The Supreme Court (TS) has once again endorsed the electricity reform promoted by the PP, the government that promoted the large cut in renewables in our country. In a ruling on September 5, the high court dismissed the appeal that 25 photovoltaic installations Castilla-La Mancha filed against the 2014 regulation.
The Supreme Court considers that the regulatory change did not violate the constitutional principles of non-retroactivity nor that of legal certainty, as claimed by those affected, therefore they are not entitled to any compensation.
CIADI
This decision comes just a few months after the blow that ICSID, the World Bank's arbitration body, gave Spain last May. As i know I comment on this web page, the court agreed with the Eiser fund, and gave the order to the kingdom of Spain to indemnify him with 128 million euros (slightly more than half of the 300 that he claimed).
ICSID considered that Spain had breached the Energy Charter by depriving Eiser of fair and equitable treatment. This international treaty, of 1994, establishes that States must maintain conditions stable for investments from other countries. In Spain, however, the courts continue to agree with the Government.
The Government of Mariano Rajoy justified its electricity reform by the urgent need to increase the tariff deficit. After the regulatory change, investors spurred a barrage of complaints. Producers had invested relying on the profitability guaranteed by these premiums, valid between 2006 and 2012. But unfortunately, only foreign investors were able to go to international arbitrations.
Several public administrations reported the events to the Constitutional Court. And thousands of producers appealed to the Supreme Court, to the administrative route, to the consider illegal that the Government change the conditions under which they planned their investments. What they claim is the patrimonial damage that caused them not to reduce their profitability, but rather the inability to pay for the facilities made on credit.
In this case, the producers appealed the royal decree of 2014, which developed a previous rule of 2013, which regulated the production of electrical energy from renewable energy sources.
Supreme Court
To date, the Supreme Court has endorsed the reform of the PP in at least six sentences. Also the Constitutional, which in 2015 determined that the adjustments were the effect of the difficult circumstances of the sector as a whole and of the need to ensure economic balance. In this last sentence, of the third section of the contentious chamber, the magistrates recall the Constitutional ruling and they also refuse to take into consideration the ICSID award, as requested by the defense of the producers, because "the present appeal is prosecuted under the application of Spanish and Community law, without the regime derived from the voluntary submission of certain subjects and States to a specific arbitration regime ”.
Private votes
The sentence, of which José Manuel Bandrés Sánchez-Cruzat is the rapporteur, has two individual votes. In the first, Judge Eduardo Espín Templado points out that the appeal should have been upheld by "retroactivity contrary to the law for incurring in the violation of the principles of legal certainty and legitimate confidence." The second, by María Isabel Perelló Doménech, is very forceful: “It is not easy to imagine a more glaring violation of the principle of legal certainty than that which consists in leading an economic sector as highly regulated as this one […] to adopt business resolutions of considerable importance, including the continuity in the exercise of the activity, without knowing the legal and economic regime that will be applicable to them ”.
According to the producers' lawyer, José Manuel Minaya, assures that "most installations of 100 kW of power" have lost up to 50% of profitability and that, in some cases, work profitably 0 or negative. It also ensures that "Some companies are doomed to closure."
As previously mentioned in other articles, our country still has about 30 arbitrations open in ICSID, which include cuts in premiums for renewable energies. applied since 2010. If they were in the same direction as last May, the State would have to face the payment of hundreds of millions in compensation to foreign investors.