In the first investment arbitration since the Achmea judgment, an ICSID tribunal composed of John Beechey, Gary Born and Brigitte Stern found that it had jurisdiction to hear the claim brought by the investor incorporated in the EU members state (Masdar Solar & Wind Cooperatief U.A) against another EU member state (Spain). The tribunal concluded that Spain had failed to accord fair and equitable treatment to claimant pursuant to Article 10(1) of the Energy Charter Treaty and ordered Spain to pay EUR 64.5 million as damages plus interest.

Masdar Solar & Wind Cooperatief U.A., a private limited liability company incorporated under the laws of the Netherlands, made an investment in November 2008 and July 2009 in three concentrating solar power (CSP) systems located in Spain. CSP systems use mirrors to concentrate the energy from the sun to drive traditional steam turbines or engines that create electricity. A dispute arose out of adjustments made by the Spanish authorities to the regulatory and economic framework for renewable energy projects in general and solar thermal power installations in particular.

Although Spain suggested that the arbitration of an intra-EU dispute pursuant to the ECT would contravene both the rules of the EU internal market and the principle of autonomy of EU law, the tribunal found that there is nothing in the text of the ECT which precludes intra-EU disputes from its scope. As regards the “primacy of EU law” objection, Spain claimed that EU law applies to inter-community relations and, thus, EU law is given preference over any other law dealing with internal EU relations. On the other hand, claimant built its argumentation on the application of Article 16 of the Energy Charter Treaty. It provides: “Where two or more Contracting Parties have entered into a prior international agreement, or enter into a subsequent international agreement (…), nothing in such terms of the other agreement shall be construed to derogate from any provision of the ECT, where any such provision is more favourable to the investor or investment.” The tribunal hold that investor protections and judicial remedies afforded by EU law differ from the ECT scheme in a number of ways, especially EU law does provide no equivalent to the dispute settlement mechanism providing for investor-State arbitration. The tribunal stated that EU law is not incompatible with the provision for investor-State arbitration contained in Part V of the ECT.

One of the most significant aspects of the award is how the arbitrators addressed the Achmea judgment of the Court of Justice of the EU and assessed its implications for investment arbitration under the Energy Charter Treaty. On 6 March 2018, the Court of Justice of the EU issued a decision in the case of the Slovak Republic v. Achmea. The court concluded that arbitration clause in intra-EU bilateral treaties is incompatible with EU law. In particular, the mechanism for settling disputes between an investor and a host state is incompatible with the principle of autonomy of EU law as it is enshrined in Articles 344 and 267 of the Treaty on the Functioning of the EU. The Court observed that the arbitration procedure is not itself capable of ensuring the uniform application of EU law. Since arbitral tribunal cannot be regarded as a ‘court or tribunal’, it is not entitled to make a reference to the Court for a preliminary ruling. Since arbitral award is subject only to limited judicial review by competent national courts, uniform and consistent interpretation of EU law is not ensured.

As regards the implications of the Achmea decision for investment arbitration under the ECT, the tribunal invited the parties to the dispute to submit their observations. Spain submitted that the ECT is an international agreement concluded by EU Member States; and the fact that the EU itself signed the ECT is irrelevant and does not limit in any way the application of the Achmea judgment to the ECT and to ICSID tribunals. However, the tribunal concluded that the Achmea judgment has no bearing upon the present case, because the ECT is not a treaty referred to in the Achmea judgment. In other words, the judgment cannot be applied to multilateral treaties, such as the ECT.