BayWa r.e. Renewable Energy GmbH and BayWa r.e. Asset Holding GmbH v. Spain
ICSID · Investment (ICSID and treaty) · Spain · 25 Jan 2021
Why it matters
This award is part of the wave of ICSID claims against Spain for retroactive cuts to renewable energy subsidies. It clarifies that while Spain could change its support scheme, clawing back lawfully paid subsidies breaches the FET standard. The decision on quantum provides a methodology for calculating damages based on the regulatory framework without the claw-back, setting a precedent for similar cases.
Summary
BayWa r.e. Renewable Energy GmbH and BayWa r.e. Asset Holding GmbH, German companies, invested in wind farms in Spain under the Special Regime (RD 661/2007) which provided generous subsidies. In 2013-2014, Spain enacted reforms (RDL 9/2013, RD 413/2014) that retroactively reduced subsidies and clawed back amounts previously paid above a 7.398% return. The investors brought an ICSID claim under the ECT. In a 2019 Decision on Jurisdiction, Liability and Directions on Quantum, the Tribunal (majority) found that Spain breached ECT Article 10.1 (FET) only by the claw-back operation, not by the prospective changes. The Tribunal held that the claw-back of lawfully paid subsidies was inconsistent with the stability principle. The present Award (25 January 2021) determines the quantum of damages. The Tribunal calculated the Standard Net Asset Value (NAV) of the plants as at 13 July 2013 at EUR 73.413 million, using the formula in the Disputed Measures but excluding the claw-back. It then determined the annual losses to the plants and translated them into damages to Claimants, including interest. The Tribunal rejected Spain's argument that the book value (EUR 40.5 million) should be used. The dissenting opinion by Dr. Grigera Naón argued that Spain violated the FET standard more broadly by replacing the Special Regime entirely. The award is significant for its detailed quantification methodology and its reaffirmation that retroactive claw-backs violate investment treaty protections.
The detail
Parties: BayWa r.e. Renewable Energy GmbH and BayWa r.e. Asset Holding GmbH v. Spain
Case number: ICSID Case No. ARB/15/16
Outcome: Spain breached the ECT by clawing back subsidies paid before 2013; Claimants awarded damages for the claw-back effect.
Quantum: EUR 73.413 million (Standard NAV as at 13 July 2013) plus interest (amount not specified in excerpt)
Applicable law: Energy Charter Treaty (ECT), ICSID Convention, Spanish law (RD 661/2007, RDL 9/2013, RD 413/2014, MO IET/1045/2014)
Issues in play: The collision was between Spain's regulatory changes (the 'Disputed Measures') and the fair and equitable treatment (FET) standard under ECT Article 10.1. The key issue was whether Spain's retroactive claw-back of subsidies violated the stability principle.
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