Silver Ridge Power BV v. Italian Republic

Case summary

At a glance

Parties: Silver Ridge Power BV (Netherlands) v. Italian Republic
Case no.: ICSID Case No. ARB/15/37
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules 2006; place of proceeding Paris
Treaty: Energy Charter Treaty
Tribunal: Judge Bruno Simma (President), Judge O. Thomas Johnson, Prof. Bernardo M. Cremades
Sector: Renewable energy (solar photovoltaic)
Outcome: Jurisdiction upheld unanimously; all claims dismissed on the merits (26 February 2021). The Spalma-incentivi claim was dismissed by majority, with Judge Johnson dissenting.
Amount: Claimant's costs claimed: EUR 3,216,388.41. Damages awarded: none. Costs of the arbitration (USD 1,120,871.78) shared equally, USD 560,435.89 per Party; each Party bears its own costs.

The dispute

Silver Ridge Power BV, a Dutch company formerly called AES Solar Energy BV, indirectly owned ten Italian companies. Those companies operated 25 photovoltaic plants of about 130 MW in total, which received feed-in tariffs under the Second to Fifth Energy Accounts. The Claimant challenged three sets of measures: (1) the Romani Decree (2011) and the Fourth Energy Account, which it said forced it to abandon the planned 123 MW Project Vega; (2) the Fifth Energy Account (2012), which excluded the two Frosinone plants from the Fourth Energy Account and introduced a GSE administrative fee; and (3) the Spalma-incentivi Decree (2014), which cut the tariffs for all 25 plants by 8% and raised the fee. It claimed breaches of fair and equitable treatment, the umbrella clause (Article 10(1)) and the expropriation provision (Article 13) of the ECT. Italy raised four jurisdictional objections: the intra-EU objection, the exclusive forum clauses in the GSE conventions, the lack of a request for amicable settlement on the Romani Decree, and the taxation carve-out. On the merits it argued that its measures were reasonable regulatory adjustments.

Key holdings

The intra-EU objection is rejected. Article 16 of the ECT works as a conflict rule and gives priority to Article 26, which is more favourable to investors than EU law. Neither the Achmea judgment nor the January 2019 Member State declarations change the clear terms of Article 26. Concerns about enforcement give no reason to decline jurisdiction. ¶¶ 207–238
The other objections are also rejected. The exclusive forum clauses in the GSE conventions do not bar ECT arbitration, because the Claimant was free to choose arbitration and is not a party to the conventions. The notice of 5 May 2015 was a sufficient request for amicable settlement on Project Vega. The GSE administrative fee is a fee for services, not a taxation measure under Article 21 of the ECT. ¶¶ 256–311
Umbrella clause: the GSE conventions are accessory contracts, fixed in all their essential elements by the legislative and regulatory framework. They are therefore not obligations 'entered into' within the meaning of Article 10(1), last sentence. ¶¶ 376–388
Spalma-incentivi Decree (by majority): the energy accounts were specific commitments that the incentive regime would not be changed fundamentally or radically. They did not freeze tariffs. The 8% cut was reasonable, foreseeable and proportionate, so fair and equitable treatment was not breached. ¶¶ 431–477
Project Vega: the Claimant did not prove that the Romani Decree and the Fourth Energy Account were the proximate cause of the project's failure. The failure to obtain financing it found acceptable, and its own business choices, broke the causal link. ¶¶ 513–532
Frosinone plants and the fee: the move to the Fifth Energy Account was foreseeable, because published cost data showed the Fourth Energy Account thresholds approaching, and the move was proportionate. There was no indirect expropriation, because access to the 2013 tariff was a mere aspiration, not an acquired right. The administrative fee was below 0.5% of incentives and was a non-radical change. ¶¶ 566–628
Costs: Italy won on the merits, but the Claimant defeated four jurisdictional objections and the Request for Termination. Each Party bears half of the costs of the arbitration and its own costs. ¶¶ 635–639
Judge Johnson dissented on the Spalma-incentivi Decree. In his view, once the energy accounts are found to be specific commitments on which the Claimant relied, cutting the promised tariffs cannot be fair. The absence of a separate stabilisation promise is irrelevant, and the size of the cut goes to damages, not liability. Dissenting Opinion ¶¶ 1–12

Procedural history

29 July 2015Request for Arbitration filed. ICSID registered it on 11 August 2015.
2 May 2017Tribunal constituted.
19 April 2018Procedural Order No. 2 granted bifurcation.
1 November 2018Hearing on Jurisdiction in Paris, after the European Commission filed an amicus curiae submission.
26 November 2018Procedural Order No. 5 rejoined the jurisdiction and merits phases.
8 July 2019Procedural Order No. 6 dismissed Italy's request to suspend the proceedings.
23–26 September 2019Hearing on the Merits in Paris.
9 February 2021Proceeding closed.
26 February 2021Award: jurisdiction upheld and all claims dismissed, with Judge Johnson's dissenting opinion.