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Award

Table of Abbreviations

Achmea judgement Judgement of the Court of Justice of the European Union in Case C-284/16, Slovak Republic v. Achmea BV, EU:C:2018:158, issued on 6 March 2018 (CL-116)
AEEG Autorita per l’energia elettrica e il gas (Authority for the Electric Energy and Gas)
Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings 2006
ASR Articles on Responsibility of States for Internationally Wrongful Acts, Annex to General Assembly Resolution 56/83 dated 12 December 2001
C-[#] Claimant’s Exhibit
CJEU Court of Justice of the European Union
Cl. Achmea Comments Claimant’s Comments on the Achmea Judgement dated 23 March 2018
Cl. Counter-Memorial Claimant’s Counter-Memorial on Jurisdiction dated 8 June 2018
Cl. Memorial Claimant’s Memorial on All Issues dated 29 September 2017
Cl. PHB Claimant’s Post-Hearing Brief dated 8 November 2019
Cl. Rejoinder Claimant’s Rejoinder on Jurisdiction dated 14 September 2018
Cl. Reply Claimant’s Reply on All Issues dated 22 March 2019
Cl. Reply PHB Claimant’s Reply Post-Hearing Brief dated 22 November 2019
CL-[#] Claimant’s Legal Authority
EC European Commission
EC Submission Amicus Curiae Submission of the European Commission dated 22 October 2018
ECT Energy Charter Treaty
EU European Union
FIT Feed-in tariffs
GSE Gestore dei Servizi Energetici S.p.A. (Management of Electricity Services Company)
GSE conventions Conventions concluded between GSE and energy producers
G.U. Gazzetta Ufficiale della Repubblica Italiana
Hearing on Jurisdiction Hearing on Jurisdiction held on 1 November 2018
Hearing on the Merits Hearing on the Merits held from 23 September to 26 September 2019
ICSID Convention Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March 1965
ICSID or the Centre International Centre for Settlement of Investment Disputes
IRR Internal rate of return
PV plant Photovoltaic plant
R-[#] Respondent’s Exhibit
REIO Regional Economic Integration Organisation
Reply to the Request for Termination Claimant’s Reply to the Respondent’s Request for Termination dated 18 February 2019
Request Request for Arbitration dated 29 July 2015
Request for Termination Respondent’s Request for an Award Declaring Immediate Termination dated 31 January 2019
Resp. Achmea Comments Respondent’s Comments on the Achmea Judgement dated 23 March 2018
Resp. Counter-Memorial Respondent’s Counter-Memorial and Request for Bifurcation dated 2 February 2018
Resp. PHB Respondent’s Post-Hearing Brief dated 8 November 2019
Resp. Rejoinder Respondent’s Rejoinder on the Merits dated 28 June 2019
Resp. Reply Respondent’s Reply on Jurisdiction dated 27 July 2018
Resp. Reply PHB Respondent’s Reply Post-Hearing Brief dated 22 November 2019
RL-[#] Respondent’s Legal Authority
Romani Decree Legislative Decree Nr. 28/2011 of 3 March 2011 on the Implementation of Directive 2009/28/EC on the promotion of the use of energy from renewable sources (CL-080)
SME Small and medium-sized enterprises
Spalma-incentivi Decree Law Decree Nr. 91/2014 of 24 June 2014 (CL-085)
SPV Special purpose vehicles
Terna S.p.A. Rete Elettrica Nazionale (Italian electricity transmission system operator)
TEU Treaty on European Union. Consolidated version published in the Official Journal of the European Union on 26 October 2012
TFEU Treaty on the Functioning of the European Union. Consolidated version published in the Official Journal of the European Union on 26 October 2012
Tr. [Day] [Speaker(s)] [page:line] Transcript of the Hearing
Tribunal Arbitral tribunal constituted on 2 May 2017
VAT Value-added tax
VCLT Vienna Convention on the Law of Treaties

 

I. INTRODUCTION AND PARTIES

1.

This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Energy Charter Treaty (the "ECT"), dated 17 December 1994, which entered into force for the Italian Republic and the Kingdom of the Netherlands on 16 April 1998,1 and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force for the Italian Republic and the Kingdom of the Netherlands on 28 April 1971 and 14 October 1966, respectively (the "ICSID Convention").

2.
The Claimant is Silver Ridge Power BV ("Silver Ridge" or the "Claimant"), a private limited liability company incorporated in the Kingdom of the Netherlands.
3.
The Respondent is the Italian Republic ("Italy" or the "Respondent").
4.
The Claimant and the Respondent are collectively referred to as the "Parties". The Parties' representatives and their addresses are listed above on page (i).
5.
In the present dispute, the Claimant challenges a series of measures taken by the Respondent between 2011 and 2014 as constituting violations by the Respondent of Articles 10 and 13 of the ECT.

II. PROCEDURAL HISTORY

6.
On 29 July 2015, ICSID received a request for arbitration of the same date from Silver Ridge against Italy (the "Request").
7.
On 11 August 2015, the Secretary-General of ICSID registered the Request in accordance with Article 36(3) of the ICSID Convention and notified the Parties of the registration. In the Notice of Registration, the Secretary-General invited the Parties to proceed to constitute an arbitral tribunal as soon as possible in accordance with Rule 7(d) of ICSID’s Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.
8.
By letter of 12 January 2016, ICSID noted that the Parties had not taken any steps in the proceedings following the registration and informed the Parties that, pursuant to ICSID Arbitration Rule 45, if no steps were taken within a six-month period, i.e. by 11 February 2016, the Secretary-General would discontinue the proceedings.
9.
By letter of 13 January 2016, the Claimant informed ICSID of its intent to continue the proceedings.
10.
By letter of 27 January 2016, the Claimant proposed a method of constituting the Tribunal. By email of 24 February 2016, the Claimant noted that the Respondent had not yet agreed to its proposal and asked if Italy was planning to propose a different method of constitution.
11.
By letter of 25 February 2016, the Respondent agreed with the Claimant’s proposed method of constitution. In accordance with Article 37(2)(a) of the ICSID Convention, the Tribunal would be constituted as follows: the Tribunal would consist of three arbitrators, one to be appointed by each Party and the third, presiding arbitrator to be appointed by agreement of the Parties.
12.
By letter of 24 June 2016, the Claimant informed ICSID that the Parties had agreed to suspend the proceedings until 16 January 2017. By email of 28 June 2016, the Respondent confirmed its agreement to the suspension.
13.
By letter of 18 January 2017, the Claimant informed the Centre that it intended to resume the proceedings and that it would nominate its arbitrator in the coming weeks.
14.
By letter of 26 January 2017, the Claimant appointed Judge O. Thomas Johnson (U.S.) as arbitrator. By letter of 30 January 2017, ICSID confirmed that Judge Johnson had accepted his appointment.
15.
By letter of 28 February 2017, the Respondent appointed Prof. Bernardo M. Cremades (Spanish) as arbitrator. By letter of 1 March 2017, ICSID confirmed that Prof. Cremades had accepted his appointment.
16.
By letter of 28 April 2017, the Respondent informed the Centre that the Parties had jointly agreed to nominate Judge Bruno Simma (German/Austrian) as the President of the Tribunal. By email of the same date, the Claimant confirmed its agreement.
17.
On 2 May 2017, the Secretary-General, in accordance with Rule 6(1) of the ICSID Rules of Procedure for Arbitration Proceedings (the "Arbitration Rules"), notified the Parties that all three arbitrators had accepted their appointments and that the Tribunal was therefore deemed to have been constituted on that date. Mr. Francisco Abriani, ICSID Legal Counsel, was designated to serve as Secretary of the Tribunal.
18.
The Tribunal is composed of Judge Bruno Simma, a national of Germany and Austria, President, appointed by agreement of the Parties; Judge O. Thomas Johnson, a national of the United States of America, appointed by the Claimant; and Prof. Bernardo M. Cremades, a national of Spain, appointed by the Respondent.
19.
By letter of 23 May 2017, the Tribunal asked the Parties, inter alia, if they would consent to the appointment of Dr. Andreas Muller as Assistant to the Tribunal. By letters of 30 May 2017, both Parties confirmed that they had no objection to the appointment.
20.
In accordance with ICSID Arbitration Rule 13(1), the Tribunal held a first session with the Parties on 19 June 2017 by teleconference.
21.
Following the first session, on 10 July 2017, the Tribunal issued Procedural Order No. 1 recording the agreement of the Parties on procedural matters. Procedural Order No. 1 provides, inter alia, that the applicable Arbitration Rules would be those in effect from 10 April 2006, that the procedural language would be English, that the place of proceeding would be Paris, France, and that Dr. Andreas Muller would serve as Assistant to the Tribunal. Procedural Order No. 1 also sets out the agreed schedule for the merits phase of the proceedings.
22.
On 29 September 2017, the Claimant filed its Memorial on All Issues ("Cl. Memorial") with accompanying documentation.
23.
On 2 February 2018, the Respondent filed its Counter-Memorial ("Resp. Counter-Memorial"), which included a request for bifurcation and a request that the Tribunal suspend the proceedings pending the decision of the Court of Justice of the European Union ("CJEU") in Case C-284/16.
24.
By letter of 17 February 2018, the Tribunal invited the Claimant to respond to the Respondent’s requests of 2 February 2018 by 21 February 2018.
25.
By letter of 21 February 2018, the Claimant asked the Tribunal to reject the Respondent’s requests for bifurcation and the suspension of the proceedings in full.
26.
By letter of 27 February 2018, the Tribunal informed the Parties that it intended to rule on the Respondent’s bifurcation request after the CJEU’s decision in Case C-284/16 on 6 March 2018.
27.
On 7 March 2018, on behalf of the Tribunal, ICSID transmitted the English and French versions of the CJEU’s decision in Case C-284/16, Slovak Republic v. Achmea BV (the "Achmea judgement") to the Parties and invited them to provide any comments by 23 March 2018.
28.
On 23 March 2018, both Parties provided their comments on the Achmea judgement ("Cl. Achmea Comments" and "Resp. Achmea Comments").
29.
On 19 April 2018, the Claimant, on behalf of the Parties, transmitted a draft confidentiality order to the Tribunal for the Tribunal’s consideration and signature.
30.
On 19 April 2018, the Tribunal issued Procedural Order No. 2 granting the Respondent’s request for bifurcation and laying out a procedural calendar for the next phase of the proceedings.
31.
By letter of 27 April 2018, the Claimant asked the Tribunal to clarify the procedural calendar beyond the hearing on jurisdiction and provided suggested dates for further submissions/hearings. By email of 30 April 2018, the Tribunal invited the Respondent’s comments on the Claimant’s proposed calendar by 7 May 2018.
32.
By email of 7 May 2018, the Respondent provided its comments on the calendar for the remainder of the proceedings.
33.
By email of 8 May 2018, ICSID noted that it had not received a confirmation from the Respondent of its agreement to the confidentiality order received from the Claimant on 19 April 2018. It informed the Parties that, unless the Respondent objected, the Tribunal intended to sign and issue the order the following day. By email of the same date, the Respondent confirmed that it agreed with the contents of the order.
34.
By letter of 9 May 2018, the Tribunal proposed slight modifications to the confidentiality order and invited the Parties to provide their comments by 11 May 2018.
35.
By email of 10 May 2018, the Claimant confirmed its agreement to the Tribunal’s proposed wording for the confidentiality order.
36.
By email of 17 May 2018, the Tribunal reiterated its request that the Respondent provide comments on the Tribunal’s proposed changes to the confidentiality order. By email of 18 May 2018, the Respondent confirmed its agreement to the changes.
37.
On 21 May 2018, the Tribunal issued Procedural Order No. 3, embodying the Parties’ confidentiality order.
38.
On 23 and 30 May 2018, the Claimant and the Respondent, respectively, provided signed copies of the confidentiality order pursuant to Procedural Order No. 3.
39.
On 8 June 2018, the Claimant submitted its Counter-Memorial on Jurisdiction ("Cl. Counter-Memorial") with accompanying documentation.
40.
On 27 July 2018, the Respondent submitted its Reply on Jurisdiction ("Resp. Reply") with accompanying documentation.
41.
On 14 September 2018, the Claimant filed its Rejoinder on Jurisdiction ("Cl. Rejoinder") with accompanying documentation.
42.
By email of 19 September 2018, the Respondent asked that the hearing on jurisdiction scheduled for 1-2 November 2018 be rescheduled to the following week. By email of the same date, the Claimant confirmed its availability for the new dates, but asked that, should the Tribunal not be available, the hearing proceed as scheduled on the original dates. By email of 20 September 2018, the Tribunal informed the Parties that it was not available for the new dates and that the hearing would proceed as originally scheduled.
43.
By emails of 28 September 2018, the Parties submitted their joint proposal for the upcoming hearing and informed the Tribunal that, unless it thought otherwise, the pre-hearing conference call could be canceled. By email of 29 September 2018, the Tribunal confirmed that the pre-hearing call was canceled.
44.
On 1 October 2018, the European Commission filed an application to intervene as a non-disputing party.
45.
By email of 2 October 2018, the Tribunal invited the Parties to provide their comments on the European Commission’s application by 9 October 2018.
46.
On 9 October 2018, the Parties filed their observations on the European Commission’s application.
47.
By letter of 12 October 2018, the Tribunal granted the European Commission permission to submit a 15-page written submission by 17 October 2018. The Parties were granted until 26 October 2018 to respond in writing, with the understanding that the Commission’s submission could also be addressed at the upcoming hearing on jurisdiction.
48.
On 17 October 2018, the European Commission filed its Amicus Curiae Submission with accompanying documentation.
49.
By email of 18 October 2018, the Claimant objected to the format of the Amicus Curiae Submission, which it stated was not in compliance with the Tribunal’s decision of 12 October 2018 and, as a result of the Commission’s font size, illegible.
50.
By letter of 19 October 2018, the Tribunal asked the European Commission to resubmit its Amicus Curiae brief in 12-point font, with 1.5 spacing, in compliance with the 15-page limit by 22 October 2018.
51.
On 22 October 2018, the European Commission provided an updated version of its Amicus Curiae Submission ("EC Submission").
52.
By letter of 23 October 2018, the Tribunal invited the European Commission to indicate, by 30 October 2018, if there were "any pending cases before the EU Court which concern the application of the Achmea principle in a case involving the Energy Charter Treaty, and the status of those proceedings".
53.
By letter of 25 October 2018, the European Commission provided its response to the Tribunal’s letter of 23 October 2018.
54.
By email of 26 October 2018, the Claimant submitted additional legal authorities into the record.
55.
On 29 October 2018, the Tribunal issued Procedural Order No. 4 regarding the organization of the hearing.
56.
A hearing on jurisdiction was held at the World Bank’s Paris headquarters on 1 November 2018 (the "Hearing on Jurisdiction"). The following persons were present at the Hearing:

Tribunal:
Judge Bruno Simma President
Prof. Bernardo M. Cremades Arbitrator
Judge O Thomas Johnson Jr. Arbitrator

Assistant to the Tribunal:
Dr. Andreas Muller Assistant to the Tribunal

ICSID Secretariat :
Mr. Francisco Abriani Secretary of the Tribunal

For the Claimant :
Counsel:
Mr. Bart Legum Dentons Europe LLP
Mr. Heiko Heppner Dentons Europe LLP
Ms. Anne-Sophie Dufetre Dentons Europe LLP
Ms. Jungmin Cho Dentons Europe LLP
Ms. Ilektra Athanasiou-Ioannou Dentons Europe LLP
Mr. Alexander Scholten Dentons Europe LLP

Parties:
Mr. Charlie Chipchase Riverstone LLC

For the Respondent :
Counsel:
Avv. Sergio Fiorentino Avvocatura dello Stato
Avv. Andrea Giordano Avvocatura dello Stato
Ms. Laura Del Bono Avvocatura dello Stato
Ms. Giuditta Marra Avvocatura dello Stato
Prof. Maria Chiara Malaguti Ministero degli Affari Esteri e della Cooperazione Internazionale

Court Reporter :
Ms. Diana Burden Court Reporter

57.
On 26 November 2018, the Tribunal issued Procedural Order No. 5, rejoining the jurisdiction and merits phases and inviting the Parties to provide an agreed procedural calendar by 3 December 2018.
58.
By email of 26 November 2018, the Respondent asked for a one-week extension to provide the draft procedural calendar. By email of the same date, the Tribunal granted the request.
59.
By email of 8 December 2018, the Claimant submitted the Parties' proposed procedural calendar. By email of 10 December 2018, the Respondent confirmed its agreement.
60.
By letter of 10 December 2018, the Tribunal confirmed its agreement to the Parties' proposed schedule for the remainder of the proceedings.
61.
On 31 January 2019, the Respondent submitted its Request for an Award Declaring Immediate Termination (the "Request for Termination") with accompanying documentation.
62.
By email of 1 February 2019, the Tribunal invited the Claimant to reply to the Request for Termination by 18 February 2019.
63.
By letter of 18 February 2019, the Claimant submitted its Reply to the Request for Termination, asking for it to be dismissed by the Tribunal.
64.
By email of 19 February 2019, the Respondent asked the Tribunal for permission to respond to the Claimant's 18 February 2019 letter. By email of 21 February 2019, the Tribunal informed the Parties that it would not allow further comments by the Respondent and decided that "[t]he issues raised by the Respondent relate to the Tribunal's jurisdiction and should thus be addressed in accordance with the Tribunal's Order at the next stage of the proceedings".
65.
On 22 March 2019, the Claimant filed its Reply on All Issues ("Cl. Reply") with accompanying documentation.
66.
By email of 10 June 2019, the Claimant asked the Tribunal to confirm the date of the pre-hearing telephone conference.
67.
By letter of 11 June 2019, the Tribunal confirmed that the pre-hearing conference would be held on 11 July 2019.
68.
On 18 June 2019, the Respondent filed a request for the Tribunal to suspend the proceedings.
69.
By email of 19 June 2019, the Tribunal invited the Claimant to respond to the Respondent’s 18 June 2019 request by 28 June 2019.
70.
On 28 June 2019, the Respondent submitted its Rejoinder on the Merits ("Resp. Rejoinder") with accompanying documentation.
71.
On the same date, the Claimant submitted its response to the Respondent’s request for the suspension of the proceedings with accompanying documentation.
72.
On 8 July 2019, the Tribunal issued Procedural Order No. 6 dismissing the Respondent’s request to suspend the proceedings.
73.
On 11 July 2019, the Tribunal held a pre-hearing organizational meeting with the Parties by telephone conference.
74.
By email of 9 August 2019, the Respondent requested permission to submit a further legal authority into the record. By email of the same date, the Tribunal invited the Claimant to provide its observations on the Respondent’s request by 16 August 2019.
75.
On 13 August 2019, the Tribunal issued Procedural Order No. 7 regarding the organization of the hearing.
76.
By letter of 14 August 2019, the Claimant confirmed that it had no objection to the Respondent’s request to submit a new legal authority, which it considered in line with the Tribunal’s letter of 10 December 2018, and stated that it also intended to submit further legal authorities prior to the hearing.
77.
By email of 21 August 2019, the Tribunal confirmed that the Respondent could submit its new legal authority into the record. The Respondent subsequently did so on 16 September 2019.
78.
By letter of 3 September 2019, the Claimant sought the Tribunal’s permission to have Mr. Claudio Pisi Vitagliano testify by video conference at the upcoming hearing. By email of 12 September 2019, the Tribunal invited the Respondent to provide its views on the request by 13 September 2019. By email of the same date, the Respondent confirmed that it had no objection.
79.
By emails of 13 September 2019, the Parties provided their views on the schedule for the upcoming hearing.
80.
By email of 16 September 2019, the Claimant submitted legal authorities CL-305 through CL-311 into the record.
81.
By letter of 16 September 2019, the Tribunal provided its ruling on the organization of the hearing. Following further emails from the Parties, by email of 18 September 2019, the Tribunal asked the Parties to submit a detailed, agreed hearing schedule with times indicated.
82.
A hearing on the merits was held at the World Bank’s Paris headquarters from 23 to 26 September 2019 (the "Hearing on the Merits"). The following persons were present at the Hearing:

Tribunal :
Judge Bruno Simma President
Prof. Bernardo M. Cremades Arbitrator
Judge O Thomas Johnson Jr. Arbitrator

Assistant to the Tribunal :
Dr. Andreas Muller Assistant to the Tribunal

ICSID Secretariat :
Mr. Francisco Abriani Secretary of the Tribunal

For the Claimant :
Counsel :
Mr. Barton Legum Dentons Europe LLP
Mr. Heiko Heppner Dentons Europe LLP
Ms. Anne-Sophie Dufetre Dentons Europe LLP
Mr. Obioma Ofoego Dentons Europe LLP
Ms. Pauline Weess Dentons Europe LLP

Parties:
Mr. Charles Chipchase Riverstone Holdings LLC
Mr. Brian Potskowski Riverstone Holdings LLC

For the Respondent:
Counsel:
Avv. Giacomo Aiello Avvocatura dello Stato
Avv. Pietro Garofoli Avvocatura dello Stato
Avv. Andrea Giordano Avvocatura dello Stato
Avv. Laura Delbono Avvocatura dello Stato
Prof. Maria Chiara Malaguti Ministry for Foreign Affairs and International Cooperation - external consultant

Parties:
Eng. Daniele Bacchiocchi GSE
Eng. Luca Miraglia GSE
Dott. Valerio Venturi GSE
Avv. Cosimo Danilo Raimondi GSE
Avv. Paolo Berisio GSE

Court Reporter:
Ms. Anne-Marie Stallard The Court Reporter

Interpreters :
Ms. Daniela Ascoli
Ms. Monica Robiglio

83.
During the Hearing, the following persons were examined:

On behalf of the Claimant :
Witnesses:
Mr. Christopher Hunt Riverstone Europe LLP
Ms. Aneliya Erdly Silver Ridge Power LLC
Mr. Claudio Pisi Vitagliano ContourGlobal

Experts:
Dr. Boaz Moselle Compass Lexecon
Ms. Ruxandra Ciupagea Compass Lexecon
Ms. Despina Doneva Compass Lexecon

On behalf of the Respondent :
Witnesses:
Eng. Daniele Bacchiocchi GSE
Eng. Luca Miraglia GSE

Experts:
Prof. Corrado Gatti Sapienza University of Rome
Prof. Giacomo Rojas Elgueta University RomaTre, Rome

84.
By email of 11 October 2019, the Claimant requested that the Tribunal rule on the outstanding points of disagreement between the Parties concerning revisions to the transcript. By email of the same date, the Respondent submitted its comments on the Claimant’s request.
85.
By letter of 25 October 2019, the Claimant provided its comments on exhibit R-48, submitted by the Respondent during the hearing.
86.
The Parties filed post-hearing briefs on 8 November 2019 ("Cl. PHB" and "Resp. PHB") and reply post-hearing briefs on 22 November 2019 ("Cl. Reply PHB" and "Resp. Reply PHB").
87.
On 6 December 2019, the Respondent filed an application to submit two documents into the record. By email of the same date, the Tribunal invited the Claimant’s observations on the Respondent’s application by 11 December 2019.
88.
By letter of 11 December 2019, the Claimant objected to the Respondent’s 6 December 2019 application.
89.
The Claimant filed its submissions on costs on 13 December 2019.
90.
On 27 December 2019, the Tribunal issued its decision on corrections to the transcript.
91.

On 30 March 2020, the Respondent filed an application to submit the award from SunReserve Luxco Holdings v. Italian Republic, SCC Case No. 2016/132, into the record.

92.
By letter of 31 March 2020, the Tribunal decided to grant the Respondent’s 6 December 2019 and 30 March 2020 applications to submit new legal authorities. The Respondent duly did so on 6 April 2020.
93.
On 20 April 2020, both Parties submitted their observations on the Respondent’s three new legal authorities.
94.

On 21 September 2020, the Claimant filed an application to submit the award from ESPF Beteiligungs GmbH et al. v. Italian Republic, ICSID Case No. ARB/16/5, into the record.

95.

On 22 September 2020, the Respondent filed an application to submit the award from Eskosol S.p.A. in liquidazione v. Italian Republic, ICSID Case No. ARB/15/50, into the record.

96.
By email of 22 September 2020, the Tribunal invited the Parties to submit both awards into the record by 23 September 2020 and provide their comments, if any, on the relevance of the awards to the present arbitration by 5 October 2020.
97.
On 23 September 2020, the Parties submitted their new legal authorities.
98.
By letter of 5 October 2020, the Claimant submitted its comments on the Parties' two additional legal authorities.
99.
By email of 6 October 2020, the Respondent stated that it had overlooked the deadline for its comments and requested an extension until 12 October 2020 to provide them.
100.
By email of 7 October 2020, the Claimant objected to the Respondent's request and asked that, should the Tribunal be minded to grant it, the Claimant be given an opportunity to respond. By email of the same date, the Respondent confirmed that it did not object to the Claimant being allowed to respond to its forthcoming submission.
101.
By email of 9 October 2020, the Tribunal invited the Respondent's submission by 12 October 2020 and the Claimant's response, if any, by 16 October 2020.
102.
On 12 October 2020, the Respondent provided its comments on the new legal authorities.
103.
By letter of 15 October 2020, the Claimant provide its comments on the Respondent's 12 October 2020 submission.
104.
The proceeding was closed on 9 February 2021.

III. FACTUAL AND REGULATORY BACKGROUND

105.
Before addressing the Parties' contentions regarding the Tribunal's jurisdiction (see Chapter V.; paras. 150 et seq.) as well as regarding the liability of the Respondent for alleged violations of Articles 10 and 13 of the ECT (see Chapter VI.; paras. 314 et seq.), the Tribunal deems it useful to briefly set out the factual and regulatory background to the present proceedings.
106.
In making its findings in the present and in the following Chapters, the Tribunal has carefully considered all written and oral submissions and arguments submitted to it by the Parties in the course of the proceedings, but refers to them in the following only inasmuch as they are relevant for this Award.

A. The Claimant’s Investments in Italy

107.
The Claimant, i.e. Silver Ridge Power BV, is a private limited liability company incorporated in the Kingdom of the Netherlands (see para. 2). The Claimant indirectly owned and controlled - through its wholly-owned Dutch holding company SRP Italia Holdings BV - Silver Ridge Power Italia s.r.l., a limited liability company incorporated in the Italian Republic. Before the creation of SRP Italia Holdings BV in 2014, the Claimant (then known as AES Solar Energy BV) had directly owned and controlled Silver Ridge Power Italia s.r.l. (then known as AES Sole Italia s.r.l.).2 Silver Ridge Power Italia s.r.l. owned and controlled the ten Italian local development companies3 which in turn owned and operated the 25 photovoltaic plants (PV plants) subject to the current dispute4 (see Request, paras. 13, 15, 33-34; Cl. Memorial, paras. 44, 46, 86, 236).
108.
These 25 PV plants went into operation between September 2010 and May 2012, with a combined capacity of approximately 130 megawatts (MW) (see Request, paras. 6, 31; Cl. Memorial, para. 84). According to the Claimant, the total cost for the acquisition, construction and maintenance of the 25 plants was approximately EUR 470 million (Cl. Memorial, para. 94).5 The Claimant further submits that it is common practice in the solar energy market to finance PV plants with a leverage of 70-85 % of the construction costs6 (Cl. Memorial, para. 92).
109.
For each of the plants, the Gestore dei Servizi Energetici S.p.A. (GSE), i.e. Italy's Management of Electricity Services Company, and the respective local development company entered into an agreement, the so-called "GSE conventions" (see para. 120). All the plants benefited from feed-in tariffs (FIT) under the Second, Third, Fourth and Fifth Energy Accounts (see paras. 123 et seq., 129 et seq.). All but two PV plants (Cangiano and Santa Maria, i.e. the so-called "Frosinone plants") also profited from the off-take regime (see para. 117), with four among them (i.e. Rimo, Gim, South and Cutrona) qualifying for the minimum guaranteed prices (see para. 118) under the off-take regime (Request, paras. 29, 36).
110.

The 25 PV plants subject to the present arbitration are enlisted below together with the corresponding Energy Account regime that they were subject to (see Request, para. 32; Cl. Memorial, para. 85):

  Nr. Name of Plant Municipality Capacity (kW) Energy Account Entry into operation
1. 177772 Cellino Cellino San Marco e Brindisi 42,692 II 29/09/2010
2. 210170 Ciminna Ciminna 6,753 II 07/04/2011
3. 237131 Rimo Ugento 996 II 18/01/2011
4. 237708 Gim Ugento 974 II 18/01/2011
5. 237857 South Ugento 980 II 18/01/2011
6. 243742 Alinca Cisterna di Latina 2,998 II 29/04/2011
7. 247417 Torchiarolo Torchiarolo 8,001 II 23/12/2010
8. 530505 Raineri Francoforte 3,427 III 29/04/2011
9. 531748 Cocomeri Cisterna di Latina 3,781 III 29/04/2011
10. 533417 Scopeto Scopeto 2,125 III 31/05/2011
11. 533761 Francavilla Apollo Francavilla Fontana 8,001 III 26/04/2011
12. 601811 La Cogna Aprilia 7,997 IV 29/08/2011
13. 602234 Apollo 2 Manduria 7,500 IV 30/08/2011
14. 610412 Nepi Nepi 1,097 2,155 IV 31/08/2011 31/10/2011
15. 615545 Del Vicario Sabaudia 5,222 IV 30/06/2011
16. 616653 Lucia Carlentini 993 IV 29/06/2011
17. 617404 Francaviglia Carlentini 1,000 IV 29/06/2011
18. 617449 Brunno Carlentini 896 IV 29/06/2011
19. 662666 Giovannino Augusta 823 IV 29/09/2011
20. 664009 Barresi Siracusa 935 IV 31/10/2011
21. 666998 Cutrona Lentini 893 IV 23/12/2011
22. 668097 Rinaldone Viterbo 4,977 IV 29/11/2011
23. 669076 Panevino Aprilia 4,997 IV 30/11/2011
24. 1003182 Cangiano Frosinone 4,836 V 27/03/2012
25. 1003223 Santa Maria Frosinone 4,997 V 09/05/2012
111.
In March 2017, Silver Ridge Power Italia s.r.l. entered into agreements by which subsidiaries owning PV plants with a capacity of about 105 MW were sold to an affiliate of Cubico Sustainable Investments. The parties to these agreements explicitly agreed that the Claimant retains the treaty claims asserted in the present arbitration7 (Cl. Memorial, para. 48).

B. Elements and Evolution of the Italian Incentivization Regime forPhotovoltaic Energy

112.
In view of the benefits of producing energy from sunlight in terms of avoiding pollution associated with fossil fuel electricity generation, producing energy locally, lowering the dependence on energy imports, thus contributing to energy efficiency and energy security, multiple efforts to encourage investment in renewable energy in general, and in PV plants producing solar energy in particular, have been made in Europe in general (see Subsection 1; paras. 113 et seq.) and in Italy in particular (see Subsection 2; paras. 116 et seq.), notably since the turn of the millennium.

(1)European Union legislation

113.
On 27 September 2001, the European Parliament and the Council adopted Directive 2001/77/EC,8 the "First Renewables Directive", in order to reduce greenhouse gas emissions and to meet the international targets set by the Kyoto Protocol. According to the Directive's preamble,

(1) […] The Community recognises the need to promote renewable energy sources as a priority measure given that their exploitation contributes to environmental protection and sustainable development. […]

(14) Member States operate different mechanisms of support for renewable energy sources at the national level, including green certificates, investment aid, tax exemptions or reductions, tax refunds and direct price support schemes. One important means to achieve the aim of this Directive is to guarantee the proper functioning of these mechanisms, until a Community framework is put into operation, in order to maintain investor confidence.9

114.
The Directive established national indicative targets with a view to achieving the EU's target of generating 22.1 % of the total electricity consumed from renewable energy sources.10 Italy's target was 25 %.11 The Directive obliged the Member States to maintain properly functioning schemes to support renewable energy as well as an objective, transparent and non-discriminatory legislative and regulatory framework that provided for timely administrative procedures.12 At the same time, it left the possibility for each Member State to identify the incentivization regime which "corresponds best to its particular situation".13
115.
In 2009, the First Renewables Directive was repealed and replaced by Directive 2009/28/EC, i.e. the "Second Renewables Directive".14 The new Directive created mandatory national overall targets for electricity consumption based on renewable energy in order for the EU to achieve a share of 20 % by 2020.15 Italy’s mandatory target was to have a gross consumption of 17 % through energy produced from renewable sources by 2020.16 These objectives have the primary purpose "to provide certainty for investors and to encourage continuous development of technologies which generate energy from all types of renewable sources".17 In this regard, the Directive encourages Member States to implement renewable energy support schemes in order to achieve their renewable energy targets,18 which may inter alia comprise "direct price support schemes including feed-in tariffs and premium payments".19

(2) Italy’s legislative and regulatory framework

116.
Italy implemented the First Renewables Directive through Legislative Decree No. 387/2003.20 Article 7 of this decree delegated the definition of specific criteria for measures to encourage the production of electricity from PV sources, including the methods for determining the scope of specific incentive rates for electricity generated by PV plants, to subsequent ministerial decrees.21 It required that, "[f]or the electricity produced by photovoltaic conversion of solar energy, the criteria [laid down in the ministerial decrees] provide for a specific incentive tariff by decreasing amount and duration as to ensure a fair remuneration of investment and operating costs".22
117.
In addition to the "Conto Energia" regime (see paras. 119 et seq.), Legislative Decree No. 387/2003 created another incentivization scheme, the so-called "off-take regime". This regime entitled eligible producers, specifically renewable energy producers with a capacity of less than 10 MW, to sell their electricity directly to the GSE which in turn sold the electricity into the market. The Autorità per l'energia elettrica e il gas (AEEG), i.e. Italy’s Authority for Electric Energy and Gas, was tasked with establishing the modalities of the system.23 All of the PV plants subject to the present arbitration except Cangiano and Santa Maria (i.e. the so-called Frosinone plants) benefited from the off-take regime (see para. 110).
118.
Moreover, owners of small plants (i.e. with a capacity below 1 MW) could sell their electricity at minimum guaranteed prices (prezzi minimi garantiti). At the end of the year, the GSE would reimburse the difference in price if the market price (prezzo zonale orario) was higher than the minimum guaranteed prices. Four of the PV plants subject to the present arbitration (Rimo, Gim, South and Cutrona) profited from the minimum guaranteed prices regimes under the off-take regime (see para. 110).
119.
Under the terms of Article 7 of Legislative Decree No. 387/2003 (see para. 116), three24 consecutive ministerial decrees were adopted which were called "Conti Energia" or "energy accounts" and which established the terms and conditions for the incentive tariff regime specifically for PV plants. In particular, the energy accounts granted PV plants connected to the national transmission grid special rates funded by the electricity consumers, referred to as "feed-in tariffs" (FIT). The level of FIT depended on capacity, technology, whether the plant was on rooftops or on the ground and the date when the PV plant was effectively connected to the transmission grid and therefore entered into operation.
120.
Once the PV plants were built and operational, they could apply for FIT under the applicable energy account. Subsequently, the GSE and the respective local development company signed an agreement, by which the GSE agreed to pay FIT at a specified rate for 20 years (convenzione per il riconoscimento delle tariffe incentivanti, i.e. "GSE conventions").25 While the specific terms of the GSE conventions differ to some extent depending on the applicable Energy Account, the contents of the various GSE conventions widely overlap.26 The terms of the conventions within a given energy account are identical, except for plant-specific information. The date of entering into service of the PV plants (or the date of the application for the incentives if made after 15 days from entering into service) fixed the starting point for the FIT under the energy accounts. Furthermore, the GSE conventions provided that any modifications to their terms were to be agreed between the GSE and the producers in writing.27
121.
Renewable energy technology scaled up over time in response to these incentives. The advances in technology drove down the costs associated with the construction and operation of PV plants. Furthermore, the cost of producing renewable energy decreased due to resulting economies of scale. In order to take into account the decreasing costs, FIT were progressively reduced over time on the occasion of the adoption of new Energy Accounts.
122.
The First Energy Account (Conto Energia I),28 adopted on 28 July 2005, was directed towards PV plants with an individual capacity between 1 kW and 1 MW, granting them the right to receive a specific incentive tariff for every kWh of electricity produced.29 None of the PV plants subject to the present arbitration falls under the regime of the First Energy Account (see para. 110).
123.
By virtue of the Second Energy Account (Conto Energia II),30 adopted on 19 February 2007, for the first time the application of the incentives was extended to the totality of the energy produced by a PV plant and not merely that produced and consumed locally. In addition, the upper limit of 1 MW prescribed by the First Energy Account was removed. The Second Energy Account granted a base FIT for PV plants that went into operation on or before 31 December 2008. For plants commencing operation between 1 January 2009 and 31 December 2010, the tariff was reduced by 2 % for each calendar year after 2008.31 The Second Energy Account also provided that PV plants connected to the grid after 14 months from Italy's reaching an overall installed capacity of 1,200 MW would not be eligible for FIT.32 Seven of the PV plants subject to the present arbitration (Alinca, Cellino, Ciminna, Gim, Rimo, South, Torchiarolo) fall under the regime of the Second Energy Account (see para. 110).
124.
Subsequently, Law-Decree No. 3/2010,33 the so-called "Salva Alcoa Decree", extended the FIT under the Second Energy Account to PV plants the construction of which was concluded by 31 December 2010, if they were connected to the grid by 30 June 2011,34 thus extending the temporal scope of the Second Energy Account.
125.
The Third Energy Account (Conto Energia III),35 adopted on 6 August 2010, granted FIT for PV plants that entered into operation between 31 December 2010 and 31 December 2013.36 It also established a mechanism of progressive reduction of FIT not any longer on an annual, but on a tri-annual basis in order to better reflect the evolution of PV technology and the significant reduction of costs components and PV systems. The cumulative threshold of the capacity of PV plants admitted to the incentivization program was increased from 1,200 MW in the Second Energy Account to 3,000 MW and extendable to PV plants that were connected to the grid within 14 months of the date on which this threshold was reached by Italy. The GSE was obliged to make a public announcement if the incentivized installed capacity for PV plants achieved under that account reached the threshold of 3,000 MW.37 Four of the PV plants subject to the present arbitration (Cocomeri, Francavilla Apollo, Raineri, Scopeto) fall under the regime of the Third Energy Account (see para. 110).
126.
The Second Renewable Directive of the EU (see para. 115) was implemented in Italy by Legislative Decree No. 28/2011,38 the so-called "Romani Decree", which was adopted on 3 March 2011 and entered into force on 29 March 2011. Article 24 of this decree ("Incentive mechanisms")39 states in its relevant part:

(1) The production of electricity from renewable sources commissioned after 31 December 2012 shall be promoted through the instruments and on the basis of general criteria listed in paragraph 2 and the specific criteria set out in paragraphs 3 and 4. The preservation of non-incentivized productions is performed with instruments referred to in paragraph 8.

(2) The electricity produced by the installations referred to in paragraph 1 [i.e. PV plants] shall be promoted on the basis of the following general criteria:

a) the incentive has the purpose of ensuring fair returns of investment and operating cost;

b) the period of entitlement to the incentive shall be equal to the average useful life of the specific types of conventional plant and shall start from the date of entry into operation of the same;

c) the incentive shall remain constant throughout the period of right, and may take into account the economic value of the energy produced [...].40

127.
Furthermore, the Romani Decree limited the applicability of the Third Energy Account to PV plants commencing operation by 31 May 2011, as opposed to the originally envisaged end-date of 31 December 2013.41 In addition, the Romani Decree added further conditions to the eligibility of PV plants to receive FIT, based on size, organization and zoning of land. In particular, according to the Romani Decree, any PV plant built on agricultural land would be eligible for FIT only if the plant in question had a capacity below 1 MW, occupied less than 10 % of the parcel on which it was erected and, in case of PV plants built on land belonging to the same owner, the plants were required to be located at least 2 km from one another.42 As an exception to this rule on PV plants located on agricultural land, if the construction permit had been issued before the entry into force of the Romani Decree (i.e. 29 March 2011) or if the application for the permit was submitted by 1 January 2011, the new requirements would not apply provided that the plant entered into operation before 29 March 2012.43
128.
Like its predecessor, i.e. Legislative Decree No. 387/2003, the Romani Decree tasked certain ministries, namely the Ministry of Economic Development and the Ministry of Protection of Land and Sea, to determine the incentive regime for renewable energy investments by way of special decrees.44 Two additional energy accounts were adopted on the basis of this authorization.
129.
The Fourth Energy Account (Conto Energia IV),45 adopted on 5 May 2011, applied to PV plants entering into operation between 1 June 2011 and 31 December 2016.46 The Fourth Energy Account also introduced a distinction between "small plants" and "large plants", the former being defined as "photovoltaic plants installed on buildings that have a power output of no more than a [sic] 1,000 kW, other photovoltaic plants with power output of not more than 200 kW […]".47
130.
In this regard, an electronic register for large PV plants eligible for FIT was established which was to be maintained by the GSE. In this register, plants were ranked according to several criteria. For the 2011 tariffs, the GSE had to compile two registers, one in July for applications made between 20 May and 30 June 2011, and one in September, for applications made between 15 and 30 September 2011. Inclusion in the registers was subject to certain cost thresholds for incentive payments, the cost limit for the period between 1 June 2011 and 31 December 2011 being EUR 300 million which was estimated to equal to 1,200 MW of installed capacity. In this framework, large PV plants that came into operation by 31 August 2011 would be automatically eligible for FIT. Large plants that entered into operation between 1 September 2011 and 31 December 2012 had to be listed in the register and would benefit from FIT provided that their ranking on the register so allowed and that their certificate of work completion was sent to the GSE within seven months (or nine months for plants with electric power capacity above 1 MW) from the date of publication of the ranking.48
131.
In addition, for the first time, a national indicative installed capacity target for PV plants was introduced which was set at 23 GW, corresponding to an indicative annual cumulative cost of incentives estimated to be between EUR 6 and 7 billion.49 The incentive regime was tied to this yearly cumulative cost threshold, and the Ministry for Economic Development was entitled to revise the FIT for future PV plants when Italy reached the lower end of the threshold, i.e. EUR 6 billion.50
132.
Twelve of the PV plants subject to the present arbitration (Apollo 2, Barresi, Brunno, Cutrona, Del Vicario, Francaviglia, Giovannino, La Cogna, Lucia, Nepi, Panevino, Rinaldone) fall under the regime of the Fourth Energy Account (see para. 110).
133.
The Fifth Energy Account (Conto Energia V) was adopted on 5 July 2012.51 According to its Article 1(3), the incentivization regime under that energy account would apply 45 days after the publication of the AEEG resolution provided by Article 1(2) of the Fifth Energy Account. On 15 July 2012, the AEEG decided that "[t]he indicative cumulative annual cost of the incentives receivable for photovoltaic plants has reached 6 billion euros per year on 12 July 2012".52
134.
The Fifth Energy Account provided for two different incentive regimes based on PV plants’ capacities. The first regime applied to plants up to 1 MW capacity and awarded them an "all-inclusive tariff" which included the price of the electricity and the value of the incentive. The second regime applied to PV plants exceeding a capacity of 1 MW and awarded them an amount equal to the difference between the all-inclusive tariff and the market price of electricity plus the revenues deriving from the sale of the energy on the market. In addition, regardless of their capacity, all plants were entitled to a bonus tariff on the electricity produced and consumed by them.53
135.
The incentive regime under the Fifth Energy Account was to cease to apply to new PV plants 30 days after the adoption of a further resolution by the AEEG that the cost threshold of EUR 700 million for incentive tariffs (bringing the total cost of PV incentives to EUR 6.7 billion per year) was reached.54 This resolution was passed on 6 June 20 1 3.55 Two of the PV plants subject to the present arbitration (Cangiano and Santa Maria, the so-called Frosinone plants) fall under the regime of the Fifth Energy Account (see para. 110).
136.
In addition, the Fifth Energy Account also contained a provision requiring PV energy producers benefiting from incentive tariffs under any of the energy accounts to pay, as of 1 January 2013, an annual administrative fee of EUR 0.0005 per kWh of incentivized energy. The relevant part of Article 10 ("Management of the incentives system and implementing regulations") of the Decree establishing the Fifth Energy Account reads:

(1) Producers applying for the feed-in tariffs set forth in this decree shall pay to the GSE a fee for the processing of the application equal to EUR 3 for each kW of nominal power for plants below 20 kW and EUR 2 for each kW above 20 kW. [...]

(4) In order to cover for management, control and inspection costs of the GSE, the responsible entities acceding to the feed-in tariffs under this decree […] shall pay to the GSE starting 1 January 2013, also through the set-off of the incentives due, a fee of 0.05 c euro for each kWh of incentivized energy. [...]56

137.
On 23 December 2013, Legislative Decree No. 145/2013,57 the so-called "Destinazione Italia Decree", was adopted: "For the purpose of containing the annual burden on prices and on the electric rates of the incentives for renewable energy and for the purpose of maximizing the medium-long term production contribution from the existing power plants",58 this decree gave PV plant operators the choice between (i) continuing the existing incentive regime for the 20 year period without any additional benefits after the expiration of this period; and (ii) accepting a reduced percentage of tariffs under the Energy Accounts, in exchange for an extension in the duration of the incentive period by seven years.59
138.
On 24 June 2014, Italy enacted Legislative Decree No. 91/2014,60 the so-called "Spalma-incentivi Decree", which entered into force on 25 June 2014. "In order to optimize the management of the collection and distribution of incentives and to foster more sustainable policies supporting renewable energy",61 the decree, according to its own terms, sought to "remodulate" or "reformulate" the incentive payments under the energy accounts ("la tariffa incentivante [...] è rimodulata"62) and to provide for altered modalities for disbursement of the FIT starting from 1 January 2015. The remodulation of the FIT regime by the Spalma-incentivi Decree was applicable for PV plants with a capacity above 200 kW. This measure affected all of the 25 plants subject to the present arbitration (see para. 110).
139.
The new regime offered PV plant operators three options, which they could choose from:63

- Under Option A, the FIT were to be spread over 24 years instead of the original 20 year period and reduced by 17 to 25 % depending on duration of the "residual period".

- Under Option B, the FIT were to be paid for the original 20 year period, but the tariffs would be remodulated by creating two periods, a first period between 2015 and 2019, in which a reduced incentive tariff would be disbursed, followed by a second period in which the incentive tariffs would be increased. The relevant percentages are set out in the Decree of the Ministry of Economic Development of 17 October 2014.64

- Under Option C, the FIT were to be paid for the original 20 year incentive period, but reduced during the residual period depending on the capacity of the respective PV plant. This would result in a reduction of (a) 6 % for PV plants having a capacity between 200 and 500 kW; (b) 7 % for PV plants having a capacity between 500 and 900 kW; and (c) 8 % for PV plants having a capacity higher than 900 kW.

140.
The Spalma-incentivi Decree granted PV plant operators until 30 November 2014 to communicate to the GSE which of the aforementioned three options they would select. In the absence of a communication from the producers, the default option to be applied by the GSE would be the third one, i.e. Option C.65 The re-modulation of the FIT became effective as of 1 January 2015.66
141.
All of the 25 PV plants subject to the present arbitration were assigned the third option by default. In view of the fact that they all have a capacity higher than 900 kW (see para. 110), each of the plants, as of 1 January 2015, was subject to an 8 % decrease in FIT (see Request, para. 40).
142.
The Spalma-incentivi legislation also modified the FIT payment mechanisms. Starting from 1 July 2014, the GSE would pay the FIT in monthly instalments during a given year in an amount equal to 90 % of the solar plants’ forecast annual average production for each calendar year of reference. On 30 June of the subsequent year, the GSE would pay the remaining balance to the producers, based on the electricity actually produced by the solar plants.67
143.
In addition, the Spalma-incentivi Decree altered the administrative management fee introduced by the Fifth Energy Account (see para. 136). The fee was made contingent on the PV plant’s capacity in the following terms: (a) 2.20 EUR/kW for PV plants having a capacity between 3 and 6 kW; (b) 2 EUR/kW for PV plants having a capacity between 6 and 20 kW; (c) 1.80 EUR/kW for PV plants having a capacity between 20 and 200 kW; (d) 1.40 EUR/kW for PV plants having a capacity between 200 and 100 kW; and (e) 1.20 EUR/kW for PV plants having a capacity above 1 MW.68

C. The Challenged Measures

144.

In the present arbitration proceedings, the Claimant challenges a series of measures taken by the Respondent between 2011 and 2014 as constituting violations by the Respondent of Articles 10 and 13 of the ECT. These "challenged measures" are the following (in chronological order):

a) the adoption of the Romani Decree (see para. 126) in 2011, restricting the applicability of the Third Energy Account and allegedly forcing the Claimant to abandon the so-called Project Vega, thus breaching Article 10(1), first and second sentences, of the ECT (see Section VI.B; paras. 478 et seq.);

b) the adoption of the Fifth Energy Account (see para. 133) in 2012, allegedly resulting in the non-accessibility of the Fourth Energy Account for the Frosinone plants and forcing them into the Fifth Energy Account regime, thus breaching Article 10(1), first and second sentences, as well as Article 13(1) of the ECT (see Sections VI.C.2.a and VI.C.2.b; paras. 566 et seq.), and creating an administrative management fee (see para. 136), thus allegedly breaching Article 10(1), second and last sentences, of the ECT (see Section VI.C.2.c; paras. 613 et seq.);

c) the adoption of the Spalma-incentivi Decree (see para. 138) in 2014, reducing the FIT the Claimant received for its 25 PV plants (see Section VI.A; paras. 316 et seq.) and raising the administrative management fee (see para. 143) introduced by the Fifth Energy Account (see Section VI.C.2.c; paras. 613 et seq.), thus allegedly breaching Article 10(1), first, second and last sentences, of the ECT.

IV. REQUESTS FOR RELIEF

145.
In the present arbitration proceedings, the Claimant argues that the Respondent, by adopting the contested measures referred to above (see para. 144), has breached Articles 10 and 13 of the ECT. The Respondent rejects the Claimant’s submissions and claims that it has not violated Articles 10 and 13 of the ECT. In addition, the Respondent raises four objections to the Tribunal’s jurisdiction.
146.
In its various submissions (see Cl. Reply, para. 393; see similarly Request, para. 109; Cl. Memorial, para. 417; Cl. Counter-Memorial, para. 351; Cl. Rejoinder, para. 257; Cl. PHB, para. 175; Cl. Reply PHB, para. 60), the Claimant requests an Award:

a) Declaring that the Tribunal has jurisdiction under the ECT and the ICSID Convention over the Claimant’s claims;

b) Declaring that the Italian Republic has breached its obligations under Part III of the Energy Charter Treaty;

c) Ordering the Italian Republic to pay to Silver Ridge Power BV damages, in an amount to be proven at the hearing;

d) Ordering the Italian Republic to pay interest on the above sum from the date of the first breach to the date of the award at the rate for Italian bonds, compounded annually;

e) Ordering the Italian Republic to pay the expenses incurred by the Claimant in connection with these proceedings, including professional fees and disbursements, and to pay the fees and expenses of the Members of the Tribunal and the charges for the use of the facilities of the Centre, in accordance with Article 61(2) of the ICSID Convention;

f) Ordering the Italian Republic to pay interest on the sums awarded at the rate for one-year Italian bonds, compounded annually;

g) Ordering such other and further relief as the Tribunal deems appropriate in the circumstances.

147.
In its various submissions (see Resp. Counter-Memorial, para. 602; Resp. Rejoinder, para. 617; see similarly Resp. Reply, para. 212), the Respondent requests the Tribunal to:

a) Decline jurisdiction to decide, as the ECT does not cover intra-EU disputes;

b) Alternatively, decline jurisdiction over the claims on the Spalma-incentivi Decree and the Fifth Energy Account, since the requirement of unconditional consent under Article 26 ECT is not satisfied as the GSE conventions contain an exclusive jurisdiction clause;

c) Decline jurisdiction over the claim on the Romani Decree, since the requirement of Article 26 ECT of prior request for amicable solution has not been fulfilled;

d) Decline jurisdiction over the imposition of administrative fees to cover GSE costs because these are Taxation Measures under Article 26 ECT; and

e) In a further alternative, decline admissibility of protection of the Claimant’s alleged interests since this is barred from seeking relief, since an exclusive forum clause was selected in the GSE conventions (relevant for claims on the Spalma-incentivi Decree and the Fifth Energy Account), as well as no amicable solution was addressed to Italy as for the Romani Decree.

148.
Should the Tribunal decide that it has jurisdiction over the case and that claims are either totally or partially admissible, the Respondent further requests the Tribunal to

a) Declare, on the merits, that the Respondent did not violate Article 10(1) ECT, first and second sentence, since it did not fail to grant fair and equitable treatment to the Claimant’s investment, and to ensure them stable, equitable, favorable and transparent conditions;

b) Equally, declare, on the merits, that Article 10(1) ECT, last sentence (the so-called "umbrella clause") does not apply in the case at stake, or, alternatively, that the Respondent did not violate it;

c) Further, declare that Italy did not violate Article 13 ECT either, since its behaviors did not amount to indirect expropriation of two of the Claimant’s plants; and

d) Consequently, declare that no compensation is due.

149.
In the event that the Tribunal were to recognise the legitimacy of one of the Claimant’s grievances, the Respondent requests the Tribunal to:

a) Declare that the damages were not adequately proved;

b) In addition, declare that both the methods for calculation and the Claimant’s calculation of damages itself are inappropriate and erroneous; and

c) Order the Claimant to pay the expenses incurred by the Italian Republic in connection with these proceedings, including professional fees and disbursements.

V. JURISDICTION

150.
The Claimant contends that all pertinent requirements of both Article 26 of the ECT and Article 25 of the ICSID Convention are met and that, therefore, the Centre has jurisdiction and the Tribunal has competence to decide the dispute at stake (Request, paras. 111-127; Cl. Memorial, paras. 222-269).
151.
In the course of the proceedings, the Respondent has raised four jurisdictional objections, namely: (A) that the ECT does not apply to disputes between an investor of a Member State of the European Union ("EU Member State") and another EU Member State, i.e. the so-called "intra-EU objection" (see paras. 153 et seq.); (B) that there is a lack of consent due to the exclusive jurisdiction clauses contained in the GSE conventions (see paras. 239 et seq.); (C) that the requirement under Article 26(1) and (2) of the ECT for prior request for amicable settlement is not met in the present case in relation to the Romani Decree69 (see paras. 265 et seq.); and (D) that the administrative fee imposed by the Fifth Energy Account falls under the "carve out" for taxation measures according to Article 21 of the ECT (see paras. 284 et seq.).
152.
Apart from the aforementioned objections, which the Tribunal will address subsequently, the Respondent has not engaged with, let alone contested, the Claimant's factual submissions concerning the fulfilment of the conditions enshrined in Article 26 of the ECT and Article 25 of the ICSID Convention (Cl. Counter-Memorial, paras. 3-5).

A. The "Intra-EU Objection"

(1) The Parties’ Positions

a) Respondent’s Position

153.
The Respondent argues that the application of Article 26(1) of the ECT, which presupposes a dispute "between a Contracting Party and an Investor of another Contracting Party", is excluded in a case where an investor of an EU Member State (such as the Netherlands) has a dispute with another EU Member State (such as Italy) in relation to an investment in this State, i.e. a so-called "intra-EU dispute". The Respondent contends that the Claimant can therefore not benefit from Article 26(1) of the ECT in the present arbitration.
154.
In its pertinent submissions, the Respondent relies on Article 26(6) of the ECT according to which "[a] tribunal established under [Article 26(4) of the ECT] shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law". In this regard, the Respondent argues that EU law forms part of the "applicable rules and principles of international law" to be applied when judging on the case and that the provision refers to any issue in dispute, including jurisdictional issues.
155.
In addition, according to the Respondent, the duty of consistent interpretation under Article 31(3)(c) of the Vienna Convention on the Law of Treaties ("VCLT") calls for acknowledging the relevance of EU law in the interpretation of the ECT arbitration clause. As concerns existing arbitral awards recognizing jurisdiction on intra-EU disputes, the Respondent contends that, while tribunals are not bound by previous awards, they are bound by EU law and CJEU decisions, including the Achmea judgement,70 since these pertain to international law to be applied under Article 26(6) of the ECT (Resp. Reply, paras. 6-18, 118; Resp. Achmea Comments, paras. 4-5; Request for Termination, p. 2; Resp. Rejoinder, paras. 6, 109-135).
156.
On this basis, the Respondent submits that investment protection for investments carried out by an EU investor in another EU Member State is governed by EU law, in particular by the rules of free movement of capital and freedom of establishment, the general principles of Union law, the Charter of Fundamental Rights of the European Union and relevant secondary legislation. Pursuant to Article 3(2) of the Treaty on the Functioning of the European Union ("TFEU"), EU Member States are prohibited from concluding an agreement between themselves which might affect the rules of EU law or alter their scope. According to the Respondent, EU Member States therefore lack the competence to conclude bilateral or multilateral international agreements concerning protection of intra-EU investments.
157.

Moreover, the Respondent contends that, pursuant to Articles 267 and 344 of the TFEU, EU Member States cannot submit a dispute concerning the interpretation and application of EU law to any method of settlement other than those provided for therein. An international agreement concluded between two EU Member States that contains an offer for intra-EU investment arbitration thus violates Articles 267 and 344 of the TFEU and the general principle of autonomy of EU law. Hence, the offer to arbitrate by the Respondent must be deemed inapplicable to intra-EU disputes from the outset, as the incompatibility of the arbitration mechanism with the primacy of EU law existed since the entry into force of the EU Treaties. According to the Respondent, the ECT does therefore not apply to disputes between an investor of an EU Member State and another EU Member State. The appropriate forum for the Claimant to bring an action against the Respondent would be the competent courts of Italy (Resp. Counter-Memorial, paras. 45, 105, 134-147; Resp. Reply, paras. 30-48; Resp. Achmea Comments, paras. 6-10, 20).

158.
In its further submissions, the Respondent notably relies on Article 1 of the ECT. Article 1(3) of the ECT defines "Regional Economic Integration Organisation" (REIO) as "an organisation constituted by states to which they have transferred competence over certain matters a number of which are governed by this Treaty, including the authority to take decisions binding on them in respect of those matters". Pursuant to Article 1(10) of the ECT, "area" with respect to a REIO means "the Areas of the member states of such Organisation, under the provisions contained in the agreement establishing that Organisation".
159.
Accordingly, the Respondent argues that the recognition of the overlapping of the "territories" of the Member States and the Union in this provision confirms the recognition by the ECT of the existence of a single, unified area within the EU where competences are internally allocated with external relevance. Hence, according to the Respondent, the ECT expressly acknowledges that the EU has competence over some of the matters regulated by the ECT and that that competence entails the power to issue decisions that are binding on the members of the ECT and, by extension, on tribunals constituted by them. The binding nature of the rulings of the CJEU was therefore contemplated and accepted by the Contracting Parties of the ECT (Resp. Counter-Memorial, paras. 51-54; Resp. Rejoinder, para. 136).
160.
Moreover, according to the Respondent, Article 25 of the ECT can be reasonably interpreted as being based on the understanding that between the ECT Contracting Parties that are members of the EU, a "preferential treatment" exists and is fully recognized by the ECT. In addition, the final part of Article 25(2) of the ECT seems specifically to recognize not only that rules of an Economic Integration Agreement, but also their further implementation by secondary measures prevail and are recognized by the ECT (Resp. Counter-Memorial, paras. 55-57).
161.
As regards the purpose of the ECT, the Respondent argues that Article 2 of the ECT refers to the European Energy Charter process which was planned since its very beginning as a tool to regulate relations between the European and the Eastern Europe/Soviet Union markets, and not to regulate the EU internal market for energy (Resp. Counter-Memorial, paras. 68-70).
162.
The Respondent further contends that the fact that the ECT does not apply to disputes between an investor of an EU Member State and another EU Member State is also confirmed by the practice of EU Member States as well as the EU. According to the Respondent, no investor-state arbitration concerning a purely intra-EU situation was instituted under the ECT until the Electrabel v. Hungary case in 2007. Starting from that very first arbitration, the EU and its Member States objected to the jurisdiction of arbitral tribunals, and the European Commission ("EC") repeatedly asked to intervene as amicus curiae to the same end. This shows that the EU and its Member States have maintained a judicial behavior that confirms their intention for the ECT not to cover intra-EU situations (Resp. Counter-Memorial, paras. 72-76; Resp. Reply, paras. 49, 110-111; Resp. Rejoinder, para. 78).
163.
With respect to Article 16 of the ECT, the Respondent contends that EU law represents a more developed and articulated legal system which is without doubt more favorable and offers more articulated forms of protection to the investors and their investments than a multilateral treaty such as the ECT. EU law includes a complete set of substantive and procedural rules that govern investments of EU investors in other EU Member States. Those rules cover all stages of the investment life cycle (Resp. Counter-Memorial, paras. 58-59, 94-95, 133; Resp. Reply, para. 61; Resp. Achmea Comments, paras. 34-38).
164.
According to the Respondent, even leaving aside Article 16 of the ECT, Article 30 of the VCLT leads to the same conclusion (Resp. Counter-Memorial, para. 96). In particular, the Respondent submits that Article 30 of the VCLT applies to the succession of treaties between the ECT and EU law as it stands after the entry into force of the Lisbon Treaty. According to the Respondent, the International Law Commission’s Report on Fragmentation of International Law71 does not require exact coincidence of provisions or objectives as regards the "same subject-matter" requirement. As the provisions of EU law and of the ECT both level the playing field, ensure development and factually cover the same situation of an investor entering a foreign market, they relate indeed to the same subject-matter; hence, Article 30 of the VCLT applies (Resp. Counter-Memorial, paras. 87-92).
165.
The Respondent further refers to Article 41 of the VCLT and argues in this regard that, also in the light of Article 16 of the ECT, the Lisbon Treaty is a perfectly legitimate inter se agreement derogating from the general rules of the ECT by reinforcing the treatment of investors and investments within the EU. By adopting the Lisbon Treaty, EU Member States did not affect, by any means directly nor indirectly the enjoyment by the other Contracting Parties and their investors of their respective rights under the ECT (Resp. Counter-Memorial, paras. 98-104; Resp. Reply, paras. 62-63).
166.
As regards the CJEU’s Achmea judgement, the Respondent submits that in terms of implications of this judgement, no distinction can be drawn between bilateral and multilateral treaties or treaties exclusively undertaken by EU Member States (like BITs) as opposed to agreements to which the EU itself is party (like the ECT). The reference in the Achmea judgement to international agreements also signed by the EU should be read as addressing situations where obligations against third parties are undertaken. What is decisive, in the light of the CJEU’s jurisprudence, is whether an international tribunal has to apply and interpret EU law. It is clear therefore, according to the Respondent, that arbitral tribunals having the features of a tribunal based on the ECT are, as far as intra-EU situations are concerned, incompatible with EU law (Resp. Reply, paras. 66-109; Resp. Achmea Comments, paras. 11-17).
167.
The Respondent further relies on the EC Communication of 19 July 201872 as well as on the Declaration of the Representatives of the Governments of the Member States of 15 January 201973 in support of its submission that the investor-State arbitration clause in the ECT is incompatible with the EU Treaties and must therefore be disapplied. According to the Respondent, the Declaration is a binding instrument emanating from sovereign States and providing an authentic interpretation of the scope of application of Article 26 of the ECT as far as the Contracting States signing the Declaration (that include Italy and the Netherlands) are concerned. A minority of EU Member States simultaneously signed a parallel declaration that is not an objection to the 22 Member States Declaration, but only declared the intention to wait for an express decision of the CJEU to provide an authoritative interpretation on the question (Resp. Reply, paras. 1-51; Request for Termination, p. 2; Resp. Rejoinder, paras. 1-57).
168.
Moreover, the Respondent contends that the 22 Member States Declaration is not a reservation, prohibited under Article 46 of the ECT, but reflects a subsequent agreement regarding the interpretation of the ECT within the meaning of Article 31(3)(a) of the VCLT. The Respondent also argues that the Declaration constitutes, for the purposes of Article 31(3)(b) of the VCLT, subsequent practice in the application of the ECT establishing agreement of the Parties regarding its interpretation. These are primary means of treaty interpretation. Hence, while it is undisputed that an arbitral tribunal has the authority to interpret the ECT, it is called to rely upon the pertinent legal instruments (Resp. Rejoinder, paras. 58-63; Request for Termination, p. 2).
169.
Finally, the Respondent submits that, if the Tribunal resolved to proceed to the merits phase and issue an award, the latter would be unenforceable and subject to non-recognition duties. According to the Respondent, there is a general duty of a tribunal to render an enforceable award, as exemplified in Article 40 of the ICC Rules of Arbitration, in order to preserve the integrity of the arbitral function. This aspect alone should warrant the Tribunal’s acceptance of the Respondent’s jurisdictional objection or, if the Tribunal prefers to treat this as a matter of admissibility, the refusal to exercise its jurisdiction in the present case. In addition, the Respondent argues that a tribunal in this situation should decline to exercise its jurisdiction in the light of the principles of international comity and forum non conveniens (Resp. Reply, paras. 120-123; Resp. Achmea Comments, paras. 44-45; Resp. Rejoinder, paras. 147-164).

b) Claimant’s Position

170.
The Claimant argues that the text, the context and the object and purpose of the ECT confirm that the Tribunal has jurisdiction to hear the present dispute under Article 26 of the ECT (Cl. Counter-Memorial, para. 14).
171.
As regards the first element, the Claimant submits that nothing in the language of Article 26 of the ECT supports the Respondent’s jurisdictional objection. The clear text of the first paragraph of this provision states that "[d]isputes between a Contracting Party and an Investor of another Contracting Party relating to an Investment of the latter in the Area of the former" may be submitted to ICSID arbitration. The provision applies to disputes between any Contracting Party to the ECT, including Italy, and an investor of any other Contracting Party, including the Netherlands. The ordinary meaning of Article 26 of the ECT is that the Contracting Parties’ consent to arbitration is unconditional and that there is no exception for disputes between EU investors and EU Member States (Cl. Counter-Memorial, paras. 15-27).
172.
As concerns secondly other relevant provisions of the ECT, the Claimant contends that nothing in Article 16 of the ECT supports the Respondent’s position that EU law should prevail over the ECT, as the Respondent fails to establish that EU law represents a more developed and articulated legal system than the ECT. To the contrary, according to the Claimant, the ECT provides protection to investors that does not exist under EU law such as investor-State arbitration. Furthermore, Article 25 of the ECT means that most-favored nation treatment obligations do not require EU Member States to extend the rights of the EU internal market to investors from beyond the EU. At the same time, nothing supports the Respondent’s assertion that this provision establishes some preferential treatment of intra-EU relations or that rules of EU law prevail over the ECT.
173.
Moreover, the Claimant argues that the definitions of "Regional Economic Integration Organisation"("REIO") and "Area" in Article 1(3) and Article 1(10) of the ECT, respectively, do not prevent EU investors from arbitrating energy investment disputes. In particular, nothing in Article 1 of the ECT suggests that the existence of an Area for a REIO excludes the existence of Areas of Member States for which the latter remain responsible. Furthermore, the existence of Decision No. 1 of the European Energy Charter Conference, according to which in case of a conflict between the Svalbard Treaty and the ECT the former shall prevail, manifests that, when the ECT Contracting Parties intended for the ECT to be displaced by another treaty in case of a conflict, they clearly expressed their intent to do so. Yet, the ECT Contracting States did not include such exception regarding the EU Treaties (Cl. Counter-Memorial, paras. 28-52).
174.
Thirdly, the Claimant submits that the object and purpose of the ECT of creating a broader European energy market fully accords with the application of the ECT to all its Contracting Parties and their investors without exception. Hence, the ECT creates obligations binding upon all Contracting Parties, including EU Member States in their mutual relations (Cl. Counter-Memorial, paras. 53-64).
175.
As regards the Respondent’s submissions on subsequent practice, the Claimant contends that the self-interested positions of a minority of ECT Contracting States cannot establish a subsequent practice in the application of the ECT that would establish the agreement of the parties regarding its interpretation in the meaning of Article 31(3)(b) of the VCLT. In addition, when the Respondent asserts that all EU Member States have always raised the intra-EU objection, the Respondent is itself an exception to the asserted rule, since it did not raise the objection in the Blusun v. Italy case, where only the EC did (Cl. Counter-Memorial, para. 69; Cl. Rejoinder, paras. 136-137).
176.
Moreover, the Claimant argues that the allocation of competences between the EU and its Member States does not detract from the grant of jurisdiction in Article 26 of the ECT. In particular, EU Member States that are parties to the ECT cannot be excused from their treaty obligations, which they accepted upon signing and ratifying the ECT, simply because they are Members of the EU. Furthermore, the EU and its Member States have never issued a so-called "declaration of competence", as they have done in the case of many other treaties, to the effect that the ECT would not be binding between EU Member States. In fact, the EC did propose a so-called "disconnection clause", but the other ECT Contracting Parties rejected it so that the EC withdrew its proposal. Hence, the ECT Contracting Parties declined to adopt a "Community exception" with the consequence that EU Member States, in their mutual relations, are not exempted from their ECT obligations (Cl. Counter-Memorial, paras. 71-111; Cl. Rejoinder, paras. 118-135).
177.
Inasmuch as the Respondent claims that Article 26(6) of the ECT requires the Tribunal to apply EU law as part of the "applicable rules and principles of international law", the Claimant submits that Article 26(6) of the ECT deals with the substantive law governing the merits of the case, but not with issues of jurisdiction. In a similar vein, according to Article 42 of the ICSID Convention, a tribunal shall decide a dispute, i.e. the merits of the case, while the jurisdiction of an ICSID tribunal is governed by Article 25 of the ICSID Convention and by the instruments expressing consent (Cl. Rejoinder, paras. 25-33).
178.
In addition, the Claimant objects to the Respondent's argument that Article 30 of the VCLT is relevant with respect to the succession of treaties between the ECT and the Lisbon Treaty. Article 30 of the VCLT applies in case of an incompatibility between successive treaties relating to the same subject-matter. However, according to the Claimant, none of these conditions is fulfilled here. First, the ECT and the EU Treaties do not relate to the same subject-matter. Secondly, these treaties co-exist and can be applied harmoniously. In particular, Article 26 of the ECT is compatible with Articles 267 and 344 of the TFEU as well as with the principle of mutual trust under EU law. Thirdly, the pertinent provisions of EU law predated the ECT; hence, the ECT is the applicable lex posterior. That the Lisbon Treaty was concluded after the entry into force of the ECT is of no relevance in this regard (Cl. Counter-Memorial, paras. 112-149, 159-169; Cl. Rejoinder, paras. 164, 166).
179.
The Claimant further argues that, if an incompatibility should exist between the ECT and the EU Treaties, this conflict would be governed by Article 16 of the ECT by virtue of which the ECT Contracting Parties expressly derogated from Article 30 of the VCLT. Article 16 of the ECT resolves the conflict in favor of the treaty that offers the most favorable protections to the investors and the investment, including substantive provisions and the right to dispute resolution. According to the Claimant, the ECT is more protective of investors' rights than the EU Treaties because the ECT provides for investor-State arbitration, while EU law does not, and because the ECT offers protections at all stages of the investment whereas EU law mostly covers the pre-investment phase (Cl. Counter-Memorial, paras. 154-158; Cl. Rejoinder, paras. 164-165).
180.

As far as Article 41 of the VCLT is concerned, the Claimant rejects the Respondent's argument that the Lisbon Treaty is a permissible inter se modification of the ECT. Nowhere does the Lisbon Treaty state that it was intended to modify the ECT. In addition, under Article 41(2) of the VCLT, any proposed modification must be notified to all signatories; no such notification was provided in the present case. Moreover, also in a substantive perspective, such modification would be an impermissible inter se agreement because the Lisbon Treaty would, due to its lower level of protection of investors' rights, be incompatible with the object and purpose of the ECT. Finally, according to the applicable lex specialis, i.e. Article 1(13) read in conjunction with Article 33 of the ECT, the negotiations of the Lisbon Treaty would have had to be "authorized" and its text "adopted" by the Charter Conference; however, this was not the case (Cl. Counter-Memorial, paras. 170-182; Cl. Rejoinder, paras. 167-171).

181.
The Claimant further submits that numerous arbitral tribunals, operating on the basis of the ECT, have repeatedly and consistently rejected the argument that the ECT did not apply to the inter se relations between EU Member States that were ECT Contracting Parties. As these tribunals have come to their conclusion by applying the ECT and the same principles of international law that the present Tribunal is called upon to apply, the Claimant invites the present Tribunal to follow their example (Cl. Counter-Memorial, paras. 183-198; Cl. Rejoinder, paras. 136-148; Cl. PHB, para. 171).
182.
Turning specifically to the Achmea judgement, the Claimant sees no support for the Respondent's assertion that this judgement confirms the lack of jurisdiction of arbitral tribunals under Article 26 of the ECT in intra-EU investment disputes. In particular, the Claimant contends that the Achmea judgement is irrelevant to the present dispute, since, differently from the situation before the CJEU, the ECT is a treaty also concluded by the EU and since the policy and constitutional concerns underlying the Achmea judgement are not pertinent to the legal regime agreed to by the EU and the other ECT Contracting Parties. Furthermore, according to the Claimant, the present Tribunal's jurisdiction, including the validity of the Respondent's offer to arbitrate, is to be determined exclusively on the basis of the ECT and international law. In this regard, the Respondent does not explain how the Achmea judgement could possibly impact the agreement on which this Tribunal is based (Cl. Achmea Comments, p. 4-7; Cl. Counter-Memorial, paras. 208-244; Cl. Rejoinder, paras. 99-117).
183.
As concerns the aforementioned EC Communication,74 the Claimant argues that the Respondent makes general comments about a non-binding policy document issued by the EC which discusses general principles of EU law, but suggests no incompatibility between EU law and the ECT (Cl. Rejoinder, paras. 152-160).
184.
Furthermore, with respect to the aforementioned EU Member States Declaration,75 the Claimant submits that this Declaration is merely a political statement without legal effect and that it reflects the position of some, but not all EU Member States’ representatives. This is manifested by the fact that, on 16 January 2019, other EU Member States (Finland, Luxembourg, Malta, Slovenia and Sweden) issued another declaration on the same topic,76 and that, on the same date, Hungary also issued a separate declaration.77 Hence, there is no consensus among EU Member States on the legal consequences of the Achmea judgement with respect to the ECT. Moreover, the Claimant rejects the Respondent’s argument that the Declaration falls within Article 31(3)(a) or Article 31(3)(b) of the VCLT since it does not reflect the agreement of all ECT Contracting Parties (Reply to the Request for Termination, p. 2-6; Cl. Reply, paras. 377-389).
185.
Finally, the Claimant contends that there is no merit in the Respondent’s argument that an award in the present case would be unenforceable. Of the 154 States that have ratified the ICSID Convention, only 27 are EU Member States. This leaves 127 States not subject to EU law where the award could be enforced. While it is undisputed that arbitrators should make every reasonable effort to ensure enforceability of the award, an arbitral tribunal should not frustrate the arbitration agreement in the interests of ensuring enforceability. Hence, according to the Claimant, the award’s supposed unenforceability could not justify a finding of lack of jurisdiction or inadmissibility in the present case (Cl. Rejoinder, paras. 72-97).

c) The European Commission’s Position

186.
The EC Submission (see para. 51) exclusively concerns the "intra-EU objection", notably the question as to whether Article 26 of the ECT, i.e. a provision of a treaty that forms part of EU law and covers a field regulated by EU law, namely energy law, contains an offer for arbitration from Italy to investors from the Netherlands, and, if so, whether that offer for arbitration is valid and applicable (EC Submission, para. 1). The observations made by the EC are presented subsequently in summary fashion. The Tribunal will consider them, however, only to the extent that they relate to arguments also made by one of the Parties to the present dispute.
187.
The EC first submits that the proper interpretation of Article 26 of the ECT - in the light of the wording, context as well as the object and purpose of the ECT, as established by reference to prior international agreements referenced in the ECT’s preamble and the circumstances of its conclusion - leads to the conclusion that the arbitration offer made by the Respondent when ratifying the ECT is solely addressed to investors from Contracting Parties other than EU Member States and did not create any international obligations between Member States inter se. According to the EC, all ECT signatory states, including the non-EU Member States, were fully aware that the EU was using its internal shared competence for energy and had set up an autonomous regime which should not be impacted or overlapped by the ECT. The EC further submits that the ECT Contracting Parties have been made aware of the special features of the EU legal order and the particularities of transfer of competences to REIOs, as notably recognized in Article 1(3) and 1(10) of the ECT. Hence, according to the EC, there exists no intra-EU offer for arbitration with the consequence that the present Tribunal should decline jurisdiction (EC Submission, paras. 8-17).
188.

Even if Article 26 of the ECT were construed in the opposite manner, i.e. as entailing an offer also to EU investors, the EC argues that EU law prevails in such a case. In this regard, the EC submits that EU law is applicable to the dispute as a matter of "applicable rules and principles of international law" between Italy and the Netherlands pursuant to Article 26(6) of the ECT. According to the EC, it is generally recognized that the conflict rules in Article 30(3) to (5) of the VCLT were conceived as residual rules. In contrast, EU law provides for a special conflict rule, namely the primacy of EU law. This rule applies not only vis-à-vis the domestic laws of each Member State but also vis-à-vis international treaties concluded between two Member States, regardless of whether these were concluded before or after accession to the EU (EC Submission, paras. 3, 18-27).

189.

Furthermore, even if one were to consider that the rules applicable to a conflict between the ECT and EU law are the general rules of conflict contained in the VCLT, the EC considers that the inter se obligations between EU Member States would have been superseded on the basis of Article 30(4)(a) of the VCLT because the ECT and the EU Treaties relate to the same subject-matter. According to the EC, Article 16 of the ECT does not lead to a different conclusion since that provision does not contain a rule of conflict, but only a rule of interpretation. In addition, even if one were to consider Article 16 of the ECT as a special conflict rule, it would have been overruled by the later special conflict rule of the primacy of EU law and Article 351 of the TFEU (EC Submission, paras. 28-35).

190.

In addition, the EC rejects the reasoning of the Masdar v. Spain award78 according to which the Achmea judgement is limited to bilateral investment treaties, but does not apply to a treaty such as the ECT. According to the EC, the phrase "a provision in an international agreement concluded by the Member States"79 in this judgement clearly includes treaties such as the ECT, if applied on an intra-EU basis. Hence, it follows from the Achmea judgement that intra-EU investment arbitration, irrespective of whether it is based upon bilateral or multilateral instruments of investment protection, is precluded by the general principles of autonomy and primacy of EU law, by Article 19 of the Treaty on European Union ("TEU") as well as by Articles 267 and 344 of the TFEU (EC Submission, paras. 2, 4, 38-39).

(2) The Tribunal’s Analysis

191.

In addressing the Respondent’s first jurisdictional objection, as to whether there exists, on the basis of the ECT, jurisdiction with respect to claims of an investor of an EU Member State against another EU Member State in relation to an investment in this State ("ECT intra-EU claims"), the Tribunal will proceed, as follows: (a) it will first clarify whether EU law is law to be applied by investment tribunals when deciding on jurisdiction regarding ECT intra-EU claims (see paras. 192 et seq.); (b) secondly, in view of an affirmative response to the previous question, the Tribunal will have to determine whether the ECT or EU law is the prevailing law in decisions on jurisdiction regarding ECT intra-EU claims (see paras. 201 et seq.); (c) thirdly, the Tribunal will turn to the question of whether EU law is relevant for the interpretation of the ECT, notably its Article 26 (see paras. 214 et seq.); (d) fourthly, the Tribunal will address the further contention that a modification, according to Article 41 of the VCLT, has been effectuated with regard to the ECT, notably its Article 26, as far as intra-EU claims are concerned (see paras. 226 et seq.); (e) finally, the Tribunal will deal with the question of whether the impact which the CJEU’s Achmea judgement may have upon the Claimant’s ability to enforce this Award should be a relevant concern for the present Tribunal (see paras. 232 et seq.).

a) EU Law as Law to be Applied by Investment Tribunals

192.
In their submissions concerning the "intra-EU objection", both the Respondent and the Claimant repeatedly refer to provisions of EU law and consider these provisions to be relevant to the dispute at hand, notably to the Tribunal’s decision on the Respondent’s jurisdictional objection. Accordingly, the Tribunal must first clarify whether, and to what extent, EU law, from the perspective of an investment tribunal established on the basis of the ECT, forms part of the law to be applied by the tribunal.
193.
The relevant parts of Article 26 of the ECT state in this regard:

(1) Disputes between a Contracting Party and an Investor of another Contracting Party relating to an Investment of the latter in the Area of the former, which concern an alleged breach of an obligation of the former under Part III shall, if possible, be settled amicably.

(2) If such disputes cannot be settled according to the provisions of paragraph (1) within a period of three months from the date on which either party to the dispute requested amicable settlement, the Investor party to the dispute may choose to submit it for resolution:

(a) to the courts or administrative tribunals of the Contracting Party party to the dispute;

(b) in accordance with any applicable, previously agreed dispute settlement procedure; or

(c) in accordance with the following paragraphs of this Article.

(3) (a) Subject only to subparagraphs (b) and (c), each Contracting Party hereby gives its unconditional consent to the submission of a dispute to international arbitration or conciliation in accordance with the provisions of this Article.

[...]

(4) (4) In the event that an Investor chooses to submit the dispute for resolution under subparagraph (2)(c), the Investor shall further provide its consent in writing for the dispute to be submitted to:

(a) (i) The International Centre for Settlement of Investment Disputes,

established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington, 18 March 1965 (hereinafter referred to as the "ICSID Convention"), if the Contracting Party of the Investor and the Contracting Party to the dispute are both parties to the ICSID Convention;

[...]

(6) 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.

194.

As regards the question of what the applicable law for decisions on jurisdiction is and, consequently, whether EU law forms part of the applicable law from the perspective of an investment tribunal established on the basis of the ECT,80 two interpretations of Article 26 of the ECT have been put forward.

195.

The first approach, which is supported by the Respondent (see para. 154), relies on Article 26(6) of the ECT according to which a tribunal "shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law". In case Article 26(6) of the ECT applies, such rules and principles of international law would also include EU law inasmuch as it is based on international treaties concluded between the EU Member States, i.e. the TEU and the TFEU,81 including judgements of the CJEU.82 In this regard, it deserves mention that the CJEU's Achmea judgement expressly characterizes EU law as "deriving from an international agreement between the Member States".83

196.
The opposite view, which is defended by the Claimant (see para. 177), insists that, with respect to applicable law, a distinction must be made between decisions on jurisdiction and decisions on the merits of a dispute. Accordingly, the reference in Article 26(6) of the ECT to "the issues in dispute" only covers the decision on the merits whereas the applicable law for decisions on jurisdiction is to be derived from Article 25 of the ICSID Convention and by the instruments expressing consent.
197.

As indicated by the Claimant, in the context of the interpretation of the ICSID Convention, a similar controversy exists in relation to Articles 25 and 42 of the Convention. According to Article 42(1) of the ICSID Convention, "[t]he Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable". Some arbitral tribunals have relied on this provision in deciding on questions of jurisdiction and have thus also applied other "rules of international law".84 Others have rejected this approach and stated that the reference to "decid[ing] a dispute" in Article 42(1) of the ICSID Convention only covers the decision on the merits, whereas questions of jurisdiction are to be decided exclusively on the basis of Article 25 of the ICSID Convention as well as the treaty provisions containing the offer to consent to arbitration.85 The second view appears to be the prevailing one.86

198.
The arbitral tribunals deciding on ECT intra-EU claims have not adopted a consistent view on this issue. On the one hand, the Vattenfall v. Germany tribunal confirmed the view that "the law applicable to the assessment of its jurisdiction is the ECT, in particular Article 26 thereof, in conjunction with Article 25 of the ICSID Convention"87 (see para. 196). On the other hand, other tribunals have not taken issue with applying Article 26(6) of the ECT in regard to jurisdictional objections (see para. 195).88
199.
In the first alternative, EU law does not form part of the law to be applied by investment tribunals in decisions on jurisdiction concerning ECT intra-EU claims. As only the ECT is applicable, the problem of how to deal with successive treaties (see infra b) does not arise in this constellation. Yet, EU law may still be relevant for the question of interpretation of the ECT, notably its Article 26 (see infra c). In the second alternative, EU law is part of the applicable law in jurisdictional decisions regarding ECT intra-EU

claims. Consequently, it is relevant for all questions discussed subsequently, including that of successive treaties.

200.
The Tribunal does not need to decide the question of which of the alternatives is the preferable one at this stage, but will return to it in the following section (see para. 213).

b) ECT or EU Law as the Prevailing Law

201.
If EU law forms part of the applicable law in decisions on jurisdiction regarding ECT intra-EU claims (i.e. the second alternative), the question arises whether, in case a conflict between the ECT and EU law exists, the ECT, notably Article 26 thereof, or rather EU law prevails. The existence of such a conflict is suggested by the aforementioned Achmea judgement. This judgement considers an international agreement "under which an investor from one of [the] 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 had undertaken to accept",89 to be incompatible with Articles 267 and 344 of the TFEU due to the interference of the jurisdiction of such tribunals with the fundamental principle of autonomy of EU law.90
202.

While it is true that the CJEU has not yet expressly ruled on the question91 of whether its ruling in Achmea solely applies to arbitral tribunals based on a bilateral investment agreement (as was the case in Achmea) – as argued by the Claimant (see para. 182)92 – or also extends to multilateral treaties with the participation not only of the EU Member States, but of the EU itself, namely the ECT – as submitted by the Respondent (see para. 166) and the EC (see para. 190)93 –, the Tribunal assumes, for the sake of argument, that the latter is the case and that therefore a conflict between the ECT and EU law exists in regard to the jurisdiction of ECT-based arbitral tribunals such as the present one.94

203.
The first provision to consider for the Tribunal in this regard is Article 30 of the VCLT which deals with the "Application of successive treaties relating to the same subjectmatter" and to which also the Parties (see paras. 164, 178) as well as the EC (EC Submission, paras. 22 et seq.) have referred in their respective submissions.
204.
According to Article 30(3) of the VCLT, in case of successive treaties relating to the same subject-matter, "[w]hen 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, the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty". Pursuant to Article 30(4) of the VCLT, the rule that the later treaty prevails (lex posterior derogat legi priori) also governs situations where the parties to the earlier and later treaties do not coincide, but its effect is then limited to the States which are parties to both treaties. This is the relevant scenario in the present context, as the relationship of, on the one hand, the ECT and, on the other hand, the EU Treaties, i.e. the TEU and the TFEU, which are the foundation of EU law (Article 1(2) of the TEU), is under scrutiny.
205.

However, in order for Article 30 of the VCLT to apply, the treaties in question must have the "same subject-matter". As far as the ECT and the EU Treaties are concerned, according to numerous arbitral tribunals, this requirement is not met.95 In addition, with respect to the concept of "successive treaties", there are different views as to whether the ECT or the EU Treaties qualify as the earlier or later treaties within the meaning of Article 30 of the VCLT. The ECT was adopted in 1994 and entered into force in 1998. While it is true that Articles 267 and 344 of the TFEU, which are the critical provisions of EU law from the point of view of the Achmea judgement (see para. 201), form part of the TFEU which was introduced by the 2007 Treaty of Lisbon (which entered into force in 2009), these provisions have existed in substantively similar form since the 1957 Treaty of Rome establishing the European Economic Community (Articles 177 and 219 of the EEC Treaty).96

206.

The Tribunal does not have to take a stand on these questions since, according to Article 30(2) of the VCLT, "[w]hen a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail". In this regard it is relevant that the ECT contains an Article 16 ("Relation to Other Agreements"), which provides:

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.97

207.
According to its terms (arg. "construed"), Article 16 of the ECT appears to represent a rule of interpretation rather than a conflict rule. This has been particularly emphasized by the EC (EC Submission, para. 35), but was also brought up by the Respondent (Resp. Counter-Memorial, para. 58). In contrast, the Claimant has endorsed the contrary position, i.e. that Article 16 of the ECT is a conflict rule (Cl. Counter-Memorial, para. 154; Cl. Rejoinder, para. 165). Arbitral tribunals98 have also considered Article 16 of the ECT to work as a conflict rule, in case provisions of two treaties are not compatible with each other, and the present Tribunal shares this view. Hence, Article 16 of the ECT is lex specialis vis-à-vis Article 30 of the VCLT and is therefore to be applied preferentially.
208.
In this regard, the Tribunal notes that the question of whether the ECT and the EU Treaties have the "same subject-matter", which is crucial to the operation of Article 30 of the VCLT (see para. 204), does not arise in the context of Article 16 of the ECT. Inasmuch as this provision requires that the EU Treaties "concern the subject matter of Part III or V" of the ECT, thus calling for a significantly weaker link than Article 30 of the VCLT, the Tribunal is satisfied that the substantive guarantees of freedom of establishment and free movement of capital (Articles 49 and 63 of the TFEU) and the mechanism of judicial protection of EU law (notably in the interpretation given to it in the Achmea judgement) overlap with the standards of investment protection and the dispute settlement mechanism in Parts III and V of the ECT to a sufficient degree for this condition of the application of Article 16 of the ECT to be met.
209.
Furthermore, Article 16 of the ECT operates irrespective of the question of timing, as it applies to both prior and subsequent international agreements relating to Part III ("Investment Promotion and Protection"; Articles 10-17 of the ECT) or Part V of the ECT ("Dispute Settlement"; Articles 26-28 of the ECT). Accordingly, the issue of whether the ECT is the earlier or later legal instrument vis-à-vis the EU Treaties, which is of relevance with respect to Article 30 of the VCLT, does not affect the application of the lex specialis of Article 16 of the ECT.
210.
According to the clear terms of this provision (see para. 206), neither Part III and V of the ECT nor the terms of the other agreement (in casu the EU Treaties) shall be construed to derogate from any substantive guarantee of investment protection or from any right of dispute resolution with respect thereto, "where any such provision is more favourable to the Investor or Investment".
211.

Accordingly, the effect of Article 16 of the ECT essentially depends on whether the substantive and procedural guarantees of either Part III/V of the ECT or of EU law are more favorable to EU investors and investments. The Parties have taken contrary positions on this question. On the one hand, the Respondent argues that EU law represents without doubt a more developed legal system offering more articulated forms of protection, both at the substantive and procedural levels, to the investors and their investment than a multilateral treaty such as the ECT (see para. 163). On the other hand, the Claimant contends that the ECT provides protection to investors that does not exist under EU law such as investor-State arbitration (see para. 172). In the arbitral jurisprudence on the subject99 it has been affirmed that Article 26 of the ECT is at least in some aspects more favorable to investors and investments than EU law, thus preventing a reading of Article 16 of the ECT which would limit EU investors’ rights to dispute resolution under the ECT.100 In particular, the Masdar v. Spain tribunal has found that

Article 16 of the ECT affords precedence to the more favourable investor-protection provisions of Article 26 of the ECT of which Claimant has availed itself over any conflicting provision of the EU treaties. They are more favourable, not least, because they obviate the need to bring the claim in the Spanish courts and Respondent cannot derogate from Article 26, pursuant to which it has given unconditional consent to arbitration.101

212.
The Tribunal embraces this statement and thus concludes that at least some of the provisions of Part III and Part V of the ECT are more favorable to investors and investments with respect to ECT intra-EU claims than EU law. In particular, the mere existence of Article 26 of the ECT and the possibility of having access to international arbitration can be seen as an advantage of the ECT over the EU system of judicial remedies. As a consequence, from the perspective of the ECT which the Tribunal must primarily apply, the provisions of the ECT, notably its Article 26, prevail over those of EU law.
213.
This is basically the end of the matter. In the light of the foregoing reasons, the Respondent’s intra-EU objection must fail. The Tribunal reaches this result, irrespective of what position one takes with respect to the question of whether EU law forms part of the law to be applied by an ECT-based investment tribunal in matters of jurisdiction (see paras. 192 et seq.). Either one denies the applicability of EU law in the first place (see para. 196) or one accepts its applicability (see para. 195), but, when called to apply Article 16 of the ECT, one gives preference to Article 26 of the ECT. In either case, the ECT emerges as the law to be applied by the Tribunal.

c) Relevance of EU Law for the Interpretation of the ECT, notably Article 26

214.
In order to complete the picture, however, the Tribunal must also address the issue of treaty interpretation, notably regarding the question of whether EU law in general and the Achmea judgement in particular have an indirect impact on jurisdiction regarding ECT intra-EU claims via the interpretation of (Article 26 of) the ECT.
215.
To start with, it is generally accepted that the ECT, and notably its Article 26, must be interpreted in accordance with Articles 31 to 33 of the VCLT and notably the general rule of interpretation in Article 31(1) of the VCLT according to which "[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms in their context and in the light of its object and purpose".102
216.

Throughout the proceedings, the Claimant (see paras. 170 et seq.) has consistently opposed the argument that the proper interpretation of the relevant provisions of the ECT would lead to the exclusion of intra-EU claims from ECT dispute settlement, since plainly no such restriction exists in the language of the ECT. In a similar vein, numerous arbitral tribunals have unanimously stated that such carve-out or disconnection clause with regard to intra-EU claims could not be implicit but would have to be express and clear.103

217.
The Tribunal endorses this position. Prior to the conclusion of the ECT, the EU had been aware of and had actually used express disconnection clauses so as to ensure that provisions of a mixed agreement would not apply between EU Member States.104 Furthermore, as opposed to the "intra-EU scenario" on which the ECT is silent, the ECT includes provisions which explicitly limit its application, notably with respect to the Svalbard Treaty105 as well as in Article 28 of the ECT. Moreover, the EU had proposed the insertion of a disconnection clause during the negotiations of the ECT, but the clause was ultimately dropped from the draft treaty.106
218.
Furthermore, while the Respondent reads Article 1(3) and (10) of the ECT, which define the terms "Regional Economic Integration Organisation" and "Area" for the purposes of that treaty, to prevent Article 26(1) of the ECT from applying to "intra-EU disputes" (see paras. 158-159) and is joined in this reading by the EC (EC Submission, para. 13), the Tribunal cannot find anything in the language of these provisions that would support such a far-reaching conclusion.107 The Tribunal has before it claims of a Dutch investor against Italy, i.e. a dispute between a Contracting Party and an investor of another Contracting Party. That the home and host States also form part of the EU as a REIO is of no relevance in this regard.
219.
Moreover, as regards the Respondent’s contention that Article 25 of the ECT can be reasonably interpreted as being based on the understanding that between the ECT Contracting Parties that are EU Member States a preferential treatment exists (see para. 160), the Tribunal would agree. It would add, however, that the fact that the EU Member States have concluded an "Economic Integration Agreement" within the meaning of Article 25(1) of the ECT and are therefore not required under their most-favored nation treatment obligations to extend preferential treatment within the EU internal market to non-EU investors has no implications for the question of what treatment is to be accorded to EU investors pursuant to the precepts of the ECT.108
220.
In addition, the Respondent submits that the rules and principles of EU law, in particular as authoritatively interpreted by the CJEU in the Achmea judgement and as established in the EC Communication of 2018,109 should be taken into account by the Tribunal when interpreting the ECT, by virtue of Article 31(3)(c) of the VCLT as embodying a "duty of consistent interpretation" (Resp. Rejoinder, paras. 109, 127-135). Indeed, pursuant to Article 31(3)(c) of the VCLT, when a treaty is interpreted, "any relevant rules of international law applicable in the relations between the parties" shall be taken into account together with the context. The Tribunal is, however, not convinced that this provision can be relied upon to "carve out" intra-EU claims from the scope of Article 26 of the ECT that is couched in clear terms.
221.

Article 31(3)(c) of the VCLT is not to be applied in isolation, but as an integral part of the general rule of interpretation as enshrined in Article 31(1) of the VCLT (see para. 215). The Tribunal agrees that the role of this provision in the exercise of treaty interpretation cannot be to introduce external elements into a treaty with the effect of rewriting the treaty altogether.110 Against this background, neither the ordinary meaning of the terms used by the ECT nor the systematic analysis of its provisions offer a basis for the Tribunal to conclude that, by drawing on the findings of the CJEU in the Achmea judgement or the EC’s statements in its legally non-binding 2018 Communication, the ECT, and notably its Article 26, is to be construed as removing intra-EU claims from ECT dispute settlement.

222.
This also holds true for the Respondent’s reference to the ECT’s object and purpose (see para. 161). According to Article 2 of the ECT, this treaty "establishes a legal framework in order to promote long-term cooperation in the energy field, based on complementarities and mutual benefits, in accordance with the objectives and principles of the Charter". In particular, the Respondent claims that the European Energy Charter process was planned since its very beginning as a tool to regulate relations between the European and the Eastern Europe/Soviet Union markets (Resp. Counter-Memorial, para. 69; see also EC Submission, para. 11). The Claimant, in contrast, reads this clause as creating a broader European energy market applying to all its Contracting Parties and their investors without exception (Cl. Counter-Memorial, para. 58). Irrespective of whether one rather leans towards the one or the other interpretation of Article 2 of the ECT, in the Tribunal’s view, it would mean putting too much burden on the function of teleological interpretation within the general framework of Article 31 of the VCLT to go as far as construing the ECT, and notably its Article 26, as excluding intra-EU claims from ECT dispute settlement altogether on this shaky basis.
223.

Moreover, inasmuch as the Respondent (see paras. 167-168) contends that the Declaration of 22 EU Member States111 reflects a subsequent agreement regarding the interpretation of the ECT within the meaning of Article 31(3)(a) of the VCLT or constitutes, for the purposes of Article 31(3)(b) of the VCLT, subsequent practice in the application of the ECT establishing agreement of the Parties regarding its interpretation, the Tribunal shares the reservations articulated by the Claimant (see para. 184). To be sure, this Declaration, as well as the two further Declarations, which were adopted by the remaining EU Member States,112 may have some interpretative value. Yet, being non-binding instruments and not reflecting a consensus of all EU Member States, let alone all ECT Contracting Parties, these Declarations cannot change the clear terms of the ECT and in particular its Article 26.113

224.

In addition, the Tribunal does not find merit in the Respondent’s claim (Request for Termination, p. 2; Resp. Rejoinder, paras. 4, 8, 51) that the Declaration of 22 EU Member States can be broken down into a bundle of bilateral declarations - one of them between Italy and the Netherlands - that provide an authentic interpretation of the scope of application of Article 26 ECT as far as the participating ECT Contracting Parties are concerned. In the Tribunal’s view, the Declaration remains what it is: an instrument which becomes part of, and is relevant to, the exercise of interpretation that is guided by Article 31(1) of the VLCT. Under this regime, there is no such thing as "authentic interpretation" with the effect of directly changing the treaty provisions to be applied, let alone ending an agreement. This can only be effectuated when respecting the pertinent rules of the VCLT on the modification or termination of treaties. While the Tribunal will address the issue of modification separately (see paras. 226 et seq.), none of the scenarios of treaty termination, as set out in Part V of the VCLT, is applicable in the present case (Cl. Rejoinder, paras. 54-63; Reply to the Request for Termination, p. 6; Cl. Reply, paras. 388, 390).

225.
In the same vein, the instances of some EU Member States objecting to the jurisdiction of arbitral tribunals in intra-EU situations or of the EC intervening in such proceedings (see para. 162) do not amount to a subsequent practice in the application of the ECT establishing agreement of (all) the ECT Parties regarding its interpretation. Even if they did, this isolated aspect could not result in an understanding of Article 26 of the ECT that is so remote from the ordinary meaning of the terms used and from the systematic analysis of this provision in the context of the ECT, as established above.

d) Modification of the ECT, notably Article 26

226.
As regards the further contention by the Respondent (see para. 165), which is contested by the Claimant (see para. 180), that Article 41 of the VCLT permits some of the parties of a treaty to enter into a second treaty by which they modify the previous one among themselves and that the Lisbon Treaty is a perfectly legitimate inter se agreement derogating from the general rules of the ECT, the Tribunal refers to the terms of Article 41 of the VCLT ("Agreements to modify multilateral treaties between certain of the parties only"):

(1) Two or more of the parties to a multilateral treaty may conclude an agreement to modify the treaty as between themselves alone if:

(a) the possibility of such a modification is provided for by the treaty; or

(b) the modification in question is not prohibited by the treaty and:

(i) does not affect the enjoyment by the other parties of their rights under the treaty or the performance of their obligations;

(ii) does not relate to a provision, derogation from which is incompatible with the effective execution of the object and purpose of the treaty as a whole.

(2) Unless in a case falling under paragraph 1(a) the treaty otherwise provides, the parties in question shall notify the other parties of their intention to conclude the agreement and of the modification to the treaty for which it provides.

227.
To start with, the Tribunal notes that Article 30(5) of the VCLT expressly states that Article 30(4) of the VCLT (see para. 204) is without prejudice to Article 41 of the VCLT. Against this background, one might make the argument that the 2007 Lisbon Treaty should be considered an inter se modification of (Article 26 of) the ECT by the EU Member States, introducing an implicit disconnection clause into the ECT insofar as the relations between the EU Member States are concerned. For the purpose of evaluating the merits of the Respondent’s argument, the Tribunal leaves aside for the moment that, as a matter of fact, the ECT was the later treaty in relation to Articles 177 and 219 of the EEC Treaty (see para. 205).
228.

For Article 41 of the VCLT to be applicable, it must however be clarified whether such modification is, in the meaning of its paragraph 1, provided for or at least not prohibited by the ECT, in particular Article 42 ("Amendments") thereof. While the former alternative ("provided for") does not apply due to the lack of a pertinent provision in the ECT (as regards Article 33 of the ECT, see para. 230), one might well take the position that the ECT does not contain an explicit prohibition of such modification either.114

229.
Yet, under Article 41 of the VCLT, it is further required that the modification does not affect the enjoyment by other parties of their rights or the performance of their obligations under the ECT and that the modification does not relate to a provision, derogation from which is incompatible with the effective execution of the object and purpose of the treaty as a whole. With respect to the latter requirement (which must be cumulatively fulfilled with the former one), the Tribunal is not convinced by the Respondent's submission (Resp. Counter-Memorial, para. 99) that the purported treaty modification was about reinforcing the treatment of investors and investment within the EU. In fact, the dispute settlement provision entitling investors to have recourse to international arbitration is often perceived as the most essential element of an investment treaty115 and is also considered by the present Tribunal as a decisive element in conceiving of the ECT as being more favorable than EU law for purposes of the Article 16 ECT assessment (see para. 212).
230.
Moreover, there can be no doubt that the notification requirement laid down in Article 41(2) of the VCLT - which applies in the present case since, contrary to the Respondent's submission (Resp. Counter-Memorial, para. 100), the requirement of paragraph 1(a) is not met (see para. 226) - has not been complied with.116 Even if the Respondent sought to rely on Article 33 ECT (Cl. Counter-Memorial, paras. 177 et seq.; Cl. Rejoinder, para. 170), the procedural requirements of this provision would not have been satisfied either.
231.
Thus, the Respondent's argument based on Article 41 of the VCLT must fail.

e) Relevance of the Enforceability of the Award

232.
Finally, the Respondent (see para. 169) contends that in view of the fact that an award on the merits would be unenforceable due its incompatibility with EU law and in particular the CJEU's Achmea judgement, the Tribunal should decline, or at least refuse to exercise, its jurisdiction in the present case in order to preserve the integrity of the arbitral function. The Claimant (see para. 185) rejects this argument and sees no reason for the Tribunal to find a lack of jurisdiction or admissibility.
233.
While neither the ICSID Convention nor the ECT contain a rule analogous to Article 40 of the ICC Rules of Arbitration,117 according to which arbitral tribunals "shall make every effort to make sure that the award is enforceable at law", the question may be asked whether serious problems to be expected with respect to the enforceability of the award rendered should indeed prompt an arbitral tribunal to refrain from exercising its jurisdiction in order to preserve the integrity of the arbitral function.118
234.
In this regard, the Micula v. Romania tribunal aptly stated that

it is not desirable to embark on predictions as to the possible conduct of various persons and authorities after the Award has been rendered, especially but not exclusively when it comes to enforcement matters. It is thus inappropriate for the Tribunal to base its decisions in this case on matters of EU law that may come to apply after the Award has been rendered. It will thus not address the Parties' and the Commission's arguments on enforceability of the Award […]. [T]he Tribunal notes that Articles 53 and 54 of the ICSID Convention […] apply in any event to [this] Award.119

235.
This was confirmed by the Eskosol v. Italy tribunal, which found:

[T]he Tribunal rejects Italy's contention that any award it may render (in either Party's favour) necessarily would be unenforceable. […] In these circumstances, a tribunal finding that it has jurisdiction under the ICSID Convention and the ECT should not decline to exercise that jurisdiction, simply because there are certain scenarios under which one or the other Party might face challenges in enforcement in certain jurisdictions, based on their national laws and/or their other treaty obligations. This Tribunal has a duty to exercise the jurisdiction it has found to exist, and will proceed to do so with respect to the issues remaining in this case.120

236.
The Tribunal agrees. Articles 53 and 54 of the ICSID Convention deal with post-award issues conclusively. The Tribunal has a duty to issue an Award on the merits, to the extent that it has jurisdiction over the claims submitted to it.
237.
Accordingly, the Tribunal sees no reason to refrain from exercising its jurisdiction.

f) Conclusion

238.
For the foregoing reasons, the Tribunal rejects the Respondent’s first jurisdictional objection and sees no reason to refrain from exercising its jurisdiction in the present case.

B. Lack of Consent due to Exclusive Jurisdiction Clauses in the GSECONVENTIONS

(1) The Parties’ Positions

a) Respondent’s Position

239.
The Respondent submits that the requirement for unconditional consent under Article 26 of the ECT is not satisfied since all GSE conventions contain a provision on exclusive jurisdiction or choice-of-forum clause in favor of the courts of Rome. According to the Respondent, if an exclusivity agreement has been legitimately reached, this agreement must prevail over the ECT (Resp. Counter-Memorial, paras. 19, 151; Resp. Reply, paras. 125, 127, 132, 137).
240.
The Respondent argues in particular that Article 26(2)(b) of the ECT, which contains the phrase "in accordance with any applicable, previously agreed dispute settlement procedure", permits the parties to agree on a specific settlement procedure for a dispute. Article 26(3) of the ECT expressly states that unconditional consent to the submission of a dispute to international arbitration is given "[s]ubject only to subparagraphs (b) and (c)", which refers back to Article 26(2)(b) of the ECT. Accordingly, there is no unconditional consent to international arbitration in a case where the parties have opted for an alternative exclusive dispute settlement procedure (Resp. Counter-Memorial, para. 155; Resp. Reply, paras. 133-136).
241.
The Respondent further submits that the language of the contractual clause contained in the GSE conventions is particularly wide, as it does not only refer to disputes directly arising out of such conventions, but also to any dispute related to the interpretation and execution of "the acts it [i.e. the convention] refers to". According to the Respondent, this should be read as referring not just to a direct breach of contract, but also to any other claim in any way connected to the contract, including the behavior challenged by the Claimant in the present proceedings and allegedly indirectly affecting the GSE conventions, either in terms of interpretation or execution thereof. In particular, the scope of the contractual clause is not limited to issues raised exclusively under Italian law. The Respondent further contends that no provision expressly states that Article 26 of the ECT would override contractual exclusive forum clauses nor can this be inferred from any provision of the ECT (Resp. Counter-Memorial, paras. 153, 155-156, 160).
242.
As regards the Claimant’s objection that there would only exist a limitation if the Claimant had actually initiated a procedure before the domestic courts, the Respondent insists that such an understanding of the choice-of-forum clause would deprive the parties’ reciprocal undertakings to exclusively settle disputes related to the GSE conventions before the courts of Rome of any actual content. Article 26 of the ECT does more than avoiding double proceedings by leaving the parties the autonomy to agree on a specific forum as possibly exclusive (Resp. Reply, paras. 125, 138).
243.
Moreover, the Respondent rejects the Claimant’s submission that the Respondent’s understanding of the exclusive jurisdiction clause would leave the Claimant in a forum where no justice could be done. To the contrary, the Respondent argues that the Claimant could receive substantially equal protection before the domestic courts of Italy, namely compensation for the losses arising from the decrease in revenues allegedly suffered by the Claimant (Resp. Reply, paras. 141, 145).
244.
In addition, the Respondent submits that this lack of consent should be considered as affecting the jurisdiction of the Tribunal. If the Tribunal should, however, prefer to qualify this as a matter of admissibility, the Respondent contends that the aforementioned arguments on the existence of an exclusive forum clause should be deemed as having also been put for the purposes of an objection based on inadmissibility of the claims in question (Resp. Counter-Memorial, paras. 161, 187-193, 195).

b) Claimant’s Position

245.
The Claimant contends that the Respondent’s jurisdictional objection finds no support in Article 26(2) and (3) of the ECT. To the contrary, the text, the context and the object and purpose of these provisions confirm that the Tribunal has jurisdiction to hear the present dispute (Cl. Counter-Memorial, para. 246).
246.
The Claimant submits that the text of Article 26(2) of the ECT makes it clear that the investor "may choose" to submit its dispute with the host State to any one of the fora listed in sub-paragraphs (a) to (c). In offering this choice, the ECT explicitly anticipated in sub-paragraph (b) that the parties might have previously agreed on an applicable dispute resolution mechanism, whether under a contract or otherwise (Cl. Counter-Memorial, para. 250; Cl. Rejoinder, para. 190).
247.
According to the Claimant, there is one exception to the Respondent’s unconditional consent to arbitration, i.e. where the investor has previously "submitted" the dispute to the domestic courts. Contrary to the Respondent’s submissions, this term is synonymous with the term "refer" the dispute to a court and does not mean to "select" a competent court under an exclusive jurisdiction clause (Cl. Counter-Memorial, paras. 253-255; Cl. Rejoinder, paras. 193-195). The Claimant further contends that the Respondent’s statement made under Article 26(3)(b)(ii) of the ECT even allows an investor who might have submitted the dispute to the domestic courts of Italy to "turn around" and submit the same dispute to international arbitration up until the domestic courts "resolve" the dispute (Cl. Counter-Memorial, paras. 265-266; Cl. Rejoinder, paras. 196-197).
248.
Moreover, the Claimant argues that the type of dispute envisaged by the GSE conventions is not the same type of dispute as the one before the present Tribunal, as (a)the jurisdiction clause in the GSE conventions does not cover disputes under Part III of the ECT; (b) the Claimant in this arbitration is not relying directly on the GSE conventions, but rather on the Respondent’s commitment in the ECT to observe the obligations it has entered into vis-à-vis the Claimant’s investments; and (c) the Claimant is not a party to the GSE conventions, but only its local subsidiaries are (Cl. Counter-Memorial, para. 274; Cl. Rejoinder, paras. 178, 185, 209-212).
249.
In addition, the Claimant contends that it has not previously submitted the present dispute to any other fora, in particular to no court or administrative tribunal in Italy. Inasmuch as the Respondent refers to investors who have supposedly addressed the administrative courts of Rome or the Italian Constitutional Court, the Claimant insists that it is not one of these (Cl. Memorial, para. 256; Cl. Counter-Memorial, paras. 275-278; Cl. Rejoinder, para. 179).
250.
The Claimant further submits that the cases on which the Respondent relies for its objection based on the exclusive jurisdiction clause do not actually support its submissions. In particular, these cases do not shed light on the interpretation of Article 26 of the ECT which spells out clear rules on how to address potential conflicts of jurisdiction. Furthermore, these cases concerned purely contractual claims whereas the present dispute relates to treaty claims. Hence, according to the Claimant, these cases are distinguishable based on both the text of the applicable treaties and the nature of the alleged breaches (Cl. Counter-Memorial, paras. 282-294; Cl. Rejoinder, para. 182).
251.
Finally, the Claimant refers to the Greentech v. Italy case in which the Respondent had raised the same arguments and in which the tribunal dismissed Italy’s objection based on the exclusive forum selection clause (Cl. Reply, paras. 351-359).

(2) The Tribunal’s Analysis

252.
The Respondent’s second jurisdictional objection is based on the argument that the GSE conventions contain a provision on exclusive jurisdiction or choice-of-forum clause in favor of the courts of Rome and that the requirement for unconditional consent under Article 26 of the ECT is therefore not satisfied.
253.
The relevant parts of Article 26 of the ECT state in this regard:

(1) Disputes between a Contracting Party and an Investor of another Contracting Party relating to an Investment of the latter in the Area of the former, which concern an alleged breach of an obligation of the former under Part III shall, if possible, be settled amicably.

(2) If such disputes cannot be settled according to the provisions of paragraph (1) within a period of three months from the date on which either party to the dispute requested amicable settlement, the Investor party to the dispute may choose to submit it for resolution:

(a) to the courts or administrative tribunals of the Contracting Party party to the dispute;

(b) in accordance with any applicable, previously agreed dispute settlement procedure; or

(c) in accordance with the following paragraphs of this Article.

(3) (a) Subject only to subparagraphs (b) and (c), each Contracting Party hereby gives its unconditional consent to the submission of a dispute to international arbitration or conciliation in accordance with the provisions of this Article.

(b) (i) The Contracting Parties listed in Annex ID do not give such unconditional consent where the Investor has previously submitted the dispute under subparagraph (2)(a) or (b).

(ii) For the sake of transparency, each Contracting Party that is listed in Annex ID shall provide a written statement of its policies, practices and conditions in this regard to the Secretariat no later than the date of the deposit of its instrument of ratification, acceptance or approval in accordance with Article 39 or the deposit of its instrument of accession in accordance with Article 41. [...]

254.
The GSE conventions under the Fifth Energy Account (and for that matter also under the other Energy Accounts) contain the following clause: "For any dispute arising out of or in relation to the interpretation and implementation of this Agreement and the documents referred to herein, the Parties agree to the exclusive jurisdiction of the Courts of Rome".121
255.
The question to be addressed in the following is whether such exclusive jurisdiction clause deprives the Tribunal of its jurisdiction, as argued by the Respondent and as denied by the Claimant. The Respondent particularly relies on the phrase "any applicable, previously agreed dispute settlement procedure" in Article 26(2)(b) of the ECT for this purpose. The Tribunal agrees with the Respondent that a clause such as the one contained in the GSE conventions (see para. 254) might qualify as a "previously agreed dispute settlement procedure" in the meaning of Article 26(2)(b) of the ECT (see, however, para. 262 regarding the question of who was party to the GSE conventions).
256.
The Claimant is, however, justified in equally emphasizing the phrase "the Investor party to the dispute may choose to submit" in the chapeau of Article 26(2) of the ECT. Hence, it is the investor’s choice on which of the three options offered by sub-paragraphs (a), (b) or (c) of that provision it relies. According to the very terms of the provision, the investor is in no way bound to opt for the option of sub-paragraph (b) rather than the other two. On the basis of the choice offered by Article 26(2) of the ECT, the Claimant has opted for sub-paragraph (c) in the present case, i.e. international arbitration pursuant to Article 26(3) of the ECT which is perfectly compatible with the requirements of that provision.
257.

Yet, the picture would not be complete without considering Annex ID to the ECT, to which both Parties have referred in their pleadings. According to Article 26(3)(b)(i) of the ECT, "[t]he Contracting Parties listed in Annex ID do not give such unconditional consent where the Investor has previously submitted the dispute under subparagraph (2)(a) or (b)". Italy is listed in Annex ID122 and made the following declaration:

In accordance with Article 26(3)(b)(ii), Italy declares that it does not allow the dispute between an Investor and a Contracting Party to be submitted for international arbitration or conciliation, provided that an Investor has already submitted the dispute to:

(a) Italian courts or administrative tribunals; or

(b) has followed an applicable, previously agreed procedure for the settlement of disputes.

In this respect the distinction must be made between two options:

(1) if the resolution of the dispute has not yet been made by the internal judicial or conciliation bodies, the Investor may revoke his judicial action or arbitral procedure by the procedural or lateral renouncement and apply to other forms of dispute settlement;

(2) if a resolution or any formal or legal document of execution has already been made to settle the dispute, conciliation or international arbitration is no longer possible. [...]

258.
Hence, under the regime of this declaration, the investor must opt for submitting a dispute to either international arbitration or to the domestic courts. However, according to the terms of Italy’s declaration, this fork-in-the-road clause is flexible in the sense that the investor, even after having submitted a dispute to the competent domestic tribunal in Italy, may revoke this step as long as the dispute has not been resolved by the domestic tribunal.
259.
In the present case, the Claimant has consistently claimed "that it has not previously submitted the dispute to the courts or administrative tribunals of Italy, nor in accordance with any other applicable, previously agreed dispute settlement procedure".123 There is no reason for the Tribunal to doubt the truth of this statement. In addition, the fact that other investors have brought their disputes before the domestic courts of Italy, notably the Administrative Tribunal of Lazio as well as the Italian Constitutional Court, as noted by the Respondent,124 is irrelevant for the operation of Article 26 of the ECT in the present case.
260.
Accordingly, the restrictions contained in Annex ID have no implications regarding the case at hand, and the Claimant was free to choose among the three options offered by Article 26(2) of the ECT. The Claimant chose option (c), i.e. international arbitration, and the Tribunal cannot see anything that would put this choice into question.
261.
Inasmuch as the Respondent seems to argue that the phrase "submit a dispute" appearing in Article 26 of the ECT and the respective Italian declaration should be understood as also covering the "selection" of a competent court under an exclusive jurisdiction clause (Resp. Counter-Memorial, para. 189), the Tribunal does not agree. It is clear from the terms used that the pertinent provisions deal with the ex post- decision where to refer an already existing dispute to, and not the ex ante- decision in what forum disputes arising in the future should be decided.
262.
This result is corroborated by the fact that, according to the Claimant's submissions, which have not been contested by the Respondent, the Claimant itself is not even party to the GSE conventions, but only its local subsidiaries. In this regard, the Tribunal endorses the finding of the Greentech v. Italy tribunal: "[...] Claimants are not party to the GSE Agreements. Thus, regardless of the wide scope of the forum selection clause in those agreements which Respondent alleges, Claimants do not appear to have standing to assert claims for breach of contract in Italian court and Respondent has not stated otherwise".125
263.
Moreover, it is doubtful whether, had the competent domestic courts been approached on the basis of the exclusive jurisdiction clause in the GSE conventions, they would actually have dealt with the same dispute. It is obvious that before the present Tribunal the Claimant claims violations of the ECT, notably the use of state powers to unilaterally modify the GSE conventions (i.e. treaty claims).126 To the extent that a possible claim before the domestic courts relied on alleged violations of the GSE conventions due to non-performance of contractual obligations (i.e. contractual claims), there would not even be identity of the dispute and the fork-in-the-road mechanism would not be triggered in the first place. As the Vivendi I v. Argentina annulment decision aptly put it: "where ‘the fundamental basis of the claim’ is a treaty laying down an independent standard by which the conduct of the parties is to be judged, the existence of an exclusive jurisdiction clause in a contract between the claimant and the respondent state or one of its subdivisions cannot operate as a bar to the application of the treaty standard".127
264.
For the foregoing reasons, the Tribunal rejects the Respondent’s second jurisdictional objection. The result would not be different were this objection construed as a challenge to the admissibility of the claim in question.

C. Lack of Prior Request for Amicable Solution Regarding the RomaniDecree

(1) The Parties’ Positions

a) Respondent’s Position

265.
The Respondent argues that the Claimant sent a number of letters to the Respondent between 21 December 2012, and 5 May 2015, and addressed various measures, notably including the Spalma-incentivi Decree128 and the Fifth Energy Account, but has referred to the Romani Decree in none of these letters (Resp. Counter-Memorial, paras. 163-168; Resp. Reply, paras. 148-150).
266.
The Respondent further contends that one of the letters, i.e. the one of 5 May 2015, even contains an explicit recognition that the measures taken before 2012 were not only legitimate, but deserve praise. The Romani Decree, however, had been adopted already in 2011 (Resp. Counter-Memorial, paras. 169-170; Resp. Reply, para. 152).
267.
According the Respondent, the Claimant’s reference to "acts and omissions of Italy since at least 2011" is not a sufficiently clear statement nor does the letter of 5 May 2015, apart from mentioning the Vega Project, state that the abandonment of the project was a direct consequence of the Romani Decree. The Respondent became aware of the claim that the Vega Project was allegedly abandoned because of the Romani Decree only when it received the Request. The principle of good faith would have required the investor to be clear in its claims and not to ex post construe them as referring to any possible past behavior not related to the other claims (Resp. Reply, paras. 147, 153-155, 161).
268.
In addition, the Respondent argues that the claim in question is completely autonomous and different from the other claims, which relate to plants that were already in operation and therefore entitled to receive incentives, in that it concerns the specific situation of a plant that never reached the stage of even applying for incentives. Given the fact that the claim relating to the Romani Decree is based on premises completely different from the other claims, it cannot be said that the latter would implicitly include the former (Resp. Counter-Memorial, para. 171; Resp. Reply, paras. 158-159).
269.
Hence, according to the Respondent, as far as the Romani Decree is concerned, no attempt amicably to settle the dispute has ever been made. The Respondent thus submits that the requirement under Article 26(1) of the ECT of prior request for amicable solution has not been met as regards the claim in relation to the Romani Decree (Resp. Counter-Memorial, paras. 171-172).
270.
In addition, the Respondent argues that, should the Tribunal - contrary to the view endorsed by the Respondent - qualify this as a matter of admissibility rather than jurisdiction, the aforementioned arguments should be deemed as also be put for the purposes of an objection based on inadmissibility of the claim in question (Resp. Counter-Memorial, paras. 187, 194-195).

b) Claimant’s Position

271.
The Claimant contends that it fully satisfied the procedural requirements in Article 26(1) and (2) of the ECT with respect to prior request for amicable solution regarding the Romani Decree and that it specifically put the Respondent on notice of the claim regarding Project Vega which is based on the Romani Decree. In particular, the Claimant argues that it made multiple written requests for amicable settlement regarding Project Vega, notably in its letter of 5 May 2015. Therefore, the Respondent had clear notice of the Claimant’s claim regarding the Romani Decree and Project Vega prior to the beginning of the arbitration (Cl. Memorial, paras. 253-254; Cl. Counter-Memorial, paras. 297, 300-304, 307; Cl. Rejoinder, para. 215; Cl. Reply, para. 363).
272.
Furthermore, the Claimant submits that the Respondent did not acknowledge receipt of any but one of the Claimant’s letters requesting amicable settlement and that the Respondent thus made no effort whatsoever to engage in a good faith effort to resolve the dispute. Hence, according to the Claimant, nothing in the record suggests that any aspect of the present dispute, including Project Vega, was capable of amicable resolution. Moreover, following the 5 May 2015 letter, the Claimant on 29 July 2015 filed the Request that further detailed its claim based on the Romani Decree and its impact on Project Vega, and requested the Centre not to register the Request until after 5 August 2015, i.e. the date three months after the 5 May 2015 notice of dispute letter (Cl. Counter-Memorial, paras. 305-306).
273.
The Claimant further contends that, in any event, the three-months waiting period in Article 26(2) of the ECT is a procedural requirement rather than a jurisdictional one and that this requirement is satisfied as long as the Parties have had such a three months opportunity before the Tribunal’s decision is taken. In addition, this procedural requirement is intended to promote amicable settlement and can therefore not be relied upon as a delay tactic by a party that has no interest in settlement. According to the Claimant, the Respondent never attempted to negotiate with the Claimant over any of the claims described in the aforementioned letters, including the Project Vega claim (Cl. Counter-Memorial, paras. 308-312).
274.
As regards the Respondent's argument that the Claimant should be estopped from raising the claim based on the Romani Decree, the Claimant submits that Article 26 of the ECT does not require that the notice be in any particular form or mention any State act by its name. Furthermore, if the Respondent had been genuinely perplexed about the Claimant's notice regarding Project Vega or the reference in the 5 May 2015 letter to the Respondent's acts and omissions dating back to 2011, the latter could have and should have reached out for clarification (Cl. Reply, paras. 217-221).

(2) The Tribunal’s Analysis

275.
The Respondent's third objection is based on the argument that the requirement under Article 26(1) and (2) of the ECT for prior request for amicable settlement is not met in the present case in relation to the Romani Decree. According to these provisions,

(1) Disputes between a Contracting Party and an Investor of another Contracting Party relating to an Investment of the latter in the Area of the former, which concern an alleged breach of an obligation of the former under Part III shall, if possible, be settled amicably.

(2) If such disputes cannot be settled according to the provisions of paragraph (1) within a period of three months from the date on which either party to the dispute requested amicable settlement, the Investor party to the dispute may choose to submit it for resolution: [...].

276.
In this regard, the Parties have notably been in dispute about the meaning and implications of the Claimant's Notice of Dispute Letter of 5 May 2015, which reads in the relevant parts:

The specific acts described above, as well as related acts and omissions of Italy since at least 2011, constitute serious and material violations of the protections accorded to the Investors and their investments under the ECT.

[...]

As an example only, Italy's wrongful alterations to the legal and business framework governing renewable energy facilities caused the Investors to abandoned [sic] a project known as Project Vega, a facility with a planned capacity of approximately 150 MW, at an early stage of its development.129

277.
The Claimant contends that, by virtue of this (and previous) letter(s), the Respondent was properly put on notice, and invited to make an effort of amicable settlement, with regard to Project Vega and its alleged failure due to the adoption of the Romani Decree. In contrast, the Respondent argues that the reference to "acts and omissions of Italy since at least 2011" is not a sufficiently clear statement and that the letter in question does in particular not state that the abandonment of the project was a direct consequence of the Romani Decree. According to the Respondent, in light of the completely autonomous character of the claim regarding the Vega Project as compared to the other claims in the present arbitration, that concern plants that were already in operation and therefore entitled to receive incentives, the Claimant would have been required to make a more specific statement in its letter in order for the prerequisite of prior request of amicable settlement under Article 26 of the ECT to be met.
278.

First, the Tribunal observes that Article 26 of the ECT, apart from laying down the requirement that relevant disputes "shall, if possible, be settled amicably", does not define in any way in what form and in what degree of specificity an investor should put the host State on notice in order to prepare the ground for an amicable settlement of the dispute. Article 26(1) ECT differs in this regard from, for instance, Article 1119 of the NAFTA, which requires the investor to "deliver to the disputing Party written notice of its intention to submit a claim to arbitration at least 90 days before the claim is submitted"130 and that such "notice shall specify"131 four different elements about the dispute. With respect to Article 26(1) and (2) of the ECT, the Tribunal endorses the approach of the Greentech v. Italy tribunal, "flatly rejecting a formalistic approach toward the notice of dispute, which need not be exhaustive".132

279.
Secondly, the good faith argument made by the Respondent cuts both ways. If, and to the extent that, the Respondent insists that the principle of good faith requires the investor to be clear in its claims and not to ex post construe them as referring to any possible past behavior not related to the other claims, there exists also a bona fide obligation on the part of the host State to request further clarification from the investors if, from its perspective, the claim is not phrased in sufficiently clear terms. As has been aptly stated by the Amto v. Ukraine tribunal:

The purpose of Article 26(2) – to provide for settlement discussions – requires the avoidance of legal forms, and the facilitation of open communication. The Investor must inform the State of the state of affairs involving disagreement, and request amicable settlement. If the State considers there is insufficient information to initiate discussions then the good faith response is simply to so advise the Investor, and require more detail. In other words, to initiate the type of communications envisaged by Article 26(2).133

280.
In the present case, the afore-cited passages regarding Project Vega (see para. 276) were certainly sufficiently specific to call for such reaction on the part of the Respondent. However, according to the case record, there has been no reaction at all to the Claimant's Notice of Dispute Letter of 5 May 2015.
281.
Thirdly, Article 26(1) of the ECT does not state an absolute or categorical duty of settling disputes amicably, but requires amicable settlement "if possible". Hence, Article 26(1) of the ECT enshrines an obligation of means calling for serious efforts on the part of both the investor and the host State to achieve an amicable settlement. Yet, according to the case record, there has never been any reaction on the part of the Respondent to any of the Claimant's five letters which it had received between 2012 and 2015.134 Hence, in the circumstances of the case, the Claimant was justified to assume that it was highly doubtful whether it would actually be "possible" to amicably settle its claims or any part or aspect of these claims. The Tribunal agrees with the Eiser v. Spain award that Article 26(1) and (2) of the ECT simply require an investor to "clearly inform[] Respondent of the existence of a dispute and of Claimants' wish to seek its amicable settlement",135 but do not "require the dispute to be carved into multiple slices".136 This is "particularly evident" where "[n]othing in the record suggests that further requests for negotiations [...] would have been more effective in securing an amicable settlement".137
282.
Taking note of the facts that (a) the Claimant filed the Request on 29 July 2015, (b) but simultaneously requested the Centre not to register the Request until after 5 August 2015138, i.e. the date three months after the Claimant’s Notice of Dispute Letter of 5 May 2015, (c) that the Claimant, on 5 August 2015, submitted a supplement to the Request explaining that the Respondent never reacted to the Notice of Dispute Letter,139 and (d) that the Centre registered the Request only on 11 August 2015,140 with the consequence that the present arbitration proceedings were only initiated on that date, the Tribunal is satisfied that the three-months waiting period was complied with before the registration of the Request and that the requirement, under Article 26 of the ECT, for prior request for amicable settlement has been met in the present case.141
283.
Accordingly, the Tribunal rejects the Respondent’s third objection to its jurisdiction. The result would not be different were this objection construed as a challenge to the admissibility of the claim in question.

D. Taxation "Carve-out" regarding the Administrative Fee imposed by theFifth Energy Account

(1) The Parties’ Positions

a) Respondent’s Position

284.
The Respondent contends that the administrative fee imposed by the Fifth Energy Account is a taxation measure in the meaning of Article 21 of the ECT and therefore excluded from the scope of application of the ECT, i.e. the so-called "taxation carve-out" (Resp. Counter-Memorial, para. 173; Resp. Reply, para. 167).
285.
The Respondent further submits that the definition of the term "taxation measures" in Article 21(7) of the ECT is extremely large and covers an open-ended category of measures. In particular, two features are characteristic for a "taxation measure" for the purposes of the ECT: the source of the measure must be either in the domestic legislation or in an international treaty, and the measure must generally relate to fiscal measures. Beyond that, it is up to domestic law to define when a domestic measure is of a fiscal nature, also bearing in mind the discretionary powers that the ECT intentionally leaves to the Contracting Parties in this matter. In particular, the Claimant’s argument that international law rather than domestic law is the decisive parameter in defining what qualifies as a taxation measure under the ECT is inapposite. The same holds true as regards the further submission that the term "imposte" used in the Italian version of Article 21(7)(a)(i) of the ECT should have the same meaning as "imposta" under Italian law. Fiscal measures according to Article 21 of the ECT are a wider category than "imposte" and include any measure having the characteristics of a "fiscal measure" under Italian law (Resp. Counter-Memorial, paras. 174-175; Resp. Reply, paras. 163-164, 173-183).
286.
The Respondent also argues that, in the absence of legislative measures defining when a specific measure is to be considered a fiscal measure (tributo), one should take guidance from the pertinent caselaw, notably that of the Italian Constitutional Court. Accordingly, irrespective of the name given to the measure, the features which qualify a disbursement as of fiscal nature are: a) "dutifulness" of the withdrawal, i.e. that it is established by law, b) absence of exact reciprocity between the parties, and c) connection of the withdrawal to the public spending by linking this to an economically significant prerequisite. Moreover, the pertinent domestic caselaw has constantly qualified similar types of fees as fiscal measures (Resp. Counter-Memorial, paras. 177-178, 186).
287.
In addition, the Respondent refers to the OECD Glossary, according to which "[t]he OECD working definition of a tax is a compulsory unrequited payment to the government", and considers this definition to define exactly the same elements as those identified by the Italian Constitutional Court, i.e. a payment required by law ("compulsory") and absence of exact reciprocity between the parties ("unrequited") (Resp. Counter-Memorial, para. 179).
288.
According to the Respondent, the administrative fees imposed by the Decree establishing the Fifth Energy Account on all producers with plants benefitting from energy accounts, were established as an annual fee corresponding to a fixed amount per kWh and were meant to cover GSE’s general management, audit and control expenses. The Respondent contends that the fee therefore satisfies the requirements to be qualified as a "fiscal measure", as it is mandatory, i.e. established by law, and does not correspond to an identifiable specific service obtained from GSE, but is imposed on all operators whose plants can be subject to auditing and investigation. Measures serving the purpose of raising general revenue for covering specific public activities and thus addressing only those categories of taxpayers that would more directly benefit from those public activities, are to be qualified as fiscal measures. The dividing criterion cannot be simply whether a measure addresses the generality of taxpayers or merely a category of them, as classes of fiscal measures may address only part of the population (Resp. Counter-Memorial, paras. 183-184; Resp. Reply, paras. 186-190; Resp. Rejoinder, para. 168).
289.
The Respondent contends that, contrary to the Claimant’s submissions, the use of the term "contribute’" does not indicate that the measure is a fee in the sense of a payment for a specific service. According to the Respondent, the term is used exactly to show that there is no synallagmatic relationship between what is paid and the services received. In addition, the producers charged with the administrative fee contribute in relation to the amount of incentives they receive, and not in proportion to the services they actually receive. The lack of any synallagmatic relationship becomes manifest in the fact that producers cannot refuse to pay by stating that they will not use the services provided by the GSE. It is also irrelevant for the assessment whether the administrative fee is subject to VAT or not (Resp. Reply, paras. 195-198, 202-204).
290.
Furthermore, the Respondent refers to the CEF Energia v. Italy award in which the tribunal had to decide on the very same claim and the very same measures and concluded that the administrative fee constitutes a taxation measure in the meaning of Article 21 of the ECT (Resp. Rejoinder, para. 169).
291.
As regards the argument made by the Claimant based on Article 21(3) of the ECT, the Respondent submits that this provision contains a "claw-back" provision with respect to Articles 10(2) and (7) of the ECT, which concern the most-favored nation and national treatment principles. However, the Claimant has not relied on any of these provisions in the present case, but has based its claims solely on Article 10(1) of the ECT. In addition, a treaty of the kind of the ECT cannot be compared to the Italy-Lebanon BIT so that the latter cannot be used to widen the interpretation of the former (Resp. Reply, paras. 206-211; Resp. Rejoinder, paras. 171-198).

b) Claimant’s Position

292.
The Claimant submits that it is not, as suggested by the Respondent, up to domestic law to define when a domestic measure is a "taxation measure" in the meaning of Article 21 of the ECT. As the ECT is an instrument of international law, its terms must be interpreted in accordance with international law (Cl. Counter-Memorial, paras. 318-321; Cl. Rejoinder, paras. 230-232).
293.
According to the Claimant, the ordinary meaning of "tax" is a payment imposed to fund general public services, as opposed to a "fee" that is paid in exchange for a specific service or public benefit. In particular, the very definition of "tax" in the OECD Glossary on which the Respondent relies refers to "a compulsory unrequited payment to the government", i.e. the government provides nothing in return to the individual unit making the payment. In contrast, the OECD defines a "fee" as a charge for specific services rendered by a state entity. Furthermore, the Respondent’s reliance on other authentic texts of the ECT, on the basis of Article 33 of the VCLT, does not change that result. Both the Spanish and French texts, just like the English and Italian versions, confirm that the treaty term "taxation measures" is defined in terms of "taxes" (Cl. Counter-Memorial, paras. 323-330; Cl. Rejoinder, paras. 234-243).
294.
The Claimant further argues that the GSE administrative fee does not resemble a tax. It is rather a charge for specific services provided to solar producers (notably for processing the application and for management, control and inspection costs of the GSE) as part of an incentive scheme that benefits those producers. It is not coherent for the Respondent to argue, on the one hand, that the GSE administrative fee is equitable because the Claimant benefits from the GSE services and, on the other, that such fee constitutes an unrequited tax (Cl. Counter-Memorial, paras. 331-337; Cl. Rejoinder, paras. 244-249; Cl. Reply, paras. 364-366).
295.

In addition, the Claimant contends that the fact that the administrative fee is not a tax is also confirmed by the Respondent’s practice of charging value-added tax on that fee (Cl. Counter-Memorial, paras. 338-341; Cl. Rejoinder, para. 250; Cl. Reply, para. 365). It is, amongst others, on this basis that the Claimant seeks to distinguish the present case from the CEF Energia v. Italy award where there was no mention of the fact that the GSE charged VAT on its fee (Cl. PHB, paras. 172-174).

296.

Finally, the Claimant submits that, should the Tribunal qualify the GSE administrative fee as a "taxation measure" under Article 21 of the ECT, the taxation carve-out would still not apply because Article 21(3) of the ECT specifically claws back the Respondent’s most-favored nation obligation from the taxation exception. According to the Claimant, the Respondent, in its bilateral investment treaty (BIT) with Lebanon, agreed to provide, amongst others, fair and equitable treatment, without excluding taxation measures from this obligation. Pursuant to Article 10(7) of the ECT, the Respondent must therefore accord the Claimant’s investments "treatment no less favourable" than that it accords to the Lebanese investors. This implies that the Claimant is entitled to the same level of substantive protection as the Lebanese investors, i.e. one that includes taxation measures. Contrary to the Respondent’s submissions, the ECT and the Italy-Lebanon BIT contain the same substantive provisions and protect the same categories of investors, including companies. In particular, there is no support for the Respondent’s argument that the rights protected under the Italy-Lebanon BIT are less articulated and specific as those of the ECT (Cl. Counter-Memorial, paras. 341-349; Cl. Rejoinder, paras. 252-255; Cl. Reply, paras. 313-335).

(2) The Tribunal’s Analysis

297.
The Respondent’s fourth jurisdictional objection is based on the argument that the administrative fee imposed by the Fifth Energy Account is a taxation measure in the meaning of Article 21 of the ECT and therefore excluded from the scope of application of the ECT (the so-called "taxation carve-out"). The Tribunal would observe at the outset that this objection must be understood to solely relate to the claims made by the Claimant under Article 10(1) of the ECT. As far as the Claimant argues that its investments have become subject to indirect expropriation, the claw-back provision of Article 21(5)(a) of the ECT applies, according to which "Article 13 [of the ECT] shall apply to taxes". Hence, in this regard the jurisdiction of the Tribunal is beyond dispute anyway.
298.
According to Article 21(1) of the ECT, "[e]xcept as otherwise provided in this Article, nothing in this Treaty shall create rights or impose obligations with respect to Taxation Measures of the Contracting Parties. In the event of any inconsistency between this Article and any other provision of the Treaty, this Article shall prevail to the extent of the inconsistency".
299.
Pursuant to Article 21(7)(a) of the ECT, "[t]he term ‘Taxation Measure' includes:

(i) any provision relating to taxes of the domestic law of the Contracting Party or of a political subdivision thereof or a local authority therein; and

(ii) any provision relating to taxes of any convention for the avoidance of double taxation or of any other international agreement or arrangement by which the Contracting Party is bound".

300.
The Parties are in disagreement whether the "fee" ("contributo") introduced by the Fifth Energy Account constitutes a taxation measure for the purposes of Article 21 of the ECT. The relevant parts of Article 10 ("Management of the incentives system and implementing regulations") of the Decree establishing the Fifth Energy Account read:

(1) Producers applying for the feed-in tariffs set forth in this decree shall pay to the GSE a fee for the processing of the application equal to EUR 3 for each kW of nominal power for plants below 20 kW and EUR 2 for each kW above 20 kW. […]

(4) In order to cover for management, control and inspection costs of the GSE, the responsible entities acceding to the feed-in tariffs under this decree […] shall pay to the GSE starting 1 January 2013, also through the set-off of the incentives due, a fee of 0.05 c euro for each kWh of incentivized energy. […]142

301.
The Decree thus creates (a) a one-time administrative fee that all producers with plants benefitting from the energy accounts have to pay to the GSE for the processing of the application (paragraph 1) and (b) an annual fee corresponding to a fixed amount per kWh of incentivized energy in order to cover for management, control and inspection costs of the GSE (paragraph 4).
302.
While the definition of "taxation measure" in Article 21(7)(a) of the ECT refers to "taxes of the domestic law of the Contracting Party", the reference to domestic law should not be understood in a manner that would put it completely at the disposal of the respective Contracting Party what it designates as a "taxation measure" for the purposes of the taxation carve-out of Article 21 of the ECT. After all, this is a term used in an international treaty, directing the interpreter, however, to have due regard to the definition of taxes in the respective domestic legal order.
303.
The Tribunal takes note in this regard of the controversy between the Parties on whether Article 21 of the ECT should be subject to a narrow reading, given that the Italian authentic version of the ECT refers to "imposte" (see para. 293), or whether it should be construed more broadly to cover all "tribute" which would not only include "imposte" (taxes), but also "tasse" (fees) and "contributi" (contributions) (see para. 285). At the same time, the Tribunal agrees with the Greentech v. Italy award that it "need not determine whether Respondent's broad interpretation or Claimants' narrower interpretation of Taxation Measures is correct".143
304.
What is decisive in the definition of taxes is, and insofar the Parties appear to be in agreement (Cl. Counter-Memorial, para. 323; Resp. Counter-Memorial, para. 177), that the obligation to pay these taxes must be laid down in a law or other binding State regulation and that there is no reciprocity between the payment and a service offered by the State, but that the payment contributes to the general public spending.
305.
These elements are also present in the OECD working definition according to which a tax is a "compulsory unrequited payment to the government" on which both Parties have relied in the present case (Cl. Counter-Memorial, para. 325; Resp. Counter-Memorial, para. 179). Furthermore, according to the OECD, taxes "are described as unrequited because the government provides nothing in return to the individual unit making the payment, although governments may use the funds raised in taxes to provide goods or services to other units, either individually or collectively, or to the community as a whole".144 In contrast, "[f]ees charged by central or local governments can be distinguished from taxes when they are charged as payments for the supply of particular services by the authorities".145
306.
Against this background, the Tribunal considers the administrative fee established by the Fifth Energy Account to qualify as a fee rather than a tax. Producers with plants benefitting from the energy accounts have to make this payment for specific purposes, i.e. for the processing of the application as well as in order to cover for management, control and inspection costs of the GSE (see para. 301). This specific purpose is confirmed by Recital 22 of the Decree establishing the Fifth Energy Account which states that the Ministry "[d]eemed it appropriate and fair that those who benefit from the feed-in tariffs for photovoltaics contribute to the coverage of charges for the management of the photovoltaic incentive scheme".146
307.
The Tribunal is aware that there is no strict reciprocal or synallagmatic relationship between the payments made to the GSE and the services offered by it. Nor do the fees paid by the producers cover the full costs of the GSE. Similarly to the Greentech v. Italy award,147 the present Tribunal considers, however, that a sufficient degree of reciprocity has been established so as to qualify the payments in question as fees (or charges, as the Greentech v. Italy tribunal refers to them), and not as taxes.
308.
The Tribunal would note in this context that the Respondent’s representation of the pertinent caselaw of the Italian Constitutional Court on fiscal measures (see para. 286) does not appear to be fully accurate. While the Respondent identifies the "absence of exact reciprocity between the parties" as an element of the jurisprudence constante of that court, the cited judgements speak of "the lack of a relationship of reciprocal nature between the parties",148 i.e. in the Italian original "mancanza di un rapporto sinallagmatico tra parti".149 The Respondent’s reading of this phrase, and in particular the addition of the word "exact", promote a widened understanding of the concept of taxes, with the Respondent suggesting that also financial measures with a considerable degree of, but not full, reciprocity would have to be deemed to lack "exact reciprocity" and would thus constitute taxes. The Tribunal is not convinced that this is what the Italian Constitutional Court held in the decisions it was referred to.
309.
The Tribunal would further observe that it is true that the CEF Energia v. Italy tribunal150 qualified the administrative fee in question as a tax in the meaning of Article 21 of the ECT and thus applied the taxation carve-out to it. It deserves mention, however, that that tribunal embraced the Respondent’s reading of the Constitutional Court’s caselaw, notably including the aforementioned criterion of "absence of exact reciprocity between the parties".151 While acknowledging that the fees in question were "consideration for a given service rendered by a public body"152 and that "they are imposed by Respondent (or an emanation thereof) in order to fund a service rendered in support of photovoltaic operators",153 the CEF Energia v. Italy tribunal nonetheless concluded that these fees were taxes, without however explaining how this result is compatible with accepting the existence of a robust element of reciprocity between the payments made and the services received. The ESPF Beteiligungs GmbH et al. v. Italy tribunal has recently adopted the same view as CEF Energia v. Italy.154
310.
The conclusion of the present Tribunal, i.e. that the amounts charged to the energy producers are actually a fee, and not a tax in the meaning of Article 21 of the ECT, is further corroborated by the fact, which is also conceded by the Respondent (Resp. Reply, paras. 197-198), that the fees are subject to value-added tax. This is an additional significant indicator of the non-tax character of the fee in question.155
311.
For the foregoing reasons, the Tribunal finds that the administrative fee imposed by the Fifth Energy Account does not constitute a taxation measure in the meaning of Article 21 of the ECT and thus rejects the Respondent’s fourth jurisdictional objection. In the light of this result, there is no need for the Tribunal to entertain the Claimant’ s claim based on the claw-back provision of Article 21(3) of the ECT with respect to most-favored nation treatment.

E. Conclusion

312.
On the basis of the Claimant’s respective submissions in these proceedings, which have remained uncontested by the Respondent (see paras. 150, 152), the Tribunal is satisfied that the general jurisdictional requirements of both Article 26 of the ECT and Article 25 of the ICSID Convention are met in the present case.
313.
Having dismissed all the Respondent’s jurisdictional objections - and seeing no reason to take up the Respondent’s submissions on unenforceability of the award, on exclusive forum clauses and on the requirement of prior request for amicable settlement as a separate matter of admissibility (see paras. 237, 264 and 283) -, the Tribunal finds that the Centre has jurisdiction and that the Tribunal has competence to decide the claims made by the Claimant.

VI. LIABILITY

314.
In the present proceedings, the Claimant argues that the Respondent has breached Articles 10(1) and 13 of the ECT and refers to three distinct sets of facts in this regard, namely - in chronological order - the so-called Project Vega, the so-called Frosinone plants and the changes brought about by the Spalma-incentivi Decree.
315.
As the Parties’ have made particularly extensive submissions with respect to the latter claim, the Tribunal will begin its liability analysis with the issues relating to the adoption of the Spalma-incentivi Decree in 2014 (Section A; see paras. 316 et seq.) and will only afterwards address the Claimant’s contentions regarding Project Vega and the adoption of the Romani Decree and the Fourth Energy Account (Section B; see paras. 478 et seq.) as well as regarding the Frosinone plants and the adoption of the Fifth Energy Account (Section C; see paras. 533 et seq.).

A. The Spalma-IncentiviDecree

316.
In the present Section, the Tribunal discusses the submissions of the Parties with respect to the impact of the Spalma-incentivi Decree (see para. 143) on the Claimant’s 25 PV plants (see para. 110).
317.
In addition, this decree also amended the provisions on the administrative management fee that had been introduced by the Fifth Energy Account (see para. 136). Accordingly, the Tribunal deems it preferable to consider this aspect of the Spalma-incentivi Decree in the context of its analysis of that energy account (see paras. 613 et seq.).

(1) The Parties’ Positions

a. Claimant’s Position

318.
The Claimant contends that the Spalma-incentivi Decree severely affected the 25 PV plants it was operating by way of both reducing the amount of FIT and deferring the payments of the incentives, thus causing substantial economic losses to the Claimant (Cl. Memorial, para. 148).
319.
According to the Claimant, the immediate effect of the Spalma-incentivi legislation was the unilateral modification of the main terms of the GSE conventions. Each GSE convention contained a provision explicitly stating the amount of the FIT, which for all plants (except the two Frosinone plants) was to remain constant over the duration of the agreement, i.e. for 20 years. Under the terms of the Spalma-incentivi Decree, due to the lack of an express choice on the part of the Claimant, Option C applied to the Claimant's PV plants by default156 and resulted in a 6 % to 8 % cut in FIT, depending on the plant's power, starting from 1 January 2015 (Cl. Memorial, paras. 149-151; Cl. PHB, paras. 6-10).
320.
Furthermore, according to the Claimant, under the new incentives payment terms introduced by the Spalma-incentivi Decree, the 25 PV plants of the Claimant no longer received FIT on a monthly basis in amounts corresponding to the actual production of solar energy. Rather, amounts due in a given year were both curtailed and partially deferred to the next year, thus negatively affecting the cash flows of the Claimant's subsidiaries (Cl. Memorial, para. 152).
321.
Moreover, the Claimant submits that its revenues were negatively impacted by the increased administrative fees imposed by the Spalma-incentivi Decree (Cl. Memorial, para. 153; Cl. PHB, paras. 11-14).
322.
The Claimant further argues that the strain imposed on the cash flows by the Spalma-incentivi Decree affected the ability of the Claimant's subsidiaries to meet their obligations under the project financing agreements they had entered into based on the FIT promised by the Respondent. The pertinent repayment schedules provided that, in the event that the relevant financial ratios fell below certain thresholds, the subsidiaries would be prohibited from distributing dividends to the Claimant (Cl. Memorial, paras. 148, 155-156).
323.
According to the Claimant, already in July 2014, the reduced cash flows due to the retroactive cut of the FIT and the amended FIT payment terms caused the aforementioned financial ratios to drop below the allowed thresholds, thus resulting in the imposition of a dividends distribution block. All the revenues coming from the sale of solar energy and from the FIT were required to be used to pay the loans and the plants' operating costs, with no amount left to pay dividends to the holding company.157 In addition, three of the Special Purpose Vehicles (SPV) established to operate the Claimant's PV plants went into so-called "technical default", i.e. the respective financial ratios dropped to a level where disposal of any proceeds was not possible anymore without the lenders' consent, except in specific cases (Cl. Memorial, paras. 156-157).
324.
The Claimant argues that, against this background, it decided to renegotiate the terms of the banking loans in order to solve the distribution block situation and avoid the possible consequences of technical defaults.158 In September 2015, the Claimant was able to agree on the terms of the restructuring. The new terms included a EUR 15.7 million partial prepayment of the loans, the rescheduling of payment dates and the modification of some of the financial ratios.159 On this basis, in October 2015, there was agreement with the banks to modify some of the terms of the banking loans. In March 2016, final agreements adopting the amendments were concluded. The Claimant submits in this regard that, while the renegotiation of the banking loans allowed the resuming of the distribution of dividends, it also meant that the Claimant ultimately bore all of the losses resulting from the Spalma-incentivi legislation (Cl. Memorial, paras. 158-160).
325.
On this basis, the Claimant contends that the Respondent's adoption of the Spalma-incentivi Decree violated both (i) Article 10(1), last sentence, of the ECT on the observance-of-obligations or umbrella clause and (ii) Article 10(1), first and second sentences, of the ECT on fair and equitable treatment (Cl. Memorial, paras. 316, 342; Cl. Reply, para. 35; Cl. Reply PHB, para. 3).

(i) Umbrella clause

326.

As regards the former, the Claimant argues that the Respondent used its sovereign legislative power to change the terms of the obligations to the detriment of the investment, thus breaching the ECT's observance-of-obligations clause. In this regard, the Claimant first submits that the Respondent's obligations under Article 10(1), last sentence, of the ECT not only cover obligations entered into with an investor, but also with an investment. As the GSE conventions were entered into with the Claimant's local subsidiaries and as these companies were investments in the meaning of Article 1(6)(b) of the ECT, the GSE entered into obligations with respect to the Claimant’s investments (Cl. Memorial, paras. 318-320; Cl. PHB, para. 7).

327.

Secondly, according to the Claimant, the Respondent’s contention (see para. 345) that the term "entered into" in Article 10(1), last sentence, of the ECT implies a negotiation between two parties, while each Energy Account was a general, non-negotiated measure, is baseless. It is commonplace that parties enter into binding obligations without negotiation (Tr. 23 September 2019, 30:12-18 [Legum]). In addition, the context of Article 10(1), last sentence, of the ECT itself contemplates the formation of agreements without negotiation since Article 26 of the ECT provides for an agreement to arbitrate based on the investor’s acceptance of the State’s consent to arbitration given in the Treaty which is not preceded by any negotiation between the host State and the investor (Cl. PHB, paras. 20-22; Cl. Reply PHB, para. 11; Tr. 23 September 2019, 30:17-25 - 31:1-8 [Legum]).

328.
Thirdly, the Claimant argues that the GSE is a State-owned entity, controlled by the Ministry of Economy and Finance and in charge of regulating the renewable energy market, including administering the Energy Accounts. In the Claimant’s view, the GSE thus expressly exercises governmental authority as concerns electricity generated from renewable sources in Italy, has the status of a State organ under Italian law and forms part of the administration, i.e. of the executive branch of the Italian Republic. Applying the pertinent principles of attribution of conduct to a State, as notably laid down in Articles 4 and 5 of the Articles on Responsibility of States for Internationally Wrongful Acts, the GSE acted on behalf of the Respondent when entering into the GSE conventions (Cl. Memorial, paras. 321-331; Cl. Reply, paras. 44-46; Cl. Reply PHB, para. 10).
329.
Fourthly, the Claimant contends that, contrary to Article 10(1), last sentence, of the ECT, the Respondent breached the obligations it had entered into with the Claimant’s investments. In the Claimant’s view, the Respondent did so by failing to observe the obligations set out in the GSE conventions, namely that each of the Claimant’s 25 PV plants would receive the applicable FIT (under the Second, Third, Fourth or Fifth Energy Accounts, as the case may be) for 20 years from the plant’s entry into operation. Thus, the Spalma-incentivi Decree caused de facto the unilateral repudiation by the Respondent of the key aspect of the GSE conventions. In addition, these conventions stipulated that amendments could be made only if agreed to in writing. In spite of this provision, the Claimant argues, the Spalma-incentivi Decree unilaterally amended the GSE conventions by imposing a retroactive reduction of FIT and by modifying the payment terms (Cl. Memorial, paras. 332-335; Cl. Reply, para. 42; Cl. Reply PHB, para. 6).
330.
Fifthly, the Claimant argues that, contrary to the Respondent’s submissions (see para. 346), there is no need to show an "autonomous act" of the GSE. In a similar vein, it is irrelevant that the Spalma-incentivi legislation was neither decided nor adopted by the GSE. Furthermore, according to the Claimant, the fact that the lex contractus of the GSE conventions is Italian law does not imply, as insinuated by the Respondent, that the application of the umbrella clause is ruled out when a breach of the obligation is not established under the municipal law governing the obligation. In particular, no case and no commentator has ever adopted the position put forward by the Respondent that the umbrella clause only applies to breaches of contract under municipal law and has no application where, as is the case here, a State uses its sovereign powers to interfere with an investor’s contractual bargain through legislative change. In the Claimant’s view, the Respondent’s invocation of its own internal law, as interpreted by the Italian Constitutional Court, cannot shield it from its international responsibility for breaches of the ECT (Cl. Reply, paras. 47-55; Cl. PHB, paras. 31-43).
331.

Sixthly, the Claimant rejects the Respondent’s contention that the GSE conventions do not reflect contractual obligations, but commitments contemplated or required by legislation which do not fall within the ECT’s observance-of-obligations clause. According to the Claimant, the GSE conventions are contracts which set out specific obligations vis-à-vis specific investments of the Claimant and are as such undisputedly covered by Article 10(1), last sentence, of the ECT. In particular, each of these conventions was denominated as an agreement between, on the one hand, the GSE and, on the other, a given local development company, indirectly owned and controlled by the Claimant at all relevant times. The price or FIT at which the GSE would buy electricity was clearly set out as well as the method of payment, the duration of contract and other specific obligations concerning access to documents or checks and inspections. Each GSE convention thus concerned a specific investment, responsible for a specific PV plant. Furthermore, the Claimant submits that the record does not support the Respondent’s suggestion that legislation or regulation dictated the entire content of the GSE conventions (see Cl. Reply, paras. 67-72; Cl. PHB, paras. 25-30; Cl. Reply PHB, paras. 8-9).

332.
In a similar vein, the Claimant contradicts the Respondent’s contention (see para. 346) that the GSE conventions were merely accessory contracts, which simply transpose legal provisions. To the contrary, the Energy Accounts, GSE tariff recognition letters and the GSE conventions concluded with the Claimant’s subsidiaries amount to obligations entered into with specific PV operators, i.e. the Claimant’s investments. In any event, in the Claimant’s view, the GSE conventions are private law contracts under Italian law, as also indicated by the Romani Decree (Cl. Reply, paras. 73-80).
333.
Moreover, the Claimant rejects the Respondent’s submission (see para. 344) that umbrella clauses do not allow the inclusion of legislative and regulatory obligations within their scope, but concludes from the broad wording of Article 10(1), last sentence, of the ECT ("any obligation"), as well as from the pertinent caselaw, that umbrella clauses protect specific undertakings which the State has entered into by contract or otherwise (Cl. Memorial, para. 304; Cl. Reply, paras. 58-66). In any event, the Claimant deems the Respondent’s contention to be beside the point because there is no dispute that the ECT’s umbrella clause covers contractual obligations (Cl. Reply, para. 67).

(ii) Fair and equitable treatment

334.

As concerns the latter claim, i.e. the breach of the fair and equitable treatment clause of Article 10(1), second sentence, of the ECT, the Claimant argues that the Spalma-incentivi Decree both violated its legitimate expectations and failed to ensure the stability and transparency of the Italian legal framework. The Claimant contends that each element of its legitimate expectations and its stability and transparency claims is met in the present case (Cl. Memorial, paras. 337, 342; Cl. PHB, paras. 49-54).

335.
First, according to the Claimant, the Respondent made specific representations that it would maintain a stable legal framework, including the levels of FIT fixed by law and in contracts. In particular, the Respondent committed in each Energy Account that, once a PV plant qualified for a given FIT, that applicable tariff was granted for 20 years. With respect to the Claimant’s 25 PV plants, these specific commitments were memorialized in writing in the respective GSE conventions. In the Claimant’s view, the record therefore establishes that the Respondent adopted the Energy Accounts with the specific aim to induce investments in solar energy and, in order to achieve this purpose, gave specific assurances to specific investments of the Claimant that these investments would receive the specified FIT for the whole 20 year period (Cl. Memorial, paras. 337-338; Cl. Reply, paras. 107-118; Cl. PHB, para. 54).
336.
Secondly, the Claimant argues that it relied on these representations when making its long-term investments which required a very substantial capital investment upfront. In particular, the Claimant submits that it relied on two main elements when making its investment: the FIT rates guaranteed for 20 years upon a plant’s entry into operation and the stability and visibility of the legal framework which would not be changed without proper advance notice. In the Claimant’s submission, the certainty provided by the fixed FIT for a 20-year period was a critical factor in justifying decisions to invest in PV plants in Italy. Furthermore, the Claimant contends that it relied not only on the GSE conventions, but also on the Italian legal framework as a whole, from the Energy Accounts through the GSE tariff recognition letters to the GSE conventions (Cl. Memorial, para. 339; Cl. Reply, paras. 119-126; Cl. PHB, paras. 56-58, 87-92; Cl. Reply PHB, paras. 15-16).
337.
Thirdly, the Claimant argues that its expectations based on these commitments were reasonable and legitimate under the circumstances. The representations were reflected in official acts that were unqualified. In a similar vein, the GSE conventions required the consent of both parties for an amendment or modification of the obligations to be valid (Cl. Memorial, para. 340; Cl. PHB, para. 61).
338.
Fourthly, the Claimant contends that the Respondent adopted measures directly contradicting its prior representations and fundamentally altering the legal framework, thus frustrating the Claimant’s investments due to a sharp and unexpected reduction in FIT. In particular, the adoption of the Spalma-incentivi Decree in 2014 violated the Claimant’s legitimate expectations that its 25 PV plants would receive a fixed FIT for 20 years from the start of operation of these plants. In the Claimant’s submission, the retroactive cut in FIT imposed by Option C, which applied to the Claimant’s subsidiaries by default, caused an immediate reduction in FIT of 7 % to 8 % for each of the 25 PV plants, resulting in a loss of EUR 37.5 million in future cash flows, and thus deprived the Claimant of a significant part of its projected revenues. Contrary to the Respondent’s contention that the Spalma-incentivi legislation was designed to avoid a disproportionate remuneration of PV investors, the expected internal rate of return of the Claimant’s PV plants was not excessive. As a matter of fact, the actual return on the Claimant’s investments was negative, even after the sale of the Italian assets in 2017 and 2018. Hence, the Claimant submits that it realized a substantial loss on its investments in Italy (Cl. Memorial, para. 341; Cl. Reply, paras. 128-143, 157-163).
339.
The Claimant further contends that the Spalma-incentivi Decree was in no sense a necessary "fine-tuning" of the FIT, but an unreasonable and disproportionate measure on the part of the Respondent. In changing the basic parameters of the Energy Accounts retroactively, this legislation was not just operating a "re-modulation" of tariffs or a modest reduction of the applicable FIT, but the Respondent suddenly and fundamentally altered the regulatory framework under which the Claimant had made its investment in a way that was not foreseeable. In addition, according to the Claimant, there can be no "fine-tuning" in an ex ante support scheme such as the Energy Accounts where the government guarantees incentive payments at a specified level which the investor will take into account when planning the project, assessing the potential profitability and deciding whether to invest. The situation would be different in an ex post scheme where the government guarantees a certain rate of return and then adjusts the support periodically to maintain the desired return despite fluctuations in costs and performance. For plants in operation that had secured a specific tariff for 20 years, the Claimant could not have anticipated the reduction imposed by the Spalma-incentivi Decree (Cl. Reply, paras. 144-156; Cl. PHB, paras. 65-78; Cl. Reply PHB, paras. 19-20).
340.
Finally, the Claimant also rejects the Respondent’s argument (see paras. 341, 352) that without the Spalma-incentivi Decree, Italy’s renewable incentive system would have been at risk of default because of an over-excessive burden on consumers. According to the Respondent, this excessive burden would have led to a reduction in consumption on the part of the consumers, making it necessary to modify the incentive system to guarantee its sustainability, but at the same time to ensure that renewable energy producers receive a "fair remuneration". The Claimant argues, however, that there is no evidence that, absent this legislation, electricity consumers would have faced increasing charges in relation to the FIT. In addition, the Spalma-incentivi Decree caused only a small reduction in prices to relevant consumers, notably particular types of industrial users, but excluded from its scope all residential customers. Moreover, according to the Claimant, the decrease in industrial electricity demand which can be observed since 2011 is the result of increasing energy efficiency and Italy's low GDP growth. As electricity demand is very inelastic to price, the Spalma-incentivi Decree, which slightly reduced the electricity bill of some industrial consumers, was therefore unlikely to stimulate any significant increase in demand for electricity. In the Claimant's view, there is thus no support for the Respondent's argument that the Energy Account incentive scheme would have been at risk of default save for adoption of the Spalma-incentivi legislation (Cl. Reply, paras. 164-180; Cl. PHB, paras. 79-86; Cl. Reply PHB, para. 18).

b. Respondent’s Position

341.
The Respondent argues that its intervention - first by the Destinazione Italia Decree and subsequently by the Spalma-incentivi legislation - was necessary to avoid the overburdening of the consumers who pay the main share of the expenses for the renewable energy incentives through their electricity bills. An additional increment of the costs would have led to a further reduction of energy consumption, with the result of exposing the FIT mechanism itself to a high risk of financial instability. In addition, the Respondent contends that, following the economic crisis that also had a fierce impact on Italy, there was a need to reinvigorate the Italian industry. At the same time, costs continued to decrease for PV energy producers and returns from operating plants were still extremely high compared to original estimates. In sum, the Respondent's intervention was motivated by promoting the sustainability of the renewable energy system, thus also benefiting the PV energy producers (Resp. Counter-Memorial, paras. 311-113, 319, 323-325, 335, 391; Resp. Rejoinder, paras. 423-440; Resp. PHB, paras. 16-17; Resp. Reply PHB, paras. 43, 46).
342.
According to the Respondent, the Spalma-incentivi Decree contained a set of emergency measures to cope with the exceptional economic situation prevailing in Italy at the time. While encompassing provisions of a different nature, all of these provisions had the objective of enhancing competitiveness of Italian markets, including the reduction of costs of electricity for small- and medium size businesses through a reduction and redistribution of the general charges of the electricity system. Thus, the aforementioned Decree did not, as argued by the Claimant (see para. 338), abrogate Italy’s incentive payment regime and replace it with a new system, but remodulated incentives under the existing system and therefore implemented a fine-tuning of a still valid and stable support system. The Respondent further argues that this did not occur abruptly, but through progressive measures, starting with voluntary and moving on to compulsory remodulation, albeit with the offering of alternatives to the PV energy producers. Moreover, the remodulated tariffs did not apply retroactively, but only to future incentives. In this regard, according to the Respondent, a distinction is necessary between, on the one hand, situations where the measure in question removes legal effects already completed and concluded (so-called "claw back" provisions) and, on the other, situations where long-term relationships are affected by the measure in the sense that it intervenes in the regulation, but only for the future; the latter is the relevant scenario in the present case. In sum, the Spalma-incentivi legislation was part of the general and progressive readjustment of the support schemes for renewable energy and adopted reasonable and proportionate solutions in this regard (Resp. Counter-Memorial, paras. 332-335, 388-390; Resp. Rejoinder, paras. 409-422; Resp. PHB, paras. 18-19).
343.

Against this background, the Respondent rejects both claims, i.e. (i) that the adoption of the Spalma-incentivi Decree violated Article 10(1), last sentence, of the ECT on the umbrella clause and (ii) that it further breached Article 10(1), first and second sentences, of the ECT on fair and equitable treatment (Resp. Counter-Memorial, paras. 28-29; Resp. Rejoinder, paras. 367-368; Resp. PHB, paras. 25-26).

(i) Umbrella clause

344.
As regards the first claim, the Respondent first submits that both the text and function of the umbrella clause do not allow the inclusion of legislative and regulatory obligations within its scope. The reason for this exclusion lies in the rationale of the umbrella clause which is to "internationalize" contractual obligations which otherwise would remain excluded by the scope of the investment treaty, due to their private nature. Therefore, Legislative Decree No. 387/2003, the Romani Decree, as well as the Second, Third, Fourth and Fifth Energy Accounts are not covered by the ECT’s umbrella clause (Resp. Counter-Memorial, paras. 427-428; Resp. Rejoinder, paras. 505, 509-512).
345.

The Respondent further contends that the term "entered into", as contained in Article 10(1), last sentence, of the ECT, implies an activity of negotiation between the parties. However, the Energy Account Decrees were not at all negotiated between investors and the Respondent. The same holds true for the GSE conventions which are not the result of a free negotiation between the parties, but are unilaterally established by, and entirely subject to, the general regulatory framework (Resp. Rejoinder, paras. 213, 508-509; Resp. PHB, paras. 49, 102-103; Resp. Reply PHB, para. 50).

346.
In addition, the Respondent argues that the GSE conventions are different from genuinely private contracts. They are of special nature and can only be understood within the regulatory context they depend on. In fact, they represent the final and lowest level of a single and unitary general regulatory framework. According to the Respondent, they are to be qualified as "accessory contracts" ("contratto accessorio" or "contratto accessivo") establishing the operational rules to implement the relevant public measure they are connected to. In particular, as opposed to private contracts, the parties do not autonomously determine the essential elements of the agreement, which are established outside the contract by the legislative and/or regulatory act they depend upon. In fact, the whole of the GSE conventions is a mere reproduction of the pertinent regulatory acts, without the need that each individual word or sentence be repeated. Hence, the Respondent did not undertake any autonomous commitments under the ECT by having the GSE sign these agreements, compared to the obligations undertaken through the adoption of the relevant general measures. Put differently, the GSE conventions must be considered jointly with the public measure as a unique act for the purposes of international investment law. This holds true irrespectively of the reference to private law made in the Romani Decree (Resp. Counter-Memorial, paras. 116-117, 253, 266-267, 428-429; Resp. Rejoinder, paras. 209-215, 524-527; Resp. PHB, paras. 51-53; Resp. Reply PHB, para. 51).
347.
Moreover, the Respondent contends that, contrary to the submissions of the Claimant (see para. 328), the GSE is by no means the regulator of the renewable energy sector. The authority in charge of regulation of the sector is rather the AEEG. Accordingly, the drafting of the standard agreements governing the concrete disbursement of the incentives, i.e. the GSE conventions, is not the competence of the GSE, but of the AEEG (Resp. Counter-Memorial, para. 252; Resp. Rejoinder, para. 209).
348.
Furthermore, according to the Respondent, the Claimant did not actually prove any infringement of the GSE conventions by the Respondent. In particular, the Claimant did not challenge any conduct by the GSE, and as far as the Respondent’s regulatory measures are concerned, they do not have any relevance with respect to the infringement of the GSE conventions. As a matter of law, as further argued by the Respondent, contracts produce their obligatory effects only between the parties; thus, the Respondent’s regulatory measures were intrinsically not apt to be a violation of the obligations set out in the GSE conventions (Resp. Counter-Memorial, paras. 432-438).
349.
In addition, the Respondent contends that also the Italian Constitutional Court did not accept that the conventions between the GSE and the investors were contracts governed by private law, but that they were of a regulatory nature and had the character of accessory agreements (Resp. Counter-Memorial, para. 440; Resp. Rejoinder, paras. 524, 530; Resp. Reply PHB, paras. 52-61).

(ii) Fair and equitable treatment

350.
With respect to the second claim, the Respondent denies that the fair and equitable treatment clause of the ECT has been breached in the present case.
351.
In this regard, the Respondent first argues in a general perspective that the legitimacy - and thus the legal protection - of an expectation may not be simply determined by relying on the legislative framework existing in a State at the time of the investment, but must also take into account the State’s fundamental sovereign prerogative of legislating, i.e. its power to regulate. Otherwise, a State would have the obligation to freeze its own normative activity each time this activity requires modification of a rule existing at the time of the investment and negatively affecting a foreign investment. In the Respondent’s view, stability of legislation is not at all equivalent to a freezing clause, but implies a degree of reasonable modification of existing rules. At the same time, the Respondent concedes that not all regulatory modifications made by the host State would be legitimate, notably if the host State acted either unfairly, unreasonably or inequitably in the exercise of its legislative power (Resp. Counter-Memorial, paras. 451-455, 467; Resp. Rejoinder, paras. 453-471).
352.
As concerns the purported legitimate expectations on the part of the Claimant, the Respondent further contends that the renewable energy market is a regulated market and that incentives are subsidies given to a category of producers with the objective of correcting a market failure to support consumption of PV energy. According to the Respondent, this needs to be understood within the context of the pertinent EU legislation, i.e. the First and Second Renewable Directives, but also the EU’s State aid regime, which requires that no excessive subsidies artificially distorting the market be granted and the sustainability of the overall scheme be ensured. Any prudent investor operating in a regulated market, in particular the Claimant as a very sophisticated investor, should be aware of such a market’s dynamics and of the specific role of the regulator in this context. Incentives may be necessary to support the market to maturity, but need not become a source of overcompensation and consequently market distortion and inefficiency. Adjustment of policies is therefore an inherent feature of these markets and of the renewable energy market in particular (Resp. Counter-Memorial, paras. 382-384, 394; Resp. Rejoinder, paras. 201-202; Resp. PHB, para. 4).
353.
In addition, the Respondent states that an adequate assessment of risk would have required the Claimant to take into consideration that it entered the Italian market at a late stage, when the support mechanism was close to reaching its sustainability limits, as well as the general crises that all European economies had undergone since 2009. The Respondent contends that the Claimant could not simply rely on extremely favorable incentives and ignore any other reasonable assessment of the context in which it was operating. The Respondent particularly submits in this regard that no legal due diligence could be found in the exhibits submitted by the Claimant (Resp. Counter-Memorial, para. 395; Resp. PHB, para. 7; Resp. Reply PHB, para. 13).
354.
Furthermore, the Respondent submits that the pertinent legal framework contained general measures addressed to the generality of the public, i.e. to anyone wanting to produce solar energy, irrespective of legal status, nationality or dimension. Hence, contrary to the Claimant’s contention (see para. 335), the incentivization regime for PV energy production was not put in place with a specific aim to induce foreign investments (Resp. Reply PHB, paras. 8-9).
355.
Moreover, the Respondent contends that, beyond the Claimant’s insistence on investor confidence, the goals of the pertinent EU renewable energy legislation such as efficiency, competitiveness and sustainability have to be taken into account as relevant context for the Respondent’s development of PV energy support schemes as well as the investors’ legitimate expectations in this respect. In particular, while permitting support schemes as a public measure to intervene in the market, EU legislation is concerned with efficiency, which must include cost-related measures and the avoidance of overcompensation. According to the Respondent, EU legislation always requests national measures to be sustainable and consistent with EU market principles, notably including State aid rules (Resp. Rejoinder, paras. 376-379).
356.
Furthermore, the Respondent submits that a distinction needs to be made between a "stable" and a "fixed" tariff. Incentives that remain stable do not necessarily remain identical. The Respondent argues that the Claimant has not been able to prove that fixed tariffs were promised or specific commitments were made by statutory act. According to the Respondent, with its interpretation of the relevant legal framework the Claimant incorrectly takes off itself any regulatory risk (in addition to the elimination of the market risk effectuated by the FIT), notwithstanding that the Claimant acts in a regulated market which by definition has a component of regulatory risk precisely arising from the possibility of redefinition of administrative conditions to adjust to policy needs (Resp. Counter-Memorial, paras. 385-386; Resp. Rejoinder, paras. 380-383, 386-389).
357.
According to the Respondent, the fact that the Claimant could not rely on fixed tariffs also becomes clear when considering the time of the investment because the entitlement to obtain a specific tariff only came into existence when the PV plant in question entered into operation and was connected to the grid, i.e. after the investment date. In addition, there might be various external reasons for not obtaining the tariff initially expected, e.g. due to construction delays. As a matter of fact, none of the Claimant’s investment companies had obtained either a tariff recognition letter or a GSE convention at the time of investment. As legitimate expectations have to be assessed at the time of making the investment, allowing investors to rely on the GSE conventions for the purposes of legitimate expectations would amount to an "ex post assurance" of the stability of the incentive regime for renewable energy (Resp. Counter-Memorial, paras. 471-474; Resp. Rejoinder, paras. 392-400, 407; Resp. PHB, paras. 7, 31-47; Resp. Reply PHB, paras. 4, 6, 10-12).
358.
Thus, the Respondent only accepts that the Claimant could legitimately rely on the overall or macro-stability of the incentive regimes in the sense of ensuring a "fair remuneration" over the long term, as provided by the pertinent primary legislation, including the fact that the incentives would be maintained at a level, both in terms of amount and duration, that would guarantee a fair return on the Claimant's investment. At the same time, an expectation that incentives would be ironclad, irrespective of the fact that they proved to be excessive and that they were not socially sustainable any longer, including the risk of failure of the system itself, could not be considered legitimate. Hence, the crucial question is to assess whether the challenged measures of the Respondent were reasonable, equitable and proportionate with respect to the expectations of stability of the incentive regime that investors were legitimate to have (Resp. Counter-Memorial, paras. 476-477; Resp. Rejoinder, paras. 472-484; Resp. PHB, para. 5).
359.
In this regard, the Respondent contends that it did not provide any stabilization clause in its regulation concerning PV plants. The Spalma-incentivi Decree simply reshaped the incentives for PV plants, but left the basic structure of the incentive regime intact. When assessing the reasonableness and proportionality of the adopted measures, what is important are the way the host State changes its previous regulation, the consistency of such modification and the concrete reasons underlying it. Furthermore, according to the Respondent, the absence in previous legislation of the express possibility for tariffs to be modified would not limit to any extent the power of the State to introduce such a change. To the contrary, only an express prohibition in a previous statutory act to modify, i.e. a stabilization clause, would have impeded the State from doing so (Resp. Counter-Memorial, paras. 480-489; Resp. Rejoinder, paras. 216-223, 390; Resp. Reply PHB, para. 44).
360.
In particular, the Respondent submits that, at the time when the Claimant started its investments, the operational costs to produce PV energy had been sharply reduced due to technological progress and economies of scale. The progressive reductions of FIT in the Third and Fourth Energy Accounts, however, were not sufficient to overcome the imbalance between PV investors' remuneration and the reduced costs for producing electricity, also in reason of the huge growth of PV plants in Italy, where the conditions for investors were particularly favorable compared to the rest of Europe. This situation, the Respondent argues, was detrimental for consumers who entirely bore the growing economic weight of the incentives. After an attempt in 2013 to favor voluntary mechanisms via the Destinazione Italia Decree, in 2014 the Respondent adopted the Spalma-incentivi Decree with the aim of balancing the necessity of avoiding excessive and cost-disproportionate burdens on consumers with the commitment to grant PV investors an equitable remuneration of the costs of investment and operation (Resp. Counter-Memorial, paras. 490, 496).
361.
In sum, according to the Respondent, the Spalma-incentivi Decree is reasonable, as it is aimed at balancing the need to grant incentives to PV energy with the necessity to respect a cost-effectiveness criterion, to avoid a disproportionate remuneration of PV investors and to protect the interests of final consumers. In addition, the Respondent considers the aforementioned legislation to be proportionate because the concrete way of reshaping the incentive tariffs is made by providing different mechanisms, notably by leaving PV investors the possibility of opting for one of three options, thus having a limited impact on the PV investors. Moreover, the Respondent deems the Spalma-incentivi Decree to be consistent and coherent with the existing regulatory framework, both at the Italian and the EU levels (Resp. Counter-Memorial, paras. 497-501; Resp. Rejoinder, paras. 441-452, 486-496; Resp. PHB, para. 8).
362.
Moreover, the Respondent submits that information documents such as guides or brochures of the GSE or other institutional subjects that have over time conducted information campaigns on the Energy Account regime cannot be the basis of protected assurances to the benefit of the Claimant (Resp. PHB, para. 54).
363.
The Respondent further argues that, in April 2018, the Claimant sold 18 PV plants to Cubico Sustainable Development.160 This shows that the plants are still valuable assets (Resp. Counter-Memorial, para. 406).

(2) The Tribunal’s Analysis

364.
The Claimant contends, and the Respondent rejects, that the adoption of the Spalma-incentivi Decree violates, on the one hand, Article 10(1), last sentence, of the ECT on the observance-of-obligations or umbrella clause (a.) and, on the other, Article 10(1), first and second sentences, of the ECT on fair and equitable treatment (b.). The Tribunal will address these two claims in turn.

a. Umbrella clause

365.

Article 10(1), last sentence, of the ECT states: "Each Contracting Party shall observe any obligations it has entered into with an Investor or an Investment of an Investor of any other Contracting Party".

366.
The Claimant argues that the agreements which the GSE concluded with the corresponding local development companies concerning each of the Claimant’s 25 PV plants (see para. 109), i.e. the so-called GSE conventions, constitute obligations which the Respondent entered into with the Claimant in the meaning of the afore-cited umbrella clause of the ECT and that the Respondent subsequently used its sovereign legislative power to change the terms of these obligations to the detriment of the investment, thus breaching the umbrella clause. The Claimant justifies its claim with a series of arguments all of which the Respondent rejects.
367.
The Tribunal notes that the Claimant has also referred to the debate as to whether the ECT’s umbrella clause extends exclusively to contractual obligations or may also cover legislative or regulatory acts (Cl. Memorial, para. 304; Cl. Reply, para. 64; see para. 333). At the same time, the Claimant considers this debate to be "beside the point" (Cl. Reply, para. 67) in the case at hand, since contractual obligations such as the GSE conventions are without a doubt covered by the umbrella clause. Against this background, the Tribunal will focus its analysis on the Parties’ arguments as to whether the GSE conventions are covered by the ECT’s umbrella clause (i) and address this clause’s relevance with respect to Legislative Decree No. 387/2003, the Romani Decree, the Second, Third, Fourth and Fifth Energy Accounts, as well as the GSE tariff recognition letters subsequently (ii).

(i) GSE conventions

368.
First, the Tribunal agrees with the Claimant’s contention that the terms of the ECT’s umbrella clause do not only cover obligations entered into with an investor, but also with an investment, and that the GSE conventions which were concluded between the GSE, on the one hand, and the Claimant’s local subsidiaries, on the other (see paras. 109, 120), fall under Article 10(1), last sentence, of the ECT in this respect.
369.
Secondly, the Tribunal is not convinced by the Respondent’s submission (see para. 345) that the use of the words "entered into" in the ECT’s umbrella clause implies that negotiations must have taken place between the parties to the obligation. The Claimant (see para. 327) is correct to argue that it is common for parties to enter into binding obligations both with or without previous negotiations.
370.
Thirdly, the Tribunal further accepts the Claimant’s position (see para. 328), which has remained unchallenged by the Respondent, that under the rules of State responsibility, the conduct of the GSE, which acts as an organ of the Italian State, in particular when concluding the GSE conventions, is attributable to the Respondent.