SPAIN Law and Practice Contributed by: Pablo Silván and Fernando Manzanedo, Ramón y Cajal Abogados, S.L.P.
treaty or contract. Investors do not always default to arbitration. Their choice depends on treaty provisions (some BITs mandate arbitration), nature of dispute (regulatory vs contractual), cost and duration (arbitra- tion may be faster but more expensive), enforceability (arbitration awards are often easier to enforce abroad) and political sensitivity (litigation may be preferred for public law issues). Spain’s Arbitration Act is based on the UNCITRAL Model Law, making it attractive for both domestic and international arbitration. Spanish courts gener- ally support arbitration and enforce awards under the New York Convention. Arbitration is often favoured for its speed, expertise, and confidentiality, especially in high-stakes commercial and investment disputes. ISA is certainly prominent in Spain’s legal landscape when referring to international investors, but it is not the exclusive or always preferred method of resolving investment disputes. For purely domestic investment disputes or where no arbitration clause exists, litigation is still widely used. Disputes involving administrative decisions, regulato- ry measures, or constitutional issues often go through Spanish courts. 1.4 Key Industries The energy industry stands out far above the rest as the industry with more activity in recent years as the Spanish government, between 2010 and 2014, reversed or reduced subsidies and feed-in tariffs that had originally attracted foreign investment. These changes were perceived by many investors as a breach of legitimate expectations and the fair and equitable treatment (FET) standard under the ECT. Other areas in which, to a much lesser extent, there have been investor–state claims in recent years are banking (eg, Antonio del Valle Ruiz and others v Spain, PCA Case No 2019-17 ) and mining (eg, Berkeley Exploration Ltd. v Spain, ICSID Case No ARB/24/22 ). 1.5 Major Arbitrations Spain’s ISA history is dominated by disputes under the ECT, particularly following its rollback of renew- able energy incentives.
Below are some of the most legally significant cases, each shaping the interpretation of key principles like investment, FET standard and legitimate expecta- tions. • Charanne B.V. and Construction Investments v Spain (2015, SCC Case No V 062/2012) . A Dutch investor challenged Spain’s 2010 regulatory changes to solar energy subsidies, claiming these reforms undermined their investment. Key legal issues: FET standard (Does it include the violation of investors’ legitimate expectations or not?) and the definition of investment (Does it include the shares and contractual rights or not?). Outcome: The tribunal rejected the claim, holding that Spain’s changes were not drastic enough to breach the FET standard. It emphasised that investors must anticipate some regulatory evolution. • Novenergia II v Spain (2018, SCC Case No 2015/063) . A Luxembourg-based fund invested in Spanish solar projects. Key legal issues: FET standard and legitimate expectations (whether or not Spain’s reversal of incentives was unforeseea- ble and disproportionate) and jurisdiction (as Spain argued that intra-EU disputes under the ECT were invalid post-Achmea). Outcome: The tribunal found Spain liable for breaching the FET standard and awarded EUR53 million. It rejected Spain’s juris- dictional objection, fuelling the intra-EU arbitration debate. • Antin Infrastructure Services v Spain (2018, ICSID Case No ARB/13/31) . Some UK investors in solar thermal plants claimed that Spain’s 2013–2014 reforms destroyed the economic viability of their projects. Key legal issues: FET standard and pro- portionality principle (whether or not Spain’s meas- ures were excessive and discriminatory) and dam- ages calculation (regarding loss of future income). Outcome: The tribunal awarded EUR112 million and reinforced the principle that radical regulatory shifts can breach the FET standard if they under- mine investor confidence and stated that a proper approach for determining the amount of reparation is to assess the reduction of the fair market value of the claimants’ investment by determining the present value of cash flows claimed to have been lost.
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