This chapter provides an overview of the arbitration developments in Spain since May 2018. It focuses on both commercial arbitration under the Spanish Arbitration Act (SAA)2 and investment treaty arbitration.

Section I briefly addresses some of the main features of the SAA, and the key differences between the SAA and the UNCITRAL Model Law. Section II provides an overview of this past year's salient developments in Spain, including recent efforts to promote Madrid as a seat of international arbitration, an analysis of relevant Spanish judicial decisions in the past year and an update on investor–state arbitration, in particular the year's developments in some of the numerous Energy Charter Treaty (ECT) claims that have been brought against the Kingdom of Spain recently. We conclude with some brief conclusions, indicating the outlook for the year to come.

i Background to the legal framework: the SAA

SAA: a monist, Model Law jurisdiction

The SAA, essentially based on the UNCITRAL Model Law of 1985 (Model Law)3 with certain significant modifications, was amended in 2011 to provide greater legal certainty and to relieve the overloaded national courts,4 and contains the following key features:

  1. it generally adopts a monist approach in providing a uniform regulation of domestic and international arbitration, although some provisions of the SAA apply to international arbitration only;5
  2. its governing philosophy aims to be anti-formalistic;6
  3. its default rule is that arbitrators will decide pursuant to legal rules (as opposed to ex aqueo et bono), absent express agreement between the parties to the contrary;7
  4. it provides that the parties are free to decide the number of arbitrators, as long as the number is uneven. If the parties have not agreed on the number of arbitrators, the default rule is that the tribunal shall consist of a sole arbitrator;8 and
  5. arbitration is permitted regarding any matter that parties are free, pursuant to Spanish law, to settle between them.9

The SAA diverges from the Model Law in certain aspects.


As previously mentioned, the SAA establishes that any dispute may be submitted to arbitration if it can be freely settled by the parties pursuant to Spanish law (Article 2.1 of the SAA). Moreover, the SAA also provides that, in respect of international arbitration, an arbitration agreement is valid when it is deemed as such pursuant to any one of the following: the law chosen by the parties to govern the arbitration agreement, the law governing the merits of the dispute or Spanish law (Article 9.6 of the SAA).10


A state or a state-owned company may not invoke the prerogatives of its own laws in order to avoid its obligations under an arbitration agreement (Article 2.2 of the SAA).

International arbitration

In addition to the criteria under Articles 1(2) and 1(3) of the UNCITRAL Model Law, the SAA provides that arbitration will be deemed international if, among other things, it affects the interests of international trade (Article 3(c) of the SAA).11

Number of arbitrators

As noted above, the SAA's default rule when an arbitration agreement fails to stipulate the number of arbitrators is a sole arbitrator (Article 12 of the SAA).

Arbitrators' liability

The SAA limits the grounds for arbitrators' liability to wilful misconduct, bad faith or gross negligence (Article 21 of the SAA).


The SAA expressly states that arbitration is confidential unless otherwise agreed by the parties (Article 24.2 of the SAA).

ii Concept of international arbitration

As previously noted, arbitration will be deemed to be international in any of the following circumstances:12

  1. at the time the arbitration agreement was concluded, the parties' domiciles were in different states;
  2. any of the following are located outside the state where the parties (or one of them) are domiciled:
    • the place of arbitration, as set forth in the arbitration agreement or pursuant thereto;
    • the place of performance of a substantial portion of the obligations of the legal relationship giving rise to the dispute; or
    • the place most closely related to the subject matter of the dispute; or
  • the legal relationship from which the dispute arises affects the interests of international trade.

iii Form and content of arbitration agreements

According to the SAA, an arbitration agreement must be made in writing in a document signed by the parties, in an exchange of correspondence or by any other means of communication that provides a record of the agreement. This requirement is satisfied when the arbitration agreement appears and is accessible for subsequent consultation in any other format.13

The SAA, naturally, recognises the principle of separability of the arbitration agreement and its corollary, the principle of Kompetenz-Kompetenz.14

The SAA recognises that a valid arbitration agreement may exist and may encompass contractual as well as extra-contractual disputes, as long as the agreement reflects the will of the parties to submit all or some disputes to arbitration that have arisen or that may arise between them in respect of a particular legal relationship.15

Pursuant to the SAA, if the arbitration agreement is included in a standard form agreement, its validity and its interpretation shall be governed by the rules applicable to such contracts.16

Spanish courts, in interpreting arbitration agreements, tend to give international disputes a wider berth than domestic ones. Indeed, in matters of the arbitrability of a dispute and the validity of an arbitration agreement, the SAA allows them to do so by offering several options for saving (validating) an arbitration agreement whose validity or application might be questionable under the lens of purely domestic law.

As noted above, the SAA establishes, with respect to international arbitration, an in favorem validatis principle inspired by Swiss private international law.17 An arbitration agreement will be valid and a dispute capable of being submitted to arbitration if the requirements of any one of the following are met: the legal rules chosen by the parties to govern the arbitration agreement, the rules applicable to the merits of the dispute or Spanish law.18


i The possibility of a unified arbitration court in Madrid

The three main arbitral institutions in Madrid, the Court of Arbitration of the Madrid Chamber of Commerce (CAM), the Madrid-based Civil and Mercantile Court of Arbitration (CIMA) and the Court of Arbitration of the Spanish Chamber of Commerce, (CEA), signed a memorandum of understanding (MOU) in December 2017 aimed at creating a unified arbitration court for international disputes.19 This project, which establishes a commission to study the bases for creating a unified international arbitration court, presumably under a set of unified rules, seeks to enhance Madrid's attractiveness as a place of arbitration within the international dispute resolution bar (notably in cases involving parties from Latin America and Europe). According to the most recent data available, the preferred seats of international arbitration are (in order of preference) London, Paris, Singapore, Hong Kong, Geneva, New York and Stockholm,20 none of which have particular ties to parties with Latin American or 'iberoamericano'21 domiciles or business interests. Thus, Madrid has aimed for some time to establish itself as a desirable seat for international arbitration involving Spanish, Portuguese and Latin American interests.22

Under the MOU, the terms and conditions for creating a unified court were meant to be established within three months following its execution. However, as of the date of writing no further news concerning this initiative has been published.

In any event, if and when a unified international arbitration court in Madrid does materialise, it would likely represent a step forward in establishing Madrid as a more appealing seat of international arbitration. Reminiscent of the motivation for the unification of the various Swiss Chambers' rules and courts that took place in 2004, it would help to do away with confusion regarding the differences between the various institutions, insofar as their handling of international disputes is concerned, and would presumably present a harmonised set of rules for international arbitral proceedings resolved under the auspices of the envisaged unified court.

ii Arbitration developments in local courts

Decisions on the recognition and enforcement of foreign arbitral awards

Section 6 of the Court of Appeals of Asturias rendered a decision on 16 February 2018 upholding an appeal against a first instance court decision that refused the enforcement of an international arbitral award on the grounds that recognition of the award was still pending in the competent court.

Although the Court of Appeals of Asturias upheld the appeal against the first instance court decision, it did so merely because recognition of the foreign arbitral award was obtained by the appellant at the time the Court of Appeals decided on the appeal. It considered, however, that the decision of the first instance court was correct, but upheld the appeal for reasons of procedural economy.

The decision is interesting because it exemplifies the differences between the recognition and enforcement of foreign judicial decisions and foreign arbitral awards, and the associated risks.

The Spanish Act on International Legal Cooperation of 2015 allows for the accumulation in a single brief of the application to obtain from the Spanish courts the recognition and enforcement of foreign judicial decisions. This is possible because the competent court to hear both proceedings (for recognition and enforcement) is the same: either the court of first instance, or the commercial court when a foreign decision relates to subject matter provided in Article 86(ter) of the Spanish Organic Act on the Judicial Power of 1985.

This single brief is not possible, however, when requesting the recognition and enforcement of foreign arbitral awards, since different courts have jurisdiction over each process.

Act 11/2011 of 20 May introduced an Item 6 into Article 8 of the Spanish Arbitration Act of 2003 according to which competence for the recognition of foreign arbitral awards or decisions will be incumbent upon the civil and penal branch of the high court of justice of the region where the party whose recognition is requested or where the person affected by such awards or decision has his or her place of business or residence; and subsidiarily upon the respective court at the place of enforcement of such arbitral awards or decisions or where they are to carry legal consequences. Item 6 of Article 8 of the Arbitration Act also determines that enforcement of foreign arbitral awards shall be heard by the civil court of first instance in accordance with the same criteria.

The lack of the possibility to bring a single brief does not entail that the different briefs can be filed simultaneously before the competent courts, since the court of first instance may correctly dismiss a claim if the foreign arbitral award was not previously recognised. This, in turn, could result in a difficult scenario for the party that tried to enforce the arbitral award, since, according to Article 552 the Spanish Civil Procedure Act of 2001, once the decision rejecting the enforcement is final, the creditor shall only claim its right in ordinary proceedings. In the case examined by the Court of Appeals of Asturias in its decision of 16 February 2016, it was only due to reasons of procedural economy and to the timely recognition of the award that the party seeking enforcement was able to avoid the burden of Article 552 of the Spanish Civil Procedure Act.

Liability of arbitrators and arbitral institutions

A decision rendered by the Spanish Supreme Court on September 2018 touched upon the liability of arbitrators and arbitral institutions.23

The liability regime established in the Arbitration Act is for damage and losses caused in the management and administration of an arbitration when such damage is caused by bad faith, wilful misconduct or fraud. If arbitration was entrusted to an institution, the injured party will have a direct action against the arbitral institution independently of the restitution actions that will assist the former against the arbitrators. Liability for arbitrators may derive, for example, from:

  1. acts that do not respect the principles of equality and the right to be heard;
  2. acceptance or inadmissibility of the arbitration assignment;
  3. illegality in the appointment of arbitrators;
  4. lack of arbitrability; or
  5. lack of neutrality regarding the parties.

In the case heard by the Spanish Supreme Court, the appeal was brought against a decision dismissing a claim against an arbitrator and the Spanish Chamber of Commerce, Industry and Navigation on the grounds of the liability regime established in Article 21 of the Arbitration Act. The appellant sought a decision granting damages as a consequence of the nullity of the arbitral award rendered in an arbitration proceeding initiated by the appellant against a financial institution, due to links between the arbitrator and the law firm that defended the bank.

Initially, the legal issue raised in the appeal was determined by the purported liability of one of the arbitrators that intervened in the institutional arbitration. However, pending the proceedings before the Spanish Supreme Court, the appellant decided to withdraw its claim in relation to the arbitrator, and only maintained its claim against the arbitral institution.

The Spanish Supreme Court confirmed that, once the liability of the arbitrator who intervened in the institutional administered arbitration has been discarded, the arbitral institution could not be held liable for conduct that did not entail liability for the arbitrator. According to the Court, it would be contrary to both logic and the law for the arbitral institution to be found liable for acts of the arbitrators that did not entail any liability, given that the liability of the arbitrators and, where appropriate, of the arbitration institution is restricted to those situations where damage was caused intentionally or through gross negligence.

Decision on the nullity of arbitral awards

Section 1 of the Civil and Criminal Chamber of the High Court of Justice of Madrid rendered a decision on 2 January 2019 in relation to the nullity of an arbitral award for contravening public order. The arbitral award in question was issued by the Arbitral Court of the Madrid Community on Merchandise Transports. The reason for nullity was simple: the Arbitral Court consisted of only two arbitrators, in direct contravention of Article 12.1 of the Arbitration Act.

The relevance of this case comes not from the fact that an arbitral award is declared null for contravening the Arbitration Act, or that such nullity can be invoked by the court by its own initiative. The relevance arises from the fact that the arbitrators were acting in accordance with what was legally foreseen.

Law 16/1987 on Terrestrial Transport Order provides in Article 38.7 that an award shall be agreed through a simple majority of the members of the court; in the event of a tie, the president's quality vote shall break the tie. Moreover Article 38.7 determines that the award shall be issued correctly without the need of other members of the court (other than the president) being present.

In the absence of any specific provision in the specific act (such as in Law 16/1987), the content of laws that are in force, such as the Arbitration Act, must constitute a limit to the exercise of regulatory power.

iii Investor–state disputes

Spain continues to see a number of international arbitral proceedings lodged against it owing to reforms to its electricity sector that, according to the claimants' cases, have had a negative impact on renewable energy investors. Below is an overview of those claims and a summary of the first rulings issued in these matters.

Overview of investor claims against Spain

To develop its renewable energy sector, and starting in the late 1990s, Spain put in place an economic regime (a special regime) for qualifying renewable energy projects based on a feed-in tariff (FIT) scheme, must notably under Royal Decree 661/2007, in May 2007 (RD 661/2007).

From 2010 onwards, the government has enacted a series of legislative and regulatory measures that have changed the terms of the incentive regime. This culminated in an overall reform of the electricity sector introduced by a royal decree law in July 2013, which announced the withdrawal of the special regime as of that time in anticipation of a reformed regime, finally implemented in June 2014 when a new Electricity Law and accompanying regulation were passed and published.24 As noted in previous editions, these changes prompted numerous claims by foreign investors in international arbitral proceedings under the ECT (as well as hundreds of claims by national investors in the Spanish domestic courts).25

Spain has faced or is facing at least 40 ECT claims as a result of these measures.26 Of these cases, five claims have been brought under United Nations Commission on International Trade Law Arbitration Rules, nine under the Rules of Arbitration of the Stockholm Chamber of Commerce and the rest before the International Centre for Settlement of Investment Disputes (ICSID), pursuant to the ICSID Convention and the ICSID Arbitration Rules. Some of these cases include claims brought by multiple investors in one proceeding.

Investors claim, inter alia, that the changes made to the FIT scheme are contrary to earlier commitments made by the Spanish government in breach of investors' legitimate expectations, and are in violation of the fair and equitable treatment (FET) standard under Article 10(1) of the ECT.

Rulings to date in the claims against Spain

To date, six final awards have been published determining ECT claims brought against Spain. In 2018, final awards were issued in the Novenergía, Antin, Masdar and Greentech arbitrations and made publicly available. During 2017, final awards were issued in the Isolux and Eiser arbitrations that were also made publicly available. Prior to this, in 2016, an award was rendered in the Charanne case. These awards are addressed in more detail below.


The first award on the merits to be rendered was in Charanne v. Spain.27 As reported in previous editions, this award, dated 21 January 2016, confirmed jurisdiction but dismissed Charanne's claims on the merits.28 It must be noted that this claim was confined to the measures that Spain adopted prior to the government's withdrawal of the regime in 2013.


In Isolux v. Spain, the tribunal rendered an award on the merits on 6 July 2016,29 but the award was not published until 2017 and thus was not reported in last year's edition. Unlike Charanne, the Isolux claim focused on the reforms that Spain introduced between 2012 and 2014. Isolux was an ECT claim brought by a sister company of the Charanne claimant from within the same group of companies. In this case, the investments were made in October 2012,30 and after the Isolux claimant's ultimate shareholders had already commenced the Charanne claim. The tribunal also considered that, in a domestic administrative proceeding initiated by the parent company of the Isolux Group (Isolux Corsan, SA), the Spanish Supreme Court had indicated that there were no obstacles to the regulation reforms.31 This led the majority of the Isolux tribunal to reject the claim, finding that changes to the special FIT regime were foreseeable by Isolux at the time of the investment.32


In May 2017, the tribunal in the ICSID case Eiser v. Spain issued an award on jurisdiction and the merits, finding Spain liable for breaching the FET standard under Article 10(1) of the ECT.33

Spain raised several jurisdictional objections, including the intra-EU objection, which was rejected by the tribunal. However, the tribunal upheld Spain's jurisdictional objection based on the tax carve-out under Article 21 of the ECT relating to one of the disputed measures: a 7 per cent levy imposed on the claimants' production of electricity through Law 15/2012 of 26 December 2012. All other jurisdictional objections were rejected.

On the merits, the Eiser tribunal found that Spain violated the FET standard under Article 10(1) of the ECT when withdrawing the FIT regime on which the claimants had relied. The tribunal reasoned that the FET standard '[provided] the most appropriate legal context for assessing the complex factual situation presented [there]' and that 'decision of the remaining claims would not alter the outcome or affect the damages'.34 The tribunal recognised the sector-specific nature of the ECT, which was designed to address the specific characteristics of investments in the energy sector, in particular their long-term and capital-intensive nature. The ECT therefore sought to provide a high degree of protection that includes political and regulatory risk. The tribunal thus understood that 'in interpreting ECT's obligation to accord fair and equitable treatment, interpreters must be mindful of the agreed objectives of legal stability and transparency'.35 The Eiser tribunal explained that Article 10(1) ECT 'embraces an obligation to provide fundamental stability in the essential characteristics of the legal regime relied upon by investors in making long-term investments'.36

According to the Eiser tribunal, the 'obligation under the ECT to afford investors [FET] does protect investors from a fundamental change to the regulatory regime in a manner that does not take account of the circumstances of existing investments made in reliance on the prior regime'.37 Therefore, if a state regulates in a way that breaches Article 10(1) of the ECT, frustrating legitimate expectations or undermining the stability of the legal framework, it will be liable under the ECT and incur the obligation to pay compensation. The tribunal found that the regulatory changes implemented by RDL 9/2013, RD 413/2014 and MO IET 1045/2014 (taken together, the new regime) were a fundamental and radical change of the regime; 'an unprecedented and wholly different regulatory approach, based on wholly different premises'38 in breach of Article 10(1).

The Eiser tribunal held that Spain's behaviour only crossed the line to breach its obligations under the ECT in June 2014 when it implemented the new regime. Therefore, damage suffered by Eiser prior to June 2014 was not taken into account for the calculation of damages. On this basis, the tribunal ordered that damages were payable to the investor. These damages were determined by 'assessing the reduction of the fair market value of its investment by calculating the present value of cash flows said to have been lost on account of the disputed measures'.39

The Eiser tribunal also noted that Spain's Constitutional Court had upheld the constitutionality of one of the disputed measures.40 The tribunal found, however, that this was 'not a sufficient response to Claimants' claims, which also must be tested against the obligations the Respondent assumed by becoming a party to the ECT'.41


The final award in Novenergía v. Spain42 was rendered on 25 February 2018. Spain lodged two jurisdictional objections, namely on the basis that the ECT does not apply to disputes between Member States of the EU and EU investors (intra-EU objection); and that the tribunal does not have jurisdiction to hear disputes concerning taxation measures pursuant to the carve-out for taxation measures contained in Article 21 of the ECT.

First, regarding the intra-EU objection, the tribunal dismissed it and noted that the only requirement of Article 26 of the ECT is for the investor to be a national of another contracting party. Moreover, the tribunal found 'no basis or evidence to suggest that the Contracting Parties had any intention to include an implicit disconnection clause in the ECT that should apply to intra-EU disputes'.43 With regards to Spain's allegations on the primacy and applicability of EU law over the ECT, the tribunal found that 'the claims in this arbitration are all submitted solely on the basis of the provisions contained in the ECT'.44 Moreover, the tribunal noted that 'no conflict between EU law and the ECT has proven to exist'.45

The Novenergía tribunal also held that the European Commission (EC) decision on state aid issued by the EC on 10 November 2017 concerning Spain's support scheme should have little relevance in investment treaty arbitration.

Secondly, the Novenergía tribunal found, in line with the Eiser tribunal, that it did not have jurisdiction to hear the claim on the 7 per cent levy under Law 15/2012, as this would amount to a taxation measure that falls within the taxation carve-out under Article 21(1) of the ECT.46

With regards to the merits of the case, in interpreting the FET standard under Article 10(1) of the ECT, the tribunal found that the primary element of the FET standard is the legitimate and reasonable expectations of the claimant.47 The tribunal found that 'legitimate expectations arise naturally from undertakings and assurances made by, or on behalf of, the state and that such undertakings and assurances need not be specific'.48 The tribunal further acknowledged that '[t]he date of the Claimants' investment is of relevance in this case, inter alia, because it lays the foundation in terms of timing for the assessment of the Claimants' legitimate expectations'.49 The tribunal set this date as the date of the investor's decision to invest. In particular, the tribunal stated that 'the timing of the investor's decision to invest sets a backstop date for the evaluation of legitimate expectations'.50 More specifically, this date should be understood to be the 'date the Claimant had irreversibly committed to investing in the Spanish PV sector'.51 The date of the claimants' investment was thus fixed at 13 September 2007.

The tribunal then considered that 'Law 54/199752 and RD 661/2007 were clearly enacted with the objective of ensuring that the Kingdom of Spain achieved its emissions and renewable energy targets'53 and that, to achieve this objective, 'the Kingdom of Spain created a very favourable investment climate for renewable energy investors, and the nucleus of such investment climate was the special regime'.54 In particular, the tribunal pointed to certain specific statements and assurances in Spanish legislation aimed at incentivising companies to invest heavily in the Spanish electricity sector.55 Thus, the tribunal concluded that 'the Claimant has convincingly established that its initial expectations were legitimate since there was nothing to contradict the guaranteed FIT in RD 661/2007 and the surrounding statements made by the Kingdom of Spain'.56

The tribunal found that the reduction in revenues suffered by the claimant of between 24 and 32 per cent to be significant enough to constitute a substantial deprivation of the claimants' investment and trigger a breach of the FET standard.

The tribunal found, however, that the measures implemented prior to 2013 scaling back the economic incentives under the FIT scheme were not substantial enough to trigger a breach of the FET standard. Spain's withdrawal of the RD 661/2007 regime was, however, drastic enough to amount to a breach of the FET standard: it was a 'radical', 'drastic' and 'unexpected' change, introduced 'in a manner that is contrary to the Kingdom of Spain's obligation to provide FET to investors'.57

The tribunal established that the adequate standard of compensation is the principle of full reparation, which mandates that 'the aggrieved investor shall through monetary compensation be placed in the same situation it would have been but for the breaches of the state's international law obligations'.58


The final award in Masdar Solar & Wind Cooperatief UA v. Kingdom of Spain was issued on 16 May 2018.59 The dispute related to three concentrated solar power installations that were acquired and developed on the basis of the RD 661/2007 economic regime. The Masdar tribunal also found Spain liable for breach of the ECT's fair and equitable treatment provision and awarded the claimant damages.

On jurisdiction, the tribunal rejected all of Spain's objections, with the exception of the claim relating to the 7 per cent tax introduced by Law 15/2012. The Masdar tribunal also concluded that this measure fell within Article 21(1) of the ECT.

On the merits of the case, the tribunal explained that although it is 'undisputed that a State is at liberty to amend its legislation',60 that power is limited when the state has made specific commitments that give rise to protected legitimate expectations.61 The tribunal reasoned that the claimant legitimately expected that its plants would enjoy the RD 661/2007 economic regime throughout their operating life.

The tribunal explained that there are two diverging positions in investment treaty case law with respect to the kind of commitments that can give rise to legitimate expectations. Some cases consider that such commitments can result from statements in general laws or regulations. Another, stricter school of thought considers that commitments must be specific (i.e., made specifically to the concerned investor in the form of, e.g., a contract) in order to give rise to legitimate expectations. The tribunal considered that it was unnecessary to decide which approach should be applied to this issue, as the tribunal found that there were specific commitments from Spain regarding the continued application of the RD 661/2007 economic regime to the installations in which Masdar invested. In particular, Spain had made a 'very specific unilateral offer' to investors under Article 22 of RD 661/2007, whereby Spain had promised to investors the 'possibility to continue to enjoy the existing benefits, provided that within a certain window of time, they did everything necessary to enable them to register in the RAIPRE'62 (which the tribunal deemed to be more than a mere administrative requirement); and specific ministerial resolutions issued to Masdar in December 2010, confirming the CSP plants' right and entitlement to the RD 661/2007 economic regime.63

By repealing RD 661/2007 for existing installations, the tribunal found that Spain breached those specific commitments and the claimant's legitimate expectations protected under Article 10(1) of the ECT.


The final award in Antin Infrastructure Services Luxembourg Sàrl and Antin Energia Termosolar BV v. Kingdom of Spain was rendered on 15 June 2018. The claimants in Antin acquired and developed two CSP thermosolar installations in Spain on the basis of the RD 661/2007 economic regime. The Antin tribunal found that these measures breached Spain's obligations under Article 10(1) of the ECT.

With respect to its jurisdiction, the tribunal confirmed that both the ordinary meaning of the ECT and its context and purpose provide ECT tribunals with jurisdiction to entertain claims against Spain by investors of other EU Member States.64 The tribunal reasoned that an exclusion such as the one sought by Spain in its jurisdictional objection 'would have to be express and clear, and none exists under the ECT'.65

On the merits, the Antin tribunal considered that the obligation to provide stable conditions for investors is a leitmotiv in the text of the ECT.66 This is reflected in particular in the first sentence of Article 10(1) of the ECT, which contained a specific obligation for the contracting parties to create stable, equitable, favourable and transparent conditions for investors.67

In the tribunal's view, the specific obligation of stability 'comprises an obligation to afford fundamental stability in the essential characteristics of the legal regime relied upon by the investor in making long-term investments'.68 In other words, the regulatory regime cannot be 'radically altered – (i.e. stripped of its key features – as applied to existing investments in ways that affect investors who invested in reliance on those regimes'.69

On the basis of the above, the Antin tribunal awarded damages to the claimants of €112 million, and ordered Spain to pay 60 per cent of the costs of the proceedings and of the claimants' legal representation costs and expenses.


The Greentech award was rendered on 14 November 201870 and concerned the claimants' investments in three photovoltaic (PV) plants. The Greentech tribunal agreed with the Eiser and Novenergía tribunals that the FET standard in the ECT 'protects investors from a radical or fundamental change in the legal or regulatory framework under which the investments are made'.71 The tribunal further held that 'a State's duty under the FET standard to ensure a stable legal and regulatory framework 'arises when the State has generated “legitimate expectations” of such stability on the part of investors''.72 To be protected under the ECT, such expectations of legal stability have to be reasonable and objective.

Applying these standards, the tribunal decided that the claimants 'did not have legitimate expectations that they would receive the precise [feed in tariff] standard specified in RD 661/2007 for the entire lifetime of their PV plants', but that they did have the legitimate expectation that 'the legal and regulatory framework would not be fundamentally and abruptly altered' such as to deprive them of a substantial part of their revenues.73

The tribunal followed Eiser in finding that RD 661/2007 did not give investors immutable economic rights,74 and distinguished Masdar on the basis that in that case, the claimant had received specific clarification from Spain that their facilities would receive the RD 661/2007 FITs for their operating lives.75 In the absence of such specific commitments, it was held to be unreasonable for an investor not to expect any changes to the RD 661/2007 regime. This was partly because the FIT regime had been amended prior to RD 661/2007, and because Spanish Supreme Court jurisprudence prior to RD 661/2007 being enacted had indicated that such changes were permissible.76

The Greentech tribunal found that the claimants did, however, have legitimate expectations that the regulatory framework would not be fundamentally and abruptly changed (as opposed to being merely modified on which point the tribunal agreed with Charanne).77 The tribunal also agreed with the finding in Novenergía that the claimants could not have expected that the reasonable rate of return would be limited to 7 per cent, or that the special regime could be abolished.78

In Greentech, the tribunal's 'own assessment of RD 1565/2010, RDL 14/2010 and RD 2/2013 concurs with that of the tribunals in Charanne, Isolux, Eiser, and Novenergía'.79 The changes enacted by RD 1565/2010, RDL 14/2010 or RD 2/2013 did not breach the FET standard,80 but Spain nonetheless 'abrogated RD 661/2007 and replaced it with a new support scheme under RD 413/2014 and MO 1045/2014 pursuant to an entirely new legal and regulatory framework under Law 24/2013.'81

The majority found that, although sophisticated investors like the claimants should have expected that RD 661/2007 could be modified within limits, this was not the case with the new regulatory regime. The tribunal followed the Eiser tribunal in finding that the new regulatory regime constituted an 'unprecedented and wholly different regulatory approach', and followed the Novenergía tribunal in finding that the measures enacting the new regime were 'radical and unexpected'.82

In response to Spain's defence that the claimants had not carried out sufficient due diligence regarding the extent of permissible changes to support schemes under Spanish law, the tribunal found that although the claimants' due diligence was in some respects vague, 'it is reasonable for an investor to assume that its legal advisers would have raised a red flag had they detected any risk of fundamental change to the regulatory regime'.83

Thus, Spain's due diligence defence was rejected. The Greentech claimants were awarded €39 million in damages. Spain was also ordered to pay the costs of the arbitration and the claimants' costs.


We reported last year that three of Spain's main arbitral institutions appeared poised to establish a unified arbitration court for international matters. This is still pending, and we believe that if and when this initiative materialises, it would be a positive development for Spain as a jurisdiction of reference for international arbitration, particularly involving Spanish, Portuguese and Latin American parties and interests.

As in most jurisdictions, judicial decisions in Spain affecting arbitration bear close watching. One may safely say that national courts in Spain are still, at times, attempting to find the right balance between supporting and supervising arbitration proceedings, particularly when addressing public policy and due process concerns. In decisions in recent years, the courts have cited public policy concerns to revisit the merits of the underlying dispute or engaged in reassessments of the arbitrators' evaluation of the evidence. Such impulses to 'over-supervise' the arbitral process could be counterproductive to the Spanish arbitral community's goal of making Spain a place of arbitration of reference internationally, and for Latin American parties in particular.

With respect to international investment arbitration proceedings brought by foreign investors in renewables against the Kingdom of Spain, it is expected that several more awards will be issued in the year to come.84


1 David Ingle and Javier Fernandez are senior associates at Allen & Overy LLP. The authors are grateful to Marta Guardiola Serra for her assistance in the preparation of this chapter.

2 Law 60/2003 on Arbitration. For a recent volume that provides a chapter-by-chapter analysis of the SAA in English, see Carlos González-Bueno (editor), The Spanish Arbitration Act: A Commentary, Dykinson, SL (Madrid), 2016. For a text in Spanish that provides a comparative law analysis of the SAA, written by one of the drafters of the SAA, see Fernando Mantilla-Serrano, Ley de Arbitraje, una perspectiva internacional (Madrid): Iustel, 2005 (first edition).

3 United Nations Commission on International Trade Model Law on International Commercial Arbitration adopted on 21 June 1985 (UNCITRAL Model Law) as amended by the United Nations Commission on International Trade Law on 7 July 2006.

4 Law 11/2011 modifying Law 60/2003 on Arbitration.

5 See Articles 2, 3, 8.6, 9.6, 34.2, 39.5 and 46 of the SAA.

6 See the Preamble to the SAA.

7 Inspired by the ICC Rules. See Rule 21.3 (2017 version).

8 See Article 12 of the SAA.

9 See Article 2 of the SAA. The Spanish term is de libre disposición, and refers to any and all disputes over matters that are not reserved to the state for their resolution, such as, for example, divorce.

10 Inspired by Swiss private international law. See Article 178 (2) of the Swiss Private International Law statute: '[A]n arbitration agreement is valid if it conforms either to the law chosen by the parties, or to the law governing the subject matter of the dispute, in particular the main contract, or to Swiss law.' Translation by the Swiss Arbitration Association, available at www.arbitration-ch.org/en/arbitration-in-switzerland/index.html (last visited on 9 May 2018).

11 Inspired by French law. See the French New Civil Procedure Code, Article 1504: 'Arbitration is international if it involves the interests of international commerce' (authors' translation).

12 See Article 3 of the SAA.

13 See Article 9.3 of the SAA.

14 See Article 22 of the SAA.

15 See Article 9.1 of the SAA.

16 See Article 9.2 of the SAA.

17 See footnote 10 and accompanying text.

18 See Article 9.6 of the SAA.

20 2018 International Arbitration Survey, conducted by Queen Mary University of London, in partnership with White & Case. See https://www.qmul.ac.uk/media/news/2018/hss/brexit-fails-to-dampen-londons-popularity-for-international-arbitration-survey-finds.html. Also see https://www.whitecase.com/publications/insight/2018-international-arbitration-survey-evolution-international-arbitration (stating that 'London and Paris remain the most preferred seats for international arbitration, followed by Singapore, Hong Kong, Geneva, New York and Stockholm.').

21 The term refers to the Spanish and Portuguese-speaking world, embracing both Iberia and Latin America. See http://dle.rae.es/?id=KrlClNl, third accepted usage.

22 See Preamble to the SAA.

23 Decision 493/2018, of 14 September 2018.

24 Royal Decree 413/2014 on the Electricity Sector (RD 413/2014) and Ministerial Order IET 1045/2014 (MO IET 1045/2014, detailing, among other things, the parameters of the new remuneration scheme applicable to producers of renewable energy).

25 Allen & Overy represents a number of investors in some of the ECT claims against the Kingdom of Spain. The observations made in this chapter are based solely on publicly available information.

26 Public sources indicate that 40 ECT claims have arisen out of Spain's changes to its renewable energy sector: see https://investmentpolicyhubold.unctad.org/ISDS/CountryCases/197?partyRole=2 (last accessed 16 May 2019).

27 Charanne BV and Construction Investments SARL v. The Kingdom of Spain, SCC case No. 062/2012, final award, 21 January 2016.

28 See Spain chapter of The International Arbitration Review (seventh edition), p. 498 and (eighth edition), p. 451.

29 Isolux Infrastructure Netherlands BV v. Kingdom of Spain, SCC case V2013/153, final award, 6 July 2016 (Spanish).

30 Isolux award, paragraphs 148 and 783.

31 Isolux award, paragraphs 793 and 794.

32 Isolux award, paragraph 787.

33 Eiser Infrastructure Limited and Energía Solar Luxembourg Sà rl v. Kingdom of Spain, ICSID case No. ARB/13/36, final award, 4 May 2017 (English).

34 Eiser award, paragraph 353.

35 Eiser award. paragraph 379.

36 Eiser award, paragraph 382.

37 Eiser award, paragraph 363.

38 Eiser award, paragraph 365.

39 Eiser award, paragraph 441.

40 Eiser award, paragraph 373.

41 Eiser award, paragraph 373.

42 Novenergía II – Energy & Environment (SCA) Grand Duchy of Luxembourg), SICAR v. The Kingdom of Spain, SCC case V2015/063, final award, 25 February 2018.

43 Novenergía award, paragraph 454.

44 Novenergía award, paragraph 460.

45 Novenergía award, paragraph 462.

46 Novenergía award, paragraph 521 ('the Tribunal agrees that for the taxation carve-out to apply, the taxation measure in question needs to have been adopted in good faith').

47 Novenergía award, paragraph 648.

48 Novenergía award, paragraph 650.

49 Novenergía award, paragraph 531.

50 Novenergía award, paragraph 539.

51 Novenergía award, paragraph 539.

52 Law 54/1997 on the Electricity Sector. This was the law governing the sector in place until RD 413/2014 was passed in June 2014.

53 Novenergía award, paragraph 665.

54 Novenergía award, paragraph 665.

55 Novenergía award, paragraph 668.

56 Novenergía award, paragraph 681.

57 Novenergía award, paragraph 695.

58 Novenergía award, paragraph 808.

59 Masdar Solar & Wind Cooperatief UA v. Kingdom of Spain, ICSID case No. ARB/14/1, final award, 16 May 2018 (English).

60 Masdar award, paragraph 485.

61 Masdar award, paragraph 511.

62 Masdar award, paragraph 512.

63 Masdar award, paragraphs 514–520.

64 Antin award, paragraphs 212–216.

65 Antin award, paragraph 215.

66 Antin award, paragraph 526.

67 Antin award, paragraph 525 (quoting Article 10(1) ECT). See also paragraph 533.

68 Antin award, paragraph 532.

69 Ibid.

70 Foresight Luxembourg Solar 1 Sà rl, Foresight Luxembourg Solar 2 Sà rl, Greentech Energy Systems A/S, GWM Renewable Energy I SPA and GWM Renewable Energy II SPA .v. The Kingdom of Spain, SCC case No. V 2015-150.

71 Paragraph 359.

72 Paragraph 352.

73 Paragraph 365.

74 Paragraph 366.

75 Paragraph 367.

76 Paragraphs 368–371.

77 Paragraph 377.

78 Paragraph 378.

79 Paragraph 386.

80 Paragraph 388.

81 Paragraph 390.

82 Paragraph 397.

83 Paragraph 380.

84 The authors would like to pay tribute to their former colleague Virginia Allan, who sadly passed away after the publication of the previous edition of this chapter. Virginia was a leading figure among arbitration practitioners in Spain. She was also a pioneer both as a female arbitrator and a US lawyer practising in Spain. She will be greatly missed by the Spanish arbitration community.