Silver Ridge Power BV v. Italian Republic (
ICSID · Investment (ICSID and treaty) · Italy · 26 Feb 2021
Why it matters
This award is a landmark in the ongoing debate over the scope of legitimate expectations under the FET standard. The majority's reasoning, that a state does not breach FET by modifying specific commitments unless it also promised not to change them, has been criticized as conflating contractual stabilization with treaty protection. The strong dissent by Judge Johnson highlights the logical tension, making the case a key reference for practitioners and scholars on the limits of investor protection in renewable energy disputes.
Summary
Silver Ridge Power BV, a Dutch company, invested in photovoltaic plants in Italy relying on generous feed-in tariffs (FITs) under Italy's Conto Energia scheme. Between 2011 and 2014, Italy enacted several measures that reduced or modified these incentives, including the Spalma-incentivi Decree, which spread tariff payments over a longer period. Silver Ridge brought an ICSID claim under the ECT, alleging violations of the fair and equitable treatment (FET) standard (Article 10) and the umbrella clause (Article 10(1)), as well as indirect expropriation (Article 13). The Tribunal first rejected Italy's intra-EU objection based on the Achmea judgment, finding that the ECT's Article 26 remained applicable. It also dismissed other jurisdictional objections. On the merits, the Tribunal analyzed whether Italy's measures breached the FET standard by frustrating Silver Ridge's legitimate expectations. The majority held that while the energy accounts created specific commitments and legitimate expectations, Italy had not committed to maintaining the incentives unchanged for 20 years. The reductions were deemed reasonable, foreseeable, and proportionate, and thus did not violate FET. The umbrella clause claim failed because the GSE conventions did not contain obligations of the state itself. The expropriation claim was also dismissed as the measures did not deprive Silver Ridge of the fundamental attributes of its investment. A strong dissenting opinion by Judge Johnson argued that the majority's reasoning was logically inconsistent: if the commitments were specific and created legitimate expectations, then modifying them to the investor's detriment necessarily breached FET. He criticized the majority for requiring a separate promise not to break the promise, which he likened to a stabilization clause irrelevant to FET. The award is significant for its detailed analysis of legitimate expectations and the FET standard, and for the sharp division between the majority and dissent on the core issue of whether a state can unilaterally reduce specific incentives without breaching its treaty obligations.
The detail
Parties: Silver Ridge Power BV v. Italian Republic (
Case number: ICSID Case No. ARB/15/37
Outcome: The Tribunal dismissed all claims. Claimant sought compensation for Italy's reduction of solar energy incentives; the Tribunal found no breach of the ECT.
Applicable law: Energy Charter Treaty (ECT); ICSID Convention; Italian legislative decrees and energy accounts (Conto Energia); EU law
Issues in play: The case involved a collision between investor legitimate expectations under the ECT's fair and equitable treatment standard and the host state's sovereign right to modify its regulatory framework. The majority held that Italy's specific commitments did not include a promise to maintain incentives unchanged for 20 years, so no breach occurred.
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