New chapter in the ‘fight’ between the Investors affected by cuts to renewable energy premiums and the State. The American Justice It strengthens the position of companies and funds by calling into question the defence that the State Attorney’s Office -through the law firms it hires- to avoid paying the awards.
On February 28th, the District Court of Columbia held an oral hearing related to the litigation between NextEra and 9Ren with the Kingdom of Spain for the non-compliance of the arbitrations that condemn the country to pay various compensations for the retroactive withdrawal of renewable premiums. And after two and a half months of confidentiality of the summary, La Información has been able to see the transcript of the panel of judges formed by Cornelia Pillard, Florence Pan and Judith Rogers.
To put it in context, Spain owes 290 million to NextEra Energy and 42 million to 9Renfigures to which must be added more than six million in late payment interest and nearly 15 million in costs. The International Centre for Settlement of Investment Disputes (ICSID), the international arbitration court dependent on the World Bank, ruled in favour of the two in 2019, although the arbitrations began in 2014 and 2015, respectively. The Spanish defence lost the attempt to annul the 9Ren award at the end of 2022.
Attempt to register the awards in the North American country
Both companies have filed complaints in US courts non-payment of arbitration awards which condemn the country and what they are trying to do is register the awards in the North American country, which would open the door to new seizures of goods and assets of the Kingdom of Spain abroad. Well, during the hearing, the comments of the judges were particularly critical of Spain’s position.
“It does not seem debatable that Spain reached an agreement with investors by offering a series of specific incentives,” said Judge Cornelia Pillard, recalling that our country signed the Energy Charter Treaty (ECT), which includes an unconditional arbitration clause, noting in this regard that, if the ECT had not permitted these procedures in the case of investments made in Europe, this would have been specified. Although she recognised the withdrawal as lawful, she recalled that this does not imply that the country can “avoid its responsibilities”. In fact, the exiting countries are subject – without changes – to the arbitration conditions provided for in the international agreement for the following 20 years despite breaking with it, according to the survival clause of Article 47(3).
According to Pillard, the ‘green’ investments of the affected companies have benefited both Spain and the European Union, which is why she was surprised that they were not now being recognised for compensation. She also criticised the State Attorney’s Office for, in her opinion, “twisting” the definitions of the TCEThe Court also considered that the international arbitration system “does not set a precedent” and that, therefore, “it cannot in any way undermine the EU’s community legality or the primacy of its courts.”
“If all countries refuse to comply with ICSID processes, ICSID would collapse”
“If all countries refuse to comply with ICSID processes, ICSID would collapse. And if all countries ask the courts of other countries not to comply with ICSID processes, ICSID would also collapse. The purpose of ICSID is precisely to guarantee neutral arbitration free from interference.“, he warned. Pillard wondered whether those affected would have invested in Spain without the certainty that they would have had neutral arbitration to settle disputes in the event of situations such as the withdrawal of subsidies for renewable energy.
Judge Florence Pan, for her part, described the fact that the ECT does not apply to European countries as “fiction.” She stressed that Arbitration saves time and reduces legal conflict and, in line with Pillard, stressed that the decisions adopted in these proceedings do not in any way interfere with the primacy of European law, because they do not set a precedent. Finally, Judge Judith Rogers emphasized that, when signing the ECT, countries must be aware that arbitration would be the expected solution to any dispute, so she considered it inconsistent to now claim that Spain did not understand or validate the implications of the agreement.
Affected investors will offer a pact to the Government
Other speakers also included: Sharon Swinglerepresenting the U.S. Department of Justice. He said the ICSID Convention establishes a clear framework for arbitration and that National sovereignty cannot be used as an excuse to avoid compliance with the awards. He also recalled that Article 54 of the Convention obliges all signatory countries to recognise the awards issued by the World Bank as if they were judgments of their own courts.
Lawyer Shay Dvoretzkyrepresenting NextEra and 9Ren, highlighted that by ratifying the Convention, Spain recognized its obligations in the event of possible adverse rulings and noted that international treaties are clear in this regard. Under this scenario, affected investors are forming a common front, as reported by this media, to find a solution solution agreed with the Government to close the pending awardsThe companies have made a series of trips to Spain in April – although they should have taken place at the beginning of the year – as a first contact and news is expected at the end of the month.
The aim of the companies is to delve deeper into the legal offensive and explore formulas that help solve the problem. “There is a willingness to work together and offer before the summer or in the summer a proposal to exit the current situation that will allow us to explore formulas to settle this matter once and for all in the most satisfactory way,” some of the investors stressed in conversation with this newspaper. Nick Cherrymanpartner at Kobre & Kim LLP; Nikos Lavranosfounder of NL Investment Consulting, and Lena Sanderba partner at Gibson, Dunn & Crutcher LLP, already visited Madrid in June last year.
Spain manages to annul three awards
Investors say that the latest rulings in their favor give them wings and confidence to continue litigating, although they are aware of the situation in Spain, which they describe as “unprecedented,” since it has lost 26 international proceedings due to the retroactive withdrawal of renewable premiums and must about 1.8 billion to the affected companies, in the form of compensation, late payment interest and costs.
Spain has managed to annul three awards and All the complaints amount to around 10.6 billion euros in various international arbitration bodies. According to sources from the Executive, the payments may be contrary to European Union law and constitute illegal State Aid, incompatible with the internal market. In this regard, they indicate that, consequently, when Spain receives an award recognising compensation, it notifies Brussels and cannot pay before the European Commission has made a decision.
Source: www.lainformacion.com
