This chapter provides an overview of the arbitration developments in Spain since May 2017 when the previous chapter was prepared. We focus 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 SAA's key differences from the UNCITRAL Model Law. Section II provides an overview of this past year's salient developments in Spain. These include recent efforts aimed at promoting 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 in recent years. We conclude with some brief conclusions, indicating our outlook for the year to come.

i Background to legal framework: Spanish Arbitration Act

SAA is a monist, Model Law jurisdiction

The SAA, essentially based on the UNCITRAL Model Law of 1985 (the 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. c 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 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 others, 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 the 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).12


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 noted, arbitration will be deemed to be 'international' in any of the following circumstances:13

a. at the time the arbitration agreement was concluded, the parties' domiciles were in different states;

b. 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

c. the legal relationship from which the dispute arises 'affects the interests of international trade'.

iii Form and content of the arbitration agreement

According to the SAA, the 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.14

The SAA, naturally, recognises the principle of separability of the arbitration agreement and its corollary, the principle of Kompetenz-Kompetenz.15

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.16

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.17

Spanish courts, in interpreting arbitration agreements, tend to give international disputes a wider berth than domestic ones. Indeed, in matters of arbitrability of the dispute and 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.18 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.19


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),20 the Madrid-based Civil and Mercantile Court of Arbitration (CIMA),21 and the Court of Arbitration of the Spanish Chamber of Commerce, (CEA),22 signed a memorandum of understanding (MOU) in December 2017 aimed at creating a unified arbitration court for international disputes.23 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,24 none of which have particular ties to parties with Latin American or 'iberoamericano'25 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.26

Under the MOU, the terms and conditions for creating the 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. The institutions who signed the MOU have stated publicly their interest in obtaining the participation of additional arbitral institutions in Madrid or in Spain, and this may explain the delay in complying with the three-month period indicated in the MOU.

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

A recent development worthy of mention in the domestic courts is related to actions to set aside arbitral awards where failure to provide sufficient reasoning was alleged as a violation of public policy.

Additionally, the Spanish Constitutional Court27 has declared unconstitutional a provision of the Spanish Insurance Contract Act28 that empowered the insured party to submit to arbitration disputes arising in connection with the insurance policy, without the need to obtain the insurer's consent to arbitrate.

Superior Court decisions: the lack of sufficient reasoning as a violation of public policy

Similar to most domestic arbitration laws, the SAA provides that an arbitral award may be set aside if the award conflicts with public policy.29 Recent decisions of the Superior Court of Justice (SCJ) of Madrid have set aside certain awards on the grounds that the lack of adequate reasoning in the award resulted in a breach of public policy.30 Specifically, the SCJ of Madrid noted that awards have to comply with the same standards regarding statement of reasons that apply to judicial decisions under Articles 24 and 117.1 of the Spanish Constitution (SC).31

In a judgment dated 8 January 2018, the SCJ of Madrid set aside an arbitral award rendered by a sole arbitrator, empowered to act ex aequo et bono, in proceedings involving a corporate dispute.32 The SCJ found that the arbitral tribunal did not take into account all the relevant evidence and, therefore, the award was not sufficiently reasoned; this in turn, in the opinion of the court, gave rise to a violation of public policy. The SCJ found that – even in proceedings allowing for ex aequo et bono decision – arbitral tribunals are bound by the same standards on reasoning (as set out in Article 24 of the Spanish Constitution on due process) that apply to judicial decisions, even if the failure to provide sufficient reasoning for the award is not expressly contemplated as a ground for setting aside an award under the Spanish Arbitration Act.33 In setting aside the award, the SCJ also considered that the award was based on an incorrect interpretation of Spanish corporate law and conducted its own assessment of the merits of the case, departing in our opinion from the correct standard of review for actions to set aside.

Therefore, the SCJ of Madrid is of the view that arbitral awards are subject to the same requirements regarding the level of reasoning as court decisions, given that arbitrators essentially exercise the same 'jurisdictional powers' as judges in resolving a dispute.34 A recent decision by the SCJ of Catalonia has followed a similar approach as the SCJ of Madrid.35 However, courts in other parts of Spain have not taken the same view.36

The Madrid and Catalonia courts' recognition that arbitrators serve a judicial function is positive. This is also in line with Spanish Constitutional Court rulings.37 The decisions are, however, of concern inasmuch as they suggest a wider scope for an action to set aside on grounds of lack of sufficient reasoning of the award. This in turn threatens both the finality of the arbitral decision and the rapid resolution of the dispute, two of arbitration's presumed advantages over slower, protracted judicial proceedings.

Indeed, in a decision of 5 April 201838 the SCJ of Madrid set aside another award, this time on the basis of an 'arbitrary' and 'irrational' evaluation of evidence by the majority of the tribunal, which, in the court's opinion, was tantamount to a failure to give adequate reasons and therefore a violation of public policy pursuant to Article 41.1(f) of the SAA. The court's reasoning, which relied heavily on the dissenting arbitrator's opinion, appeared to reopen the case on the merits. In particular, the court disagreed with the majority's conclusion that the evidence showed that the parties' intent had been to (1) execute on paper a 'real' EPC contract (i.e., one that places the liability for the finished project on the principal contractor, including among others the underlying civil works performed by a subcontractor) for the benefit of the bank that was financing the project, while, according to a series of emails exchanged during negotiations, (2) in fact executing a 'virtual' EPC contract, the purpose of which was to shield the principal contractor from liability for various aspects of the turnkey project (including the part of the civil works performed by a subcontractor that was the subject of the claim brought in arbitration against the principal contractor).

From the court's exposition of the facts, it seems that the court may have disapproved of the parties' way of structuring their contractual arrangement, as understood and credited by the majority. Viewed in this way, the SCJ of Madrid's decision is not unlike the series of set aside decisions by the same court in recent years on grounds of violation of 'economic public policy,' concerning awards that dealt with financial products (namely, purchase and sale of swaps and derivatives) that the SCJ found objectionable.39 The SCJ's 5 April 2018 decision is of concern both because it (1) disregards the power conferred upon arbitrators to determine the admissibility, relevance, and usefulness of the evidence under 25.2 of the SAA and (2) seems to indicate a widening scope for public policy violations that are at heart based on the court's perception of faulty decision-making by the arbitral tribunal.

Even where actions to set aside ultimately fail, there are reported cases in which the SCJ of Madrid appears to re-open the merits, effectively acting as a second instance, or court of appeals. In a 13 February 2018 decision,40 the court acknowledged that pursuant to the SAA, the court hearing an action to set aside cannot 're-examine the questions discussed during the arbitration proceedings', and 'can only set aside an award based on the limited grounds that are set forth in Article 41'. However, the SCJ was of the view that it can nevertheless 'examine the reasonableness in the assessment of evidence, as expressed in the reasons given' in the award, as it considered that, 'in certain circumstances', there might be 'a breach of due process and, for that reason, a violation of public policy'.

Invalidity of unilateral agreements to arbitrate insurance disputes

In a decision dated 11 January 2018, the Spanish Constitutional Court held that Article 76(e) of the Spanish Insurance Contract Act (SICA) was unconstitutional41. Article 76(e) allowed an insured party to submit a dispute arising out of an insurance policy to arbitration without the insurance company's consent.42

In this proceeding, the insured party attempted to submit a dispute with its insurer to arbitration, but the insurer refused to participate. The insured party then turned to the SCJ of Catalonia to request judicial appointment of an arbitrator on behalf of the respondent, pursuant to Article 8.1 of the SAA. In the course of those proceedings an issue was raised regarding the constitutionality of Article 76(e) of the SICA, and this was referred by the SCJ of Catalonia to the Spanish Constitutional Court.

While the party seeking to compel arbitration argued that the norm was compliant with EU law, and thus necessarily compatible with Spanish law, the Spanish Constitutional Court interpreted the norm exclusively through the lens of the Spanish Constitution. The Court reasoned, among others, that two constitutional precepts were violated, with respect to the non-consenting insurance company: the fundamental right to have recourse to the courts (Article 24.1 of the Spanish Constitution)43 and the exclusive jurisdiction granted by the Spanish Constitution to the courts for the resolution of disputes 'in accordance with the rules of jurisdiction and procedure' established at law (Article 117.3).44 The judgment confirms that there can be no arbitration without the parties' consent.

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, on the claimants' cases, had a negative impact on renewable energy investors. Below, we provide an overview of the claims and summarise 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 enacted a series of legislative and regulatory measures that changed the terms of the incentive regime, culminating in an overall reform of the electricity sector introduced by Royal Decree Law in July 2013, which announced withdrawal of the Special Regime as of the date in anticipation of a reformed regime, finally implemented in June 2014, when a new Electricity Law and accompanying regulation were passed and published.45 As noted in our previous reports, these changes prompted numerous claims brought by foreign investors in international arbitral proceedings under the ECT (as well as hundreds of claims by national investors in the Spanish domestic courts).46

Spain is currently facing a minimum of 36 ECT claims.47 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 awards have been published, one on jurisdiction and five on jurisdiction and merits combined. In the first half of 2018, final awards were issued in the Novenergía and Masdar arbitrations and made publicly available. During 2017, final awards were issued in the Isolux and Eiser arbitrations and were also made publicly available. Prior to this, in 2016, an award was rendered in the Charanne case, and a decision on jurisdiction was rendered, in the RREEF arbitration. These awards and decisions are addressed in more detail below.


The first award on the merits to be rendered was in Charanne v. Spain.48 As reported in previous editions, this award, dated 21 January 2016, confirmed jurisdiction but dismissed Charanne's claims on the merits.49 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.


On 6 June 2016, a decision on jurisdiction in RREEF v. Spain was issued.51 The decision addressed five objections, including the intra-EU objection, based on the alleged argument that EU nationals cannot bring ECT claims against EU Member States. The tribunal, however, dismissed all of Spain's objections, including the intra-EU objection. Notably, the tribunal reasoned that EU law cannot 'trump' public international law.52


In Isolux v. Spain, the tribunal rendered an award on the merits on 6 July 2016,53 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 201254 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.55 This led the majority of the Isolux tribunal to reject the claim, finding that changes to the Special Regime FIT were foreseeable by Isolux at the time of the investment.56


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.57

As in RREEF, 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'.58 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'.59 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'.60

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.'61 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'62 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, damages suffered by Eiser prior to June 2014 were 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'.63

The Eiser tribunal also noted that Spain's Constitutional Court had upheld the constitutionality of one of the disputed measures.64 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'.65


The final award in Novenergía v. Spain66 was rendered on 25 February 2018. Spain lodged two jurisdictional objections, namely on the basis that: (1) the ECT does not apply to disputes between Member States of the EU and EU investors (Intra-EU Objection); and that (2) 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'.67 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'.68 Moreover, the tribunal noted that 'no conflict between EU law and the ECT has proven to exist'.69

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

Secondly, the Novenergía 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.70

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'.71 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'.72 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'.73 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'.74 More specifically, this date should be understood to be the 'date the Claimant had irreversibly committed to investing in the Spanish PV sector'.75 The date of the claimants' investment was thus fixed at 13 September 2007.

The tribunal then considered that 'Law 54/199776 and RD 661/2007 were clearly enacted with the objective of ensuring that the Kingdom of Spain achieved its emissions and renewable energy targets'77 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'.78 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.79 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'.80

The tribunal found that the reduction in revenues suffered by the claimant of between 24 per cent 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'.81

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.'82


The final award in Masdar Solar & Wind Cooperatief UA v. Kingdom of Spain was issued on 16 May 2018.83 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',84 that power is limited when the state has made specific commitments which give rise to protected legitimate expectations.85 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'86 (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.87

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.


Three of Spain's main arbitral institutions appear poised to establish a unified arbitration court for international matters. 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 the arbitration proceedings, particularly when addressing public policy and due process concerns. In some of the decisions referred to in Section II above, 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, 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 issue in the year to come. As a general proposition, these will add to the growing body of arbitral awards regarding states' conduct and the investment protections contained in the ECT. From a more specific vantage point, as the number of awards increases, these will provide growing certainty about the likely outcomes of future awards.


1 Virginia Allan and Ignacio Madalena are counsel, and David Ingle is a senior associate at Allen & Overy LLP. The authors are grateful to the following Allen & Overy associates for their assistance in the preparation of this chapter: Gonzalo Jiménez-Blanco, Beatriz Fernández-Miranda, Millicent Domínguez and Marina Jiménez.

2 Law 60/2003 on Arbitration. For a recent volume that provides 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 We reported in last year's chapter on the first Spanish Supreme Court judgment to determine that arbitrators had incurred liability under Article 21 of the SAA. See Supreme Court, Civil Chamber, Number 362/2017 dated 15 February 2017.

13 See Article 3 of the SAA.

14 See Article 9.3 of the SAA.

15 See Article 22 of the SAA.

16 See Article 9.1 of the SAA.

17 See Article 9.2 of the SAA.

18 See footnote 10 above and accompanying text.

19 See Article 9.6 of the SAA.

20 As of December 2017, the CAM has administered more than 2,900 cases since its creation (http://www.arbitramadrid.com/estadisticas-2017).

21 There are no statistics available for CIMA.

22 There are no CEA statistics available.

24 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.').

25 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.

26 See Preamble to the SAA.

27 The Spanish Constitutional Court is the ultimate interpreter of the Spanish Constitution, with the power to determine the constitutionality of the conduct, including legislation, of any public body, whether national, regional or local.

28 Law 50/1980, of 8 October, on Insurance Contracts.

29 Article 41.1(f) of the SAA.

30 See SCJ of Madrid No. 61/2017 dated 31 October and SCJ of Madrid No. 1/2018 dated 8 January.

31 Spanish Constitution 1978 (Sp) Articles 24.1 and 117. Article 24.1 of the Spanish Constitution provides: '1. All persons have the right to obtain effective protection from the judges and the courts in the exercise of their rights and legitimate interests, and in no case may a party be left without legal protection.' Article 117.1 of the Spanish Constitution provides: 'Justice emanates from the people and is administered on behalf of the King by judges and magistrates who comprise the Judicial Power and who shall be independent, have fixed tenure, and be accountable for their acts and subject only to the rule of law.' (authors' translation, based on a translation published by the Spanish Official Gazette of the Spanish Ministry of Justice, available at https://www.boe.es/legislacion/documentos/ConstitucionINGLES.pdf).

32 SCJ of Madrid No. 1/2018 dated 8 January.

33 Article 37.4 of the SAA states that an award 'shall state the reasons on which it is based', but compare to Article 41.1 SAA (setting forth the limited grounds for set aside under the Act).

34 See also SCJ of Madrid No. 61/2017 dated 31 October. In this decision, although the SCJ does not set aside the award based on factual grounds, it clearly states that the test applied for judicial decisions on sufficiency of reasoning is also applicable to arbitration proceedings as an alternative method of dispute settlement.

35 SCJ of Catalonia No. 9627/2017 dated 20 November (considering that in a so-called 'consumer' arbitration –proceedings which in Spain specifically contemplate ex aequo et bono decision– arbitrators are bound to comply with a 'minimum' of logical or experiential reasoning, in contrast with arbitration applying legal rules, which must adhere to the same legal reasoning standards that apply to judicial decisions).

36 SCJ of Andalusia No. 16092/2017 dated 20 November (acknowledging that in action to set aside, a court's assessment of an arbitral tribunal's decision should be minimal, as arbitration proceedings, which are based on the autonomy of the parties, contemplate only limited grounds for setting aside an award, i.e., those that are set forth in Article 41 of the SAA).

37 See, e.g., Spanish Constitutional Court No. 288/1993, dated 4 October.

38 SCJ of Madrid No. 15/2018.

39 For further details, see The International Arbitration Review, Seventh Edition (2016), Spain chapter at pp. 495-496.

40 SCJ of Madrid No. 1954/2018.

41 See Spanish Constitutional Court No. 1/2018, dated 11 January.

42 See the aforementioned Articles 24.1 and 117 of the Spanish Constitution (footnote 31 above).

43 See footnote 31 above.

44 Article 117.3 of the Spanish Constitution establishes that, 'The exercise of judicial authority in any kind of action, both in passing judgment and having judgments executed, lies exclusively within the competence of the Courts and Tribunals established by the law, in accordance with the rules of jurisdiction and procedure which may be established therein.' (Translation published by the Spanish Official Gazette of the Spanish Ministry of Justice, available at https://www.boe.es/legislacion/documentos/ConstitucionINGLES.pdf.)

45 Royal Decree 4/3/2014 on the Electricity Sector (RD 4/3/2014) and Ministerial Order IET 1045/2014 (MO IET 1045/2014, detailing among others the parameters of the new remuneration scheme applicable to producers of renewable energy).

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

47 Public sources indicate that 40 ECT claims have arisen from Spain's changes to its renewable energy sector: see http://investmentpolicyhub.unctad.org/ISDS/CountryCases/197?partyRole=2 (last accessed 28 May 2018).

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

49 See Spain chapter of The International Arbitration Review (Seventh Edition), p. 498 and (Eighth Edition), p. 451.

50 See Spain chapter of The International Arbitration Review (Eighth Edition), p. 451.

51 RREEF Infrastructure (GP) Limited and RREEF Pan-European Infrastructure Two Lux Sà rl v. Kingdom of Spain, ICSID Case No. ARB/13/30, decision on jurisdiction.

52 RREEF decision on jurisdiction, Paragraph 89.

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

54 Isolux award, Paragraphs 148 and 783.

55 Isolux award, Paragraphs 793 and 794.

56 Isolux award, Paragraph 787.

57 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).

58 Eiser award, Paragraph 353.

59 Eiser award. Paragraph 379.

60 Eiser award, Paragraph 382.

61 Eiser award, Paragraph 363.

62 Eiser award, Paragraph 365.

63 Eiser award, Paragraph 441.

64 Eiser award, Paragraph 373.

65 Eiser award, Paragraph 373.

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

67 Novenergía award, Paragraph. 454.

68 Novenergía award, Paragraph. 460.

69 Novenergía award, Paragraph. 462.

70 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').

71 Novenergía award, Paragraph 648.

72 Novenergía award, Paragraph 650.

73 Novenergía award, Paragraph 531.

74 Novenergía award, Paragraph 539.

75 Novenergía award, Paragraph 539.

76 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.

77 Novenergía award, Paragraph 665.

78 Novenergía award, Paragraph 665.

79 Novenergía award, Paragraph 668.

80 Novenergía award, Paragraph 681.

81 Novenergía award, Paragraph 695.

82 Novenergía award, Paragraph 808.

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

84 Masdar award, Paragraph 485.

85 Masdar award, Paragraph 511.

86 Masdar award, Paragraph 512.

87 Masdar award, Paragraphs 514-520.