Award

Dominicana Renovables v. Dominican Republic

ICC · Investment (ICSID and treaty) · Dominican Republic · 20 Jan 2021

Why it matters

This ICC award clarifies the scope of contractual obligations of state entities in the renewable energy sector under Dominican law. It addresses the interplay between a concession contract and the regulatory duty to negotiate a PPA, setting a precedent for investor-state disputes involving state-owned utilities. The decision underscores that failure to negotiate in good faith can constitute a breach of contract, even without a final agreement.

Summary

Dominicana Renovables, a Spanish company, obtained a definitive concession from the Dominican Republic to develop a wind farm (La Isabela) in 2013. The concession contract required the state-owned electricity company CDEEE to negotiate a Power Purchase Agreement (PPA) with Dominicana Renovables. Despite multiple attempts, CDEEE refused to negotiate a PPA, citing commercial terms and regulatory changes. Dominicana Renovables initiated ICC arbitration under the concession contract, claiming breach of contract. The Tribunal, applying Dominican law, found that CDEEE's failure to negotiate in good faith constituted a breach of the concession contract attributable to the state. The Tribunal rejected the state's counterclaim for contract termination due to the claimant's alleged lack of seriousness. The award quantified damages at US$2,343,832.39 for wasted project costs, based on expert evidence. The Tribunal also addressed procedural issues regarding the admissibility of a confidential legal opinion, ultimately denying the state's request to exclude it. The award was later corrected for typographical errors but the substance remained unchanged.

The detail

Parties: Dominicana Renovables v. Dominican Republic

Case number: ICC Case No. 23364/JPA

Outcome: The Tribunal found that the Dominican Republic breached the Concession Contract by failing to negotiate a PPA in good faith, and awarded Dominicana Renovables US$2,343,832.39 in damages.

Quantum: US$2,343,832.39

Applicable law: ICC Rules of Arbitration; Dominican law (Ley General de Electricidad No. 125-01, Ley 57-07, Decreto No. 202-08); Concession Contract dated 23 January 2013.

Issues in play: The case involved the interpretation of the Concession Contract and the regulatory framework for renewable energy in the Dominican Republic, specifically whether the state-owned utility CDEEE was obligated to negotiate a Power Purchase Agreement (PPA) with the claimant.

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