14 settlements for each financial year for those entitled to receive amounts from the SES.

e) To supervise and control the electricity sector including, among others:

To supervise the suitability of the legal system of prices and conditions for the end consumers and publishing recommendations to adapt the supply prices to the obligations of public service and consumer protection.

To manage the guarantee of origin system for electricity from renewable sources and high-efficiency cogeneration.

To publish electricity final market prices, based on the information provided by the market operator and system operator.270

256.
Claimants state that the CNMC is only formally independent from the Spanish Government, as the CNMC is governed by the Council of the CNMC and the President of CNMC, which are appointed by the Spanish Government.271
257.
Claimants state that a bill on a new Act 24/2013, of 26 December, on the Electric Power Sector ("Act 24/2013") was prepared by the Spanish Government in July 2013. This bill incorporated 57 of the 498 proposals (all 57 from the same entity) for amendment at the Lower House.272
258.
At a press conference on 12 July 2013, Respondent announced an upcoming new regulatory framework for existing renewable energy installations and announced that a draft new Electricity Power Act and an accompanying Royal Decree had been adopted.273
259.
On 13 July 2013, Royal Decree-Law 9/2013 of 12 July, which sets forth urgent measures to ensure the financial stability of the electricity system ("RD-Law 9/2013") was published.274 Claimants state that RD-Law 9/2013 (1) repealed what remained of RD 661/2007,275 (2) eliminated the Special Regime contained in RD 661/2007, RD 1578/2008 and the RAIPRE, and (3) ended the feed in model regulation in Spain. They state that "RD-L[aw] 9/2013 empowered the Government to 'approve a new legal and economic regime for existing electric energy production facilities using renewable energy sources' and further explain that this New Regime introduced a remuneration system based "on obtaining revenue arising from the participation in the market with an additional remuneration, which, if necessary, will cover those investment costs which an efficient and well-managed company does not recover in the market."276 Respondent states that RD-Law 9/2013 maintains the principle of reasonable rate of return for facilities and provides a new remuneration model that is consistent with community guidelines.277 RD-Law 9/2013 entered into force on 14 July 2013.278
260.
On 16 July 2013, Respondent submitted a draft of Royal Decree 413/2014, of 6 June, regulating the activity of power production from renewable sources of energy, cogeneration and waste ("RD 413/2014") to the CNE.279
261.
On 22 July 2013, Secretary of State for Energy, Mr. Alberto Nadal, requested that Secretary General of IDAE, Mr. Arturo Fernández, organize a public tender procedure to retain at least two independent consulting firms "to produce a study valuing and establishing investment and operational cost standards for electricity generation technologies operating under the special regime in Spain."280 The following day, in light of its recognition of the "significant economic and social repercussions that future regulations will have", the Ministry of Energy provided Special Terms and Conditions and Technical Terms and Conditions for the independent consultants to be recruited by IDAE. Claimants explain that pursuant to these, the independent consultants would be required to prepare a study analyzing the remuneration needs of existing installations to achieve reasonable profitability and to test IDAE's remuneration models for standard facilities.281 Respondent explains that Boston Consulting Group ("BCG") and Ronald Berger ("RB") were hired not to prepare or quantify the parameters on which the implementing remunerative model of RD 413/2014 would be based, but rather to act as "technical assistance" in support of IDAE, which was the expert that would conduct the study of the production cost of the electricity generation technologies under the special regime.282
262.
On 30 July 2013, Protermosolar,283 UNEF,284 APPA285 made declarations to CNE regarding the Royal Decree Proposal regulating the electricity production activity from renewable energy, cogeneration, and waste. AEE made a proposal on 1 August 2013.286
263.
On 4 September 2013, CNE issued "Report 18/2013 on the new Royal Decree on renewable energy production" ("CNE Report 18/2013").287 The Parties agree that this report contained the criticisms made by RE associations during the consulting period and noted that the consultation period had been too short,288 which, Respondent states, led it to re-start the procedures for RD 413/2014. Claimants state that this report demonstrates that Respondent's 2013 regulatory overhaul was unprecedented and caused significant uncertainty.289
264.
On 26 November 2013, the Ministry sent a second draft RD 413/2014 to CNMC.290 Respondent states that Protermosolar viewed the drafts of the Royal Decree.291
265.
On 28 November 2013, IDAE awarded BCG and RB the tender to issue reports on the estimated values for the remuneration parameters to be approved under what would become Ministerial Order IET/1045/2014, of 16 June, approving the remuneration parameters for standard plants applicable to certain facilities that produce power from renewable sources of energy, cogeneration and waste ("MO IET/1045/2014").292
266.
Claimants explain that, in December 2013, the Senate approved 47 proposals for amendment to Act 24/2013, each coming from the same party.293
267.
On 11 December 2013, UNEF,294 Protermosolar,295 and AEE296 provided their comments on the proposed RD 413/2014 to CNMC.297
268.
Claimants state that the consultation period for the second draft of RD 413/2014 ended in mid-December 2013. CNMC issued its report on 17 December 2013, and this report completely surpassed CNE Report 18/2013.298
269.
On 18 December 2013, IDAE entered into contracts with BCG and RB.299
270.
On 27 December 2013, Act 24/2013 was published.300 Two Royal Decrees that followed the Act 24/2013 are Royal Decree 1047/2013, of 27 December, which establishes the methodology for calculating the remuneration for the activity of electricity transport ("RD 1047/2013")301 and Royal Decree 1048/2013, of 27 December, which establishes the methodology for calculating the remuneration for the activity of electricity distribution and other regulations ("RD 1048/2013").302
271.
The Act 24/2013 went into force on 28 December 2013.303
272.
On 31 January 2014, the Government released the first draft of MO IET/1045/2014 (an "Order of Parameters") and submitted it to CNMC for fast-track consultation and invited interested entities to submit allegations.304 Claimants state that the values contained in this draft revealed for the first time the economic parameters of the standard installations.305
273.
On 3 February 2014, BCG delivered a January 2014 report to IDAE at a meeting of the IDAE-BCG Joint Committee. The Parties dispute whether this Report, which Claimants state contained BCG's conclusions and recommendations for IDAE's methodology,306 was a draft or final report.307
274.
On 4 February 2014, RB delivered its report to IDAE at a meeting of the IDAE-RB Joint Committee.308 The Parties dispute whether this was a draft309 or a final Report.310 Respondent states that neither draft report submitted by BCG or RB have been requested or provided in these proceedings.311
275.
On 17/18 and 21 February 2014, respectively, Acciona and Iberdrola Renovables Energia, SA requested that Respondent grant a new public consulting period to present arguments on the draft MO IET/1045/2014.312
276.
By the end of February 2014, when Claimants state that the consultation period ended,313 CNMC received pleadings on the draft MO IET/1045/2014 from the Regional Government of Aragon,314 the Navarra Regional Government,315 Protermosolar,316 UNEF,317 the Government of Extremadura,318 ACIE,319 and AEE.320
277.
On 6 March 2014, RB responded to IDAE's comments on their report of 4 February 2014.321
278.
On 21 March 2014, there was a meeting of the IDAE-BCG Joint Committee, where IDAE identified errors in the BCG Report and BCG corrected them.322
279.
On 4 April 2014, CNMC issued a report where it commented on the draft of MO IET/1045/2014, noting that applying the parameters laid down in the draft would entail an approximate EUR 1,700 million decrease in feed-in remuneration received by the facilities covered by the draft.323 Respondent notes that the CNMC Report also made a positive assessment regarding the different standard facilities contained in the draft.324
280.
On 9 April 2014, BCG provided further written responses to IDAE's comments on its report.325
281.
In late May 2014, the Council of State received pleadings on the draft MO IET/1045/2014 from AEE,326 UNEF,327 Protermosolar,328 and APPA.329
282.
On 11 June 2014, RD 413/2014, which introduced the remuneration system announced by RD-Law 9/2013, went into force.330
283.
On 12 June 2014, the Council of State issued its Opinion on the draft of MO IET/1045/2014.331 Claimants state that this Opinion confirmed that the Ministry of Energy never explained how it calculated the economic parameters included in the Draft and expressed that Respondent's new regulatory framework represented a sudden switch.332 Respondent states that this non-mandatory report is one example of Respondent going above and beyond what was required to ensure that all interested parties have the opportunity to participate.333
284.
On 16 June 2014, Respondent enacted MO IET/1045/2014.334 This established the Government's rate of return on assets for every standard installation of 7,398%.335 Claimants state that, when MO IET/1045/2014 was enacted, they learned they "would have to hand back incentive payments earned since July 2013 exceeding the amounts granted under [MO IET/1045/2014]."336 According to Respondent, the new remuneration model is contained in RD-Law 9/2013, Act 24/2013, and regulations with the force of law that have been developed by RD 413/2014, and MO IET/1045/2014.337
285.
On 28 June 2014, the EC issued a Communication, entitled "Guidelines on State Aid for Environmental Protection and Energy 2014 – 2020."338
286.
On 31 July 2014, BCG submitted its confidential final report dated to IDAE.339 On 31 October 2014, RB issued a document – which Claimants call a version of RB's "Failed Report"340 and Respondent characterizes as a technical document which could not be subjected to public hearing as of February 2014.341 Claimants state that Respondent did not receive the RB report until much later – 11 December 2014.342 Respondent agrees with Claimants that the reports became public after the entry into force of RD 413/2014 and MO IET/1045/2014.343 Respondent notes that their publication is meaningless and has nothing to do with the transparency or consistency of an administration.344 Claimants argue that the reports that post-date are evidence of wrongdoing.345
287.
On 26 February 2015, after IDAE adopted a resolution to terminate the agreement with BCG, IDAE notified BCG of the termination of the contract for nonfulfillment and requested that BCG pay back the amounts already invoiced. BCG requested that IDAE reverse its decision.346
288.
On 11 July 2015, the Ministry of Energy published Royal Decree-Law 9/2015, of 10 July, on urgent measures to reduce fiscal burden by tax payers of [income tax] and other measures of economic content ("RD-Law 9/2015").347 This reduced Access Tolls that consumers pay for the remainder of 2015 and thereby reduced final domestic consumer electricity prices by 0.7% and had an impact of EUR 250 million, representing a 4% decline in the total regulated revenues that the electricity system collected for the same period.348
289.
On 1 April 2017, Royal Decree 359/2017, of 31 March, establishing a call for granting the specific remuneration regime to new facilities producing electricity from renewable energy sources in the peninsular electricity system ("RD 359/2017") was published.349 Respondent states that the success of the auction enabled by RD 359/2017 demonstrates that the situation of the Spanish SES and the Tariff Deficit is no longer a problem for markets.350
290.
On 10 November 2017, the EC rendered its Decision regarding the Support for Electricity generation from renewable energy sources, cogeneration and waste ("EC State Aid Decision (11 November 2017)").351

VI. APPLICABLE LAW

A. THE ROLE OF EU LAW AS "APPLICABLE LAW"

1. Arguments by Claimants

291.
The Tribunal does not have to apply or interpret EU law.352
292.

The Tribunal's jurisdiction arises exclusively from Articles 25 and 26 of the ICSID Convention and Article 26 of the ECT.353 The ECT is the constitutional treaty and, by definition, must prevail over other treaties in the Tribunal's analyses.354 This Tribunal will not be called upon to apply EU law.355

293.
Claimants explain that, since EU law must be treated as a fact and must be analyzed in light of the ECT, "the discussion will be whether the EU's actions and omissions (in the form of EU law provisions) comply with the ECT."356 Hence, the ECT must prevail over EU law as applicable law before an ECT tribunal.357
294.
The ECT's scope is broader than the concept of "energy" in Article 4(2) of the TFEU, and several legal rules contained in the ECT have no equivalent in EU law. Even following the Treaty of Lisbon in 2009, EU Member States retained their competences on energy matters, such that the new treaty could not supersede the ECT. EU treaties subsequent to the ECT did not change the content of the EU Member States' inter se obligations under the ECT, and energy remained a shared competency between the EU and its Member States. The ECT continues to apply to intra-EU disputes after the Treaties of Amsterdam, Nice, and Lisbon, as does the ECHR.358
295.
Respondent incorrectly invokes Article 25 of the ECT to suggest that EU law prevails over the ECT, ignoring Article 16 of the ECT.359 No problems with the ECT's compatibility with EU law exist.360 Any compatibility of regimes between EU law and the ECT would be resolved in the ECT's favor by virtue of Article 16 of the ECT, which gives precedence to the provisions of either the ECT or other international agreement that are most favourable to the investor or investment.361 Even if this Tribunal considered that a "conflict of treaties" could exist (finding that the TFEU and the ECT have the same subject matter), the Tribunal should apply Article 16 of the ECT, which, in the words of the Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain decision "affords precedence of the more favorable investor-protection provisions of Article 26 of the ECT […] over any conflicting provision of the EU treaties."362 Article 25 of the ECT only refers to the non-extension of preferential treatment stemming from economic integration agreements to non-signatories of those agreements. It does not prohibit the application of the ECT to intra-EU disputes or establish that EU law supersedes the investor's protection warranted by the ECT in intra-EU relations.363 The primacy of EU law does not have any application in the context of the ECT, whether on jurisdictional issues or on the merits.364
296.
Every time the EU has wanted treaty provisions to supersede the investor's protection warranted by a treaty, the EU has negotiated and included a disconnection clause in that treaty. The travaux préparatoires show that the ECT does not contain a disconnection clause that would bar its applicability in intra-EU disputes because the European Communities withdrew it.365 Other ECT tribunals involving Respondent have rejected the existence of an alleged implicit disconnection clause in the ECT.366
297.
Neither the Respondent nor the EU can amend the ECT by way of a judgment of the CJEU. Any amendment to the ECT must be made pursuant to the mechanisms set out in the ECT and, subsidiarily, by the Charter Conference envisioned in Article 40 of the ECT. The intra-EU issue is not presently on the Charter Conference agenda.367 Article 46 of the ECT expressly forbids reservations in the context of the ECT, and Article 46 of the VCLT provides that a State may not invoke provision of its internal law regarding competence to conclude treaties to invalidate a treaty unless it was a manifest violation of a rule of fundamental importance.368 No CJEU judgment should be binding on an international tribunal seized under the ECT and the ICSID Convention. The CJEU is no more and no less than the highest court of a Contracting Party, and as such cannot decide whether a tribunal is competent.369
298.
Achmea must be read in its narrow context of (1) dealing only with the compatibility of an intra-EU investment arbitration based on an intra-EU BIT with the TFEU and (2) resolving the intra-EU issue in the context of an annulment proceeding before a court of an EU Member State. It cannot apply to cases where other treaties control,370 and it cannot supersede any international obligations the Contracting States have acquired under a treaty.371 The CJEU expressly recognized in Achmea that an international agreement providing for the establishment of a court responsible for the interpretation of its provisions and whose decisions are binding on institutions, including the CJEU, is not in principle incompatible with EU law.372
299.
In Achmea, the CJEU recognized the capacity of the EU to conclude international agreements like the ECT and the obligation to implement the resulting awards, "provided that the autonomy of the EU and its legal order is respected."373 This exception of the general competence of the EU to conclude agreements must be read restrictively.374
300.
Claimants explain that:

[t]he respect for the autonomy of the EU and its legal order is fully ensured in our case. First, the merits of the dispute should be resolved in accordance with the provisions of the ECT. Second, both Parties admit that there is no conflict between the ECT and EU law. The Tribunal has to decide if the abrogation of Regulatory Framework No. 1 applicable to the PV Plants, operated by the Respondent between 2010 and 2014, is compatible with Articles 10(1) and 13 ECT. All the awards that have analyzed such compatibility (Charanne, Isolux, Eiser and Novenergia ) have found no conflict between the ECT and EU law.375

301.
The EC's presentation on the state of EU law should be disregarded in limine.376 Rather than offer a straightforward explanation of law, the EC has presented a pleading. The EC ignored publicly available awards and neglected to mention that, in RREEF v. Spain, the tribunal expelled the EC twice during proceedings.377 The EC's analysis was selective and omitted (1) that the disconnection clause was expressly excluded from the ECT, (2) the German Supreme Court's and General Wathelet's statements that there is no incompatibility between EU law and investment law, (3) Opinion 2/15's rule that arbitration is consensual.378
302.
After the Hearing, Claimants rejected Respondent's condition that they have relied on EU law, and stated that, as found by other tribunals,379 this dispute presents no question of the validity of EU law or a challenge of EU legislation.380 References to EU Directives and soft law have served as evidence of the attractiveness of Respondent's legislative framework. These establish the policy in favor of RE that was followed at the time of Claimants' investment and was later dismantled.381 The reference to EU law as background cannot convert this ECT case into an EU law dispute.382
303.

This Tribunal is not called upon to rule on State Aid matters.383 A State Aid issue would only arise when the Tribunal renders an Award ordering Respondent to pay damages.384 Such an Award would not impair EC competencies in State Aid, as the EC will exercise those competencies when Respondent notifies the Award to it.385 In the event of disagreement of Respondent or Claimants with the eventual EC Decision on State Aid in relation to the Award, the CJEU will have the final word on this matter of EU internal law.386 Claimants noted that the Novenergia tribunal considered the EC Decision on State Aid to be irrelevant, and stated that the Antin and Masdar tribunals refused to accept evidence on it prior to closure of proceedings. The issue was not considered by the Charanne B.V. and Construction Investments S.A.R.L. v. Kingdom of Spain or Isolux Infrastructure Netherlands, B.V. v. the Kingdom of Spain tribunals.387

304.
The Vattenfall tribunal carries out this interpretation, as required, under international law (in particular, the law of treaties codified under the VCLT). That tribunal did not deny the existence/effectiveness of EU law. To the extent that the EC or the EU Member States saw an incompatibility between EU law and Article 26 ECT at the time of the ECT negotiation, or to the extent that they now see such an incompatibility, it was and is incumbent upon them to take necessary action to remedy that situation. But "[i]t is not for this Tribunal to redraft the Treaty which has been agreed by the Contracting Parties to the ECT."388 Even if there existed any type of conflict between the ECT and the TFEU (quod non, in the eyes of the Vattenfall tribunal since both instruments do not share the "same subject matter"), the conflict would have to be resolved by applying the lex specialis in Article 16 of the ECT that gives preference to the ECT dispute settlement mechanism.389

2. Arguments by Respondent

305.
Since the Tribunal must resolve disputes in line with the ECT and other principles and rules of international law under Article 26(6) of the ECT, the Tribunal must apply EU Law and the ECT under equal conditions.390 Under the principle of primacy, it is EU Law and not the ECT that is the international law that must be applied to resolve this dispute.391
306.
Claimants' invocation of Article 16 of the ECT is based on an objective lack of confidence in the EU judicial system (of which the courts of their country of origin are a part), which is incompatible with EU law.392
307.
Article 16 of the ECT establishes the rules of compatibility between earlier and later treaties with the ECT. These treaties include those governing the EU, which prevail over the ECT in intra-EU relations.393 As recognized in Article 25 of the ECT and the Declaration of the European Communities and their Member States, the Treaties Establishing the European Communities pre-date the ECT and share and exceed the objectives of the ECT. The protection of the ECT is superseded by EU regulations, which post-date the ECT and prevail due to the principle of primacy.394 Any hypothetical conflict is resolved by Article 25 of the ECT, which recognizes that the primacy of EU law in intra-EU relations and prevents an EU right from being extended to nationals of the ECT signatory states that are not members of the EU, through an MFN clause.395 Further, the ECT itself recognizes the primacy of EU law.396 As recognized in Article 25 of the ECT and as elaborated in the CJEU judgment of Costa v. ENEL,397 the principle of primacy means that EU Law must be applied to intra-community relations in preference to or prevailing over other law, displacing any other national or international provision.398 Article 25 of the ECT recognizes that the process of economic integration of the EU is more advanced than the ECT and, ultimately, more favorable to the Investor.399
308.
Respondent states that it "has never upheld the existence of an explicit disconnection clause, since the application of the principle of primacy renders it superfluous."400 Claimants' insistence on the need for such a clause, by analogy to the case of the Convention on Mutual Administrative Assistance in Tax Matters of 1988 of the Council of Europe and the Organisation for Economic Co-operation and Development ("OECD") and the Convention on Insider Trading of 1989, which expressly included disconnection clauses regarding the acquis communautaire, lacks the necessary "identity of reason."401 The relationship that these conventions may have with EU regulations has nothing to do with the relationship between EU Treaties and the ECT.402
309.
The economic and non-discrimination goals of the ECT could best be met by applying EU Competition Law, which require that State Aid (1) be proportional and (2) not have the effect of distorting competition.403 An investor's receipt of subsidies that distort the energy market competition that the ECT seeks to create is incompatible with the ECT and EU Law.404
310.
After the Hearing, Respondent noted that Claimants' witness, Mr. Kofmel, stated that Schwab invested in Spain relying on the EU legal order. The Brattle Report also assumed that the Spanish Supportive Scheme was approved in compliance with EU Directives on RE, which set out the State Aid nature of such schemes. The application and interpretation of EU Law is, thus, necessary for the resolution of this dispute.405
311.
Contrary to Claimants' assessment, the conflict between the ECT and the EU legal order is not limited to the enforcement of an award, nor may it be resolved by the EC's determination of whether payment of an Award would constitute State Aid. This conflict affects the core of the dispute, as (1) the EU legal order must be applied to the present dispute with prevalence over any other international rules, and (2) Claimants are asking for additional State Aid, which can only be granted by the EC.406
312.
The Vattenfall Decision is irrelevant and neither invalidates or affects Respondent's position regarding the Achmea Judgment because the Vattenfall (1) proceeds from a radically flawed premise of international law and (2) did not address the relevance of Achmea.407 The Vattenfall tribunal simply ruled out the application of EU law to the assessment of its own jurisdiction, by means of a sui generis interpretation of Article 26(6) and 42(1) of the ICSID Convention, despite having concurred with the parties and the EC that EU law constituted International Law as defined in Article 38(1) of the Statute of the ICJ. This decision, thus, is internally inconsistent and unsupported by arbitral case law and doctrine.408 The Vattenfall tribunal's interpretation of Article 26(6) of the ECT and Article 42(1) of the ICSID Convention is contrary to the principles of treaty interpretation contained in Article 31 and 32 of the VCLT and to arbitral precedent, including Electrabel S.A. v. Hungary ; Blusun S.A., Jean-Pierre Lecorcier and Michael Stein v. Italian Republic ; AES Summit v. Hungary; Charanne; and Isolux,409 as well as Blusun and AES Summit, which considered that the principles of EU law are relevant as part of the applicable law.410
313.

The Vattenfall tribunal further erred by rejecting the application of EU Law as an interpretative parameter under Article 31(3)(C) of the VCLT and by rejecting a harmonious or systemic interpretation between the ECT and the relevant provisions of EU Law.411Vattenfall provided a partial and decontextualized interpretation of the ECT, in complete isolation from and without reference to EU Law or to the relevant provisions contained therein that apply to each EU Member State.412 This isolated and biased interpretation of the ECT is improper and renders the Vattenfall decision irrelevant to this Tribunal, which must start from the harmonious or systemic interpretation of the ECT and EU Law.413

314.
The Vattenfall decision is further flawed because it considers Article 16 of the ECT to be a conflict rule, when it is nothing more than an interpretive provision. The Vattenfall decision also misinterprets Article 351 of the TFEU.414 As reasoned in Electrabel :

the ECT's historical genesis and its text are such that the ECT should be interpreted, if possible, in harmony with EU law. (…) [F]or three important legal reasons. The first derives from the ECT's genesis: it would have made no sense for the European Union to promote and subscribe to the ECT if that had meant entering into obligations inconsistent with EU law. The second derives from one of the ECT's objectives: it is an instrument clearly intended to combat anti-competitive conduct, which is the same objective as the European Union's objective in combating unlawful State aid. The third derives from the ECT's implicit recognition that decisions by the European Commission are legally binding on all EU Member States which are party to the ECT.415

315.
Respondent pointed out that the Masdar Award was not consistent in its position on the applicability of EU law. While recognizing the tribunal's power and duty to apply EU law, it decided not to apply the Achmea Judgment, which is clearly binding under EU law.416 The Masdar Award's findings regarding the applicability of EU law on the jurisdictional phase was at odds with its decision on the facts, merits, and on quantum, where that tribunal failed to analyze how, according to the EC Decision on State Aid, EU law shapes the expectations of an investor.417 Likewise, the Novenergia tribunal recognized that (1) the Spanish regulatory framework comes from EU Law, (2) it should comply with EU Law on State Aid, and (3) EU Law's relevance for the resolution of the dispute, as international law, under Article 26(6) of the ECT. Nonetheless, that Tribunal failed to apply EU Law because it reasoned that none of the claimant's claims were submitted based on EU law and failed to reference EU Law on the merits.418 Respondent explains that "the applicable law for the resolution of the case is determined by Article 26(6) of the ECT, which undeniable [sic] comprises the EU Law, and the same should be applied iuria novit curia by the Arbitral Tribunal, even if the parties do not invoke it. That's why, Novenergia's findings on jurisdiction and the merits are flawed, since it does not apply the international rules imposed by the ECT, i.e., the EU Law."419

3. Statements by the European Commission

316.
When both the EU and its Member States become parties to a multilateral agreement, it is the EU's legal order that informs the latter's behavior and actions and, therefore, constitutes a "relevant rule of international law applicable in the relations between the parties" in the sense of Article 31(3)(c) of the VCLT.420
317.
EU law provides a complete set of substantive and procedural rules for investment protection, and the Internal Market rules govern and protect the life-cycle of an investment.421 The intra-EU application of the ECT would create the risk of a substantive conflict between EU law on energy and investment protection and the rules of the ECT.422
318.
Based on Articles 30(4)(a) or 41(1)(b) of the VCLT or Article 351 of the TFEU, the EU Treaties prevail over the ECT:423

Article 30(3) VCLT provides that when all the parties to the earlier treaty are parties also to the later treaty but the earlier treaty is not terminated or suspended in operation under Article 59 VCLT, the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty. Article 30(4) and (5) of the VCLT specify that when the parties to the later treaty do not include all the parties to the earlier one, as between States parties to both treaties the same rule applies, provided that the provisions of Article 41 VCLT are respected.424

319.
Here, the ECT and the EU Treaties relate to the same subject matter: energy. If one assumes that the provisions on investment protection in Chapter III and Article 26 of the ECT have created inter se obligations between EU Member States, quod non, the EU Member States would be party to successive treaties that relate to the same subject matter.425 Here, the ECT is the earlier Treaty, preceding Treaty of Accession of Malta to the EU and the Treaty of Lisbon.426 Under Article 30(4)(a) of the VCLT, the ECT only applies to the extent that its provisions are compatible with those later treaties.427 The provisions of the ECT on investment protection (Chapter III) and dispute settlement (Article 26) are not compatible with EU law and are, therefore, not applicable.428 The same result is reached by application of Article 351(2) of the TFEU (formerly Article 307 of the Treaty Establishing the European Community, "TEC"), pursuant to which the Member State must apply all appropriate means to remove any incompatibility with EU law arising from prior international agreements.429Pacta sunt servanda does not apply to treaties concluded between EU Member States.430
320.
The inter se obligations between EU Member States would have been superseded on the basis of Article 41(1)(b) of the VCLT, pursuant to which a treaty can be amended by a later treaty if it does not (1) affect the enjoyment by other parties of their rights under the treaty or performance of their obligations and (2) relate to a provision, derogation from which is incompatible with the effective execution of the object and purpose of the treaty. Here, by the Accession Treaty of Malta to the EU and the Treaty of Lisbon, the investment protection rules of EU law were reaffirmed. This treaty could be interpreted as an amendment pursuant to Article 41(1)(b) VCLT.431 The suppression of inter se obligations between EU Member States only concerns those EU Member States. In the case of investor-State arbitration such as the one foreseen in Article 26 of the ECT, this is compatible with the effective execution of the object and purpose of the ECT as a whole: the possibility of investor-State arbitration between investors from non-EU Member States and either the EU or EU Member States remains untouched.432
321.
The ECT lacks an explicit disconnection clause, but this is not material for the interpretation of the ECT. EU Member States are presumed to be aware of the rules governing the distribution of competencies in the supranational organization they have created. Disconnection clauses have traditionally been used in international treaties where the EU could not become a Contracting Party itself. Such a clause serves as a "reminder" of the EU's existence. The ECT contains detailed provisions by means of which Contracting Parties have been made aware of the special features of the legal order of the European Communities.433

4. The Tribunal

322.
Article 26(6) of the ECT provides: "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."
323.
The Parties agree that, pursuant to that provision, the Tribunal shall decide this dispute in accordance with the ECT and applicable rules and principles of international law.434 Articles 31 – 33 of the VCLT reflect the relevant rules of interpretation of international treaties under customary international law, and these are applicable to the construction of the ECT and the ICSID Convention.435
324.
The Parties also agree that the Tribunal is not bound by Spanish domestic law, which the Tribunal shall consider as fact.436
325.
While the Parties agree that EU law is part of the domestic law of any Member State, the Respondent also contends that EU Law is also applicable international law.437
327.
As the Parties agree, Article 26(6) of the ECT is the provision ruling on the substantive law applicable for this Tribunal. Even if, as Respondent argues, in addition to the ECT itself, this provision would make EU law applicable as part of the "applicable rules and principles of international law", in the view of the Tribunal it is clear that EU law does not prevail over any provisions of the ECT relevant in the present arbitration. Article 16(2) of the ECT expressly provides:

Article 16 Relation to Other Agreements

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

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

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

328.
Subsection (1) of this provision is not relevant for the present arbitration, as the Claims raised by Claimants rely only on and call for application only of the ECT and not for any application of EU law. However, subsection (2) makes it expressly clear that Parts III and IV of the ECT – which are precisely those dealing with Investment Promotion and Protection and Dispute Settlement relevant for this arbitration – remain fully applicable.
330.
In view of the above considerations, the Tribunal concludes that all substantive provisions of the ECT remain fully applicable and EU law is not part of the applicable substantive law in this case.
331.
Whether and, if so, to which extent EU law has to be taken into account for determining the Tribunal's jurisdiction will be discussed below.

VII. JURISDICTION OF THE TRIBUNAL

332.
Claimants state that they are entitled to submit this dispute to arbitration before ICSID, because (1) Claimants are investors under the ECT, (2) Respondent is another Contracting Party to the ECT, (3) the dispute refers to an Investment of the former in the Area of the latter, (4) both Parties have consented to submit the dispute to international arbitration and have not submitted this dispute to another settlement procedure,439 and (5) the Parties have complied with the 3-month negotiating period, during which no response was received from Respondent.440 Claimants met the three-month "Cooling-Off" period of Article 26(2) of the ECT by (1) OperaFund sending the appropriate trigger letters to the competent Spanish authorities on 26 January 2015; (2) Schwab sending the appropriate trigger letters to the competent Spanish authorities on 31 March 2015, and (3) by Claimants submitting an additional triggering letter specifically related to RD 1565/2010, RD-Law 14/2010 and Act 2/2011 ad cautelam on 11 May 2016.441
333.
Claimants submit that the Tribunal has jurisdiction ratione materiae over this case because Claimants' investments include, without limitation "shares in several limited liability companies, participative loans granted to the SPVs owning and running the PV Installations, and other investments having economic value in the SPVs."442 Claimants' investments are associated with "an Economic Activity in the Energy Sector."443
334.
Finally, Claimants state that the jurisdictional requirements of the ICSID Convention have been met, as (1) Claimants are nationals of Contracting States (Article 25(2) ICSID); and Respondent is another Contracting State to the ICSID Convention.444
335.
Respondent accepts that Claimants made investments between July 2008 and July 2009, though no decisions from Claimants have been provided.445 Respondent has only objected to Claimants' jurisdictional arguments insofar as they relate to (1) Respondent and Malta's membership in the EU (a partial objection related only to Claimant OperaFund) and (2) arbitration over matters related to the TVPEE (as not being covered by Part III of the ECT).

A. JURISDICTIONAL OBJECTION 1: THE INTRA-EU OBJECTIONS / WHETHER RESPONDENT HAS CONSENTED TO THE ARBITRATION OF INTRA-EU DISPUTES

1. Respondent's Arguments

336.
The Tribunal should declare that it lacks jurisdiction over the present intra-EU dispute brought by a Maltese investor (OperaFund) against Respondent because (1) access to arbitration under Article 26(1) of the ECT is only available in a dispute between a Contracting Party and an investor of a different Contracting Party – a requirement not satisfied here – and (2) the valid interpretation of the arbitration clause of Article 26 of the ECT excludes arbitration between investors from the EU and Member States.446
337.
First, the dual nationality requirement of Article 26(1) of the ECT, combined with the European nationality recognized under Article 20 of the TFEU, excludes OperaFund's dispute from the Tribunal's jurisdiction because OperaFund has dual citizenship: Maltese and European. OperaFund is a European investor investing in Europe, and both the Kingdom of Spain and Malta belong to the EU, which is also a Contracting Party to the ECT. An EU Member State cannot be "another contracting party" in relation to another Member State under Article 26 of the ECT.447
338.
Under Article 25(2) of the ICSID Convention,448 dual nationals that have the nationality of the Respondent State cannot seek ICSID arbitration, and this is the case with OperaFund. While Article 25(2) of the ICSID Convention refers to natural persons, it must also be applied to cases where legal entities have dual nationality, as occurs in the case of national legal entities of the Member States of the EU. Accordingly, the Tribunal lacks jurisdiction over this matter, as Claimant OperaFund meets neither the dual nationality requirement of Article 26 of the ECT nor Article 25(2) of the ICSID Convention.449
339.
Second, analyzing Article 26 of the ECT in light of EU law, one also sees that there is no valid offer to arbitrate because EU Member States are not competent to bind themselves to one another under Part III of the ECT.450 By acceding to the EU, the Member States transferred the competency for treatment of EU investors and investments within the EU to the EC. This prevents – and indeed has prevented – Member States from entering into investment treaties that establish protections that overlap or differ from the rights to which any EU citizen is entitled under EU law.451
340.
Within the EU, the only "foreign investors" are those who come from non-Member States.452 This reality is contained in the ECT itself: Article 1(2) defines "Contracting Party" as "a state or Regional Economic Integration Organisation ["REIO"], which has consented to be bound by this Treaty and for which the Treaty is in force."453 In addition, Article 1(3) of the ECT's definition of REIO as one "constituted by states to which they have transferred competence over certain matters a number of which are governed by this Treaty" expressly recognizes that there are matters governed by the ECT that should be negotiated by the REIO – here, the EU – because its Member States do not have the competence over them.454 This is reflected in and confirmed by the Article 1(1) definition of "territory" of the REIO,455 and the voting rights contained in Article 36(7), which give the EU a number of votes equal to its number of Member States, and preclude the EU and its Member States from voting simultaneously: each may only vote within its scope of competencies.456
341.
Interpreted in accordance with its context and purpose of speeding the recovery of Eastern Europe after the fall of the Berlin Wall though cooperation in the energy sector, Article 26 of the ECT provides no grounds for submitting disputes between an intra-EU investor and an EU Member State to arbitration.457 Respondent's position is confirmed by the CJEU's 6 March 2018 judgment in Achmea, which examined whether investment arbitration proceedings are compatible with EU law:458

Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States…, 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.459

342.
Thereby, the CJEU declared that investor-state arbitration is incompatible with (1) essential values of the EU such as the autonomy and primacy of its legal order, distribution of powers, mutual trust between Member States (Article 2 TEU) and (2) the duty of sincere cooperation (Article 4 TEU). Both (1) and (2) are protected and guaranteed by the Member States' obligation to submit disputes to the European court system (Article 344 TFEU) and the obligation of the legal authorities to raise preliminary judgments (Article 267 TFEU), which guarantee the uniform application of EU law.460
343.
Applying the Achmea Judgment, this Tribunal should declare its lack of jurisdiction over the present dispute. First, this Tribunal is called upon to interpret and apply EU Law, as Claimants' witnesses invested relying on the EU Legal Order and Brattle assumed that the Spanish Supportive Scheme complied with EU Law.461 Second, it is not in dispute that intra-EU investment arbitration tribunals are not part of the judicial system and that, third, there is no possibility of complete judicial control by a national judge at the annulment or recognition stages.462 Fourth, agreements concluded by Member States need to safeguard the principle of autonomy of EU law and, as conceded by Claimants' counsel, this Tribunal is not an EU judicial body and, therefore, cannot safeguard the autonomy of EU Law.463 The Tribunal should, therefore, declare that it lacks jurisdiction over this dispute.464
344.
Arbitration within the context of the ECT is only possible between a non-EU investor and an EU Member State or between an EU investor and a non-EU Member State because to do otherwise violates the principles of autonomy and primacy.465 Although arbitral tribunals have ruled otherwise,466 paragraph 58 of the Achmea Judgment explains that international agreements that provide for arbitration are not "in principle" incompatible with EU legislation, but rather must "provid[e] that the autonomy of the EU and its legal order is [sic] respected."467 Thus, in cases where the autonomy and legal order of the EU are not guaranteed, those treaties would be incompatible with EU regulations.468 A regime that removes purely intra -EU disputes from the jurisdiction of courts of the Member States would not be compatible with EU law because such disputes have only an internal dimension, governed by European legislation, which prevails over any other international law.469
345.
The judicial system of the EU, which per Article 344 of the TFEU has a monopoly on the interpretation of EU law, guarantees the freedoms that support the Internal Market. No matter relating to the Internal Market may be submitted to arbitration.470 The institutional and judicial framework of the EU provides the appropriate judicial appeals and actions when the rights of investors are breached: the investor may claim damages and report any violation of EU law. When a national court fails to fulfill its obligations under EU law, the injured party has grounds to file a claim for damages from the Member State. This system to promote and protect investments requires that no distinction is made within the EU between investors from one Member State or another. Only foreign investors may seek arbitration to defends rights granted under Article 10(1) of the ECT.471 Article 26 of the ECT does not provide a preferential ordering to its methods of dispute resolution, and Claimants have not explained how arbitration is more favorable for investors or investments. Under Article 26 of the ECT, the Parties could have the possibility of recourse to international conciliation or to the ordinary or Administrative Tribunals of the Contracting Party involved in the dispute.472
346.
With regard to State Aid, Respondent has argued that Article 10(8) of the ECT excludes "subsidies" from its scope of application, subjecting them to a supplementary treaty that has not yet been approved.473 As an EU Member State, Respondent undertook to achieve the aims of the Directives handed down by the EU, and these directives enabled Spain to incentivize the investment by means of the concession of State Aid, as permitted by the EU within limitations.474 OperaFund's investment was made within the framework of the Internal Market in Energy of the EU, which is preferential to the protection conferred by the ECT or any BIT.475 Claimants are requesting payment of compensation deriving from a subsidy system that the EC has classified as State Aid.476 State Aid is the exclusive competence of the EC and is of essential character to the four fundamental freedoms supporting the Internal Market. Any decision made in relation to Claimants' alleged right to receive a particular amount of aid will affect an essential pillar of the EU – competition – and will infringe upon the EC's competency in this area.477 Here, the autonomy is EU law, its primacy, and the distribution of powers can only be guaranteed if this Tribunal recognizes the sole and exclusive competence of the CJEU.478
349.
In its later Submission on the Member State Declarations on Achmea and the Opinion 01/17 of AG Bot, Respondent noted that all Member States acknowledge the EC's position as to the incompatibility with EU law of investor-State arbitration between a Member State and an investor from another Member State. EU law offers a comprehensive and effective legal framework to intra-EU investors when they invest in another Member State, a regulation that precludes any arbitration on such matters subtracting them from the EU judicial system.485
350.
The Declarations are significant and relevant to the Tribunal's interpretation of the ECT because EU law is among the "applicable rules and principles of international law" specified in Article 26(6) of the ECT, to be applied in this case.486 The 22-Member State Declaration resolves the conflict between EU law and the ECT because the ECT must be interpreted in a way that accords with EU law. Where that is not possible, that provision of the ECT is inapplicable. Article 26 of the ECT cannot be considered a valid consent to arbitration in the case of intra-EU disputes for it would be incompatible with the autonomy and primacy of EU law, and the Declaration reinforces the need to solve any potential conflict in favor of EU law.487
351.
The Declaration issued by 5 EU Member States, including Malta, does not contradict this.488 AG Bot's Opinion concluded that the CJEU should declare the compatibility between CETA and the EU Treaties based on four elements: "a) the context of the agreement; b) the possible impact on the autonomy of EU Law of a dispute settlement mechanism as the one designed in the agreement; c) the effects on the principle of equal treatment; and d) finally, the compatibility of the mechanism with the right of access to an independent and impartial Tribunal."489 From this, one sees that all agreements concluded by the EU must be compatible with constitutional principles stemming therefrom, including the autonomy of the EU legal order.490 The test of whether the exclusive powers of the EU judicial system are ensured is by reference to either by the possibility of the arbitration tribunal to refer to the CJEU or rather by the possibility of control by the EU judicial system in the enforcement and/or annulment stages. With these in mind, the basic principles of the EU, meaning autonomy, loyal cooperation and mutual trust, are respected by the international agreement, by ensuring the exclusive powers of the EU judicial system and specifically the CJEU.491

2. Claimants' Arguments

352.
Respondent's intra-EU objection, which Claimants note is made for "the sole purpose [of] […] so-called 'institutional loyalty' towards the Commission", is without merit and must be dismissed.492 Respondent maintains the intra-EU objection despite the jurisprudence constante (and cohérente) which has repeatedly dismissed the objection in ECT and BIT cases.493 This jurisprudence constante makes the ECT and EU law perfectly compatible and gives tribunals jurisdiction under Article 26 of the ECT over intra-EU investment disputes.494 In Electrabel, the tribunal agreed that the ECT applies to intra-EU disputes.495 The Hearing confirmed Claimants' position, as well as that of the Masdar and Antin awards.496
353.
Since 2014, tribunals in Spanish ECT cases have analyzed and dismissed the intra-EU objection and none of these awards have been challenged by Respondent.497 The same is true in at least four other intra-EU ECT cases.498 These cases have not "ignored" the principle of primacy EU law.499 While there is no doctrine of precedent in investment arbitration, these decisions are compelling since they concern circumstances that are identical to the case at hand.500 In particular, (1) the ECT and EU law do not cover the same subject matter and there is no inconsistency or incompatibility between them, (2) the CJEU has no interpretative monopoly preventing tribunals from exercising jurisdiction over cases that would require them to apply EU law, and (3) EU law does not prevent investor-state arbitration of intra-EU disputes.501 Regardless, however, it is well settled that an arbitral tribunal can and must apply EU law if the circumstances so require it.502 The Achmea Judgment does not change the ECT landscape.503 There is no provision in either the EU Treaties, the European Energy Charter, or the ECT that proscribe the settlement of intra-EU disputes by investor-State arbitration.504 The EC's exercise in distinguishing an investment arbitration from a commercial arbitration is one of futility: a non-EU organ (a tribunal) can apply EU law to a legal relationship (public or private).505 The Tribunal has jurisdiction to hear a claim pursued by a Maltese investor against Spain under the ECT.506
354.
No CJEU judgment should be binding on an international tribunal seized under the ECT and the ICSID Convention. The CJEU is no more and no less than the highest court of a Contracting Party, and as such cannot decide whether a tribunal is competent.507 Thus, the validity of the arbitration agreement must be analyzed through the application of Article 26 of the ECT and in light of Article 25 of the ICSID Convention, without consideration of the CJEU's views on the compatibility of the arbitration agreement with the TFEU. Consent to arbitration cannot depend on the preliminary question mechanism set out in Article 267 of the TFEU, i.e. on the unilateral interpretation of the highest court of a legal sub-system.508 A judge in an EU Member State where enforcement is sought can request a preliminary ruling from the CJEU if they consider necessary.509 Even if Respondent were correct in considering the superior protection of EU law (quod non), the ECT does not exclude intra-EU disputes from its scope.510
355.
Articles 1 and 26 of the ECT, together with Articles 25 and 26 of the ICSID Convention, provide the basis for jurisdiction of the Tribunal and allow nationals of the EU Members States to bring a claim against another EU Member State under the ECT.511 Pursuant to these, an irrevocable and unconditional consent to arbitrate has been perfected between Claimants and Spain. Claimants accepted Respondent's offer to arbitrate under Article 26(3) of the ECT prior to the Achmea Judgment, and Article 26(3)(a) of the ECT and Article 25(1) of the ICSID Convention proscribe the unilateral withdrawal of consent once given, which is provided unconditionally.512 The fact that one of the Claimants is a national of an EU Member State that is a Contracting Party other than the Respondent, and that Malta and Respondent are EU Member States does not change anything: the ECT has intra-EU effects.513
356.
The term "Area" in Article 26 of the ECT, per Article 1(2) and (10) of the ECT, refers to the territory of a particular respondent - either an EU Member State or the EU.514 Contrary to the EC's view, Article 1(10) ECT has effet utile : if the EU makes a decision on energy cases within the scope of its competences that is contrary to the ECT, the EU will be held responsible under international law.515
357.
The concept of European nationality as intended by Respondent does not exist. Respondent's invocation of the "Citizenship of the Union" as an equivalent of dual nationality is an attempt to assimilate terms under to different concepts: the concept of nationality and the concept of citizenship of the EU. Citizenship of the EU is not equivalent to the concept of nationality. EU citizenship is distinguished from nationality and, per Articles 20 - 25 of the TFEU, applies only to natural persons and includes five limited political rights.516
358.
There is no dispute that both the EU and the Respondent are parties to the ECT. Article 216(2) of the TFEU sets for that "[a]greements concluded by the Union are binding upon the institutions of the Union and on its Member States."517 EU Member States are separate subjects of international law, capable of entering into international obligations between them under international conventions like the ECT.518 Both Spain and Malta were competent to enter into the ECT, which as a "mixed treaty", that covers matters for which the EU and the Member States share competencies.519 As confirmed by the Tribunal in Eiser v. Spain, the definition of REIO provided in Article 1(3) of the ECT and its voting rights provided in Article 36(7) do not affect this.520 The CJEU confirmed in its Opinion 2/15 concerning the Free Trade Agreement between the EU and the Republic of Singapore that there are shared competences of the EU Member States at an international level.521 There is no violation of Article 3(2) of the TFEU: the rules of competence of the EU and its Member States do not mean that intra-EU disputes are legally impossible.522 The ECT's scope of application is broader than the concept of energy established in Article 4(2) of the TFEU. The Treaty of Lisbon's entry into force in 2009 did not change this, as Member States still retain their competences on energy matters.523 EU treaties subsequent to the ECT did not change the content of EU Member State inter se obligations under the ECT. The ECT continues to apply to intra-EU disputes after the Treaties of Amsterdam, Nice and Lisbon, as does the ECHR.524
359.
The Respondent's invocation of EU law does not affect the jurisdiction of the Tribunal. Respondent's argument that the incentives granted by Spain constituted State Aid has no relevance to the Tribunal's jurisdiction or for the merits of this dispute, though it could later have relevance for enforcement.525 The question before the Tribunal is whether Respondent breached its duty by Respondent to accord fair and equitable treatment to Claimants as foreign investors.526
360.
The ECT gives a specific and much appreciated right to investors: access to an international arbitral tribunal to solve a dispute with the host State.527 Since the ECT provides for investor-state arbitration in intra-EU disputes, but EU law does not, the Tribunal must rule in favor of the ECT's provisions, as they are more favorable to investors and offer an additional avenue for the settlement of disputes.528 Article 344 TFEU only applies in inter-State disputes, and the EC's interpretation of that provision is contrary to its plain meaning.529 In addition, Respondent's doctrinal citations are misleading, as Prof. Kleinheisterkamp and other commentators unequivocally support the resolution of intra-EU disputes under the ECT.530
361.
In response to the EC's submissions, Claimants note that the EC ignored that, in Eastern Sugar v. Czech Republic, Ms. Stier underlined that the EC did not deny jurisdiction for claims under Dutch-Czech Republic BIT.531 In Electrabel, the EC submitted that other measures under the ECT "fall within the Respondent's (Hungary) responsibility under the ECT, being 'neither ordered nor determined in substance by the European Commission or Community State aid law.'"532 The EC has made no reference to its amicus brief in Electrabel,533 and, as a matter of international law, the EC is estopped from departing from its previous position on the ECT's application to intra-EU disputes.534 The EC's analysis in paras 25 – 39 is superfluous and refers to the merits, rather than jurisdiction. The EC is not entitled to request that the Tribunal suspend proceedings, nor is the Tribunal empowered to accept it.535
362.
After the Hearing, Claimants confirmed that the Isolux and Charanne tribunals rejected Spain's intra-EU objection,536 as did the Antin, Masdar, Novenergia, and Eiser tribunals.537
363.
The Vattenfall Decision has also affirmed the jurisdiction of an ECT tribunal in an intra-EU context.538Vattenfall makes clear that a "Contracting Party" to the ECT includes both EU Member States and Non-EU Member States without distinction or carve-out from the ECT's dispute settlement provisions concerning their applicability to EU Member States inter se.539
364.
In response to AG Bot's Opinion 01/17 and the Member State Declarations, Claimants pointed out that the applicability of the reasoning of the Achmea judgment to matters arising under the ECT is far from agreed by the EU Member States under the 2019 Declarations. Thus, while 22 Member States believe that the ECT does not apply to intra-EU disputes, 5 others – including the Republic of Malta, read Achmea restrictively, stating that it only concerns the application of EU Law in relation to intra-EU BITs. Hungary, making its own declaration, believes that Achmea is silent on the investor-state dispute resolution clause in the ECT and that it does not concern any pending or prospective arbitration proceedings initiated under the ECT. It is obvious that, for Switzerland, the intra-EU issue is res inter alios acta.540
365.
As a matter of international law, the EU-22 Declaration does not reflect any consensus among EU Member States and cannot unilaterally modify the application of the ECT to intra-EU disputes.541 Likewise, the Opinion of AG Bot is not binding upon the CJEU, nor is the Tribunal bound by it. It concerns a different treaty. Unlike the CETA, the ECT was established in 1994 when EU Member States, Third States, and the EU established a special set of rules to deal with investments in the energy sector.542 The CETA and the ECT do not share the same subject matter. Even if they did, however, any conflict should be resolved by the Tribunal in the ECT's favor, according to Article 16 of the ECT. Undoubtedly, having access to a neutral, independent tribunal, as per the ECT, is more favourable than not having such an option, as under the EU Treaties.543
366.
While AG Bot's opinion is of little importance, the conclusion that "the domestic law of each Party, of which EU law forms part in the case of the Member States, can be taken into account by the Tribunal only as a matter of fact" is noteworthy.544 AG Bot also correctly identified that the ECT falls within the exception provided for by paragraph 57 of the Achmea judgment.545
367.
Finally, neither the EU-22 Declaration nor the CJEU can override the impossibility for Respondent to withdraw its consent pursuant to the second sentence of Article 25(1) of the ICSID Convention.546 It is undisputed that the Claimants consented to arbitration on July 31, 2015 when they accepted the Respondent's offer of Article 26 ECT with their filing of the request for arbitration.547 Thus, Claimants respectfully request that the Tribunal affirm its jurisdiction over the totality of the case and the Claimants and, consequently, to dismiss the Respondent's intra-EU objection.548

3. The European Commission

368.
Insofar as OperaFund is concerned, this dispute is an intra-EU dispute between an investor from one EU Member State and the Kingdom of Spain, based on an international treaty – which is part of EU law – covering a field that is regulated by EU law. The Parties agree that the contested measures transpose the First and Second Directive on Renewable Energy of 2001 and 2009 into Spanish law. The Contested Measures constitute State Aid in the sense of Article 107(1) of the TFEU.549
369.
The EC suggested three options for the resolution of the present dispute. The EC's proposal to suspend proceedings pending the ruling in Achmea is now moot. Next, the Tribunal could declare that it lacks the competence to hear the case. Finally, the EC urged the Tribunal to suspend proceedings until the EC has taken a view on Spain's notification regarding Spain's national RE support scheme, which was notified to the EC on the basis of Article 108(3) of the TFEU as constituting State Aid pursuant to Article 108(1) TFEU.550
370.
The published awards concerning intra-EU BITs that give the ECT intra-EU effect proceed from the faulty premise that EU Member States remain free to conclude international agreements inter se because the internal competence for energy in the internal market is qualified as a "shared competence" in Article 4(2)(a) of the TFEU.551 This is based on an incorrect understanding of Article 2(2) of the TFEU, which only regulates to what extent an EU Member State may legislate within its own territory, but does not define the extent to which an EU Member State may enter into international agreements, including with other Member States.552 The CJEU addressed this issue in Pringle, finding that, under Article 3(2) of the TFEU "Member States are prohibited from concluding an agreement between themselves which might affect common rules or alter their scope."553 Thus, as a result of the exclusive external competence of the EU for RE, any international agreement between EU Member States inter se is incompatible with EU Law.554
371.
As RE falls within the external exclusive competence of the EU, the EU – and not its Member States – are bound under international law by the ECT. This has the consequence that (1) the EU is the internationally responsible party for a breach of provisions on investment protection and promotion and (2) Article 26 of the ECT does not allow an EU investor to initiate arbitration proceedings against a Member State because the dispute would be one between the EU and an EU investor from the EU.555 The EC also argues that EU investors are unable to bring claims against the EU:

[b]y defining area with reference to the agreement establishing the REIO, the ECT wants to make it clear that EU investors cannot bring claims against the Union. That aim would, however, be put into jeopardy if one were to allow EU investors to bring a claim against an EU Member State: Indeed, EU law is usually implemented by actions of the Member States, as the Union lacks - with very narrow exceptions mainly in the area of competition law - enforcement tools. EU investors, therefore, in most cases, will find national acts of execution of Union law, which they could challenge by bringing a claim against the EU Member State executing Union law, rather than against the Union itself. This can well be illustrated in the present case, where the measure contested by the Claimant constitutes the transposition of an obligation flowing from the First and Second Renewable Energy Directives.556

372.
Article 26 of the ECT must be interpreted on the basis of Article 31 of the VCLT "in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose" and with the assistance of "the preparatory work of the treaty and the circumstances of its conclusion"557 Such interpretation shows that, rather than create inter se relationships between EU Member States, the ECT created international obligations only between third countries and the competent subject of international law in the area of EU law – either the EU, or the Member States (for areas of Member State competence). This is analogous to the situation of the WTO agreement.558 Article 1(2) of the ECT supports this, defining "Contracting Party" as either the State or the REIO, defined in Article 1(3). A Contracting Party is bound only by parts of the ECT – i.e., the parts for which it enjoys international competence. The fact that the EU and the Member States only vote on matters where each has competence, with the EU voting with the number of votes equal to the number of its Member States, supports this. The term "Area" defined in Article 1(10) further recognized the relationships between the Contracting Parties that are members of the REIO (the EU).559 While other tribunals have considered that the term "Area" must be defined depending on who the respondent is, this view is not convincing because (1) it deprives part of Article 1(10) of its effet utile, ignoring the text "under the provisions contained in the agreement establishing that Organization" and (2) it disregards the importance that the ECT placed in Article 1(3) on the transfer of competence from the EU Member States to the EU.560 The term "another" contained in Article 26 of the ECT also excludes disputes brought by EU investors against a Member State.561 The interpretation proposed by the EC avoids "respondent shopping", which is not allowed under the ECT, as confirmed by the statement submitted by the EU to the Secretariat of the ECT pursuant to Article 26(3)(ii) of the ECT.562
373.
A systemic or harmonious interpretation of the ECT discussed at length in Electrabel leads to the conclusion that there is no valid offer for arbitration under EU law. If the Tribunal agrees that EU law constitutes "relevant rules of international law applicable to the relations between the parties", then an interpretation of Article 26 of the ECT on the basis of Article 31(3)(c) of the VCLT leads to the conclusion that there is no valid offer to arbitrate from Spain to Maltese investors. Due to a lack of valid consent, the Tribunal would not be competent to hear the case.563
374.
The interpretation based on the context, object and purpose of the ECT shows that the EU Member States did not intend to create inter se obligations between them. The historical process of creating the European Energy Charter and the ECT (as the translation of the European Energy Charter – a policy document – into international law), shows that the ECT aimed to create an international framework for cooperation in the energy sector between the European Communities, Russia, the Commonwealth of Independent States ("CIS"), and the countries of Central and Eastern Europe. The ECT was perceived as part of the European Communities' external – not internal - energy policy.564 The EC argues that, at the time, "the ECT provisions on investment protection fell into the Union's undisputed exclusive external competence under the common Commercial Policy."565
375.
Intra-EU investor-state dispute settlement is not compatible with EU law and this renders the offers for intra-EU investment arbitration in intra-EU BIT and ECT cases invalid. The offer by Spain to investors from Malta ceased as of the date of Malta's accession to the EU, on 1 May 2004.566 Said offer would violate Article 3(2) of the TFEU, because the EU has exclusive external competence in the field of renewable energy at least since 2001, as the Court held in Green Network.567
376.
The submission of intra-EU disputes to treaty-based investor-State arbitration under the ECT violates Articles 267 and 344 TFEU and the principles of unity, autonomy and effectiveness.568 Through the preliminary ruling mechanism established by Article 267 of the TFEU, the EU can ensure that, in all circumstances, the law has the same effect in all Member States and avoid divergences in interpretation. The dispute settlement system is exhaustive for intra-EU disputes and, if any Member State creates such an additional mechanism, those States are in violation of Article 19 of the TEU and 344 of the TFEU.569 Article 26 of the ECT creates a new, separate dispute settlement system, for subjects that would otherwise be covered by the exhaustive dispute settlement procedures envisaged in Article 258 – 260, 263, and 267 of the TFEU.570 By submitting this dispute to arbitration, the Member States violate Article 267 of the TFEU because this system does not have the possibility or obligation to refer preliminary questions to the CJEU pursuant to Article 267 of the TFEU.571 Only one Arbitral Tribunal (EURAM v. Slovakia) has considered this problem, but incorrectly transposed case law from the field of commercial arbitration to the field of investment arbitration and did not address the underlying problem – one which is not solved b