Eskosol S.p.A. in liquidazione v. Italian Republic
ICSID · Investment (ICSID and treaty) · Italy · 4 Sep 2020
Why it matters
This award is significant for its detailed analysis of the 'foreign control' requirement under Article 25(2)(b) of the ICSID Convention and the ECT, particularly in the context of an Italian company with Belgian majority ownership. It also clarifies the limits of legitimate expectations in the face of non-discriminatory, good faith regulatory changes, and addresses the res judicata effect of a related shareholder claim. The decision contributes to the growing body of case law on Italy's renewable energy disputes.
Summary
Eskosol S.p.A. in liquidazione, an Italian company with an 80% Belgian shareholder (Blusun S.A.), brought an ICSID claim against Italy under the Energy Charter Treaty (ECT). Eskosol had invested in a large photovoltaic solar project in Italy, expecting to benefit from generous feed-in tariffs (FiTs) under Italy's 'Conto Energia' program. In 2011, Italy enacted the Romani Decree and Conto Energia IV, which reduced FiTs and imposed new registration deadlines. Eskosol's project was not completed in time to qualify for the higher tariffs, and the company entered liquidation. Eskosol alleged that Italy breached the ECT's fair and equitable treatment (FET) standard, umbrella clause, expropriation, constant protection and security, and the prohibition on unreasonable or discriminatory measures. Italy raised jurisdictional objections, arguing that Eskosol was not a 'national of another Contracting State' under the ICSID Convention because it was Italian, and that the claim was inadmissible due to res judicata and abuse of rights (since Blusun had already brought a related claim). The tribunal rejected Italy's jurisdictional and admissibility objections, finding that Eskosol was under foreign control (by Blusun) and that the claims were not identical. On the merits, the tribunal held that Italy's regulatory changes were not arbitrary, disproportionate, or a violation of legitimate expectations. The changes were part of a general sector-wide reform, applied non-discriminatorily, and were reasonably related to the public policy goal of controlling costs. Eskosol had not received specific assurances that the tariff regime would remain unchanged, and its investment was at an early stage. The tribunal denied all of Eskosol's claims and ordered each party to bear its own costs and half of the arbitration costs.
The detail
Parties: Eskosol S.p.A. in liquidazione v. Italian Republic
Case number: ICSID Case No. ARB/15/50
Outcome: Italy prevailed on all liability claims; Eskosol's claims for breach of ECT (FET, umbrella clause, expropriation, constant protection and security, unreasonable measures) were denied. Each party bears its own costs and 50% of arbitration costs.
Applicable law: Energy Charter Treaty (ECT), ICSID Convention
Issues in play: The case involved the interaction between Italy's regulatory changes to solar feed-in tariffs and investors' legitimate expectations under the ECT's fair and equitable treatment standard. The tribunal also addressed the intra-EU objection and the requirement of foreign control for jurisdiction.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.