SPAIN Trends and Developments Contributed by: Pablo Silván and Fernando Manzanedo, Ramón y Cajal Abogados, S.L.P.
Financial institutions enter the arena A notable trend in investor–state arbitration in Spain is the increasing involvement of financial entities as potential investors. The Portigon case ( Portigon AG v Spain, ICSID case No ARB/17/15 ) exemplifies this shift, with the tribunal initially recognising project finance instruments as protected investments under the ECT. This development expands the scope of trea- ty protection beyond traditional equity holders. Banks, insurers, and hedge funds are now exploring arbitra- tion as a tool to safeguard structured finance arrange- ments, particularly in sectors vulnerable to regulatory change. The implications are significant. It challenges the conventional view that only direct investors can invoke treaty protections and raises questions about the boundaries of investment definitions. Third-party funding and strategic litigation Another emerging trend is the use of third-party fund- ing in investor–state claims. Litigation financiers are increasingly backing arbitration proceedings, espe- cially those with high-value claims and strong treaty foundations. Spain has not yet regulated third-party funding, but disclosure requirements are gaining traction. Arbitral tribunals have begun to scrutinise funding arrange- ments, particularly in relation to cost allocation and potential conflicts of interest. This development raises ethical and procedural questions. While funding can democratise access to arbitration, it may also incen- tivise aggressive litigation strategies and complicate settlement dynamics. Sectoral focus: banking and mining Beyond energy, Spain has seen disputes in the bank- ing and mining sectors. One of the most significant ISA proceedings in Spain’s recent history involves the “resolution” of Banco Pop- ular in 2017. Some Mexican investors in Banco Popu- lar initiated arbitration under the Spain–Mexico BIT, alleging that Spanish authorities contributed to the bank’s collapse by withdrawing deposits and refus- ing liquidity support. The claimants sought EUR647 million in damages. However, the Permanent Court of Arbitration (PCA) dismissed all claims in March 2023, ruling in favour of Spain ( Antonio del Valle Ruiz and
others v Spain, PCA Case No 2019-17 ). The tribunal found that the “bank resolution” process, including the sale of Banco Popular to Banco Santander for one euro, complied with EU law and international stand- ards. This outcome was a major legal victory for Spain and reinforced the legitimacy of its financial regulatory framework. It also highlighted the challenges investors face when seeking redress for losses stemming from systemic financial interventions. The recent Berkeley Minera España case ( Berkeley Exploration Ltd. v Spain, ICSID Case No ARB/24/22 , in progress), involves a uranium project in Salamanca and exemplifies the tensions between environmental regulation and investor expectations. Although no for- mal investor–state contract was signed, the investor relied on ECT protections to challenge permit denials. The case underscores the importance of regulatory stability and the potential for arbitration in sectors subject to political and social contestation. Public perception and political sensitivities Investor–state arbitration has become a politically charged topic in Spain. Media have reported on the growing public scrutiny of arbitration awards, particu- larly those involving large payouts to foreign inves- tors. Critics argue that arbitration prioritises corporate interests over public welfare. Supporters contend that it provides a neutral forum for resolving disputes and protects against arbitrary state action. The debate has intensified in the context of Spain’s energy transition and fiscal pressures. As the government seeks to attract sustainable investment, it must balance legal certainty with policy autonomy. Institutional developments and future outlook Spain’s arbitration institutions, including the Madrid International Arbitration Center, are evolving to meet the demands of cross-border disputes. While inves- tor–state arbitration remains largely external to these bodies, they play a role in shaping legal culture and promoting best practices. The future of ISDS in Spain will likely be influenced by broader EU reforms, with the inclusion of permanent arbitration tribunals and appeal mechanisms in free trade agreements concluded by the EU with Canada, Vietnam and other countries and a move toward a
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