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Decision on Stay of Enforcement of the Award

Table of key Abbreviations/Defined Terms

Annulment Application or Application Spain's application dated 21 July 2020 for annulment of the Award
Arbitral Tribunal or Tribunal Arbitral tribunal constituted on 31 March 2016 in the original proceeding
Arbitration Rules or ICSID Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings 2006
Award Final award rendered on 21 January 2020 in the original arbitration proceeding
Claimants Watkins Holdings S.à r.l.; Watkins (Ned) B.V.; Watkins Spain, S.L.; Redpier, S.L.; Northsea Spain S.L.; Parque Eólico Marmellar, S.L.; and Parque Eólico La Boga, S.L.
Committee Ad hoc annulment committee constituted on 13 January 2021 comprising Professor Lawrence Boo Geok Seng (president), Ms Olufunke Adekoya (member), and Ms Dyalá Jiménez Figueres (member)
Convention or ICSID Convention Convention on the Settlement of Investment Disputes between States and Nationals of Other States dated 18 March 1965
EU European Union
ICSID International Centre for Settlement of Investment Disputes
Parties Claimants and Spain
Rejoinder Claimants' Rejoinder on Continuation of the Stay of Enforcement, dated 5 April 2021
Reply Spain's Reply in support of the Continuation of the Stay of Enforcement of the Award, dated 18 March 2021
Request Spain's request for stay of enforcement of the Award and continuation of such stay pending the Committee's decision on the Annulment Application
Response Claimants' Response to Spain's Request for Stay of Enforcement, dated 4 March 2021
Spain Kingdom of Spain
Submission Spain's Submission in support of the Continuation of the Stay of Enforcement of the Award, dated 18 February 2021
TFEU Treaty on the Functioning of the European Union
Watkins Parent Companies Watkins Holdings S.à r.l. and Watkins (Ned) B.V.

I. THE PARTIES

1.
The claimants comprise the following entities (together, "Claimants"):

i. Watkins Holdings S.à r.l., a private limited liability company incorporated under the laws of Luxembourg;

ii. Watkins (Ned) B.V., a limited liability company incorporated under the laws of the Netherlands;

iii. Watkins Spain, S.L., a private limited liability company incorporated under the laws of Spain;

iv. Redpier, S.L., a private limited liability company incorporated under the laws of Luxembourg;

v. Northsea Spain S.L., a private limited liability company incorporated under the laws of Spain;

vi. Parque Eólico Marmellar, S.L., a private limited liability company incorporated under the laws of Spain; and

vii. Parque Eólico La Boga, S.L., a private limited liability company incorporated under the laws of Spain.

2.
The applicant is the Kingdom of Spain ("Spain").
3.
The Claimants and Spain are collectively referred to as the "Parties". The Parties' representatives and their addresses are listed above on page i.

II. PROCEDURAL HISTORY

Date Event
21 July 2020 ICSID received from Spain an application for the annulment of the award rendered on 21 January 2020 in the original arbitration proceeding, together with annexes. In its Annulment Application, Spain also requested a stay of the enforcement of the Award.
31 July 2020 The Secretary-General of ICSID registered the Annulment Application, in accordance with Rule 50(2)(a) of the ICSID Arbitration Rules. Together with the notice of registration, the Secretary-General informed the parties of the provisional stay of the Award, in accordance with Rule 54(2) of the ICSID Arbitration Rules.

 

   
14 January 2021 The Secretary-General, in accordance with Rule 52(2) of the ICSID Arbitration Rules, notified the parties that all members of the ad hoc Committee had accepted their appointments, and that the Committee was therefore deemed to have been constituted, and the annulment proceedings to have begun, as of 14 January 2021, pursuant to Rules 6(1) and 53 of the ICSID Arbitration Rules. The Committee is composed of Professor Lawrence Boo Geok Seng, a national of Singapore, as president; Ms Olufunke Adekoya, a national of the United Kingdom and Nigeria, as member; and Ms Dyalá Jiménez Figueres, a national of Costa Rica, as member. All three members of the Committee were appointed by the Chair of the ICSID Administrative Council, in accordance with Article 52(3) of the ICSID Convention. On the same date, the parties were notified that Mr Francisco Grob, Legal Counsel at ICSID, had been appointed as Secretary of the Committee.
21 January 2021 The Committee directed that the provisional stay of the enforcement of the Award would be maintained until it had had an opportunity to review all of the parties' submissions and to issue a further decision on the matter, thereby extending the time limit under Rule 54(2) of the ICSID Arbitration Rules.
22 February 2021 The Committee held the first session by video conference, with the following participants: Members of the Committee: Professor Lawrence Boo, President of the Committee Ms Olufunke Adekoya, Member Ms Dyalá Jiménez Figueres, Member ICSID Secretariat: Mr Francisco Grob, Secretary to the Committee On behalf of the Claimants: Ms Marie Stoyanov, Allen & Overy Mr Antonio Vázquez-Guillén, Allen & Overy Mr Pablo Torres, Allen & Overy Mr Gonzalo Jiménez-Blanco, Allen & Overy On behalf of Spain: Mr Alberto Torró Molés, Abogacía General del Estado Mr Lorena Fatás Pérez, Abogacía General del Estado Ms María del Socorro Garrido Moreno, Abogacía General del Estado

 

18 February 2021 Spain filed its Submission in support of the Continuation of the Stay of Enforcement of the Award, together with annexes ("Submission").
26 February 2021 The Committee issued Procedural Order No. 1, which provides, inter alia, that the applicable arbitration rules are those in force as of 10 April 2006, and that the procedural languages are English and Spanish.
4 March 2021 The Claimants filed its Response to Spain's Request for Stay of Enforcement, together with annexes ("Response").
18 March 2021 Spain filed its Reply in support of the Continuation of the Stay of Enforcement of the Award, together with annexes ("Reply").
5 April 2021 The Claimants filed its Rejoinder on Continuation of the Stay of Enforcement, together with annexes ("Rejoinder").
28 April 2021 The Committee held the Hearing on Stay of Enforcement of the Award by video conference, with the following participants: Members of the Committee: Professor Lawrence Boo, President of the Committee Ms Olufunke Adekoya, Member Ms Dyalá Jiménez Figueres, Member ICSID Secretariat: Mr Francisco Grob, Secretary to the Committee Mr Frederico Salon Kajganich, ICSID Paralegal On behalf of the Claimants: Ms Marie Stoyanov, Allen & Overy Mr Antonio Vázquez-Guillén, Allen & Overy Mr Pablo Torres, Allen & Overy Ms Lucinda Critchley, Allen & Overy On behalf of Spain: Mr Alberto Torró Molés, Abogacía General del Estado Ms Lorena Fatás Pérez, Abogacía General del Estado Ms María del Socorro Garrido Moreno, Abogacía General del Estado

 

III. PARTIES' REQUESTS

4.
In its Submission of 18 February 2021 read with its Reply dated 18 March 2021, Spain requested:1

[…] that the stay of enforcement of the Award is continued and maintained in effect, without security or other conditions, until the decision on the Annulment Application is rendered by the Committee in this proceeding.

5.
In their Response dated 4 March 2021, the Claimants requested that the Committee:2

(a) dismiss the Request in its entirety;

or, alternatively, if the Committee were to grant Spain's Request,

(b) condition the maintenance of the stay of enforcement on Spain providing security within 30 days of the Committee's decision in the form of:

(i) a payment of the full amount of the Award inclusive of accrued interest into an escrow account maintained by a reputable international bank located in the United States or elsewhere outside the European Union; or alternatively,

(ii) an irrevocable and unconditional bank guarantee for payment of the Award in full inclusive of accrued interest issued by a reputable international bank located in the United States or elsewhere outside the European Union; or alternatively,

(iii) a binding and unconditional written undertaking executed by Spain's Secretary of State for Energy that the Award, including interest, will be paid in the event that the Application is rejected, the Application is withdrawn or the annulment proceedings are discontinued, along with the designation of an agent for service in the United States and a waiver of sovereign immunity as to the attachment of its assets; and

(c) order that if Spain fails to provide security within 30 days of the Committee's decision, the stay will automatically be lifted and the Award enforceable;

and, in all cases; and

(d) order Spain to bear all fees and costs associated with the Request.

In the event that the Committee decides to grant the Claimants' alternative pleas (b)(i) or (b)(ii), the Claimants also request to be consulted on the terms of the relevant escrow or bank guarantee arrangement, which should in all cases allow immediate collection by the Claimants should the Application be rejected, the Application be withdrawn or the annulment proceedings otherwise be discontinued at the request of or as a result of an action by Spain.

IV. STAY OF ENFORCEMENT UNDER ARTICLE 52(5) OF THE ICSID CONVENTION

6.
The arguments raised by the Parties regarding Spain's request for a continuation of the stay of enforcement of the Award and the Claimant's request for a termination of stay are set out briefly below. While the Committee has heard and read all of the Parties' submissions and arguments, its analysis will deal only with those which in its view have an impact on the outcome of the Request.

A. The Law Applicable

7.
The Request is made pursuant to Article 52 of the ICSID Convention, which provides that –

Article 52

[…]

(5) The Committee may, if it considers that the circumstances so require, stay enforcement of the award pending its decision. If the applicant requests a stay of enforcement of the award in his application, enforcement shall be stayed provisionally until the Committee rules on such request.

[emphasis added]

8.
This provision allows the Committee to stay enforcement of the Award if the "circumstances so require". A threshold question that arises for consideration is what the applicable legal standard is that the Committee should apply when the "circumstances so require".

(1) Applicable Legal Standard

a. Spain's Position

9.
Spain submits that there is no requirement that there be 'exceptional' circumstances for the Committee to order a stay,3 referring to Perenco v Ecuador.4 It also points out that ad hoc committees "have recognised the common, prevailing practice of granting stays of enforcement during annulment proceedings",5 and that stays of enforcement have indeed been granted in the "vast majority" of cases.6 At the same time, Spain clarifies that although this does not mean that a stay should be continued automatically, it does mean that greater restraint is not needed in deciding whether a stay should be continued.7
10.
According to Spain, the principle of finality of awards is "not an absolute principle" and its right to seek annulment and stay of enforcement of the award is not subordinate to the Claimants' right to enforcement.8

b. Claimants' Position

11.

The Claimants argue that the use of the word 'require' under Article 52(5) of the ICSID Convention makes clear that there should be "a sense of necessity" in the circumstances for the stay of enforcement to continue.9 In this regard, the Claimants cite, amongst other cases, Antin v Spain, where the ad hoc committee held that "the circumstances which should exist for a stay to be required must, at the very least, rise above those which are common to most stay applications".10

12.
The Claimants also submit that despite Spain's claims, other ad hoc committees have found that statistics regarding the outcome of stay of enforcement applications are "not particularly helpful", and that "recent trends suggest that stays are being lifted, rather than continued" (emphasis in original).11 The Claimants point out in particular that in the more apposite cases, where Spain was the party requesting continuation of stay, most ad hoc committees decided to lift the stay of enforcement.12

c. The Committee's Analysis

13.

Article 31(1) of the Vienna Convention on the Law of Treaties13 provides that treaties "shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms […] in their context". It is therefore only appropriate that the Committee first considers the ordinary meaning of Article 52(5).

14.
On a plain and simple reading, Article 52(5) contemplates a two-stage analysis for the stay to be continued: first, it must be shown that "circumstances so require" for the enforcement of the Award to be stayed pending the Committee's decision regarding the Annulment Application; and second, if such circumstances are present, the Committee should then exercise its discretion (evident from the word "may") whether to continue the stay. The Parties agree with the second stage of the analysis, in that the Committee has the discretion to continue or lift the stay,14 but their positions differ as regards the first. The Parties also agree that the ICSID Convention and Arbitration Rules do not specify the factors that should be considered in determining whether to continue or lift a stay of enforcement.15
15.
At the oral hearing, Spain restated its position that under Article 52(5), "there is not a requirement for exceptional or compelling circumstances",16 but rather, that there needs to be a "balancing exercise".17 The Claimants took issue with this and contended instead that "there have to be compelling circumstances for there to be a stay. It cannot be circumstances that exist in any annulment proceedings. Otherwise […] a stay would be automatic, and that is simply not the case."18
16.

The Parties also refer to the finality of ICSID awards,19 which is spelt out under Article 53(1) of the Convention:

Article 53

(1) The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention.

[emphasis added]

17.
On a plain reading of Article 53(1), ICSID awards are final and binding, subject only to the remedies available under the ICSID Convention. There is no suggestion in the text or any justification in principle to impose the right to enforce an award as ranking superior to that of an aggrieved party's right to seek its annulment. If each is intended to be a counterbalance of the other, they must be accorded equal weight and treatment. The Committee is therefore not persuaded that there must necessarily be "compelling circumstances" before a continuation of stay is granted as suggested by the Claimants, or that "a general rule of prudence" exists in deciding whether to lift a stay simply because a party has applied for annulment,20 which Spain urges us to adopt.
18.
In taking this view, the Committee is conscious that while past decisions by other ad hoc committees might have taken one view or the other in relation to the exercise of restraint on the specific facts of those cases, they do not constitute precedents which this Committee is bound to follow. In the Committee's view, each matter should be decided based on an appreciation of the specific circumstances of the case and taking into account any evidence submitted by the parties in discharging their respective burdens of proof. Indeed, the Parties seem to agree that a fact-specific enquiry is necessary in the present case.21 This then leads the discussion regarding the burden of proof required to be discharged by each of the Parties.

(2) Burden of Proof

a. Spain's Position

19.
It is Spain's position that the burden of proof lies on the party making an affirmative assertion,22 and argues that the Claimants "must give proof that [they] will suffer a prejudice as a result of the stay and that the Kingdom of Spain does not hold the risk that it is invoking".23 It also contends that its "burden of proof has been discharged by far" because it "has presented the Committee with an array of circumstances that justify the continuance of the stay of enforcement".24

b. Claimants' Position

20.
The Claimants submit that there is no presumption either way, whether in favour of lifting or continuing the stay.25 They point in this regard to previous ad hoc committees that have heard Spain's request for continuation of stay, which have consistently found that there is no presumption in favour of a stay.26 Notwithstanding this, the Claimants submit that the party making a positive assertion bears the burden of proving that assertion,27 and that in this instance "[f]or the most part, that party is Spain",28 elaborating that "[t]he only positive assertions made by the Claimants are that: (a) there is a material risk of non-recoupment29 of the Award should Spain's Annulment Application fail; and (b) should the stay be granted, it should be conditioned on security".30

c. The Committee's Analysis

21.
It appears that the Parties agree that the party making a positive assertion bears the burden of proving that positive assertion,31 but there is no further agreement beyond that point.
22.

Rule 54 of the ICSID Arbitration Rules, which deals with stay of enforcement, may well be the best indication available within the ICSID Convention and Arbitration Rules as to which party bears the burden of proof. It provides as follows:

Rule 54

Stay of Enforcement of the Award

(1) The party applying for the interpretation, revision or annulment of an award may in its application, and either party may at any time before the final disposition of the application, request a stay in the enforcement of part or all of the award to which the application relates. The Tribunal or Committee shall give priority to the consideration of such a request.

(2) If an application for the revision or annulment of an award contains a request for a stay of its enforcement, the Secretary-General shall, together with the notice of registration, inform both parties of the provisional stay of the award. As soon as the Tribunal or Committee is constituted it shall, if either party requests, rule within 30 days on whether such stay should be continued; unless it decides to continue the stay, it shall automatically be terminated.

(3) If a stay of enforcement has been granted pursuant to paragraph (1) or continued pursuant to paragraph (2), the Tribunal or Committee may at any time modify or terminate the stay at the request of either party. All stays shall automatically terminate on the date on which a final decision is rendered on the application, except that a Committee granting the partial annulment of an award may order the temporary stay of enforcement of the unannulled portion in order to give either party an opportunity to request any new Tribunal constituted pursuant to Article 52(6) of the Convention to grant a stay pursuant to Rule 55(3).

(4) A request pursuant to paragraph (1), (2) (second sentence) or (3) shall specify the circumstances that require the stay or its modification or termination. A request shall only be granted after the Tribunal or Committee has given each party an opportunity of presenting its observations.

[…]

[emphases added]

23.

Rule 54(4) in particular stipulates that the party requesting a stay or modification or termination of stay "shall specify the circumstances that require the stay or its modification or termination". Notwithstanding this, it does not expressly state that the burden of proof per se is incumbent on the applicant seeking the stay. The Committee therefore has some difficulty accepting that the burden lies only on Spain simply because "[t]he application was made by Spain for the stay to be maintained",32 as asserted by the Claimants, when Claimants have also presented their observations and positions to the contrary and seeking a termination of the stay. The Committee is unable to discern any principle under Rule 54(4) of the Arbitration Rules that the burden of proof lies solely with Spain.

24.
The situation is similar as regards Article 52(5) of the Convention, which sheds even less light on the matter, given that it is silent in this respect.
25.
Given that the relevant provisions under the ICSID Convention and Arbitration Rules do not specify or otherwise indicate which party bears the burden of proof, the Committee believes it appropriate to consider the general principle of onus probandi incumbit actori: that the burden of proof lies with the party making a positive assertion. This is broadly in keeping with the way in which the Parties have presented their positions, so that Spain must prove the circumstances which it alleges require the stay to be continued, while the Claimants must prove the circumstances that they allege require the stay to be terminated.
26.
This leaves the Committee to consider if each has so discharged their burden and if so, how the discretion to lift or continue the stay should be exercised.

B. The Circumstances of the Present Case

27.
The Parties have in their submissions raised several circumstances for the Committee to take into account in considering whether to lift or continue the stay.

(1) Whether the Annulment Application is Dilatory or Frivolous

a. Spain's Position

28.
Spain submits that it made the Annulment Application in good faith, explaining that its Application has been made on "serious grounds".33 It also contends that previous ad hoc committees have held this to be one of the circumstances to be considered in determining whether to continue a stay,34 arguing that those committees "have found that a request for continuation of a stay should be granted unless it is obvious that the application is 'without any basis under the Convention' and is 'dilatory' in nature".35

b. Claimants' Position

29.
The Claimants submit that the merits of an annulment application are not a valid ground for staying enforcement. They explain that a "substantial body" of previous decisions and commentaries indicate that such merits are not relevant except where the underlying application is manifestly dilatory, in which case the stay application should be rejected outright, but that this does not mean that a stay should be granted just because the annulment application is serious.36

c. The Committee's Analysis

30.
As mentioned, the Parties agree that the question as to whether the stay should be continued is fact-specific and dependent on the circumstances of each case,37 but they do not fully agree on the elements that should be taken into account, including whether the Annulment Application is 'serious'.
31.
The Committee does not accept Spain's submission that a stay should be granted unless the annulment application is frivolous or dilatory. The mere fact that there is some merit in the Application is a neutral factor and cannot of itself constitute a basis to continue the stay of enforcement. The Committee agrees however that the converse is applicable, such that if the grounds for stay are frivolous or dilatory, it operates as a factor for lifting the stay.
32.

Spain in its Application cited the following as grounds for annulment:

i. That the arbitral tribunal in the original proceeding ("Arbitral Tribunal") lacked jurisdiction on the basis that the case at hand was an intra-European Union dispute, meaning a dispute between a European Union ("EU") member State and investors from other EU member States. According to Spain this means that no arbitration could be filed validly under Article 26 of the ECT since that breaches EU law, particularly Articles 267 and 344 of the Treaty on the Functioning of the European Union ("TFEU"),38, mandatory among member States ;39

ii. That the Arbitral Tribunal failed to apply the proper law (being EU law) to the merits of the dispute and to the determination of its jurisdiction;40

iii. That there was a serious departure from a fundamental rule of procedure in that the Arbitral Tribunal jeopardised Spain's right to be heard;41

iv. That the Award failed to state reasons in respect of the Arbitral Tribunal's findings on the merits and damages;42 and

v. That the Award failed to state reasons for not applying EU law.43

(2) The Risk that the Award will not be Honoured if the Annulment Application is Unsuccessful

a. Claimants' Position

34.
The Claimants submit that the risk of a State's non-compliance with an award is a reason to lift a stay of enforcement, but that the contrary (i.e. a State's compliance) is not a circumstance requiring a stay.45 They also clarify that where ad hoc committees have considered a risk of non-compliance as a relevant factor in determining whether to continue or lift a stay, the issue has largely arisen in circumstances where award creditors have made submissions on it, not because committees had considered it is a circumstance justifying a stay.46
35.
The Claimants further point out that Spain's affirmation that it will pay the Award only upon receipt of the European Commission's authorisation to do so in fact means that Spain might not pay the Award, and that this therefore betokens Spain's insufficient commitment to honour the Award.47
36.

The Claimants moreover argue that the purported conflict caused by Spain's EU law obligations pertains to the merits and is therefore irrelevant to the determination of whether to continue or lift the stay.48 They also submit that "Spain cannot use [this purported conflict] as a shield to escape its obligations to comply with the Award, which stem from the ICSID Convention",49 and contend that Spain's arguments in this respect are simply an attempt to "postpone" dealing with such conflict.50 According to the Claimants, cases involving Spain also demonstrate that as far as Spain's purported conflict of international law obligations is concerned, the stay should be even lifted altogether.51

37.
The Claimants highlight that Spain, despite all its reassurances, has taken steps to actively resist the enforcement of the Award ever since it was rendered. This, in the Claimant's submission, indicates Spain's unwillingness to comply with the Award.52 According to the Claimants, similar behaviour on the part of Spain is reflected in its "significant track record of non-compliance with investment-treaty awards",53 as well as its refusal to give the relevant undertaking when requested to do so.54

b. Spain's Position

38.

Spain submits that while the risk of non-payment of the Award "may be relevant to consider, it has not been found determinative by arbitral precedents".55 More significantly, Spain points out that being the fifth-largest economy in the European Union, and ranking 13th among all countries in the world in terms of gross domestic product, there is "no danger" of Spain not having the financial resources to pay on the Award.56 It also indicates that there is no history of non-compliance with international obligations on its part,57 and contends that its notification of the Award to the European Commission is proof that it has taken the "appropriate steps" to pay the Award and therefore demonstrates that it abides by its international obligations.58 According to Spain, the European Commission has in fact already specifically determined that payment of the Award is notifiable State aid under Articles 107 and 108 of the TFEU,59 and that payment under the Award has been suspended until the European Commission has rendered a decision thereon.60

c. The Committee's Analysis

39.
The Parties appear to agree that Spain's conduct is a factor that should be taken into account in considering the continuation of stay.61
41.
The Claimants have described Spain as a State that "has yet to pay a single cent to any of the claimants that have prevailed in cases against it, including where either challenges before local courts have completed in favour of the claimant investors or where stays of enforcement were lifted by ad hoc committees".62 While it may be true that Spain has not as yet paid on any of the referred awards made against it, the Committee notes that Spain has applied for annulment of the awards in each and every one of these cases. It is therefore not as 'clear' as the Claimants seem to suggest, that Spain "is today in breach of its international obligations under the ICSID Convention".63 In the Committee's view, it seems premature to conclude that Spain has failed or refused to comply with the awards rendered against it. The fact that Spain has sought to annul the awards does not mean necessarily that it is a recalcitrant defaulter, as it is exercising a right and remedy available under the ICSID Convention and Arbitration Rules. Accordingly, the Committee is not prepared to hold that Spain "is today in breach of its international obligations under the ICSID Convention", or that Spain has a "significant track record of non-compliance with investment-treaty awards".64
42.
The Committee also agrees that whether Spain has the ability to pay on the Award is a relevant factor to be considered in continuing or granting stay. In this regard, the Committee accepts that Spain is the fifth largest economy in the EU and ranked 13th among all countries in the world in terms of gross domestic product. While there may be other award creditors seeking payment from Spain, the Committee is not convinced that Spain lacks the funds or the ability to honour the awards, including the Award in this arbitration. The Committee is therefore not persuaded that Spain will be unable to meet the payments under the Award should the Annulment Application fail.
43.
In the Committee's view, there is minimal or no risk that the Award would not be satisfied by Spain should the Application fail.

(3) Prejudice to the Claimants if the Stay is Continued and the Annulment Application is Unsuccessful

a. Spain's Position

44.
Spain submits that the continuation of the stay will not prejudice the Claimant as any delay in payment under the Award consequent upon a stay will be properly remedied by the accrual of interest payable on the amount due under the Award,65 at a rate which in this case is "well above the Spain 10-years Government Bonds".66 It reiterates that Spain has no history of defaulting in its international obligations and the suggestion of such a risk is clearly speculative.67

b. Claimants' Position

45.
The Claimants submit that a continuation of stay not harming them is "not a circumstance justifying a stay that is requested by Spain",68 (emphasis in original) and that "there is a real risk that they would never be able to recover the damages to which they are entitled"69 given the large number of investment treaty claims against Spain, including those which have already resulted in awards against Spain making up a total compensation of approximately EUR 1 billion. The Claimants also add that this figure is likely to increase "significantly" since "most of the remaining proceedings are still pending",70 and argue further that "maintaining the stay currently in place would force the Claimants into a queue of potentially around 45 creditors".71
46.
The Claimants also point out that the post-award interest rate was put in place "to incentivise Spain's compliance" with the Award, and not to compensate default risk or delay in payment, so Spain cannot use it as an excuse to defer payment.72
47.
According to the Claimants, the ad hoc committee decisions cited by Spain finding accrual of interest to be a factor warranting a stay of enforcement are also misleading because they discussed accrual of interest in relation to whether security should be granted as a condition of stay. The Claimants contend that, on the contrary, several ad hoc committees have found accrual of interest as not constituting a 'circumstance' warranting continuation of stay, while others have stated that post-award interest is not adequate compensation.73 The Claimants submit that the cases cited by Spain are "not instructive" either, because "[n]o prejudice apart from delay (and costs associated with annulment proceedings) was established by the responding parties" in those cases.74

c. The Committee's Analysis

48.
The Claimants seek to persuade the Committee that if they succeed in defeating the Application, they will suffer prejudice due to the delay in receiving payment of the damages, assuming they even receive such payment at all. This is especially so, they argue, in view of the long queue of award creditors holding rights against Spain, some of whom are not encumbered by a stay of enforcement and would be ahead in the queue. In essence, the Claimants' complaint of prejudice is one of delay and loss of priority.
49.

As discussed above in paragraph 40, the Committee does not agree that there will be any solvency issue or risk of non-payment by Spain such that if the Claimants succeed, there would be nothing left for it to recover under the Award. The Award has provided not just for monetary compensation but also that the same compensation attracts interest at 2.16% per annum compounded monthly,75 which is a rate above the rate for Spanish government bonds.76 This means that for any delay in receiving any money due to them under the Award, the Claimants would be more than adequately compensated by the interest that will have accrued. While the Committee agrees with the Claimants that "[p]ost-award interest cannot […] serve as an excuse to defer payment of the Award that is final and binding",77 the Committee does not agree that continuing the stay undermines the finality of the Award. Permitting a stay is in fact a further step to preserve the Award's eventual finality so that if affirmed by the annulment process, there will be no doubt as to its universal finality and enforceability.

50.
The Committee is also not persuaded that the Committee should lift the stay so that the Claimants remain at the front of the queue instead of "los[ing] [their] seat in the very long queue of award-holders that have rights against Spain"78 if the stay is continued and the Annulment Application eventually dismissed. The use of such a description is premised on the fear that Spain is in a precarious financial situation. As such is not the case here, if the Application fails, the Claimants remain in the pool of creditors who would eventually be paid, whether it is in the front or the back of the line.
51.
There is therefore no added prejudice to the Claimants, much less any added "harm that damages cannot adequately remedy".79 In this respect, the Committee shares the view of the annulment committee in NextEra v Spain that "such a possibility of being behind the queue of other creditors is not a significant risk factor that would be sufficient to support the lifting of the stay".80 This Committee would go even further to say that even if there is a queue of creditors, there is no legitimate basis, or any need for the Committee to assist the Claimants to jump the queue ahead of other creditors by lifting the stay. That is not the role of an annulment committee.

(4) The Risk of Non-Recoupment of the Award if It is Paid and later Annulled

a. Spain's Position

52.
Spain submits that there is a risk of non-recoupment of the Award if the stay is lifted and the Award later annulled,81 considering that:

i. Claimants 1 and 2, the parent companies of the remaining Claimants ("Watkins Parent Companies"), have sold their assets in Spain, including their shareholdings in those remaining Claimants.82

ii. The Watkins Parent Companies are shell companies with "no relevant economic activity".83

iii. The Watkins Parent Companies do not have total assets that are sufficient to guarantee repayment of the Award.84

iv. The Watkins Parent Companies "do not have significant cash amounts".85

v. Claimants 6 and 7's profits are all distributed to the current owners and not the Claimants, their assets are not of sufficient value for repayment of the Award, and they have pledged all the cash flows and collection rights generated by the wind farm to their lenders.86

vi. It is unclear whether the Claimants even have the right to collect the Award.87

b. Claimants' Position

53.
The Claimants submit that "[t]he risk of seeking reimbursement from [them] is not […] a circumstance that would justify the stay being continued, [but] rather a natural consequence of the enforcement regime under the ICSID Convention".88 They argue that the factor to be considered is instead whether "there is a risk that Spain would be unable to recover any proceeds of enforcement from the Claimants" (emphasis in original), which Spain has not proven.89
54.
The Claimants further clarify that the Watkins Parent Companies own all economic rights with respect to the Award, including all rights to proceeds from the Award, by virtue of an assignment from the remaining Claimants, and that therefore Spain's arguments regarding Claimants 6 and 7 should be disregarded.90
55.
In addition, while the Claimants admit that the Watkins Parent Companies have no business activity and currently do not have sufficient assets on their balance sheet to repay the Award, the Claimants maintain that the Watkins Parent Companies will be able to 'ringfence' proceeds from the Award,91 and further offer to provide the necessary undertaking to this effect.92 In this regard, they point out Spain's payment of the Award would naturally remedy any inadequacies in terms of assets,93 as well as debt owed by Claimant 2 to its "only significant creditor", which is the legal team representing the Claimants in these proceedings.94

c. The Committee's Analysis

56.
There is no dispute that the possibility of recoupment is a relevant factor in deciding whether to continue the stay. Indeed, the Committee sees this as one of the key factors to be considered. While Spain is a sovereign State with a sizeable economy and resources that will be able to pay when required, the question is whether the Claimants as award creditors will be able to repay all sums paid to or received by them should the Application succeed.
57.
In this regard, the Claimants reiterate their position during the hearing as follows: "we're not on the brink of insolvency at all. We have no liabilities, we Watkins entities, other than to me in my capacity as A&O. Those are the only liabilities of the Watkins entities that are the award-holders."95 They also pointed out that they "do have one very important asset, which is the Award",96 and that therefore recoupment of the Award, if eventually necessary, is entirely possible. To fortify their position, they offer to provide an undertaking "to ringfence the proceeds of the Award",97 such that "the amounts will not be distributed upwards",98 and even added during the hearing that "they would be very happy to provide a guarantee by one of the ultimate funds".99
58.
While there is some force to the argument that there is less risk of the Award proceeds being siphoned away, given the Claimants' solvency, the Committee does not consider that this necessarily translates to there being no risk of non-recoupment by Spain. Although the Claimants offer to provide an undertaking to 'ringfence' the proceeds when paid, and possibly a guarantee by one of the "ultimate funds" (presumably the ultimate beneficiary), the Committee is not convinced that this is adequate assurance to Spain as there remains the risk that the Claimants may not be able to make good their undertaking, or 'ringfence' the funds once they are released. Accordingly, the Committee is of the view that this is a factor that militates against lifting the stay of enforcement.

C. Whether Security should be Ordered

a. Spain's Position

59.
Spain accepts that ad hoc committees have the power to condition a stay on posting of security but cautions that "such a power should not be taken lightly". It highlights that the ICSID Convention does not expressly accord such a power to committees and points out that a provision for the adoption of provisional measures was removed from the original draft of the Convention.100 Spain also submits that posting of security would place award creditors (here, the Claimants) in a better position than they would otherwise be in,101 as observed by other ad hoc committees.102
60.
As regards posting of security into escrow and in the form of a bank guarantee, Spain adopts the position that the related costs "would likely be exorbitant" and likens such security to "imposing a cost or a fine to the Kingdom of Spain […] and in fact penalizing it for requesting annulment and curtailing the right provided by Article 52 of the ICSID Convention".103 Spain also argues that the Claimants' request for security to be posted in outside the EU also reveals their attempt to "escape from the European Union",104 and offers "its commitment to honor the Award in good faith, consistent with its international obligations under the ICSID Convention and EU law, if the Award is not annulled in this proceeding".105

b. Claimants' Position

61.
According to the Claimants, the Committee has the power to condition any stay granted on the posting of security, as seen in previous ICSID annulment proceedings.106 They submit that this would not put them in a better position than they otherwise would have been, since they "would […] have by now received full payment", referring to case law where other ad hoc committees have rejected the so-called 'betterment' argument.107 They also point out that even if Spain gives security, they would in fact "still be out of the money pending the outcome of the Annulment Application".108
62.
The Claimants argue that security is justified and in line with case law, considering Spain's behaviour: since the Award was rendered, Spain has either sought to delay, frustrate or otherwise resist payment, and this shows that it is unlikely to comply voluntarily with the Award.109 To underscore their point, the Claimants also refer to other ICSID cases where Spain acted similarly.110
63.
The Claimants further argue that the provision of security will counterbalance the risk of hardship they will face if the Application fails, repeating the position that "the stay is likely to force the Claimants into a queue of potentially around 45 creditors" and that "the Claimants will run the risk of never being able to recover the damages to which they are entitled under the Award at all".111
64.
As to the form of security requested, the Claimants explain that it must be established outside the EU because there are "legitimate concerns that if such security is posted within the EU, the Claimants will not be able to access it",112 and also reject Spain's claim that the costs of an escrow account will be exorbitant as being "pure speculation".113 The Claimants contend that "it is entirely fair that Spain should bear the cost of the [escrow] account, as the party against whom security is being ordered",114 and indicate that posting security into escrow would also address Spain’s concerns that proceeds from the Award will be paid out to the Claimants’ shareholders. In addition, the Claimants stress the necessity of the requested undertaking by explaining that Spain’s offer of commitment to honour the Award "is not of comparable binding force, and hence is insufficient".115

c. The Committee's Analysis

65.
The Committee notes the Claimant’s observations that Spain had resisted the enforcement of the Award both in the United States and in Australia which in their view represented Spain’s intention to delay, frustrate or otherwise resist payment of the Award. As the Committee has accepted that Spain is not in any state of insolvency, there is no justification for the Claimant to insist that stay, if granted, be made conditional upon Spain furnishing security either by deposit in escrow or a bank guarantee. In the Committee’s view, doing so would impose an unnecessary burden on Spain and would have a direct effect of placing the Claimants in a better position than they would otherwise be in, especially vis-à-vis other creditors. As this is not the role of an annulment committee, the Committee declines to do so.
66.
Taking into account all the factors considered above, namely that there is minimal risk that Spain will not honour the Award if the Annulment Application fails, that any delay on the part of the Claimants receiving payment will be adequately compensated by the payment of the interest rate as set in the Award, and that there remains a risk that Spain may not be able to recoup payment should it succeed in the Annulment Application, the Committee reaches the view that the circumstances in this case require a stay of enforcement,
67.
As the Committee could find no other substantive prejudice that could befall the Claimant by any delay in a stay of enforcement, it exercises its discretion to continue the stay of enforcement without condition and rejects the Claimant’s request for the termination of stay.

V. COSTS

68.
The costs of this application will be deferred for determination with the Committee’s final decision on the Annulment Application.

VI. DECISION

69.
For the reasons set out above, the Committee hereby:

I. Grants Spain's request for the stay of enforcement of the Award to be continued and maintained in effect, without security or other conditions, until the decision on the Annulment Application is rendered by the Committee;

II. Reserves its right to modify or terminate the stay at any time; and

III. Reserves its decision on costs for determination in the Committee's final decision on the Annulment Application.

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