WA Investments Europa Nova Ltd. 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 of investors in the context of changing renewable energy support schemes. The Tribunal clarified that while a stable legal framework may be promised, investors cannot expect that framework to remain frozen if the state has a legitimate public policy reason to change it. The case also addressed the tax carve-out under Article 21 of the ECT and the implications of the CJEU's Achmea judgment on intra-EU investment arbitration, though the Tribunal ultimately upheld jurisdiction.
Summary
WA Investments-Europa Nova Limited, a Cypriot company, invested in a Czech solar photovoltaic plant (SolarOne s.r.o.) relying on the Czech Republic's generous feed-in tariffs and other incentives for renewable energy introduced under Act No. 180/2005. In 2010-2011, the Czech government, facing a solar boom and budget concerns, amended the regime: it imposed a 26% solar levy on revenues from solar plants, abolished tax holidays, and reduced feed-in tariffs. The claimant argued these changes violated the Cyprus-Czech BIT and the ECT, specifically fair and equitable treatment (FET), full protection and security, and the prohibition of arbitrary and discriminatory measures. The Tribunal, constituted under UNCITRAL Rules with seat in Paris, first upheld jurisdiction, rejecting the respondent's arguments that the claimant was not a protected investor, that the investment was not foreign under the ECT, that the solar levy was a tax exempt under ECT Article 21, and that the Achmea judgment barred intra-EU BIT arbitration. On the merits, the Tribunal found that while the Czech Republic had made promises of a stable framework, the claimant's legitimate expectations were not violated because the changes were reasonable, non-discriminatory, and proportionate to address a genuine public interest (the excessive cost of the support scheme). The Tribunal also rejected claims for full protection and security and non-impairment. Consequently, all claims were dismissed, and costs were apportioned with the claimant bearing 75% of arbitration costs but each party bearing its own legal fees.
The detail
Parties: WA Investments Europa Nova Ltd. v. Czech Republic
Case number: PCA Case No. 2014-19
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: Agreement between the Government of the Cyprus Republic and the Government of the Czech Republic for the Promotion and Reciprocal Protection of Investments (BIT) of 15 June 2001; Energy Charter Treaty (ECT) of 16 April 1998; UNCITRAL Arbitration Rules 1976
Issues in play: The case involved the interaction between investment treaty protections (FET, full protection and security, non-impairment) and the Czech Republic's sovereign right to amend its renewable energy support regime, including the imposition of a solar levy. The Tribunal also addressed the impact of EU law, particularly the Achmea judgment, on intra-EU BIT arbitration.
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