VM Solar Jerez GmbH and others v. Kingdom of Spain

Case summary

At a glance

Parties: VM Solar Jerez GmbH, M Solar Verwaltungs GmbH, Solarizz Holding Verwaltungs-GmbH, M Solar GmbH & Co. KG, Solarizz Holding GmbH & Co. KG (Germany) and Dr. Helmut Vorndran (Germany) v. Kingdom of Spain
Case no.: ICSID Case No. ARB/19/30
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules
Treaty: Energy Charter Treaty
Tribunal: Michael Collins (President), Guido Santiago Tawil (appointed by the Claimants), Ioana Knoll-Tudor (appointed by Spain)
Sector: Renewable energy (photovoltaic)
Outcome: 24 July 2020: the Chair of the ICSID Administrative Council, David R. Malpass, rejected Spain's proposal to disqualify Guido Santiago Tawil. The published documents do not show the outcome on the merits.

The dispute

German investors in photovoltaic plants in Spain brought claims under the Energy Charter Treaty. They challenged a series of Spanish measures, from RD 661/2007 through the 2013 reforms, Royal Decree 413/2014 and the Ministerial Orders of 2014, which ended the special remuneration regime (Régimen Especial). The only published document is a decision on Spain's proposal to disqualify the Claimants' appointee, Guido Santiago Tawil. Spain relied on two grounds. First, investors had appointed him in three earlier cases against Spain about the same renewable energy measures (Charanne, Isolux and STEAG). Second, his dissents in Charanne and Isolux showed that he had already prejudged core issues: the intra-EU objection, legitimate expectations under RD 661/2007 and RD 1578/2008, and whether the regime guaranteed stable remuneration. The Claimants answered that the cases differed in their investors, law firms, investment dates and measures. They also argued that Spain had not challenged him in STEAG and had itself proposed presiding arbitrators who had sat in other Spain renewables cases.

Key holdings

The Chair refused Spain's request to refer the proposal to the Permanent Court of Arbitration for a recommendation. The circumstances did not justify an external recommendation, and under Article 58 of the ICSID Convention the decision belongs to the Chair in any event. ¶¶ 80–81
Legal standard: "manifest" in Article 57 means evident or obvious. Article 14(1) requires both impartiality and independence. The appearance of bias is enough, but it is judged objectively, by a reasonable third party's evaluation of the evidence. Other standards, such as the IBA Guidelines, UNCITRAL Rules and national laws, are only guidance. ¶¶ 83–89
Multiple appointments by investors against Spain do not by themselves show a manifest lack of independence or impartiality. Charanne, Isolux and STEAG involved different investors, different law firms for the claimants, different investment dates and different measures. There is no objective basis to suggest that Tawil will not approach this case with an open mind. ¶¶ 92–95
An arbitrator who has expressed views on issues of law or fact common to several arbitrations is not, without more, biased or apparently biased. Charanne and Isolux concerned unrelated investors, different counsel, different timing and different measures. A reasonable third party would not conclude that Tawil manifestly lacks impartiality or independence, so the second ground was rejected. ¶¶ 100–104
The proposal was rejected in full. The costs of the challenge are left to the Tribunal under ICSID Arbitration Rule 28(1). ¶¶ 105–106

Procedural history

17 September 2019ICSID receives the Request for Arbitration. It is registered on 4 October 2019.
3 December 2019The Claimants appoint Guido Santiago Tawil. He accepts on 5 December 2019 and discloses his three earlier appointments in cases against Spain.
11 December 2019Spain appoints Ioana Knoll-Tudor.
20 March 2020Michael Collins accepts appointment as president, and the Tribunal is constituted.
2 April 2020Spain proposes Tawil's disqualification, and the proceeding is suspended.
15 May 2020The two unchallenged arbitrators are equally divided, so the proposal passes to the Chair of the Administrative Council.
24 July 2020The Chair rejects the disqualification proposal.

Tribunal, counsel and experts

Decided by: Michael Collins President — appointed by the parties jointly
Guido Santiago Tawil Co-arbitrator — appointed by the claimant (challenge rejected)
Ioana Knoll-Tudor Co-arbitrator — appointed by the respondent
David Malpass Chairman of the ICSID Administrative Council, Chairman of the ICSID Administrative Council (decided the disqualification proposal)
For the claimant: Morgan, Lewis & Bockius LLP
For the respondent: Abogacía General del Estado, Departamento de Arbitrajes Internacionales, Ministerio de Justicia