30 April 2024 BETWEEN THE ROCK AND HARD PLACE: WILL THE U.S. COURT FOLLOW THE EU OR INTERNATIONAL ARBITRATION TRIBUNALS?
The second front can open in the United States (“U.S.”) for over 50 investment arbitration claims against the Kingdom of Spain (“Spain”) that are worth hundreds of millions of U.S. dollars combined. The ongoing disputes spotlighted the continuing controversy between the decisions of the European Union’s (“EU”) highest court and international investment tribunals. The cases in question relate to the events of more than ten years ago when the government of Spain declared special incentives for energy-renewable projects to stimulate investment flow into the country, which the country revoked in the aftermath of the economic downturn, eventually triggering investors to initiate arbitrations alleging breach of the Energy Charter Treaty (“ECT”). Although many investors received awards, the Supreme Court of Spain refused to enforce them, reasoning that payments may violate EU law, constituting illegal state assistance. Moreover, the Court of Justice of the EU (“CJEU”) in Achmea and later in Komstroy has held that investor-state dispute settlement provisions between EU members are void as contravening the EU establishment treaties. However, the relentless investors from Luxemburg, the Netherlands, and the United Kingdom proceeded with the enforcement of their awards in the U.S. despite the CJEU’s cold showers.
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