Green Power v Spain
SCC (Stockholm) · Investment (ICSID and treaty) · Spain · 16 June 2022
Why it matters
The first investment tribunal ever to accept the intra-EU objection and decline jurisdiction because of EU law. Dozens of tribunals had rejected the same argument; Green Power broke ranks, reasoning that with a seat inside the EU, EU law formed part of the law it had to apply. It is the case to cite on whether intra-EU ECT arbitration survives, and part of why states began leaving the ECT altogether.
Summary
Danish investors in Spanish solar projects claimed against Spain under the Energy Charter Treaty after Spain rolled back its renewable subsidies, one of dozens of such claims. Spain ran its usual defence: following the EU Court of Justice's Achmea and Komstroy judgments, EU law prohibits investor-state arbitration between an EU investor and an EU state, so the treaty's offer to arbitrate simply does not exist between them. Until this case, tribunal after tribunal had rejected that objection, reasoning that their jurisdiction came from the treaty, not EU law. The Green Power tribunal, seated in Stockholm, went the other way. Because the seat was inside the EU, Swedish law, including EU law as part of it, governed the validity of the arbitration agreement, and under EU law as authoritatively interpreted by the Court of Justice, Spain could not have made a valid offer to arbitrate with EU investors. No agreement to arbitrate, no jurisdiction, case dismissed. The award did not end the wider war: ICSID tribunals, whose seat-less system gives EU law less purchase, have largely continued to take jurisdiction, while EU member states have moved to exit the ECT. The split it crystallised, between ICSID and non-ICSID outcomes on identical facts, is one of the defining structural fights in investment arbitration today.
The detail
Parties: Green Power Partners K/S and SCE Solar Don Benito APS (Denmark) v Kingdom of Spain
Case number: SCC Case No. V2016/135
Outcome: Tribunal declined jurisdiction: within the EU, the Energy Charter Treaty arbitration offer was held inapplicable between EU parties.
Applicable law: Energy Charter Treaty Article 26; EU law (the Achmea and Komstroy judgments of the EU Court of Justice); Swedish law as the law of the seat.
Issues in play: A head-on collision between two legal orders: the Energy Charter Treaty's standing offer to arbitrate against the EU Court of Justice's ruling that intra-EU investor arbitration is incompatible with EU law. Which one does a tribunal seated inside the EU obey?
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