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International Arbitration Forum

Veolia Propreté SAS v. Italian Republic

Case summary

At a glance

Parties
Veolia Propreté SAS (France) v. the Italian Republic
Case no.
ICSID Case No. ARB/18/20
Forum and rules
ICSID Convention; ICSID Arbitration Rules 2006; place of proceeding Paris; hearing held in Madrid
Treaty
Energy Charter Treaty (Articles 10(1) and 13)
Tribunal
Prof. Eduardo Zuleta (President), Ms. Judith Gill KC, Prof. Laurence Boisson de Chazournes
Sector
Waste management and waste-to-energy (Calabria and Tuscany concessions)
Outcome
Jurisdiction upheld. Italy was held in breach of the umbrella clause and of fair and equitable treatment; the expropriation claim was rejected and most damages were refused (Award, 26 September 2025). A Supplementary Decision of 11 May 2026 added interest on the historical losses.
Amount
Claimed: EUR 411.3 million (Memorial), rising to EUR 438 million or alternatively EUR 425.7 million (first Post-Hearing Brief). Awarded: EUR 85,832,011, plus EUR 9,279,749 added by the Supplementary Decision, plus interest at 12-month EURIBOR + 2%, compounded annually. Costs: Italy bears the proceeding costs of USD 1,161,916.20 and reimburses USD 580,958.1; each side bears its own legal costs. Supplementary phase: proceeding costs of USD 20,870.20 shared equally; Italy reimburses EUR 74,064 (50% of Veolia's legal costs).

The dispute

In 2007 Veolia Propreté acquired, through its Italian subsidiary VSA, 75% of TMT (later renamed VSAT). It bought the remaining 25% in 2011. TMT held two concession companies: TEC, which held a 15-year concession from the Commissario for the waste emergency in Calabria to build and run five mechanical-biological treatment plants and the Gioia Tauro waste-to-energy plant, and TEV, which held a 19-year concession in Tuscany (Versilia) for the Pioppogatto and Falascaia plants. Veolia alleged that Italian authorities failed to pay and update gate fees, did not pay the public subsidy (the "Contributo"), did not deliver the agreed waste quantities, and through conflict between the Commissario and the Calabria Region frustrated the TEC2 incineration line and the Reggio Calabria (Sambatello 2) plant. It said this forced it to terminate both concessions in 2012 and led to the insolvency of its subsidiaries. Veolia claimed breach of the ECT umbrella clause, of fair and equitable treatment (both under Article 10(1)) and of the bar on indirect expropriation (Article 13). Italy objected that the dispute was intra-EU, that there was no qualifying investment in the energy sector and that the fork-in-the-road clause applied. On the merits it argued that Veolia had acted in bad faith over environmental breaches at the Falascaia plant, had chosen to terminate the concessions itself and had contributed to its own loss.

Key holdings

  1. Objection ratione personae rejected. The EU's status as a Contracting Party to the ECT does not stop Italy and France from being separate Contracting Parties, so a French investor is an "Investor of another Contracting Party". Award ¶¶ 156–160
  2. The intra-EU objection was rejected. Article 26 of the ECT gives unconditional consent with no exception for intra-EU disputes. Neither Article 16 nor Article 25 nor the 2009 Lisbon Treaty takes such disputes out of the ECT. All of Italy's jurisdictional objections were dismissed. Award ¶¶ 208–227, 1096(a)
  3. Umbrella clause breached. Italy failed to pay gate fees on time and to update them, failed to pay the Contributo and failed to deliver the guaranteed waste quantities under the TEC Concession. It also failed to pay and adjust gate fees and to deliver waste quantities under the TEV Concession and the 2010 Agreement. Italy's plea that Veolia acted in bad faith over the CO-emission manipulation at Falascaia failed: the manipulation was the former owner's conduct, and Italy gave no legal basis or evidence for the plea. Award ¶¶ 740, 756, 932
  4. Fair and equitable treatment breached. The ECT standard is not limited to the customary minimum standard. The Commissario allowed the Calabria Region's opposition to obstruct TEC2 and to force the relocation of the Reggio Calabria plant, even though he had the power to keep the original plans. This was unfair and unreasonable treatment. The indirect expropriation claim was rejected because key parts of the alleged creeping breaches had been dismissed. Award ¶¶ 775, 831, 841, 857
  5. Sunk costs were not the right measure, because the concessions were ongoing projects and their termination was caused by Italy's breaches. Even so, no damages were awarded for the unpaid Contributo, because Veolia caused that loss itself: it paid the deferred purchase price and released the Vendor under the 2011 Master Settlement Agreement. Lost profits for the unfinished TEC2 and Sambatello 2 plants were too speculative. Award ¶¶ 938–942, 972–980, 1001
  6. Prospective losses were refused. Accuracy's model rested on waste-quality ratios that the Tribunal had found to be only indicative, so Veolia did not prove the amount. Historical losses were fixed at EUR 70,405,812 before tax, or EUR 85,832,011 after adjustment for tax and minority shareholding. Italy's requested deductions for restoration costs (EUR 19.5 million) and for sums paid under the annulled domestic awards were rejected. Award ¶¶ 1021, 1029, 1046, 1052, 1057
  7. Interest runs from 31 December 2011 at the average 12-month EURIBOR plus 2%, compounded annually, before and after the Award. Italy bears the costs of the proceeding; each party bears its own legal costs. Award ¶¶ 1078–1079, 1092–1095
  8. Supplementary Decision: the Award had omitted to decide on interest on the historical losses for the period from each breach to 31 December 2011. The Tribunal awarded it at EURIBOR plus 1%, using a mid-year interest factor, which came to EUR 9,279,749. Supplementary Decision ¶¶ 39, 43–45, 60

Procedural history

  1. 25 May 2018Request for Arbitration dated 25 May 2018, received by ICSID on 30 May and registered on 20 June 2018.
  2. 15 January 2019Tribunal constituted. Italy asks for the proceeding to be terminated on the basis of the 2019 Member State declarations on Achmea; the parties then agree to stay the case for most of 2019.
  3. 6 March 2020Procedural Order No. 1 sets the 2006 ICSID Arbitration Rules, English as the language and Paris as the place of proceeding.
  4. 24 March 2021Procedural Order No. 2 grants the European Commission leave to file a written non-disputing party submission, on condition that it gives an undertaking on costs. The application was disallowed on 3 June 2021 because no undertaking was given.
  5. 11 June and 22 July 2021Procedural Orders No. 3 and No. 4 on document production.
  6. 15–19 May 2023Hearing on jurisdiction and merits at the Madrid Court of Arbitration, organised under Procedural Order No. 5.
  7. 30 June 2023Procedural Order No. 6 sets two rounds of post-hearing briefs and the parties' Skeleton Summaries.
  8. 26 September 2025Award: jurisdiction upheld; breaches of the umbrella clause and of fair and equitable treatment found; EUR 85,832,011 awarded plus interest.
  9. 7 November 2025Veolia requests a supplementary decision on interest on the historical losses.
  10. 11 May 2026Decision on the Request for Supplementary Decision adds EUR 9,279,749 to the amount awarded.

Tribunal, counsel and experts

Decided by
For the claimant
Mayer Brown · Darrois Villey Maillot Brochier · Pierre Mayer
For the respondent
Avvocatura Generale dello Stato · Ministry for Foreign Affairs and International Cooperation / Avvocatura dello Stato (external consultants)
Experts
Anthony Theau-Laurent (claimant) · Louis Osman (claimant) · Pranshu Agarwal (claimant) · Christophe Schmit (claimant) · Stefano Consonni (respondent) · Federico Viganò (respondent) · Stefano Pedrini (respondent)

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Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID
ICSID Case No. ARB/18/20
Outcome
In favour of Investor
Section