I.C.W. Europe Investments Limited v. Czech Republic
PCA · Investment (ICSID and treaty) · Czech Republic · 15 May 2019
Why it matters
This award is significant for its detailed analysis of the legitimate expectations standard in the context of renewable energy incentives, and for its rejection of the Achmea-based jurisdictional objection in a PCA-administered UNCITRAL arbitration. The Tribunal held that the Czech Republic's changes to the solar levy did not breach the BIT or ECT, clarifying the limits of investor protection when a state modifies support schemes in response to unforeseen costs.
Summary
The dispute arose from changes to the Czech Republic's renewable energy support regime. The Claimant, a UK company, invested in solar photovoltaic plants in the Czech Republic between 2009 and 2010, relying on feed-in tariffs and other incentives. In 2010-2013, the Czech government introduced a solar levy and other measures to reduce the cost of the support scheme, which had become more expensive than anticipated due to a boom in solar installations. The Claimant argued that these changes violated the fair and equitable treatment standard, full protection and security, and the prohibition of arbitrary and discriminatory treatment under the UK-Czech Republic BIT and the Energy Charter Treaty. The Respondent raised several jurisdictional objections, including that the solar levy was a tax exempt under the ECT, and that the Tribunal lacked jurisdiction because both parties were EU Member States (relying on the CJEU's Achmea judgment). The Tribunal rejected the tax carve-out argument, finding the levy was not a tax but a regulatory charge. It also rejected the Achmea objection, holding that the arbitration was based on the BIT and ECT, not EU law, and that the EU law arguments went to the merits. On the merits, the Tribunal found that the Czech Republic had not made specific promises to maintain the support regime unchanged, and that the changes were a reasonable response to the unforeseen cost of the scheme. The Claimant's legitimate expectations were not violated because the regulatory framework was not stable and predictable in the way the Claimant alleged. The Tribunal dismissed all claims and ordered the Claimant to bear 75% of the arbitration costs, with each party bearing its own legal costs.
The detail
Parties: I.C.W. Europe Investments Limited v. Czech Republic
Case number: PCA Case No. 2014-22
Outcome: The Tribunal dismissed all of the Claimant's claims. The Claimant was ordered to pay EUR 49,180.98 to the Respondent for arbitration costs, and each party bore its own legal costs.
Applicable law: UK-Czech Republic BIT (1990), Energy Charter Treaty (1994), UNCITRAL Rules (1976)
Issues in play: The case involved a conflict between the Czech Republic's sovereign right to modify its renewable energy support regime and the investor's claim that such modifications breached fair and equitable treatment and legitimate expectations under the BIT and ECT. The Tribunal also addressed whether EU law (Achmea) deprived it of jurisdiction over intra-EU disputes.
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