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Procedural Order No. 3

I. PROCEDURAL HISTORY

1.
On July 19, 2018, the ICSID Secretariat received an Application for leave to intervene as a non-disputing party by the European Commission (the “Application for leave”). In its Application for leave, the European Commission (the “Commission” or “EC”) requested the ad hoc Committee to: i) grant the Commission leave to intervene in the proceedings, ii) set a deadline for the Commission to file a written amicus curiae submission on two points of law, iii) allow the Commission access to the documents filed in the case, to the extent necessary for its intervention in the proceedings, and iv) allow the Commission to attend hearings in order to present oral arguments and reply to questions of the ad hoc Committee at those hearings, should the ad hoc Committee and the Parties deem that useful.1
2.
The Commission based its request on Rule 53 and Rule 37(2) of the ICSID Arbitration Rules. In addition, the Commission pointed out that Article 29(2) of Council Regulation (EU) 2015/1589 of July 13, 2015 forms “part of the applicable law for the proceedings pending before the [ad hoc] Committee”,2 it recognizes its significant interest and provides further support for its request.3
3.
Regarding the scope of its intervention, it considers that the Tribunal manifestly exceeded its powers and seriously departed from a fundamental rule of procedure for three reasons: i) because it lacked jurisdiction to hear the case and failed to state reasons, ii) because it failed to apply European Union (‘‘EU’) law on State aid, and in particular the standing case-law of the Court of Justice of the European Union on the (exclusion of) legitimate expectations in case of unlawful State aid, and iii) the Tribunal has seriously departed from a fundamental rule of procedure by requiring a commitment from the Commission to pay costs, and, as a result, refusing the Commission’s amicus curiae submission.4
4.
As to its first argument, the Commission contends that by not declining jurisdiction and not addressing at all the most problematic aspects of intra-EU investor-State arbitration under the Energy Charter Treaty, the Tribunal manifestly exceeded its powers and failed to state reasons.5 Regarding its second argument, the Commission contends that under EU law any legitimate expectations of the Claimants were precluded.6 Therefore, the fact that the Tribunal did not discuss State aid obligations under EUlaw as a matter of law or as part of the relevant facts, constitutes both a violation of Article 52(b) ICSID Convention and Article 52(e) ICSID Convention.7 Concerning its third argument, the Commission states there is no legal basis in the ICSID Arbitration Rules for requiring a commitment to bear the costs of the other parties as a precondition. Thus, requiring such commitment, disregarding its amicus curiae submission on that basis, and not providing any reasons for following a divergent view, constitutes a violation of Article 52(d) ICSID Convention and Article 52(e) ICSID Convention.8 The Commission alleges a particular interest in the present proceedings since it “has a central role in the interpretation and application of rules relating to investment protection within the Union [... ]” as well as a "central role in the application of the system of control of State aid [„.].”9
5.
Finally, it argues that Spain is under an obligation “not to pay the award”10 until the Commission has taken a final decision on the compatibility of such payment and considers that if the Committee “was to refuse to grant an unconditional stay on enforcement of the Award, it would equally violate[] its obligations under international law.”11
6.
On July 24, 2018, the Secretary of the ad hoc Committee invited the Parties to submit observations on the Application for leave.
7.
On August 7, 2018, the Kingdom of Spain (“Spain” or the “Applicant”) submitted observations on the Application for leave (the “Applicant’s observations”) On that same date, Eiser Infrastructure Limited and Energia Solar Luxembourg S.à r.l (“Eiser”, “Eiser Parties” or the “Claimants”) provided its observations on the Application for leave (the “Claimants’ observations”).

II. POSITIONOFTHEPARTIES

A. The Applicant’s Position

8.
In its observations, Spain alleges that the Committee may allow an entity that is not a party to the dispute to file a written submission regarding a matter with the scope of the dispute according to Rule 37 of the ICSID Arbitration Rules, which applies mutatis mutandis to the present proceeding. Spain argues that “the European Union’s ‘state aid rules apply to any measure by a Member State that ‘distorts or threatens to distort competition by favouring certain undertakings’ and which may be ‘incompatible with the internal market’ of the European Union”12 and the Commission has already stated that the Eiser Award constitutes notifiable “state aid” although it has not yet made a determination as to whether it is “incompatible” with the internal market.13
9.
According to Spain, since the Eiser Parties have disputed Spain’s submissions regarding the potential conflict between the Eiser Award and EU law, a submission directly from the Commission “would provide the Committee with an authoritative ‘perspective, particular knowledge or insight’ other than that of either the Eiser Parties or Spain, which could facilitate its determination of this issue.”14 Additionally, Spain argues that the rejection of multiple requests of the Commission to make an amicus curiae submission is one of the grounds for annulment and the Committee will have the benefit of the Commission’s perspective.15
10.
Spain points that there is no risk that the submission would disrupt the proceeding or create undue burden or prejudice in terms of Rule 37 of the ICSID Arbitration Rules and, considering the timing of the Commission’s Application for leave, “there is ample opportunity for both parties to review and present their observations and for the Committee to give the EC’s submission due consideration.”16 Consequently, in Spain’s view, the Commission “should be allowed to file an amicus curiae submission” and “be granted access to the parties’ pleadings in this proceeding, as well as to attend the hearing to be held in January 2019.”17

B. Kiser's Position

11.
In its observations, Eiser requests the Committee to reject the Commission’s Application for leave as procedurally improper and/or because it fails to meet the requirements of ICSID Arbitration Rule 37(2). Alternatively, it requests the Committee that: i) the submission be limited to the issue of whether the Eiser Tribunal committed an annullable error by requiring the Commission to provide a cost undertaking as a condition to making a non-disputing party submission; ii) the Commission file its submission within 10 days from the decision of the Committee on the Application for leave; iii) the Commission’s submission not exceed five pages in length including footnotes; iv) the Commission not be granted access to the documents filed in the case; v) the Commission not be granted permission to attend the annulment hearing; vi) as a condition for filing its submission and prior to any response being filed by the Parties, the Commission shall provide copies of all correspondence (including emails) between it and Spain in relation to the Award; vii) as a condition for filing a submission and prior to any consideration of that submission by the Committee, the Commission provide a written undertaking, satisfactory to the Committee, not to take any steps to undermine the Award or prevent Spain from paying the Award in full; and viii) the Parties be allowed to submit their observations on the Commission’s non-disputing party submissions within 30 days of the Commission’s submission.18
12.
Eiser contends that the Commission fails to cite fully the cumulative criteria that the Committee must consider in deciding the Commission’s Application for leave and it fails to demonstrate that the criteria are satisfied. In its view, the Application for leave does not attempt to demonstrate how the mandatory criteria are satisfied. Also, since the Commission’s Application for leave goes to the substance of its position rather than establishing that the criteria under Rule 37 are satisfied, it should be disregarded.19 Eiser identified ICSID Arbitration Rule 37 as the only relevant legal standard for the consideration of the Application for leave. Therefore, it contends that the Commission’s reliance on secondary EU legislation is inapposite and that the Committee is not bound to apply EU law.20
13.
Eiser argues that the Commission’s Application for leave fails under Rule 37(2) because it identified two issues that are not in dispute before the Committee. First, “the Eiser Tribunal’s alleged failure to ‘decline[] jurisdiction by allegedly ignoring ‘the most problematic aspects of intra-EU investor-State arbitration under the Energy Charter Treaty.’”21 Second, “the Eiser Tribunal’s alleged ‘fail[ure] to apply Union law on State aid especially, and in particular the standing case-law of the Court of Justice of the European Union on the (exclusion of) legitimate expectations in case of unlawful State aid.’”22 However, it claims neither of those issues were raised by Spain as grounds for annulment and are not issues in dispute before the Committee. Additionally, Eiser contends that the Commission’s submissions on the Committee’s “obligation” to stay enforcement of the Eiser v. Spain award are improper and that it has no standing to make independent allegations for the annulment of the Award.23
14.
In its observations, Eiser states that the refusal to allow the Commission to intervene without providing a cost undertaking is the only issue addressed by the Commission within the scope of the dispute, however, the Commission fails to establish that it can offer a perspective that the Parties are unable to offer as is required by Rule 37(2), thus it must be rejected. Moreover, its views are identical to Spain’s and it has failed to inform the Committee of the fact that it has, in other cases, provided the very cost undertaking required by the Eiser Tribunal.24
15.
Eiser continues to argue that the Commission has failed to establish that it has a significant interest in the proceeding, the Commission's argument is “premised on the flawed assumption that ‘Union law on State aid plays a decisive role in the annulment proceedings’”,25 however the Committee “has no mandate to apply anything other than the provisions of the ICSID Convention and Arbitration Rules.26 Moreover, in its view, the Commission is not seeking to intervene to assist this Committee by offering a different insight, or perspective on the issues in dispute. Instead, the Commission is seeking to act as a party, seeking annulment of the Award.27
16.
Granting the Application for leave would in loser's view disrupt the proceedings and unduly burden and unfairly prejudice the Eiser Parties would create a new procedural step, with the resulting detrimental impact on time and costs”28 Eiser considers that the Commission “is also seeking to ‘take sides’ by putting forward arguments that would support Spain’s position in the annulment to the detriment of the Claimants’ case”,29 therefore, this would result in procedural inequality.30
17.
Eiser indicates that if the Committee is minded to allow the Commission to make a written non-disputing party submission, it must impose certain restrictions on the Commission’s participation “so that it does not unduly burden the Eiser Parties or the proceedings/’31 It must limit the Commission’s submission to addressing the one issue it has identified that is within the scope of the dispute and the Committee should limit the submission to five pages and require that it be filed within 10 days of the Committee’s decision. Eiser further requests that the Commission’s submission should be made on a conditional basis. First, it should be required to provide an undertaking that it will promptly provide the Claimants and the Committee with copies of all correspondence (including emails) between it and Spain in relation to the Award. Second, the Commission should be required to provide an undertaking that it will not seek to prevent Spain from honouring its ICSID Convention obligations to satisfy the Award.32
18.
Finally, Eiser does not consent to the Commission being granted access to the documents filed in this Proceeding nor do they consent to the Commission’s attendance at the oral hearing, thus in terms Rule 32(2) the Committee must reject the Commission’s requests. Eiser also considers the Commission’s submissions on the application to stay the enforcement of the Award should be disregarded.33

III. THE COMMITTEE’S ANALYSIS

19.
The arbitration procedure concerns the parties involved in a dispute. However, Arbitration Rule 37(2) provides a non-disputing party with the possibility to file a written submission:

After consulting both parties, the Tribunal may allow a person or entity that is not a party to the dispute (in this Rule called the “non-disputing party”) to file a written submission with the Tribunal regarding a matter within the scope of the dispute. In determining whether to allow such a filing, the Tribunal shall consider, among other things, the extent to which:

(a) the non-disputing party submission would assist the Tribunal in the determination of a factual or legal issue related to the proceeding by bringing a perspective, particular knowledge or insight that is different from that of the disputing parties;

(b) the non-disputing party submission would address a matter within the scope of the dispute;

(c) the non-disputing party has a significant interest in the proceeding.

The Tribunal shall ensure that the non-disputing party submission does not disrupt the proceeding or unduly burden or unfairly prejudice either party, and that both parties are given an opportunity to present their observations on the non-disputing party submission. (Emphasis added.)

20.
Furthermore, ICSID Arbitration Rule 53 establishes that “[t]he provisions of these Rules shall apply mutatis mutandis to any procedure relating to the interpretation, revision or annulment of an award and to the decision of the Tribunal or Committee.” Therefore, we begin our analysis with the text of ICSID Arbitration Rule 37(2). The language used in this provision makes clear that the decision to allow a non-disputing party to file a written submission is discretionary:

The role of an amicus curiae is to provide assistance to a tribunal that it would not otherwise have from the disputing parties before it. A third and non-disputing party offers its help to the tribunal about a specific matter that is in dispute before the tribunal (from a particular perspective, with particular knowledge or with a particular insight that is different from that of the disputing parties) and the tribunal may allow” a written submission regarding that specific matter [...] The tribunal has a margin of appreciation to determine whether a particular applicant is able to assist it or not, according to the terms of Art. 37 of the Rules.34

21.
The first sentence of paragraph (2) also provides a requirement regarding the submission that may be allowed, which is, it must be limited to “a matter within the scope of the dispute.” Additionally, it provides for certain elements that the Committee must consider mandatorily in its decision-making process. First, the extent to which such submission would assist the Committee in the determination of a factual or legal issue related to the proceeding by bringing a perspective, particular knowledge or insight that is differentfrom that of the disputing parties. Second, the extent to which it would address a matter within the scope of the dispute. Third, the extent to which the non-disputing party has a significant interest in the proceeding.
22.
The text “shall consider, among other things” in paragraph (2) connotes that these elements do not constitute an exhaustive list. This seems to be confirmed by the last paragraph of Arbitration Rule 37, according to which the Committee “shall ensure” that such submission “does not disrupt the proceeding or unduly burden or unfairly prejudice either party, and that both parties are given an opportunity to present their observations.” Both of these elements address due process for the parties.
23.
The elements set out through subparagraphs a) to c) do not incorporate the disjunctive connector “or” This indicates that those are cumulative elements, all of which must be considered by the Committee. We find support for our interpretation in the views expressed by the RREEF v. Spain Tribunal regarding the conditions set forth by Arbitration Rule 37(2). We note that in RREEF v. Spain, the Tribunal agreed that the Applicant had not attempted to demonstrate it met the three cumulative conditions that had to be considered according to Rule 37(2):

The Tribunal shares the Claimants’ view that the Applicant “has made no attempt at demonstrating that it meets any of the three cumulative conditions that the Tribunal must consider according to Rule 37.” The Claimants are right. In abstaining from addressing those obligatory factors, the European Commission has deprived both the disputing parties and the Tribunal of any possibility to discuss them in full knowledge. This is a fatal failure on the part of the Applicant that cannot be remedied by the Parties or the Tribunal guessing what the Applicant might or might not have set out, had it cared to do so.35

24.
Furthermore, the Tribunal was concerned that the application submitted in that case “[did] not attempt to address the three conditions set out in Rule 37” observing that: “[t]he European Commission has correctly stated the requirement that rests on an applicant under Rule 37(2) but then, having stated what it must to, it does not do it/’36
25.
However, as already mentioned, the Committee must also make sure that the submission does not disrupt the proceeding or unduly burden or unfairly prejudice either Party. The use of the connector “or” indicates the Committee’s obligation to ensure the submission either does not disrupt the proceeding or unduly burdens or unfairly prejudices; on the other hand, the word “and” indicates the Committee’s obligation to ensure that both parties have an opportunity to present their observations. Finally, the Committee notes that this article only provides for the opportunity to file a “written submission” and does not envisage other rights. This ad hoc Committee notes that, in light of the discretion granted by Arbitration Rule 37(2) and the consideration of its terms, the Commission has been allowed to participate as non-disputing party in other procedures.37 In Micula v. Romania, the Committee noted its “authority to permit a non-disputing party to file a written submission in the context of the annulment proceeding” and the criteria to be met on: i) the subject matter of the application, ii) the applicant and iii) procedural fairness.38 Moreover, it noted that “due to the limited scope of annulment proceedings, a request for leave by a non-disputing party must be dealt with in a more restrictive and circumscribed manner.”39 In that case, the Committee also observed the different role of the Commission in the annulment proceeding, which was limited to “its knowledge and perspective directly related to the grounds for annulment”40

A. Whether the Application for leave fulfills the elements of subparagraphs a) to c) of ICSID Arbitration Rule 37(2)

26.
The Commission addresses three main arguments in support of its Application for leave. Particularly, those arguments aim to show “why the conditions set out in Rule 37(2)(a) and (b) of the ICSID Arbitration Rules are met.”41 In a separate section, the Commission addresses its interest in the proceedings.42 The Committee will examine these three arguments and whether they meet the elements that must be considered in accordance with Rule 37(2).
27.
The first argument is that the Eiser Tribunal manifestly exceeded its powers because it lacked jurisdiction to hear the case. The second argument is that the Tribunal manifestly exceeded its powers with regard to the applicable law because it failed to apply EU law on State aid. The third argument is that the Tribunal has seriously departed from a fundamental rule of procedure by requiring a commitment from the Commission to pay costs.43
28.
The first two arguments are based on the grounds of annulment b) and e) of Article 52 of ICSID Convention. The Commission states that the Tribunal should have interpreted Article 26 of the Energy Charter Treaty as not containing an offer for arbitration; it mentions that the conflict between such provision and the general principles of EU law of autonomy and other EU law provisions would have to be decided in favor of the latter; it states that by not declining jurisdiction and by not applying EU law on State aid, the Tribunal exceeded its powers and failed to state reasons.44
29.
The Committee considers that, in strict sense, those issues do not address a matter within the scope of the dispute. Whilst Spain’s Application for Annulment mentions as grounds that the Tribunal manifestly exceeded its powers and failed to state reasons, the specific arguments addressed by the Commission in its Application for leave were not raised by Spain as grounds for annulment.45 Consequently, the Committee fails to see how those specific arguments would assist the Committee in its determination as to the grounds of annulment put forward by Spain under Article 52(1)(b) and (c), and address a matter within the scope of the dispute, regardless of the fact that the Commission may have a significant interest on those matters.
30.
The third argument raised by the Commission is that the Tribunal has seriously departed from a fundamental rule of procedure by requiring a commitment from the Commission to pay costs and refusing the Commission’s amicus curiae submission. The Committee considers that a written submission by the Commission on this issue may assist in the determination of a factual or legal issue related to the proceeding, as provided in subparagraph a), since it would address a ground of annulment raised by Spain. In its Application for Annulment, Spain argues that.

The Tribunal had required, as a condition of submission, that the EC provide an undertaking to reimburse the “additional costs of legal representation reasonably incurred by the parties in responding to that submission,” which the EC declined. This denied Spain the benefit of the EC’s intervention, which would have provided the Tribunal with authoritative clarification and confirmation of Spain’s obligations as a member State of the European Union in regard to the matters at issue in the case.46

31.
In its Application for leave, the Commission asserts that “there is no legal basis in the ICSID arbitration rules for requiring such a commitment” and that “[t]he Tribunal has never provided a reasoned justification for a divergent view, but has simply ignored the arguments put forward by the Commission.” Additionally, it states that “that procedural irregularity has also had an impact on substance, as it prevented the Commission from setting out its view on the matter of jurisdiction and Union State aid law to the Tribunal/’47
32.
While the views of the Commission may concur with the views expressed by Spain, the Commission could nonetheless provide a particular insight as an institution of the European Union on whether such request and refusal constitute a ground for annulment.
33.
For the same reason, this issue would fall as “a matter within the scope of the dispute” as provided by subparagraph b).
34.
Regarding subparagraph c), the Application for leave indicates that the Commission has a significant interest in the proceeding. In its Application for leave, the Commission argues that such “irregularity [...] prevented the Commission from setting out its view on the matter of jurisdiction”, that it has a “central role in the interpretation and application of rules relating to investment protection” and in the “application of the system of control of State aid/’48 Overall, the Commission considers that:

In order to avoid further open conflict between investment arbitration and Union law, the Commission would appreciate the opportunity to set out in detail its reasoning before the [ad hoc] Committee, so as to enable your [ad hoc] Committee to assess the Award contested before it in the light of all relevant legal arguments.49

35.
The Committee considers that the Commission has indicated a significant interest in this procedure. Consequently, it would be appropriate to receive a submission from the Commission on whether the Tribunal seriously departed from a fundamental rule of procedure by requiring a commitment from the Commission to pay costs and refusing the Commission’s amicus curiae submission. The Committee concedes that the Commission’s view on this ground of annulment could intertwine with the substantive issues on jurisdiction and EU State aid law, which the Commission has indicated it considers were affected as a result of a procedural irregularity. Therefore, the Committee considers such issues could be addressed to the extent that they relate to its view on whether there has been a serious departure from a fundamental rule of procedure.
36.
According to Arbitration Rule 37(2), the Committee shall ensure that the non-disputing party submission does not disrupt the proceeding or unduly burden or unfairly prejudice either party. The Committee is of the view that allowing a written submission by the Commission would not disrupt the procedure, or unduly burden or unfairly prejudice either Party. While this may involve an additional step in the process, the Eiser Parties’ Rejoinder is due on October 29 and the hearing will be held on March 2019. Therefore, the Committee considers there is sufficient time for the Commission to submit a written submission and for both parties to present their observations without disrupting the procedure or representing an unduly burden. In order not to disrupt the filing of the Eiser Parties’ Rejoinder, the Committee considers that the appropriate time for the Commission’s submission is November 12, 2018. In addition, in the interest of not putting an undue burden on the Parties making comments to the submission, the Committee considers a page limit of 30 pages should be set. Finally, since the participation of the Commission as non-disputing Party will be limited to only that submission, the Committee finds no justification to conditioning its filing to the provision of copies of the correspondence between the Commission and Spain in relation to the Eiser Award or a written undertaking not to take steps to undermine the award.
37.
Regarding the Commission’s request to have access to the documents filed in the case and attend the hearings, the Committee finds no legal basis to allow that under the ICSID Arbitration Rules agreed by the Parties. Moreover, Rule 37(2) is clear as to the extent of the participation of a non-disputing party, which is limited to filing a written submission. As the Tribunal in Philip Morris v. Uruguay observed:

Acceptance of a submission shall confer to the petitioner neither the status of a party to the arbitration proceeding nor the right to access the file of the case or to attend hearings. The need to safeguard the integrity of the arbitral process requires in fact that no procedural rights or privileges of any kind be granted to the non-disputing parties.50

38.
Finally, Rule 32(2) provides that the Tribunal may allow other persons to attend or observe all or part of the hearings, unless either party objects. In this case, the Eiser Parties have objected to the Commission’s participation in the hearing. Therefore, the Committee rejects the Commission’s requests in this regard.

B. Whether the ad hoc Committee has an Obligation to Suspend Enforcement of the Award

39.
The Commission included in its Application for leave several assertions regarding the stay of enforcement. In its Application for leave, the Commission states that “if your [ad hoc] Committee was to refuse to grant an unconditional stay on enforcement of the Award, it would equally violate[] its obligations under international law.”51 The Commission presents its view that the Committee is “obliged to suspend enforcement of the award” pursuant to Arbitration Rule 54. The Committee observes that, within the context of a stay of enforcement, the provisions governing an application in that regard confer rights to the Parties. Non-disputing parties are not authorized by the ICSID Arbitration Rules to apply for such stay and their participation is limited to a matter within the scope of the dispute subject to the requirements already addressed. The Committee’s reasoning for refusing to grant the stay is set out in the Decision on the Stay of Enforcement of the Award pursuant to Article 52(5) of the ICSID Convention issued on March 23, 2018. Therefore, this is a matter in which the Commission’s views would not assist the Tribunal and would not need to be further addressed in its submission.

IV. DECISION

40.
In view of the above, the Committee hereby:

a. Allows the Commission to file a written submission as a non-disputing party, in accordance with Arbitration Rule 37(2), on whether the Tribunal seriously departed from a fundamental rule of procedure by requiring a commitment from the Commission to pay costs and refusing the Commission’s amicus curiae submission;

b. Decides that the Commission shall file its written submission on Monday, November 12, 2018; the submission shall be limited to 30 pages;

c. Rejects the Commission’s request to have access to the documents filed in the case and rejects its request to attend the hearing;

d. Rejects the Eiser Parties’ request to condition the filing of the Commission’s written submission to the provision of copies of all correspondence or a written undertaking;

e. Authorizes both disputing parties to present their views to the Commission’s written submission no later than Wednesday, December 12, 2018; and

f. Decides that this Procedural Order shall be communicated to the Commission for its exclusive use in this annulment proceeding.

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