{"id":6643,"date":"2019-09-19T00:36:52","date_gmt":"2019-09-19T05:36:52","guid":{"rendered":"https:\/\/www.iisd.org\/itn\/?p=6643"},"modified":"2024-08-09T18:30:11","modified_gmt":"2024-08-09T16:30:11","slug":"spain-is-ordered-to-pay-damages-of-eur-290-6-million-in-nextera-renewable-energy-case-gabriela-barcellos-scalco","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2019\/09\/19\/spain-is-ordered-to-pay-damages-of-eur-290-6-million-in-nextera-renewable-energy-case-gabriela-barcellos-scalco\/","title":{"rendered":"Spain is ordered to pay damages of EUR 290.6 million in NextEra renewable energy case"},"content":{"rendered":"\r\n

<\/h2>\r\n

NextEra Energy Global Holdings B.V and NextEra Energy Spain Holdings B.V v. Kingdom of Spain, ICSID<\/span> Case No. ARB\/14\/11<\/h2>\r\n

An ICSID tribunal ordered Spain to pay two Dutch investors EUR 290.6 million in compensation for its breach of the FET<\/span> standard under ECT<\/span> Article 10(1), as well as one-third of the investors\u2019 legal costs.<\/p>\r\n

Background and claims<\/h3>\r\n

The claimants\u2014NextEra Energy Global Holdings B.V and NextEra Energy Spain Holdings B.V (jointly, NextEra)\u2014are companies incorporated under the laws of the Netherlands. NextEra invested in the construction of two concentrated solar power plants, the Termosol Plants.<\/p>\r\n

NextEra claimed that after their Spanish subsidiaries committed to constructing the plants and spent around EUR 750 million in the construction, Spain altered the regulatory framework applicable to it, negatively affecting the profitability of the project. The changes to the regime provided that the plants would be paid on the basis of capacity, not on the basis of production, and that additional tariffs would be applicable.\u00a0<\/p>\r\n

NextEra initiated arbitration on May 23, 2019 arguing that Spain had breached its obligation FET under ECT Art. 10 in three ways: (1) by frustrating NextEra\u2019s legitimate expectations, (2) by breaching its duty to provide a stable, consistent and transparent framework, and (3) by failing to adopt reasonable, proportionate and non-discriminatory measures.<\/p>\r\n

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

Decision on jurisdiction, liability and quantum principles: FET breach through frustration of NextEra\u2019s legitimate expectations<\/h3>\r\n

On March 12, 2019 the tribunal rendered its Decision on Jurisdiction, Liability and Quantum Principles<\/a><\/u>. First, the tribunal decided it had jurisdiction over the matter, as NextEra qualified as an investor. Spain objected to the tribunal\u2019s jurisdiction, arguing that the ECT did not apply to intra-EU<\/span> disputes and relying on the Achmea<\/em> judgment of March 6, 2019. The tribunal, however, dismissed this objection, concluding that Spain\u2019s consent to submit ECT disputes to arbitration did not exclude intra-EU investment disputes.\u00a0<\/p>\r\n

As for the liability portion, the tribunal started by assessing whether Spain breached NextEra\u2019s legitimate expectations protected by ECT Art. 10(1). The tribunal decided that the change in regulation itself would not be a sufficient basis for the breach of NextEra\u2019s expectation that the terms of the prior regulatory framework would be guaranteed. However, it considered that the statements and assurances made directly to NextEra by Spanish authorities served as grounds to justify NextEra\u2019s legitimate expectation.<\/p>\r\n

The tribunal decided that the changes made to the regulatory framework were substantial, especially considering the following:<\/p>\r\n