EDF Energies Nouvelles S.A. v. Kingdom of Spain

Case summary

At a glance

Parties: EDF Energies Nouvelles S.A. (France) (anonymised as "A." in the judgment) v. Kingdom of Spain
Case no.: PCA Case No. AA613; Swiss Federal Tribunal case 4A_244/2023
Forum and rules: Ad hoc arbitration under Art. 26 of the Energy Charter Treaty, seated in Geneva; set-aside appeal under Arts. 190–192 of the Swiss Federal Law on Private International Law (LDIP)
Treaty: Energy Charter Treaty (ECT)
Court: Swiss Federal Tribunal, First Civil Law Court: Federal Judges Jametti (Presiding), Hohl, Kiss, Rüedi and May Canellas
Underlying award(s): Award of 11 April 2023 of an ad hoc arbitral tribunal seated in Geneva; majority decision, with a dissenting opinion by Spain's appointee
Sector: Renewable energy (photovoltaic)
Outcome: Spain's appeal to annul the award was dismissed to the extent it was admissible (3 April 2024).
Amount: The award ordered Spain to pay EUR 29,600,000 plus interest. Court costs of FF 75,000 were charged to Spain, which must also pay the investor FF 85,000 in costs (currency as printed in the translation).

The dispute

A French company acquired and developed twelve photovoltaic plants in Spain through Spanish entities it controlled. Three plants came under the feed-in tariff regime of Royal Decree 661/2007 and nine under Royal Decree 1578/2008. Between 2010 and 2014 Spain amended these support schemes and then repealed them, replacing the feed-in tariffs with a "reasonable rate of return" scheme. The investor started arbitration under Article 26 of the ECT on 24 February 2016. The tribunal unanimously rejected Spain's intra-EU jurisdictional objection. By majority it found that the 2013 measures breached fair and equitable treatment under Article 10(1) ECT and awarded EUR 29,600,000 plus interest. Spain asked the Swiss Federal Tribunal to annul the award. It alleged a defective deliberation, lack of impartiality of the tribunal's president, lack of jurisdiction over an intra-EU dispute, and inarbitrability because the CJEU has exclusive jurisdiction.

Key holdings

No defect in the deliberations. The award (Nos. 269–270) expressly considered the Green Power award, and all three arbitrators signed it. Spain's appointee had the chance to state his view and expressed it in his dissent. He also agreed with the unanimous decision upholding jurisdiction, so any defect had no effect on the result. Spain's request for production of the arbitrators' deliberations was dismissed. consid. 5.3
Spain lost the right to challenge the president's impartiality. It knew that he presided over the Triodos arbitration, which raised the same objection, and it made no objection when the Triodos award was issued in October 2022. It is not surprising that two tribunals chaired by the same person, deciding six months apart, answered an identical issue in the same way. consid. 6.2
Jurisdiction upheld. Interpreted under Art. 31 of the Vienna Convention, the "unconditional consent" in Art. 26(3)(a) ECT covers intra-EU disputes. The definitions in Art. 1(3) and 1(10), Art. 25, the 1997 Declaration of the European Communities and the absence of a disconnection clause do not support a different reading. The Declaration of the 22 of 15 January 2019 is a political declaration of intent, not a subsequent agreement or practice, and it cannot apply retroactively to an arbitration started in 2016. consid. 7.7.1–7.7.6
The CJEU's Komstroy judgment does not bind a Swiss court reviewing an award made in Switzerland, and the Federal Tribunal is not persuaded by its reasoning. No conflict between Art. 26 ECT and Arts. 207, 267 or 344 TFEU is established. Even if one existed, Art. 16 ECT preserves the investor's right to arbitrate, and Arts. 30 and 41 of the Vienna Convention do not give EU law priority. Spain's arguments under Arts. 30 and 41 were in any case inadmissible because they were raised for the first time in its reply. consid. 7.6.5, 7.8.1–7.8.3
The inarbitrability complaint was inadmissible. Arbitrability goes to jurisdiction under Art. 190(2)(b) LDIP, but Spain argued it under public policy (Art. 190(2)(e)) and Art. 190(2)(a) LDIP. consid. 8
The appeal was dismissed to the extent admissible. Spain bears court costs of FF 75,000 and must pay the investor FF 85,000 in costs. Operative part

Procedural history

24 February 2016The investor starts ad hoc arbitration under Art. 26 ECT. The tribunal is seated in Geneva.
10 November 2017The European Commission decides that Spain's 2013–2014 support mechanism is compatible with EU law.
15–19 October 2018Hearing held in London.
January 2019After requesting to take part (15 November 2018) and being invited by the tribunal (10 December 2018), the European Commission files an amicus curiae brief on 9 January 2019.
29 July 2022Procedural Order No. 12 (by majority) admits the Green Power award into the record but does not allow the parties to comment on it.
11 April 2023Award: the intra-EU objection is rejected, and by majority Spain is found to have breached Art. 10(1) ECT; EUR 29,600,000 plus interest awarded.
16 May 2023Spain files an appeal in civil matters with the Swiss Federal Tribunal to annul the award. Suspensive effect is granted on 14 July 2023 because the investor did not oppose it.
3 April 2024The Swiss Federal Tribunal dismisses the appeal to the extent it is admissible.