European Solar Farms A/S v. Kingdom of Spain
ICSID · Investment (ICSID and treaty) · Spain · 14 Oct 2024
Why it matters
This is the first ICSID award to accept the EU's position that intra-EU investment arbitration under the ECT is incompatible with EU law. It marks a major victory for Spain and the European Commission, potentially ending dozens of pending claims. The award aligns with the SCC award in GreenPower v. Spain and reinforces the trend against intra-EU ECT arbitration.
Summary
European Solar Farms A/S (ESF), a Danish company, invested in solar energy projects in Spain. After Spain reduced renewable energy subsidies, ESF initiated arbitration under the Energy Charter Treaty (ECT) at ICSID, claiming over €45 million in damages. Spain argued that the tribunal lacked jurisdiction because the dispute was intra-EU: both the investor and the state are EU members, and EU law requires such disputes to be heard in EU courts. The tribunal agreed, holding that when the EU became a party to the ECT, it incorporated EU law's supremacy into the treaty. Therefore, the ECT's arbitration clause does not apply to intra-EU disputes. This is the first ICSID tribunal to accept this reasoning, following the SCC tribunal in GreenPower v. Spain. The decision is a landmark for EU law's primacy over investment treaties and may influence other pending cases.
The detail
Parties: European Solar Farms A/S v. Kingdom of Spain
Case number: ICSID Case No. ARB/18/45
Outcome: The tribunal declined jurisdiction, dismissing all claims. No damages awarded.
Applicable law: Energy Charter Treaty (ECT); EU law; ICSID Convention
Issues in play: The collision was between the ECT's investor-state arbitration clause and EU law's principle that intra-EU disputes should be resolved in EU courts, not by arbitral tribunals. The tribunal held that EU law supremacy overrides the ECT's arbitration offer for intra-EU disputes.
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.