Spain: Recent Developments In Renewable Energy Claims

Last Updated: 29 September 2016
Article by Bryan W. Jardine and Ceyda Akbal Schwimann

Starting in 2013, several investment treaty claims have been filed in the field of renewable energy, more specifically in the field of solar energy, against Spain, Italy, the Czech Republic and other European countries based upon an alleged breach of the Energy Charter Treaty.

There are currently more than 25 treaty claims pending against Spain alone, five against Italy, seven against the Czech Republic and one against Bulgaria. The first one of these cases, Charanne vs Spain, was decided at the beginning of 2016. In the last 10 to 15 years, many states have provided incentives through favorable feedin tariffs and other subsidies to promote investment in the field of renewable energy. Spain was one of these.

In 2004, with the aim of promoting investment in renewable energy installations, the Spanish Government issued Royal Decree 436/2004, dated 12 March 2004, establishing the methodology for updating and systemizing the legal and financial regime of the electric energy sector production special regime. However, as a consequence of the economic crisis and the need to tackle the ever-growing tariff deficit, these incentives were gradually reduced, first in 2010 and then again in 2013 and 2014, thereby affecting those investments completed during the validity period of the prior subsidy regime.

In 2014, a new regime was introduced which repealed the very favorable tariffs and remuneration regimes established under the old system and created a completely new regime for renewable energies. These changes triggered the initiation of several investment-treaty claims against Spain based upon an alleged breach of the Energy Charter Treaty.

In these cases, claimants have typically argued a breach of fair and equitable treatment and have requested protection from measures equivalent to expropriation without compensation. Spain's defense revolves around its right to regulate the electricity sector, particularly in light of the economic crisis it was suffering. The state has further argued that the regulatory changes did not discriminate against foreign investors and that investors should never reasonably expect the state to guarantee a fixed return on investments.

An important aspect of the cases is the participation of the European Commission as amicus curiae on the side of the respondent states which are members of the European Union, including Spain. The position of the European Commission is that European investors cannot bring claims based upon the Energy Charter Treaty against EU member states based on article 344 of the TFEU.

Charanne vs. Spain is the first award of the more than 25 investment treaty arbitrations filed and pending against Spain. The distinctive feature of this first arbitration is that it was filed at the beginning of 2013, and thus did not challenge the legislative amendments that were brought in 2013/2014. The majority of the Tribunal did not find any breach of the Energy Charter Treaty. The Tribunal's rationale for reaching this decision was as follows:

First, the Tribunal came to the conclusion that a mere decrease in profitability, despite its serious and economic financial consequences, does not amount to an "expropriation", unless the loss of value can be considered equivalent to a deprivation of property. The majority of the Tribunal also came to the conclusion that there was no breach of the principle of fair and equitable treatment. The tribunal mentioned that in the absence of a specific commitment on the part of the state, an investor cannot expect the regulatory framework to remain unchanged. As a second step, the Tribunal analyzed whether the regulatory framework generated legitimate expectations that this framework would not be modified as it was in 2010. The tribunal held that the expectations must be reasonable and objective and that investors, as part of their due diligence in a highly regulated industry such as energy, must exhaustively analyze the applicable framework before they make their investment.

The Tribunal further went on to analyze whether the modified regulatory framework frustrated the legitimate expectation that the state would not act unreasonably, contrary to public interest or disproportionately. Here, the tribunal compared the maximum lifespan of a solar plant, which is in the Tribunal's view 30 years, with the extension of the application of the original tariffs to the first 30 years of the plant's operation, and came to the conclusion that there was not a breach of legitimate expectations.

A positive aspect of the Charanne award for foreign investors is the rejection of the arguments brought by Spain and the European Commission that European investors cannot bring any Energy Charter claims against EU member states. This is important for the viability of all of the pending renewable energy cases against EU member states. The Charanne award illustrates that the success of claims based upon violations of the Energy Charter Treaty in the context of the renewable energy field will not be straight forward. However, investment treaty arbitrations filed later in 2013 and 2014 will have a considerably higher chance of successfully demonstrating violations of the obligations under the Energy Charter Treaty. We will most certainly have to wait a few years for all of these matters to be decided.

The Wolf Theiss Arbitration Team stands ready to assist you in evaluating those matters raised by the Charanne award and their applicability to your investments in the field of renewable energy in our region.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions