TABLE OF SELECTED ABBREVIATIONS
|Arbitration Rules||ICSID Rules of Procedure for Arbitration Proceedings 2006|
|CL-[#]||Claimants' Legal Authority|
|Cl. Mem.||Claimants' Memorial on the Merits, dated 30 October 2014|
|Cl. Reply||Claimants' Reply on the Merits and Counter-Memorial on Jurisdiction, dated 18 September 2015|
|Cl. Rej.||Claimants' Rejoinder on Jurisdiction, dated 23 December 2015|
|Cl. Sub. New Def.||Claimants' Additional Submission on the New Defense, dated 22 January 2016|
|Cl. St. Costs||Claimants' Statement of Costs (as revised 16 September 2016)|
|First Meissner Statement||First Witness Statement of Hans Meissner, dated 30 October 2014|
|Second Meissner Statement||Second Witness Statement of Hans Meissner, dated 16 September 2015|
|First Hector Statement||First Witness Statement of Jaime Hector, dated 30 October 2014|
|Second Hector Statement||Second Witness Statement of Jaime Hector, dated 15 September 2015|
|Bolana Statement||Witness Statement of Mauricio Bolana, dated 11 September 2015|
|First Brattle Regulatory Report||Expert Report of the Brattle Group - Changes to the Regulation of Concentrated Solar Power Installations in Spain, dated 29 October 2014|
|Second Brattle Regulatory Report||Second Expert Report of the Brattle Group - Rebuttal Report: Changes to the Regulation of Concentrated Solar Power Installations in Spain, dated 17 September 2015|
|First Brattle Quantum Report||Expert Report of the Brattle Group - Financial Damages to EISER, dated 30 October 2014|
|Second Brattle Quantum Report||Second Expert Report of the Brattle Group - Rebuttal Report: Financial Damages to EISER, dated 17 September 2015|
|First Mancini Report||First Expert Report of Thomas R. Mancini - Evaluation of the Expected Lifetime of the EISER Solar Parabolic Trough Plants, dated 15 September 2015|
|Second Mancini Report||Second Expert Report of Thomas R. Mancini - Regarding the Installed Capacity of the Generators at the Solar Thermal Plants ASTE-1A, ASTE-1B and ASTEXOL-2, dated 22 January 2016|
|ECT||Energy Charter Treaty|
|Hearing||Hearing on Jurisdiction and Merits, held 15-20 February 2016|
|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|
|RL-[#]||Respondent's Legal Authority|
|Resp. C-Mem.||Respondent's Counter-Memorial on the Merits and Memorial on Jurisdiction, dated 13 April 2015|
|Resp. Rej.||Respondent's Rejoinder on the Merits and Reply on Jurisdiction, dated 27 November 2015|
|Resp. St. Costs||Respondent's Statement of Costs (as revised 16 September 2016)|
|First Montoya Statement||First Witness Statement of Carlos Montoya, dated 13 April 2015|
|Second Montoya Statement||Second Witness Statement of Carlos Montoya, dated 24 November 2015|
|Olivas Statement||Witness Statement of Alfonso Olivas, dated 26 November 2015|
|First BDO Regulatory Report||BDO Expert Report - Economic and Financial Analysis of Incentives to the Solar Thermal Energy Sector, dated 10 April 2015|
|Second BDO Regulatory Report||Second BDO Expert Report - Rejoinder Report to Brattle's "Rebuttal Report: Changes to the Regulation of Concentrated Solar Power Installations in Spain", dated 26 November 2015|
|First BDO Financial Report||BDO Expert Report - Economic and Financial Analysis of EISER and the Solar Thermal Plants, dated 10 April 2015|
|Second BDO Financial Report||Second BDO Expert Report - Rejoinder Report to Brattle's "Rebuttal Report: Financial Damages to EISER", dated 26 November 2015|
|Servert Report||Expert Report of Jorge Servert -Astexol II (Badajoz), Aste 1A and Aste 1B (Alcazar de San Juan) CSP Plants - Lifetime Analysis, dated 26 November 2015|
|RfA||Request for Arbitration, dated 9 December 2013|
|Rev. Tr. Day [#] (ENG/SPA), [page:line] ([Speaker(s)])||Transcript of the Hearing (as revised by the Parties on 1 April 2016)|
|Tribunal||Arbitral Tribunal constituted on 8 July 2014|
The Tribunal notes the numerous recent requests by the Parties for Tribunal rulings on late admission of documents and other procedural matters. In the interests of fairness and efficiency, the Tribunal will not be disposed to consider further requests for such rulings by either Party prior to the hearing, absent a compelling and documented justification.
The Hearing on Jurisdiction and the Merits was held in Paris, France from 15 to 20 February 2016 (the "Hearing").5 The following persons were present throughout the Hearing:
|Professor John R. Crook||President|
|Dr. Stanimir A. Alexandrov||Arbitrator|
|Professor Campbell McLachlan QC||Arbitrator|
|Ms. Luisa Fernanda Torres||Secretary of the Tribunal|
|For the Claimants|
|Ms. Judith GillQC||Allen & Overy LLP|
|Mr. Jeffrey Sullivan||Allen & Overy LLP|
|Ms. Marie Stoyanov||Allen & Overy LLP|
|Mr. Ignacio Madalena||Allen & Overy LLP|
|Ms. Naomi Briercliffe||Allen & Overy LLP|
|Mr. Tomasz Hara||Allen & Overy LLP|
|Ms. Lucy Judge||Allen & Overy LLP|
|Ms. Stephanie Hawes||Allen & Overy LLP|
|Ms. Kristin Bong||Allen & Overy LLP|
|Mr. Jaime Hector*||EISER Infrastructure Partners LLP|
|Mr. Hans Meissner*||EISER Infrastructure Partners LLP|
|Mr. Lorenzo Cannizzo||EISER Infrastructure Partners LLP|
|Mr. Mauricio Bolana*||Antin Infrastructure Partners S.A.S|
|Mr. Carlos Lapuerta||The Brattle Group|
|Mr. Jose Antonio Garcia||The Brattle Group|
|Mr. Richard Caldwell||The Brattle Group|
|Mr. Jack Stirzaker||The Brattle Group|
|Dr. Thomas R. Mancini||TRMancini Solar Consulting, LLC|
|For the Respondent :|
|Mr. Diego Santacruz||Abogatia del Estado, Ministerio de Justicia|
|Mr. Javier Torres||Abogatia del Estado, Ministerio de Justicia|
|Ms. Monica Mr. Moraleda||Abogatia del Estado, Ministerio de Justicia|
|Ms. Elena Onoro||Abogatia del Estado, Ministerio de Justicia|
|Mr. Antolm Fernandez||Abogatia del Estado, Ministerio de Justicia|
|Ms. Esther de Benito Navarro||Abogatia del Estado, Ministerio de Justicia|
|Ms. Amaia Rivas||Abogatia del Estado, Ministerio de Justicia|
|Mr. Carlos Montoya*||Instituto para la Diversification y Ahorro de la Bnergia|
|Mr. Alfonso Olivas*||Instituto para la Diversification y Ahorro de la Hnergia|
|Mr. Javier Espel||BDO|
|Mr. David Mitchell||BDO|
|Mr. Eduardo Perez||BDO|
|Mr. Gervase MacGregor||BDO|
|Mr. Gerdy Roose||BDO|
|Mr. Manuel Alejandro Vargas||BDO|
|Ms. Cristina Centellas||BDO|
|Dr. Jorge Servert|
|Court Reporters :|
|Mr. Leandro Lezzi||DR-ESTENO|
|Mr. Dionisio Rinaldi||DR-ESTENO|
|Ms. Rachel Bradbury||Opus 2|
|Ms. Rebecca Ridgway||Opus 2|
|Mr. Jesus Getan Bornn|
|Mr. Mark Viscovi|
|Ms. Amalia Thaler de Klem|
*not present prior to their testimony
The venue for the Hearing was established on 19 May 2015, following consultation with and agreement of the Parties.
The following persons were examined during the Hearing:
On behalf of Claimants :
Mr. Jaime Hector
Mr. Hans Meissner
Mr. Mauricio Bolana
Dr. Thomas R. Mancini
Mr. Carlos Lapuerta
Mr. Richard Caldwell
On behalf of Respondent :
Mr. Carlos Montoya
Mr. Alfonso Olivas
Dr. Jorge Servert
Mr. Javier Espel
Mr. David Mitchell
Mr. Eduardo Perez
Rev. Tr. Day 5 (ENG), 39:20-22 (Mr. Espel).
The Energy Charter Treaty ("ECT") is a multilateral treaty adopted in 1994 that has over fifty parties, including the European Union, Luxembourg, Spain and the United Kingdom. As described in the Energy Charter Secretariat's Guide:
According to Article 2 of the ECT, the purpose of the Treaty is to establish 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 Energy Charter. It is a milestone in international energy cooperation. By creating a stable, comprehensive and nondiscriminatory legal foundation for cross-border energy relations, the ECT reduces political risks associated with economic activities in transition economies. It creates an economic alliance between countries with different cultural, economic and legal backgrounds, but all united in their commitment to achieve the following common goals:
- To provide open energy markets, and to secure and diversify energy supply;
- To stimulate cross-border investment and trade in the energy sector;
- To assist countries in economic transition in the development of their energy strategies and of an appropriate institutional and legal framework for energy, and in the improvement and modernisation of their energy industries.11
R-007, Energy Charter Secretariat, The Energy Charter Treaty: A Readers Guide, at 9.
The ECT's emphasis on developing secure long-term energy cooperation is coupled with provisions addressing the environmental aspects of energy development. Article 19(1) of the ECT thus requires:
In pursuit of sustainable development and taking into account its obligations under those international agreements concerning the environment to which it is party, each Contracting Party shall strive to minimize in an economically efficient manner harmful Environmental Impacts occurring either within or outside its Area from all operations within the Energy Cycle in its Area, taking proper account of safety. In doing so each Contracting Party shall act in a Cost-Effective manner. In its policies and actions each Contracting Party shall strive to take precautionary measures to prevent or minimize environmental degradation. The Contracting Parties agree that the polluter in the Areas of Contracting Parties, should, in principle, bear the cost of pollution, including transboundary pollution, with due regard to the public interest and without distorting Investment in the Energy Cycle or international trade [...].12
1. The activities involved in the supply of electric power shall be remunerated economically in the manner provided by this Act, as charged to the rates and prices paid.
2. To determine the rates and prices that consumers must pay, the remuneration of activities shall be stipulated in regulations with objective, transparent and non-discriminatory criteria that act as an incentive to improve the effectiveness of management, the economic and technical efficiency of said activities and the quality of the electricity supply.20
1. Electricity generation activities shall be regarded as generation under the special regime in the following cases whenever they are carried out from installations whose installed capacity is no greater than 50 MW:
(b) Whenever non-consumable renewable energies, biomass or biofuels of any type are used as primary energy, provided their holder does not engage in generation activities under the ordinary regime.
2. Generation under the special system shall be governed by specific provisions and, in cases not provided for in these special provisions, by the general regulations on electricity generation where applicable. […]22
(b) Minimise regulatory uncertainty. The National Energy Commission understands that transparency and predictability in the future of economic incentives reduce regulatory uncertainty, which in turn, incentivises investment in new capacity and minimises the cost of project financing, thereby reducing the final cost for consumers. Regulation must offer sufficient guarantee, in order to ensure that economic incentives are stable and predictable throughout the entire life of the installation, setting, where appropriate, both transparent mechanisms to be updated annually, linked to the evolution of strong indices (such as the average or baseline fee, the CPI, ten-year bonds, etc.) and periodic revisions, which would take place every four years, for example, and would only affect new installations, in terms of investment costs, whereby the reduction of operating costs might also affect existing installations.33
The regulated tariffs, premiums, supplements and limits derived from any of these revisions will be applicable only to those facilities that have been registered definitively[...]after 1 January of the year following the year in which the revision is made.34
The aim of this Royal Decree is to increase remuneration for facilities using newer technologies, such as biomass and solar-thermal, in order to comply with targets outlined under the Renewable Energies Plan 2005-2010 and those agreed upon between Spain and the European Union. As these renewable energy technologies are developed, renewable energy shall cover 12% of Spain's energy needs by 2010 [...] With regard to technologies in need of a boost in view of their limited development, such as biogas or solar-thermoelectric, profitability shall rise to 8% for facilities that choose to supply distributors and between 7% and 11% return for those participating in the wholesale market. Tariffs shall be reviewed every 4 years, taking into account compliance with the established targets. Such a revision shall allow for adjustments tobe made to the tariff in virtue of new costs and the level of compliance with the targets. Future tariff revisions shall not be applied to existing facilities. This guarantees legal certainty for the electricity producer and stability for the sector, thereby favouring development. The new legislation shall not be applied retroactively.
The new Royal Decree [...]is aimed at establishing a stable subsidy system that guarantees attractive profitability for electricity production under the special scheme, and shall regulate over coming years the legal and economic scheme under which electricity producing facilities using combined heat and power technology, renewable energy resources and waste shall operate.
The new text, substituting Royal Decree 436/2004, is in harmony with Spain's energy policy commitment to encourage the use of clean and efficient domestic energy resources. The Government's investment in favour of these energy technologies is behind the effort enshrined in the new legislation to create stability and give investors time to plan mid to long-term, and to guarantee sufficient and reasonable profitability, together with stability, thereby attracting more investors to this sector.
Similarly, the Royal Decree shall contribute towards reaching targets under the Renewable Energies Plan 2005-2010 and those agreed upon between Spain and the European Union. As these renewable energy technologies are developed, renewable energy shall cover 12% of Spain's energy needs by 2010, thereby avoiding  million tons of CO2 emissions during that year. Similarly, compliance with combined heat and power targets set for 2010 means that up to 6.3 million tons of CO2 emissions shall be averted every year.
Overview of the new Royal Decree
The new legislation provides the right to a special remuneration sum in exchange for energy produced by facilities operating under the special scheme, i.e. those with an installed power capacity of less than 50 MW [...]
This legislative reform shall not be applied retroactively. [...]
Future tariff revisions shall not be applied to existing facilities. This guarantees legal certainty for the electricity producer and stability for the sector, favouring development.36
• guaranteed "priority of dispatch" assuring that all production could be introduced into the grid subject to the established tariff;37
• allowed producers to annually elect between two different tariffs, a fixed tariff per unit of production (the "Fixed Tariff Option") and a premium for each unit on top of the market price (the "Premium Option");38
• provided for tariffs solely based on production39 for the entire operational life of the facility,40and without setting limits on total lifetime payments;
• established caps and floors for payments under the Premium Option;41
• allowed use of gas for up to 15 % of total generation.42
During the year 2010 [...] there shall be a review of the tariffs, premiums, supplements and lower and upper limits defined in this Royal Decree with regard to the costs associated with each of these technologies, the degree of participation of the special regime in covering the demand and its impact upon the technical and economic management of the system, and a reasonable rate of profitability shall always be guaranteed with reference to the cost of money in the capital markets. Subsequently a further review shall be performed every four years, maintaining the same criteria as previously.
The revisions to the regulated tariff and the upper and lower limits indicated in this paragraph shall not affect facilities for which the deed of commissioning shall have been granted prior to 1 January of the second year following the year in which the revision shall have been performed.43
13. The First Claimant, EIL [Eiser Infrastructure Limited], is the general partner of five limited partnerships (EISER Infrastructure Capital Equity Partners 1-A, EISER Infrastructure Capital Equity Partners 1-B, EISER Infrastructure Capital Equity Partners 1-C, EISER Infrastructure Capital Equity Partners 1-D and EISER Infrastructure Co-Investment Partners LLP). EIL directly and wholly owns the Second Claimant.
14. The Second Claimant, ESL [Energia Solar Luxembourg S.a r.l.], is a private limited company (societe a responsabilite limitee) incorporated under the laws of Luxembourg, having its registered address at [...] Luxembourg [...]. ESL owns shareholding and debt interests in two Spanish companies that own and operate three CSP plants in Spain with a total installed capacity of 149.7 MW.44
EISER is a London headquartered multinational asset manager specialising in deploying and managing equity and debt instruments in the real assets class. [...]
Founded in 2005 as part of a standalone initiative developed by ABN AMRO Bank, a leader in project financing, EISER today is an independent, wholly Partner-owned asset manager.
EISER has a particular focus in the following infrastructure sectors: energy, principally distribution and renewables power-generation; environmental services, mainly in the water and waste management sector; commercial transportation assets, such as city airports; and social infrastructure, particularly new-build development projects.
EISER currently manages real assets with a total enterprise value of over EUR 4 billion, for its fund and managed co-investment products. Throughout the challenging markets that have defined the post-2007 financial era, EISER has raised over EUR 2 billion in financing and overseen over EUR 1.5 billion of project capital expenditure.45
The process of meeting regulatory and administrative requirements continued during 2009. A 26 November 2009 document prepared for Eiser's Investment Committee indicated that ASTE 1A and 1B had been successfully pre-registered for the RD 661/2007 regime under RDL 6/2009.72 This was perhaps a few days premature; the actual registrations of ASTE 1A and 1B and ASTEXOL were recorded in separate resolutions dated 11 December 2009. Allowing for slight discrepancies perhaps attributable to differences in interpretation, the three registration documents indicate in similar terms that all three plants had been granted the RD 661/2007regime.
• The registration document for ASTEXOL, captioned "Ruling of the Directorate General of Energy and Mining Policy in which [the ASTEXOL plant owned by DIOXIPE], who have been granted the economic regime regulated in Royal Decree 661/2007, of 25 May, is registered in the payment pre-allocation registry." The document states: "[...]the economic regime of the installations which are registered in the payment pre-allocation Registry [...] shall be as established in Royal Decree 661/2007[...]."73
• The registration document for ASTE-1A speaks of ASTE 1-A "to which the economic regimen regulated in Royal Decree 661/2007, dated 25 May, is granted." The text of the Resolution repeats the language of ASTEXOL registration regarding application of the RD 661/2007regime.74
• The registration document for ASTE-1B again speaks of ASTE 1-B "to which the economic regime regulated in Royal Decree 661/2007, dated 25 May, is granted."75 The text again repeats the language of the ASTEXOL registration regarding application of the RD 661/2007 regime.
R-207.23, Investment Committee Minutes, Project Helianthus, 26 November 2009, at 1.
R-0202, Resolution of the Directorate-General of Energy and Mining Policy, which registers in the pre-allocation register the Power station CENTRAL SOLAR TERMOELECTRICA "ASTEXOL -2", whose owner is DIOXIPE SOLAR, S.L, who is awarded the economic regime regulated by Royal Decree 661/2007, of 25 May, 11 December 2009, at 5-6. See also, C-154 and R-060.
C-075, Resolution of the Directorate General for Energy Policy and Mines, through which the THERMOELECTRIC SOLAR ENERGY POWER PLANT ASTE-1A owned by ARIES SOLAR TERMOELECTRICA, S.L. is registered in the Pre-Allocation Registry for Compensation and to which the economic regime regulated in Royal Decree 661/2007, dated 25 May, is granted, 11 December 2009.
C-076, Resolution of the Directorate General for Energy Policy and Mines, through which the THERMOELECTRIC SOLAR ENERGY POWER PLANT ASTE-1B owned by ARIES SOLAR TERMOELECTRICA, S.L. is registered in the Pre-Allocation Registry for Compensation and to which the economic regime regulated in Royal Decree 661/2007, dated 25 May, is granted, 11 December 2009.
[C]urrently, by dint of the stipulations of section 1 [...] the remuneration applicable to the installation is made up of the tariffs, premiums, upper and lower limits and complements set out in Royal Decree 661 [...].92
The applicable economic regime for the billing of the power and energy delivered to the grid shall be established by Royal Decree 661/2007, of25 May, regulating the production of electrical energy under the special regime.108
The economical regime resulting from this final registry corresponds to group b.1.2 of article 24.1 a) of Royal Decree 661/2007, of the 25th of May, to sell electricity according to a regulated tariff and shall be applicable to such installation with effect from the 1st of June 2012, without prejudice of what is established in article 4 of Royal Decree-Law 6/2009 of the 30th of April.111
The applicable economic regime for the billing of the power and energy delivered to the grid shall be established by Royal Decree 661/2007, of 25 May, regulating the production of electrical energy under the special regime.112
Claimants' request for relief is formulated in the Memorial as follows:
537. The Claimants request the following relief:
(a) a declaration that the Respondent has violated Articles 10 and 13 of the ECT;
(b) an order that the Respondent make full reparation to the Claimants for the injury to its investments arising out of Spain's violation of the ECT and international law, such full reparation being in the form of:
(i) full restitution to the Claimants by re-establishing the situation which existed prior to Spain's breaches of the ECT, together with compensation for all losses suffered prior to the reinstatement of the prior regime; or
(ii) pay the Claimants compensation for all losses suffered as a result of Spain's breaches of the ECT; and
(iii) in any event:
A. pay the Claimants pre-award interest at a rate of 2.07% compounded monthly; and
B. pay post-award interest, compounded monthly at a rate to be determined by the Tribunal on the amounts awarded until full payment thereof; and
(c) pay the Claimants the costs of this arbitration on a full indemnity basis, including all expenses that the Claimants have incurred or will incur in respect of the fees and expenses of the arbitrators, ICSID, legal counsel and experts; and
(d) any other relief the Tribunal may deem appropriate in the circumstances.
538. The Claimants reserve their rights to amend or supplement this Memorial and to request such additional, alternative or different relief as may be appropriate.135
Cl. Mem., ¶¶ 537-538. This same request for relief was reiterated in the Reply, including a few additional "reservations" pertaining to documents the production of which was pending at the time of the Reply, and discovery of any translation discrepancies. Cl. Reply, ¶ 997.
As to jurisdiction, Claimants request in the Rejoinder:
Insofar as the jurisdictional objections are concerned (and in addition to the relief set out at paragraph 537 of the Claimants' Memorial and paragraph 997 of the Claimants' Reply on the Merits and Counter-Memorial on Jurisdiction), the Claimants request the Tribunal to:
(a) dismiss all of the Respondent's objections; and
(b) order that the Respondent bear the cost of the jurisdictional objections.137
Cl. Rej., ¶ 194.
Respondent, in turn, asks:
1261. In view of the arguments set forth in this document, the Kingdom of Spain respectfully requests that the Arbitral Tribunal:
a) Declare it has no jurisdiction over the Claimants' claims, or inadmissibility, if applicable, in accordance with that set forth in section III of this brief, referring to Jurisdictional Objections;
b) In the alternative, in the event that the Arbitral Tribunal decides that it has jurisdiction over this dispute, to dismiss all the Claimant's pretensions regarding to merits as the Kingdom of Spain has not breached the ECT in any way, in accordance with the above-mentioned part (A) and (B) of Section IV of this brief, referring to the merits of the case;
c) In the alternative, to dismiss all reparation pretensions from the Claimants as they do not have right to compensation, in accordance with the foregoing in part (C) of Section IV of the present brief; and
d) Order the Claimants to pay all the costs and expenses arising from the present Arbitration, including the administrative costs incurred by ICSID, the fees of the arbitrators and the fees for legal representation of the Kingdom of Spain, their experts and advisers, as well as any other costs or expenses incurred, all of this including a reasonable rate of interest from the date on which these costs were incurred up to the date of payment.
1262. The Kingdom of Spain reserves the right to supplement, modify or complement these allegations and to present any additional arguments required in accordance with the ICSID Convention, the ICSID arbitration rules, the Procedural Orders and the guidelines of the Arbitral Tribunal in order to respond to all the allegations made by the Claimants in relation to the present matter.
1263. In particular, in the exercise of their right of defence, the Kingdom of Spain reserves the right to incorporate into these arbitral proceedings the necessary documents to discredit the manifestations of the witness for the Claimants, Mr Bolana. This presentation shall be requested to the Arbitral Tribunal as soon as the authorisation to lift the the confidentiality agreed in the Procedural Order by the Court in the case Antin is received.138
Resp. Rej., ¶¶ 1261-1263. See also, Resp. C-Mem., ¶¶ 1245-1246.
Respondent summarizes the essence of its Intra-EU Objection in its Rejoinder:
[T]he Kingdom of Spain considers that there is no protected investor pursuant to the ECT. Both, [sic] the United Kingdom [...] and the Kingdom of Spain were Member States of the European Economic Community, currently the European Union (henceforth 'EU'), when subscribing the ECT. The EU is a Contracting Party of the ECT and hence the Claimants do not derive from 'another Contracting Party' as Article 26 of the ECT requires in order to seek arbitration. The arbitration dispute settlement mechanism foreseen in Article 26 of the ECT is not applicable to an intra-EU dispute such as the present one. In such disputes, European Law and its dispute resolution mechanisms take precedence over the ECT, thus determining the lack of jurisdiction of the Arbitral Tribunal to hear this dispute.139
Resp. Rej., ¶ 4.
• Article 1(3), the definition of REIOs, which clearly covers the EEC (and now the EU), the only such entity party to the ECT. Article 1(3) defines REIOs as organizations constituted by States to which they have transferred competence over certain matters, some governed by the ECT, "including the authority to take decisions binding on them in respect of those matters." Respondent views this as recognition in the ECT that the EU may exercise sole competence with respect to certain matters, presumably including the harmonized electrical market.148
• Article 25, under which the ECT's most-favored-nation treatment obligations do not extend to preferential treatment accorded to members of an Economic Integration Agreement eliminating or prohibiting discriminatory measures among its members. Respondent again regards this as recognition of the allegedly preferential treatment accorded to intra-EU investors, again presumably including the energy sector.149
• Article 36(7), which accords to a REIO a number of votes equivalent to the number of its member States when voting on matters as to which the REIO has competence. According to Respondent, this necessarily implies that a REIO fully stands in the shoes of its member states in areas where it has competence.150
Resp. Rej., ¶ 154; Cl. Mem., ¶ 308.
CL-101, VCLT, Arts. 31-32.
The Kingdom of Spain does not deny that the shareholders have legitimation to have resort to an Arbitral Tribunal for damages suffered directly in their authentic investment.
[…] the legitimation of the shareholders and the Jurisdiction of the Tribunal can only be extended to […] the dispute relating to the loss of value of the shareholders' shares as a consequence of the measures approved by the State.259
[T]he Claimants have made substantial investments in the CSP electricity generation sector in Spain, which include, without limitation, the Claimants' direct and indirect shareholding and debt interests in the Operating Companies that own and operate the CSP Plants, as well as interests in those CSP Plants (Article 1(6)(b)); claims to money (Article 1 (6)(c)); returns (Article 1 (6)(e)); and rights conferred by law (including those conferred by RD 661/2007) (Article 1(6)(f)). The Claimants' investments thus fall within the ECT's definition of ‘Investment.'262
The alleged investment of the Claimants would not affect:
- the installations or the Plants;
- credits of any kind of the Spanish companies that own the Plants,
- the alleged rights granted by RD 661/2007 to the Spanish companies that own the Plants;
- returns of any other nature of the Spanish companies that own the Plants.263
20. […] EISER holds shares and shareholder loans in dedicated project companies, which themselves have borrowed substantial sums. Reflecting standard practice, we first estimate the value of the relevant project companies as a whole, before deducting the value of the outstanding liabilities of the project companies to derive the value of EISER's investment interests. The final step is to reduce the value of EISER's investment interests by a further 18% to account for their relatively illiquid nature. Investors attribute value to liquidity, since it provides the opportunity to acquire or dispose of investments at short notice and for low cost. The 18% discount reflects recent published research in corporate finance concerning the effects of liquidity.
21. We conclude that in the Actual world the alleged violations reduced the fair market value of EISER's financial interests in CSP assets by a further €193 million as of June 2014, relative to their value under the But For scenario and the continued application of the Original Regulatory Regime. […].273