NextEra vs. Spain: Regulatory changes
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  • Amount demanded: US$586 million
  • Outcome: US$324 million
  • Treaty invoked: Energy Charter Treaty
  • Sector: energy
  • Issue: regulation

by IISD (edited by

NextEra invested in the construction of two concentrated solar power plants in Spain. Later the Spanish government altered the regulatory framework applicable to it, negatively affecting the profitability of the project.

In May 2014, the Dutch investor initiated arbitration arguing that Spain had breached its obligation of fair and equitable treatment under the Energy Charter Treaty.

To justify these claims, NextEra alleged that the original regulatory framework, which committed to maintaining a production-based remuneration regime and to providing certainty around the premiums and tariffs, would never have invested. Spain, however, alleged that NextEra should have been aware that changes could be made to the regulatory regime.

In May 2019, the tribunal ruled in favour of NextEra, deciding that the changes made to the regulatory framework were substantial, and therefore that Spain failed to protect NextEra’s legitimate expectations.

Spain was ordered to pay US$324 million to NextEra, in addition to two-thirds of the costs of the proceedings and one-third of the investor’s legal costs.

Last update: May 2021

source: IISD