Voltaic Network GmbH 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, particularly the distinction between general regulatory changes and specific commitments. It also addressed the Achmea judgment's impact on intra-EU BIT arbitrations, ultimately upholding jurisdiction but dismissing claims on the merits. The case illustrates the limits of investor protection when a host state modifies support schemes in response to unforeseen market developments.
Summary
Voltaic Network GmbH, a German company, invested in a solar photovoltaic plant in the Czech Republic under a generous feed-in tariff regime introduced to promote renewable energy. The regime guaranteed fixed purchase prices for 20 years, with a 5% annual cap on reductions. In 2010-2011, the Czech Republic amended the regime due to a solar boom that caused excessive costs, introducing a solar levy (26% on feed-in tariffs) and other changes. Voltaic claimed these amendments violated the Germany-Czech Republic BIT and the Energy Charter Treaty, specifically fair and equitable treatment, full protection and security, and non-impairment. The Tribunal, constituted under UNCITRAL Rules, first rejected the Respondent's objection that the solar levy was a tax exempt under the ECT, finding it was a regulatory charge. It also rejected the objection that the Achmea judgment deprived the Tribunal of jurisdiction over intra-EU disputes, distinguishing the BIT's dispute resolution clause from the one in Achmea. On the merits, the Tribunal found that the Czech Republic had not made specific promises to investors that the regime would remain unchanged; the legislative framework allowed for adjustments. The changes were a rational response to an unforeseen market distortion and were implemented transparently and non-arbitrarily. The Tribunal dismissed all claims, ordering Voltaic to pay a portion of the arbitration costs.
The detail
Parties: Voltaic Network GmbH v. Czech Republic
Case number: PCA Case No. 2014-20
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: Germany-Czech Republic BIT (1990), Energy Charter Treaty (1998), UNCITRAL Arbitration Rules (1976)
Issues in play: The case involved a conflict between the Czech Republic's sovereign right to amend its renewable energy support regime and the investor's claim that such amendments breached fair and equitable treatment and legitimate expectations under the BIT and ECT. The Tribunal also addressed the EU law issue of whether an intra-EU BIT arbitration was permissible post-Achmea.
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