In its decision dated 24 May 2023, the High Court of Justice Business and Property Courts Commercial Court (High Court) refused to set aside an arbitral award based on the Energy Charter Treaty (ECT) ordering Spain to pay €120 million to the European investor Infrastructure Services Luxembourg and its subsidiary Energia Termosolar (formerly Antin).
The arbitral tribunal issued its award in June 2018, following the Spanish government’s reforms in the renewable energy sector. In June 2021, an ad hoc ICSID committee confirmed the award, the existence of which was subsequently recognised by order in the United Kingdom.
Spain immediately appealed the order. In its appeal, Spain relied on the Achmea and Komstroy decisions and argued that there was no written consent on the part of Spain to submit to arbitration on the basis of the ECT, nor was there a valid arbitration agreement. Under the UK State Immunity Act (1978), Spain sought immunity from execution. In its decision dated 24 May 2023, the High Court held that Spain could not claim immunity from execution, having signed the ICSID Convention whose consent to arbitration was incorporated into the ECT. The English judge observed that there was no provision in the ECT that would justify a situation in which the States’ offer would concern only certain investors (in this case, investors outside the European Union).
According to the High Court, the CJEU is not the ultimate judge of either the ICSID Convention or the ECT, and there was written consent from the State to arbitration. The High Court also rejected the argument that European law takes precedence over international treaties.
Furthermore, the High Court ruled that Spain could not rely on the Achmea and Komstroy decisions to oppose the enforcement, outside the European Union, of an ICSID award rendered on the basis of the ECT in the context of an intra-European investment arbitration.
This decision provides a clarification, in line with recent decisions in the United States[1] and Australia[2] , and in application of the solution adopted by the UK Supreme Court in the Micula case[3]: European law cannot take precedence over international treaties, such as the ICSID Convention and the ECT, outside the European Union.
Source: Infrastructure Services Luxembourg and Energia Termosolar (formerly Antin) v. Spain, UK High Court of Justice, Commercial Court (KBD), [2023] EWHC 1226 (Comm), 24 May 2023
[1] NextEra Energy Global Goldings BV v. Spain, US District Court for the District of Columbia, Civil Action No. 19-cv-01871 (TSC), 15 February 2023; REN Holding v. Spain, US District Court for the District of Columbia, Civil Action No. 19-cv-01871 (TSC), 15 February 2023.
[2] Spain v. Infrastructure Services Luxembourg, Supreme Court of Australia, [2023] HCA 11, 12 April 2023.
[3] Micula and others v. Romania, [2020] UKSC 5, UK Supreme Court, 19 February 2020.
