SPAIN Trends and Developments Contributed by: Pablo Silván and Fernando Manzanedo, Ramón y Cajal Abogados, S.L.P.
Evolving Dynamics and Strategic Shifts in Investor–State Arbitration in Spain Spain’s trajectory in investor–state arbitration has shifted dramatically over the past decade. Tradition- ally considered a stable jurisdiction for foreign invest- ment, the country now finds itself at the centre of a legal and political storm. Regulatory reforms, particu- larly in the energy sector, have triggered a cascade of international claims. At the same time, Spain’s efforts to resist enforcement of adverse awards (largely driven by the European Commission in the case of awards rendered in intra-EU arbitration proceedings) have raised questions about its commitment to inter- national legal norms. The country’s experience reflects broader tensions between sovereign prerogatives and international obligations. The legacy of the energy reform and its legal fallout Spain’s decision to revise its renewable energy incen- tive schemes between 2010 and 2014 triggered a cascade of arbitration claims. These reforms, which included the withdrawal of feed-in tariffs and the impo- sition of new levies, were perceived by many foreign investors as retroactive. Investors alleged breaches of fair and equitable treatment, indirect expropriation, and denial of legitimate expectations under the Energy Charter Treaty (ECT). More than 50 proceedings were initiated against Spain under the ECT, with claimants ranging from infrastruc- ture funds to pension-backed vehicles, making Spain one of the most litigated states in the world in this domain. Spain has argued that the revision of its renewables incentive regimes between 2010 and 2014 was nec- essary, proportionate, and in line with public interest, especially regarding energy market stability, and has invoked EU law to challenge the jurisdiction of tribu- nals in intra-EU disputes relying on the Achmea and Komstroy rulings by the Court of Justice of the Euro- pean Union (CJEU) that state that arbitration between EU investors and EU member states under the ECT is incompatible with EU law. This strategy has yielded mixed results. While some tribunals have rejected Spain’s arguments, others –
such as the Svea Court of Appeal in Sweden – have annulled awards on these grounds. In NextEra Energy v Spain (ICSID ARB/14/34) , the tri - bunal awarded EUR290.6 million to the Dutch inves- tors (owned by a US one). Spain’s annulment request was rejected, confirming the award. In Watkins Hold- ings v Spain (ICSID ARB/15/15) , UK-based claimants received EUR77 million. The award was upheld after Spain’s appeal failed. And in RREEF Infrastructure v Spain (ICSID ARB/15/36) , Germany’s Deutsche Bank subsidiary won EUR59.6 million. Spain’s annulment efforts were dismissed. These cases reflect a consist- ent pattern: tribunals have largely sided with inves- tors, citing Spain’s failure to provide a stable regula- tory framework, reinforcing the principle that radical regulatory shifts can breach the fair and equitable treatment (FET) standard if they undermine investor confidence. Conversely, in Green Power K/S and Obton A/S v Spain (SCC Case No V 2016/135) , the tribunal stated that it had no jurisdiction to hear the Danish-based investors’ claims against an EU member state since the primacy of EU law precluded the unilateral offer to arbitrate in Article 26 of the ECT. And in Foresight Lux- embourg Solar 1 S.à r.l. and others v Spain (SCC Case No 2015/150) , the Svea Court of Appeal declared the arbitral award invalid because of the lack of jurisdic- tion of arbitral tribunals to resolve disputes between EU member states and investors from other member states under the ECT. Spain’s withdrawal from the ECT Spain formally began its exit from the ECT in 2024, aligning with broader EU efforts to phase out intra- European investment treaties (Spain signed, on 5 May 2020, the Agreement for the Termination of Bilateral Investment Treaties Between the Member States of the EU entered into by 22 EU member states). The rationale was two-fold: to avoid further liability from legacy claims and to support climate goals by remov- ing protections for fossil fuel investments. This withdrawal has profound implications. It cur- tails the jurisdiction of arbitral tribunals over disputes involving future energy investments and reflects a growing skepticism toward investor–state dispute
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