The soap opera for cutting renewable premiums reaches the US court: the first funds to win before ICSID, the international arbitration board dependent on the World Bank, have appealed to the US court, asking Spain to pay the compensation to pay for being convicted, which currently amounts to 800 million, or have assets to that value confiscated. For its part, the state is trying to delay this process as much as possible.
Currently, Spain has received 17 judgments from ICSID for the Rajoy government’s decision to cut the state-guaranteed profitability of renewable installations. Of those 17 setbacks, on two occasions the claimants – the RREEF and Masdar Solar funds respectively – chose to waive enforcement of their premiums in exchange for the shield of a 7.4% 25-year return on renewable assets proposed in 2019 by the Vice President for Ecological Transition, Teresa Ribera, for those who waived litigation with the state for the 2014 decision. Each of them waived raising around 60 million.
The vast majority has therefore already made fines of more than 800 million pending, which the experts surveyed will increase to 7,000 million once the twenty outstanding cases before the arbitral tribunals have been decided. Those deposited amounts that exceed 2% per month must bear interest.
The Spanish state refuses to pay the amounts supplied, using a judgment of the ECJ that does not recognize the validity of international contracts between member countries of the EU, since the investors who bet on Spanish renewable energies before 2014 did so through subsidiaries in Luxembourg or Netherlands for tax reasons.
Whenever Spain suffers a court setback before this body, the strategy is always the same. The funds are going swiftly to the US judiciary to begin proceedings where, if Spain refuses to pay, the judge will agree to an embargo on Spanish assets in the US, while Spain, for its part, exhausts the avenue to seek an annulment by another court of the ICSID itself, a kind of appeal before this tribunal. At the moment, practically all the files are on the table of a court in the state of Colombia, which has decided to stay the proceedings to seize Spanish assets until the ICSID announces its final decision before the Spanish authorities.
He managed to get ICSID to cancel a single case, von Eiser’s, for 128 million. But the arbitral tribunal gave final approval to five more, those from Nextera, Antin, Watkins Holdings, Infrared and JCG. And the court case was immediately reactivated. They are already demanding the confiscation of assets from Spain before the US judiciary, although the state is always pleading for the processes to be paralysed. The sources consulted indicate that it is foreseeable that Spain will challenge any kind of decision against the country before the highest possible authorities.
The choice of US courts is not accidental. Investors try to avoid that the enforcement of the arbitral awards falls within the judiciary of an EU country and that the competent court rejects their claims on the basis of this judgment of the ECJ. In the case of Antin, that the French fund sold the process to other investors, it also chose to go to court in Australia to put more pressure on Spain.
The US judiciary is also one of the fastest in handling conflicts of this type. But investors choose this country mainly because Spain has assets in the US that can be confiscated. International regulations stipulate that assets intended for government use are free from any confiscation in any case, but not commercial ones. In other words, the funds could not seize the outbuildings of the Spanish embassy in Washington, for example, but they could seize US bonds or dollars. “The first step is to determine how many Spanish assets can be confiscated in the United States,” comment legal sources consulted by the newspaper.
The sources consulted agree that Spain will resort as much as possible and even to the highest possible instances to avoid paying these compensations, or that the funds with Spanish assets remain in the United States only if the State uses all judicial possibilities the moment when this conflict with the main investors in renewable energies can be resolved after eight years has passed. They assume that compensation will then be privately agreed that will be less than that offered by ICSID, but that the funds would prefer to be collected immediately.
The other arbitration boards
- Stockholm. Although most of the investors affected by the cut in the renewable premium have opted to turn to ICSID, the World Bank-dependent arbitration body, some of them have opted to sue the Stockholm Chamber of Commerce. Unlike the World Bank Court, in this case the parties must agree on the place of arbitration of the proceedings, while the ICSID has no jurisdiction and its arbitral awards can be applied to any jurisdiction. In proceedings where the place of arbitration is in Europe, the plaintiffs have difficulties asserting the seizure of assets due to the position of the ECJ.
- uncitral. It is much less common for the parties to turn to Uncitral, the arbitral tribunal dependent on the UN. The rules to be applied in these procedures must be agreed between the parties and given the complexity of the procedure, few funds have made claims against Spain there.