The possible avalanche effect of complaints about cuts to renewables

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The former German public bank WestLB, has been the last entity that has presented a lawsuit against the Kingdom of Spain before the ICSID (International Center for the Settlement of Investment Disputes) by the remuneration cut of renewable energies carried out by the Government of the PP.

With this, already there are more than 30 arbitrations against our country in different international organizations for the lawsuits filed by foreign investors in Spain: one, before Uncitral (United Nations Commission); three, before the Arbitration Institute of the Stockholm Chamber of Commerce, and 28 before the ICSID (World Bank).

Since the first lawsuit, which was filed 6 years ago, against the reform of the sector carried out by the Zapatero government until today, only three arbitrations have been resolved. Two in Stockholm, favorable to our country, and one in ICSID, the most recent and such as commented on this web page, favorable to the Eiser investment fund.

The ICSID condemned Spain last May to a fine of 128 million euros, plus interest, for the damages that the cut in premiums caused in its three solar thermal plants located in the south of Spain.

solar energy

Various cuts without compensation

Miguel Angel Martinez-Aroca, president of Anpier (National Association of Photovoltaic Energy Producers), affirms that there are two important nuances that differentiate the two awards of the Stockholm Court from that of the ICSID. “On the one hand, the Stockholm cases referred to the reform of the sector approved by the socialist government of Rodríguez Zapatero and that of the ICSID to the latest reform of the PP.

On the other, and most importantly, the Zapatero government compensated the three years of cuts with another five years maintaining the remuneration, that is, the compensation was superior to cuts. However, the Government of Rajoy has not set any compensation for its very high cuts.

Mr. Martínez adds that, The renewables conflict has placed Spain as one of the three countries in the world with the most lawsuits filed against it. And what is more important, the State could have to face compensation that would total 7.000 million if the rest of the arbitrations agree with the investors. "This would leave our country with a sorry image."

For his part, the Minister of Energy, Tourism and Digital Agenda, Álvaro Nadal, has publicly said that these compensations they don't worry him too much, since they will always be lower than the savings generated by the reform of the electricity sector.

After the ICSID arbitration that condemns the Kingdom of Spain to a fine of 128 million, the Government has approved a law by which the surplus of the electricity system will be used to pay so much that fine like other future ones.

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This decision was not liked at all in the sector, after twelve years of deficit, the system had accumulated since 2014 a surplus of about 1.130 million until 2016. According to several organizations, «Using the sector surplus to pay compensation for cuts to international investors is regrettable.

On the other hand, in this conflict there is the serious paradox that Spanish investors cannot for the moment recover the investments made in renewable plants because both the Constitutional Court and the Supreme Court have given the reason to the governmentWhile foreign investors in these same plants can receive compensation thanks to international arbitrations (which can only be used by foreign entities).

The Ombudsman to the rescue

This situation was denounced by a group of those affected before the Ombudsman, who recommended that the Government “adopt the necessary measures so that Spanish investors in photovoltaic energy who have seen their remuneration cut do not receive worse treatment than investors from the signatory countries of the Treaty on the Energy Charter.

In addition, it must establish the mechanisms deemed convenient to compensate for the singular sacrifice that the remuneration change implies for employees. Spanish investors«.

LPP material for solar panels


Regarding international arbitrations, it should be noted that they are very slow processes and that their resolutions are final. In the ICSID case, 27 of the 28 cases have already designated the corresponding court, formed by a president and two referees, one chosen by each party. All three are from different and disparate countries. The costs of the latest ICSID arbitration, which gave the reason to the British Eiser, amounted to almost 900.000 euros, of which 255.000 corresponded to the president of the court, the American John Crook, 163.000 euros to the Bulgarian arbitrator Alexandrov, who defended the plaintiff , and 114.000 to the New Zealander McLachlan, who defended the interests of the Kingdom of Spain.

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