Spain loses its third millionaire arbitration award for the reduction of renewables

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Turkey Telegraph | 17 May 2018

Spain loses its third millionaire arbitration award for the reduction of renewables

New setback to Kingdom of Spain by cutting renewables. The Masdar fund, which is associated with Spanish company Sener in Torresol Energy, had claimed 165 million euros for reduction of premiums committed at Gemasolar plant, located in Fuentes de Andalucía (Sevilla); But ICSID has understood that it is not necessary to apply 7% tax or that service life of facilities was 40 years, but of 25.

Although decision does not apply, Spain can request an annulment action as it did in two previous awards lost. In this case, law of State is studying 400 pages of which award, communicated on Wednesday afternoon to parties, to decide if it presents action of annulment that can be based precisely in judgement of Court of Justice of The EU last March that invalidates this type of arbitration between member countries.

The EU decision opened a hopeful way for Spain in many conflicts opened by international investment funds, but it was not definitive since most of arbitrations requested have been based on protection of Energy Charter. The ICSID, however, has estimated in this case that it is of its competence. The state’s advocacy had precisely raised an extraordinary appeal because Masdar fund, though of Abu Dhabi’s control, has a subsidiary in Nerlands, from which it made claim.

The ruling, in any case, has been unanimous of three arbitrators (Brigitt Stern, appointed by Spain, Gary Born and John Beechey, who held presidency of Tribunal). Sources of Spanish Government have valued very positively role of state advocacy, which in its view has achieved that it has been left in a partial estimate and reduced to almost one third of amount requested.

On or hand, this award is first in which a sovereign state participates directly, so it can lead to a diplomatic conflict with a country with which re is precisely good relations. The firm Mubdala has interests in Spain, mainly in oil company CEPSA, in which it controls 100% of capital.

The Sevillian plant was Inaugrada in October 2011 by King Juan Carlos and Prince of Abu Dhabi Sheikh Mohammed bin Zayed al Nahyan. In addition to solar rmal technology, it has a storage of salts to produce at night. Masdar attended ICSID through Masdar Solar Wind Cooperatief UA. Masdar has been represented by Allen Overy, law firm that has brought more arbitrations against Spain.

Fifth Award

The decision is fifth award on renewables. The first two were in favor of Spain. But n Eiser and Novaenergía funds won ir claim. The first in ICSID with a compensation of 128 million against more than 300 that claimed, and second, in Court of Arbitration of Stockholm, of 53 million, against 60.4 claimed.

Eiser and its Luxembourg subsidiary called for Arbitration in December 2013 also invoking Treaty of Charter of energy by cutting subsidies for its three photovoltaic plants (one in Extremadura and two in Castilla-La Mancha), with an investment Committed to 935 million. In case of Novenergía, investor with domicile in Luxembourg, claim was for cut in its seven installations Castilla-La Mancha, Extremadura, Murcia and Catalonia.

Demands for more than 7.5 billion

Spain faces nearly 30 lawsuits in ICSID international arbitration courts, which is dependent on World Bank; UNCITRAL (United Nations Commission for International Trade Law) and Stockholm Chamber for cuts applied to renewable energy plants in reforms of 2010 and 2013. Of m, five have already been elucidated. The claims of foreign investors ( Spanish cannot go to those courts) amount to 7.566 billion euros. The most significant of se demands is one presented by PV investors ante UNCITRAL for a total of 1.9 billion euros.