Jürgen Wirtgen, Stefan Wirtgen, Gisela Wirtgen and JSW Solar (zwei) GmbH & Co. KG v. Czech Republic
PCA · Investment (ICSID and treaty) · Czech Republic · 11 Oct 2017
Why it matters
This award is one of several Czech solar investment cases clarifying the scope of legitimate expectations under FET. The tribunal held that the Czech Republic's guarantee of a 15-year payback and 7% return was met, and that subsequent regulatory changes did not breach the BIT. It also addressed the definition of 'investor' under the BIT and the impact of EU law on intra-EU BITs.
Summary
German investors (the Wirtgen family and their company JSW Solar) invested in three solar photovoltaic plants in the Czech Republic between 2008 and 2010, relying on a support scheme that included feed-in tariffs (FITs) for 20 years and tax incentives. In 2010, the Czech Republic introduced a 26% solar levy on FIT revenues and withdrew income tax exemptions for solar producers, citing excessive profits and the need to protect consumers. The investors claimed these measures breached the Germany-Czech Republic BIT, specifically the fair and equitable treatment (FET) standard, full protection and security, and the umbrella clause. The tribunal, seated in Switzerland under the PCA, first upheld jurisdiction over the German limited partnership (Claimant 4) as an 'investor' under the BIT. On the merits, the tribunal analyzed whether the investors had legitimate expectations that the support scheme would remain unchanged. It found that Act 180 guaranteed a 15-year payback of capital expenses and a 7% return, but did not guarantee fixed FITs for 20 years. The tribunal concluded that the investors had already achieved or exceeded that return before the levy, so the measures did not breach the BIT. The tribunal also dismissed claims for full protection and security and under the umbrella clause, as no specific obligation was breached. The award includes a dissenting opinion arguing that the majority misapplied the FET standard. The case is significant for its detailed analysis of legitimate expectations in the context of renewable energy subsidies and its confirmation that states retain regulatory space to adjust support schemes as long as basic investment returns are preserved.
The detail
Parties: Jürgen Wirtgen, Stefan Wirtgen, Gisela Wirtgen and JSW Solar (zwei) GmbH & Co. KG v. Czech Republic
Case number: PCA Case No. 2014-03
Outcome: The Tribunal dismissed all claims, finding no breach of the Germany-Czech Republic BIT.
Applicable law: Germany-Czech Republic BIT (1990); Swiss PILA; EU law
Issues in play: The case involved the interaction between the Czech Republic's renewable energy support scheme (Act 180) and subsequent amendments (Solar Levy, withdrawal of tax incentives) with the FET standard, full protection and security, and umbrella clause under the BIT.
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