Sapec, S.A. 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 intra-EU objection under the ECT, following the GreenPower SCC award. It confirms that EU law supremacy precludes ICSID jurisdiction over intra-EU investment disputes, closing the debate on whether ICSID tribunals differ from SCC tribunals on this issue. The award strengthens Spain's position in over 30 pending renewable energy cases and may lead to further annulments of prior awards.
Summary
Sapec, S.A., a Belgian company, brought an ICSID claim against Spain under the Energy Charter Treaty (ECT) seeking €27.4 million plus interest and costs for alleged breaches of the ECT's fair and equitable treatment and expropriation provisions related to Spain's renewable energy regulatory changes. Spain objected to jurisdiction, arguing that the dispute was intra-EU and that EU law, which establishes the Court of Justice of the European Union (CJEU) as the exclusive forum for such disputes, overrides the ECT's arbitration clause. The tribunal, constituted under the ICSID Convention, agreed with Spain. It held that the ECT must be interpreted in light of EU law, and that the EU's accession to the ECT as a Regional Economic Integration Organization introduced EU law supremacy into the treaty's framework. Consequently, the tribunal lacked jurisdiction because the dispute fell within the exclusive competence of the CJEU under EU law. This is the first ICSID award to uphold the intra-EU objection, following the earlier SCC award in GreenPower v. Spain. The decision is a landmark victory for Spain, which has faced numerous similar claims. The award also orders Sapec to pay Spain's costs, though the exact amount is not specified in the press release. The outcome reinforces the trend of EU member states successfully resisting investor-state arbitration in intra-EU disputes under the ECT.
The detail
Parties: Sapec, S.A. v. Kingdom of Spain
Case number: ICSID Case No. ARB/19/23
Outcome: Tribunal declined jurisdiction; Spain prevailed, no damages awarded.
Quantum: 0
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 of autonomy and exclusivity of the Court of Justice of the European Union for intra-EU disputes.
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