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The Sun Behind the Clouds? Enforcement of Renewable Energy Awards in the EU

Published online by Cambridge University Press:  07 June 2019

Ana Mercedes López-Rodríguez Open the ORCID record for Ana Mercedes López-Rodríguez [Opens in a new window]
Ana Mercedes López-Rodríguez*
Affiliation:
Law Department, Loyola University Andalusia (Spain). Email: amlopez@uloyola.es.
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Abstract

A number of European Union (EU) countries have undertaken thorough reforms in the renewable energy sector over the past years. The regulatory changes have triggered a wave of claims from low-carbon investors asserting that the reforms have diminished or exhausted the economic viability of their investments. Unlike local investors, who typically take legal action before domestic courts, foreign investors have filed arbitration claims in accordance with the Energy Charter Treaty, notably against Spain, Italy, Bulgaria, and the Czech Republic, resulting in several awards of damages. However, recent developments in EU state aid law seem to restrict the ability of investors to obtain compensation. This article argues that such developments may undermine renewable energy policy, because arbitration enhances the regulatory stability and predictability which low-carbon investments require only if arbitral awards can be enforced effectively. The article examines the different scenarios that may arise out of the interplay between EU law and investment arbitration in the EU and concludes that the European Commission's arguable redrawing of the boundaries of state aid rules to encompass investment arbitration, combined with the EU's general quest to replace investment arbitration with alternative mechanisms of adjudication, may jeopardize climate change mitigation policies.

Keywords

Renewable energyEnergy Charter TreatyState aidInvestor-state dispute settlement (ISDS)EU lawClimate change mitigation
Type
Article
Information
Transnational Environmental Law , Volume 8 , Issue 2 , July 2019 , pp. 279 - 302
Copyright
Copyright © Cambridge University Press 2019 

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Footnotes

The author wishes to thank the anonymous reviewers for their time and valuable suggestions. Any errors in the final version are, of course, solely those of the author.

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22 European Commisson, Commission Staff Working Document, ‘European Commission Guidance for the Design of Renewables Support Schemes’, SWD(2013) 439 final, 5 Nov. 2013, available at: https://ec.europa.eu/energy/sites/ener/files/documents/com_2013_public_intervention_swd04_en.pdf; European Commission, ‘Renewable Energy: Progressing towards the 2020 Target’, COM(2011) 31 final, 31 Jan. 2011, available at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52011DC0031&from=EN; J. Tirado & J. Bloom, ‘Renewable Energy Reforms in Europe: Growing Threats to International Investors’ (2014) Lexology online articles, available at: http://cdn2.winston.com/images/content/8/4/v2/84476/IA-RenewableEnergyReformEurope-6-9-2014.pdf.

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25 The Hague (The Netherlands), 17 Dec. 1994, in force 16 Apr. 1998, available at: https://energycharter.org/process/energy-charter-treaty-1994.

26 E.g., ECT, Art. 10. See Schreuer, C.H., ‘Selected Standards of Treatment Available under the Energy Charter Treaty’, in Coop, G. & Ribeiro, C. (eds), Investment Protection and the Energy Charter Treaty (Juris Publishing, 2008), pp. 63–99Google Scholar.

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29 ‘El nuevo Gobierno “se come” su primer laudo contra España por los recortes renovables’, El Confidencial, 18 June 2018, available at: https://www.elconfidencial.com/empresas/2018-06-18/laudo-antin-arbitraje-ciadi-renovables-primas-termosolar_1580658 (in Spanish).

30 ICSID Database, n. 28 above.

31 Charanne and Construction Investments v. Spain, SCC Case No. V 062/2012, IIC 758 (2016), available at: https://www.italaw.com/cases/2082.

32 Isolux Infrastructure Netherlands BV v. Kingdom of Spain, Award, SCC Case No. V 2013/153, IIC 979 (2016), available at: https://www.italaw.com/cases/5893.

33 Blusun S.A., Jean-Pierre Lecorcier and Michael Stein v. Italian Republic, ICSID Case No. ARB/14/3, available at: https://www.italaw.com/cases/5739.

34 Eiser Infrastructure Ltd and Energía Solar Luxembourg S.à.r.l. v. Kingdom of Spain, Award, ICSID Case No. ARB/13/36, IIC 950 (2017), available at: https://www.italaw.com/cases/5721.

35 Jürgen Wirtgen et al. v. Czech Republic, Final Award, PCA Case No. 2014-03, 11 Oct. 2017, available at: https://www.italaw.com/cases/6428.

36 Novenergia II – Energy & Environment (SCA) (Grand Duchy of Luxembourg), SICAR v. Kingdom of Spain, Award SCC Case No. 063/2015 (2018), available at: https://www.italaw.com/cases/6613.

37 Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain, Award, ICSID Case No. ARB/14/1 (2018), available at: https://www.italaw.com/cases/6608.

38 Antaris Solar GmbH and Dr Michael Göde v. Czech Republic, PCA Case No. 2014-01, available at: https://www.italaw.com/cases/2080.

39 Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V. v. Kingdom of Spain, ICSID Case No. ARB/13/31, available at: https://www.italaw.com/cases/2319.

40 Greentech Energy System A/S, Foresight Luxembourg Solar 1 S.à.r.l., Foresight Luxembourg Solar 2 S.à.r.l., GWM Renewable Energy I S.P.A, GWM Renewable Energy II S.P.A v. Kingdom of Spain (SCC Case No. 2015/50) – final award – Athena Investments AS Company Announcement No. 17-2018 – 14 Nov. 2018 (unpublished).

41 RREEF Infrastructure (GP) Ltd and RREEF Pan-European Infrastructure Two Lux S.à.r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/30, notice of the decision available at: https://www.italaw.com/cases/2317.

42 NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. v. Kingdom of Spain, ICSID Case No. ARB/14/11, notice of the decision is available at: https://icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=ARB/14/11.

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54 Case T-694/15, Micula v. Commission.

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68 Ibid., para. 827.

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72 Opinion of Advocate General Wathelet delivered on 19 Sept. 2017, ECLI:EU:C:2017:699.

73 The Court did not answer the question regarding the compatibility of the BIT with Art. 18 TFEU.

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76 Vienna (Austria), 23 May 1969, in force 27 Jan. 1980, available at: https://treaties.un.org/doc/Publication/UNTS/Volume%201155/volume-1155-I-18232-English.pdf.

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78 Masdar Solar & Wind Cooperatief U.A. v. Spain, n. 37 above, paras 678–82.

79 Brussels (Belgium), 30 Oct. 2016, partially in force 21 Sept. 2017, [2017] OJ L 11, pp. 23–1079, available at: http://data.consilium.europa.eu/doc/document/ST-10973-2016-INIT/en/pdf.

80 Opinion of the Court (Full Court) of 30 April 2019 on Case C-1/17, Request for an Opinion by the Kingdom of Belgium on the Compatibility with the Treaties of the Comprehensive Economic and Trade Agreement between Canada, of the one part, and the European Union and its Member States, of the other part, ECLI:EU:C:2019:341, paras 126 and 127; L. Ankersmit, ‘Investment Court System in CETA to be Judged by the ECJ’, European Law Blog, 31 Oct. 2016, available at: http://europeanlawblog.eu/2016/10/31/investment-court-system-in-ceta-to-be-judged-by-the-ecj.

81 Communication from the Commission, ‘Protection of Intra-EU Investment’, COM(2018) 547 final, 19 July 2018, available at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018DC0547&rid=8.

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83 Decision T 4658-18, 16 May 2018, available at: https://www.italaw.com/sites/default/files/case-documents/italaw9746.pdf (in Swedish).

84 Declaration of the Member States of 15 Jan. 2019 on the Legal Consequences of the Achmea Judgment and on Investment Protection, available at: https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190117-bilateral-investment-treaties_en.pdf.

85 UNCTAD, n. 19 above.

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89 S. Fankhauser & L. Lavric, ‘The Investment Climate for Climate Investment: Joint Implementation in Transition Countries’, European Bank for Reconstruction and Development, Working Paper No. 77, Jan. 2003, available at: http://www.ebrd.com/downloads/research/economics/workingpapers/wp0077.pdf; Boute, n. 17 above.

90 Hendel, n. 44 above.

91 New York (USA), 10 June 1958, in force 7 June 1959, available at: http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/New-York-Convention-E.pdf.

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97 Micula & Ors v. Romania & Anor [2017] EWHC 31 (Comm) (20 Jan. 2017), para. 64.

98 Micula & Ors v. Romania [2018] EWCA Civ 1801 (27 July 2018).

99 Decision of 25 Jan. 2016. The decision is currently on appeal before the Brussels Court of Appeal, available at: http://www.globalarbitrationreview.com/digital_assets/46aa46ba-9228-4118-a74f-1a452dcd4198/micula-belgium.pdf.

100 Gragl, P., ‘The Silence of the Treaties: General International Law and the European Union’ (2015) 57 German Yearbook of International Law, pp. 375–409Google Scholar.

101 Pernice, I., ‘Multilevel Constitutionalism and the Treaty of Amsterdam: European Constitution-Making Revisited?’ (1999) 36(4) Common Market Law Review, pp. 703–50, at 711CrossRefGoogle Scholar; Schilling, T., ‘The Autonomy of the Community Legal Order: An Analysis of Possible Foundations’ (1996) 37(2) Harvard International Law Journal, pp. 389–409Google Scholar.

102 Case 6-64, Flaminio Costa v. ENEL, Judgment of the Court, 15 July 1964, ECLI:EU:C:1964:66. Simma, B. & Pulkowski, D., ‘Of Planets and the Universe: Self-Contained Regimes in International Law’ (2006) 17(3) European Journal of International Law, pp. 483–529CrossRefGoogle Scholar. Moreno-Lax, V. & Gragl, P., ‘The Quest for a (Fully Fledged) Theoretical Framework: Co-Implication, Embeddedness, and Interdependency between Public International Law and EU Law’ (2016) 35(1) Yearbook of European Law, pp. 455–70, at 457CrossRefGoogle Scholar.

103 Reed, L. & Consedine, S., ‘Fair and Equitable Treatment: Legitimate Expectations and Transparency’, in Kinnear, M. et al. (eds), Building International Investment Law: The First 50 Years of ICSID (Kluwer Law International, 2015), pp. 283–94Google Scholar. Reisman, W.M. et al. , ‘Violation of Investor Rights under Investment Treaties’, in Bishop, D.R., Crawford, J.R. & Reisman, W.M. (eds), Foreign Investment Disputes: Cases, Materials and Commentary, 2nd edn (Kluwer Law International, 2014), pp. 753–896Google Scholar; Dumberry, P., ‘The Protection of Investors’ Legitimate Expectations and the Fair and Equitable Treatment Standard under NAFTA Article 1105’ (2014) 31(1) Journal of International Arbitration, pp. 47–74Google Scholar.

104 Reed & Consedine, ibid.

105 Selivanova, n. 27 above.

106 Case C-369/09 P, ISD Polska and Ors v. Commission, Judgment of the Court (First Chamber), 24 Mar. 2011, ECLI:EU:C:2011:175, para. 122.

107 Giraud, A., ‘A Study of the Notion of Legitimate Expectations in State Aid Recovery Proceedings: “Abandon All Hope, Ye Who Enter Here”’? (2008) 45(5) Common Market Law Review, pp. 1399–431Google Scholar.

108 European Commission, Decision of 10 Nov. 2017, n. 46 above, para. 161.

109 Micula et al. v. Government of Romania, US District Court, Southern District of New York, No. 15 Misc. 107 (SDNY 5 Aug. 2015).

110 Petition for Recognition and Enforcement of an Arbitration Award, filed 19 May 2017 by Eiser Infrastructure Ltd and Energia Solar Luxembourg S.à.r.l. against the Kingdom of Spain, US District Court for the Southern District of New York, available at: https://www.italaw.com/sites/default/files/case-documents/italaw9186.pdf; Petition for Recognition and Enforcement of an Arbitration Award, filed 27 July 2018 by Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar BV against the Kingdom of Spain, US District Court for the District of Columbia, available at: https://www.italaw.com/sites/default/files/case-documents/italaw9983.pdf; Petition for Enforcement of an Arbitration Award, filed 28 Sept. 2018 by Masdar Solar & Wind Cooperatief UA against the Kingdom of Spain. US District Court for the District of Columbia, available at: https://www.italaw.com/sites/default/files/case-documents/italaw9983.pdf.

111 Struckmann, Forwood & Kadri, n. 61 above, p. 260. However, this is a highly controversial debate. Whereas public international lawyers consider EU law as mere regional international law, the status and effects of which are to be determined on the basis of international rules on conflict of treaties and by the principles governing the internal law of international organizations, EU institutions and the CJEU, in particular, consider the EU as a subject of international law with its own independent and autonomous legal order since Case 26-62, NV Algemene Transport – en Expeditie Onderneming van Gend & Loos v. Netherlands Inland Revenue Administration, Judgment of the Court, 5 Feb. 1963, ECLI:EU:C:1963:1, and Case 6-64, Flaminio Costa v ENEL, n. 102 above: Simma & Pulkowski, n. 102 above. See also Moreno-Lax & Gragl, n. 102 above, p. 457.

112 Struckmann, Forwood & Kadri, ibid.; Lukashuk, I.I., ‘The Principle Pacta Sunt Servanda and the Nature of Obligation under International Law’ (1989) 83(3) American Journal of International Law, pp. 513–18CrossRefGoogle Scholar; Yackee, J.W., ‘Pacta Sunt Servanda and State Promises to Foreign Investors before Bilateral Investment Treaties: Myth and Reality’ (2009) 32(5) Fordham International Law Journal, pp. 1550–613Google Scholar.

113 Struckmann, Forwood & Kadri, ibid.

114 Database of ICSID Member States, available at: https://icsid.worldbank.org/en/Pages/about/Database-of-Member-States.aspx.

115 Micula v. Commission, n. 54 above.

116 Micula & Ors v. Romania & Anor, n. 97 above.

117 As ruled by the Court of Justice in, e.g., Case T-69/89, RTE v. Commission, Judgment of the Court of First Instance (Second Chamber), 10 July 1991, ECLI:EU:T:1991:39.

118 In the same sense, see Struckmann, Forwood & Kadri, n. 61 above, p. 262.

119 See n. 110 above.

120 Prisecaru, P. & Calanter, P., ‘Governance of Renewable Energies in the EU’ (2017) 5(2) Global Economic Observer, pp. 31–38Google Scholar.

121 Communication from the Commission, ‘A Clean Planet For All: A European Strategic Long-term Vision for a Prosperous, Modern, Competitive and Climate Neutral Economy’, COM(2018) 773 final, 28 Nov. 2018, available at: https://ec.europa.eu/clima/sites/clima/files/docs/pages/com_2018_733_en.pdf.

122 European Commission, ‘Clean Energy for all Europeans’, available at: https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/clean-energy-all-europeans.

123 Proposal for a Directive of the European Parliament and of the Council on the Promotion of the Use of Energy from Renewable Sources (Recast), COM/2016/0767 final, 30 Nov. 2016, 2016/0382 (COD).

124 Communication from the Commission, ‘A Policy Framework for Climate and Energy in the Period from 2020 to 2030’, COM/2014/015 final, 22 Jan. 2014, available at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014DC0015&from=EN.

125 European Parliament, Amendments adopted on the Proposal for a Directive on the Promotion of the Use of Energy from Renewable Sources (Recast), (COM/2016/0767 – C8-0500/2016 – 2016/0382(COD), 17 Jan. 2018, available at: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT%20TA%20P8-TA-2018-0009%200%20DOC%20XML%20V0//EN.

126 Council of the EU, ‘Analysis of the Final Compromise Text with a View to Agreement’, 21 June 2018, available at: http://data.consilium.europa.eu/doc/document/ST-10308-2018-INIT/en/pdf.

127 Directive (EU) 2018/2001 of 11 December 2018 on the Promotion of the Use of Energy from Renewable Sources [2018] OJ L 328/82.

128 COM/2014/015 final, n. 124 above.

129 COM/2016/0767 final, n. 123 above, Art. 15(3).

130 European Parliament, n. 125 above.

131 Directive (EU) 2018/2001, n. 127 above.

132 R. Dolzer & C. Schreuer, Principles of International Investment Law (Oxford University Press, 2008), pp. 145–49; Bellantuono, n. 10 above; Schiereck, D. & Trillig, J., ‘Regulatory Changes and the Volatility of Stock Returns: The German Solar Energy Sector’ (2014) 8(2) International Journal of Energy Sector Management, pp. 160–77CrossRefGoogle Scholar; Gatzert, N. & Kosub, T., ‘Determinants of Policy Risks of Renewable Energy Investments’ (2017) 11(1) International Journal of Energy Sector Management, pp. 28–45CrossRefGoogle Scholar; Dias Simões, n. 23 above, pp. 251–71.

133 Communication from the Commission, ‘Towards a Comprehensive European International Investment Policy’, COM(2010) 343 final, 7 July 2010, p. 10, available at: http://ec.europa.eu/transparency/regdoc/rep/1/2010/EN/1-2010-343-EN-F1-1.Pdf.

134 N. 79 above, Arts 8.27–29. See also Commission Concept Paper, ‘Investment in TTIP and Beyond: The Path for Reform’, p. 3, available at: http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF (‘CETA is the first agreement to which the U.S. is not a party which contains a clear commitment to the possible creation of an appeal mechanism’).

135 European Union's Proposal for Investment Protection and Resolution of Investment Disputes, Transatlantic Trade and Investment Partnership (TTIP), 12 Nov. 2015, Arts 9–10, 12, available at: http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153955.pdf. See also Commission Concept Paper, ibid. (remarking that the TTIP contains the first EU negotiating directives that explicitly mention an appellate mechanism).

136 EU-Vietnam Trade and Investment Agreement, authentic text as of Aug. 2018, not yet binding under international law, available at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1437.

137 Investment Protection Agreement between the European Union and its Member States, of the one part, and the Republic of Singapore, of the other part, Brussels (Belgium), 19 Oct. 2018, available at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=961.

138 New EU-Mexico Agreement, agreement in principle, Brussels (Belgium), 23 Apr. 2018, available at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1833.

139 Council of the EU, ‘Negotiating Directives for a Convention establishing a Multilateral Court for the Settlement of Investment Disputes’, Document/ST-12981-2017-ADD-1-DCL-1, 20 Mar. 2018, available at: http://data.consilium.europa.eu/doc/document/ST-12981-2017-ADD-1-DCL-1/en/pdf.

140 UNCITRAL, ‘Possible Reform of Investor-State Dispute Settlement (ISDS)’ (5 Sept. 2018), UN Doc. A/CN.9/WG.III/WP.149, available at: http://www.uncitral.org/uncitral/en/commission/working_groups/3Investor_State.html.

141 Franck, S.D., ‘The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law through Inconsistent Decisions” (2005) 73(4) Fordham Law Review, pp. 1521–625Google Scholar; G. van Harten, ‘A Case for an International Investment Court’, Society for International Economic Law, Online Proceedings, Working Paper No. 22/08, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1153424; Schill, S.W., ‘Crafting the International Economic Order: The Public Function of Investment Treaty Arbitration and Its Significance for the Role of the Arbitrator’ (2010) 23(2) Leiden Journal of International Law, pp. 401–30, at 412CrossRefGoogle Scholar.

142 Schill, S., ‘Editorial: Opinion 2/13: The End for Dispute Settlement in EU Trade and Investment Agreements?’ (2015) 16(3) The Journal of World Investment & Trade, pp. 379–88CrossRefGoogle Scholar; L. Woods, ‘Fit for Purpose? The EU's Investment Court System’, Kluwer Arbitration Blog, 23 Mar. 2016, available at: http://arbitrationblog.kluwerarbitration.com/2016/03/23/to-be-decided.

143 Case C-1/09, Opinion delivered pursuant to Art. 218(11) TFEU, Opinion of the Court (Full Court), 8 Mar. 2011, ECLI:EU:C:2011:123.

144 Rome (Italy), 4 Nov. 1950, in force 3 Sept. 1953, available at: http://www.echr.coe.int/pages/home.aspx?p=basictexts.

145 Case C-2/13, Draft International Agreement: Accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms, Compatibility of the Draft Agreement with the EU and FEU Treaties, Opinion of the Court (Full Court), 18 Dec. 2014, ECLI:EU:C:2014:2454.

146 Opinion C-1/17, n. 80 above. See further, G. Kübek, ‘CETA's Investment Court System and the Autonomy of EU Law: Insights from the Hearing in Opinion 1/17’, VerfBlog, 4 July 2018, available at: https://verfassungsblog.de/cetas-investment-court-system-and-the-autonomy-of-eu-law-insights-from-the-hearing-in-opinion-1-17.

147 Opinion of Advocate General Bot, delivered 29 Jan. 2019, ECLI:EU:C:2019:72; Opinion of the Court (Full Court) of 30 April 2019 on Case C-1/17, n. 80 above.

148 Puig, S. & Shaffer, G., ‘Imperfect Alternatives: Institutional Choice and the Reform of Investment Law’ (2018) 112(3) American Journal of International Law, pp. 361–409CrossRefGoogle Scholar.

149 In the same sense, Roberts, A., ‘Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration’ (2018) 112(3) American Journal of International Law, pp. 410–32CrossRefGoogle Scholar.

150 UN Conference on Trade and Development, World Investment Report 2018, available at: https://unctad.org/en/PublicationChapters/wir2018ch3_en.pdf.

151 Selianko, I. & Lenschow, A., ‘Energy Policy Coherence from an Intra-Institutional Perspective: Energy Security and Environmental Policy Coordination within the European Commission’ (2015) 19(1) European Integration online Papers, pp. 1–29Google Scholar, available at: http://eiop.or.at/eiop/pdf/2015-002.pdf.

152 Similarly, Alessi, Ferrer & Egenhofer, n. 24 above.