ACF Renewable Energy v. Bulgaria
ICSID · Investment (ICSID and treaty) · Bulgaria · 5 Jan 2024
Why it matters
This award is significant because it addresses the protection of investors' legitimate expectations under the ECT in the context of retroactive changes to renewable energy support schemes. The Tribunal's detailed analysis of the stability of feed-in tariffs and the impact of subsequent amendments provides guidance for future investment treaty claims involving regulatory changes in the energy sector.
Summary
ACF Renewable Energy Limited, a Maltese company, invested in a photovoltaic plant in Bulgaria under the country's Renewable Energy Sources Act (ERSA) regime, which offered a 20-year feed-in tariff (FiT) and guaranteed offtake. Bulgaria later introduced several measures that reduced the FiT, imposed grid access fees, production caps, a 20% levy, balancing costs, and a 5% contribution to the Energy System Security Fund, and transitioned from FiT to feed-in premium. ACF claimed these measures violated the ECT's fair and equitable treatment (FET) standard, the umbrella clause, and constituted unreasonable impairment. Bulgaria raised jurisdictional objections under Article 17(1) (denial of benefits), Article 21 (taxation measures), and the Komstroy/Achmea objection (intra-EU). The Tribunal rejected most jurisdictional objections, except for the 5% ESSF contribution which was deemed a taxation measure outside its jurisdiction. On the merits, the Tribunal found that Bulgaria breached the FET standard by violating ACF's legitimate expectations that the FiT and offtake would remain stable for 20 years, and by fundamentally altering the investment framework. The Tribunal awarded EUR 61.04 million in damages plus pre- and post-award interest, and ordered Bulgaria to pay 80% of ACF's costs and 80% of the ICSID costs.
The detail
Parties: ACF Renewable Energy v. Bulgaria
Case number: ICSID Case No. ARB/18/1
Outcome: The Tribunal found that Bulgaria breached the Energy Charter Treaty and ordered Bulgaria to pay EUR 61.04 million plus interest and costs.
Quantum: EUR 61.04 million
Applicable law: Energy Charter Treaty (ECT), ICSID Convention, Bulgarian law
Issues in play: The case involved the interaction between Bulgaria's renewable energy incentive regime (ERSA) and the ECT's fair and equitable treatment standard, particularly regarding legitimate expectations and stability of the regulatory framework.
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