Greentech Energy Systems A/S, et al v. Italian Republic

Case summary

At a glance

Parties: Greentech Energy Systems A/S (Denmark; later Athena Investments A/S), NovEnergia II Energy & Environment (SCA) SICAR and NovEnergia II Italian Portfolio SA (Luxembourg) v. the Italian Republic
Case no.: SCC Case No. V 2015/095
Forum and rules: SCC Arbitration Rules 2010; seat Stockholm, Sweden; hearing in Paris
Treaty: Energy Charter Treaty (Articles 10(1) and 26)
Tribunal: Prof. William W. Park (Presiding Arbitrator), Mr. David R. Haigh, Prof. Giorgio Sacerdoti (dissented in part)
Sector: Renewable energy; solar photovoltaic feed-in tariffs
Outcome: Award of 23 December 2018: Italy found liable by majority for the Spalma-incentivi tariff cut; all other claims dismissed or outside jurisdiction. On 17 June 2024 the Svea Court of Appeal declared the award invalid.
Amount: Claimed: EUR 25.06 million. Awarded: EUR 11.9 million (EUR 7.4 million to Greentech; EUR 4.5 million to NovEnergia and NIP), with interest at annual LIBOR + 2% compounded annually from 1 January 2015. Costs: EUR 478,000 (costs of the arbitration) plus EUR 1,408,268 (half of the claimants' legal and related costs). Svea Court of Appeal ordered the investors to pay Italy EUR 144,679.11 and SEK 2,800 in court costs.

The dispute

Between 2008 and 2013 the claimants, Danish and Luxembourg investors, bought interests in Italian companies that owned 134 solar photovoltaic plants. The plants received incentive tariffs fixed for twenty years under the Conto Energia decrees, GSE tariff recognition letters and GSE Agreements. Some plants also received minimum guaranteed prices. From 2012 Italy adopted several measures that reduced the value of this support. The main one was the Spalma-incentivi Decree (Law Decree No. 91/2014, converted into Law 116/2014), which cut tariffs or spread them over a longer period from 1 January 2015. The claimants alleged breaches of the fair and equitable treatment, non-impairment and umbrella clauses of Article 10(1) ECT. Italy, supported by the European Commission as amicus, objected that the ECT does not apply to intra-EU disputes. It also raised fork-in-the-road, amicable-settlement and taxation objections, and argued that the measures were reasonable and proportionate regulation.

Key holdings

The Tribunal has jurisdiction, except over the Robin Hood tax and the reclassification of PV plants as immovable property. Both are Taxation Measures excluded by ECT Article 21. The fork-in-the-road objection failed because Italian subsidiaries are Investments, not Investors, so they cannot have submitted the dispute on the claimants' behalf. Award ¶¶ 175, 204–205, 594(a)
The intra-EU objection fails. The ECT has no express or implied disconnection clause. The Lisbon Treaty did not modify the ECT between EU Member States. There is no conflict with TFEU Article 344. The Achmea judgment does not remove jurisdiction: the ECT is a multilateral treaty to which the EU itself is a party, and the Tribunal does not apply EU law under Article 26(6). Award ¶¶ 337–355, 395–403
By majority (Haigh and Park), the Spalma-incentivi tariff reduction breached fair and equitable treatment. The decrees, GSE letters and GSE Agreements gave specific assurances that the tariffs would stay fixed for twenty years. In the majority's view these amounted to guarantees that Italy could not waive, and Italy's cost-to-consumer justification was not persuasive. The majority also found a failure to provide transparent conditions. Bad faith was not shown. Award ¶¶ 446–460
By majority, the tariff reduction was also an unreasonable measure that impaired the investments. It also breached the umbrella clause, because the Conto Energia decrees, GSE letters and GSE Agreements, taken together, were specific obligations entered into with the PV operators. Award ¶¶ 461–467
Several measures did not breach Article 10(1): the change to payment terms, the cancellation of the ISTAT inflation adjustment, and the administrative fees and imbalance costs. The changes to the minimum guaranteed price scheme were rejected by majority (Sacerdoti and Park). Award ¶¶ 477, 500–506, 517–520, 536–538
Damages follow the Chorzów Factory full-compensation standard. They are measured as the diminution in fair market value, using a DCF valuation at 1 January 2015 and a 5% WACC: EUR 11.9 million. Compound interest runs at annual LIBOR + 2%. Italy bears all the costs of the arbitration and half of the claimants' other costs, partly because it failed to pay its share of the advances. Award ¶¶ 548–577, 591–593
Dissent (Sacerdoti): the 6–8% tariff reduction was foreseeable, proportionate and justified by Italy's economic situation, so it breached neither fair and equitable treatment nor the impairment clause. The Conto Energia decrees are not obligations covered by the umbrella clause. Only GSE contracts concluded when the operator was already foreign-owned could be covered. Dissenting Opinion ¶¶ 47–68
The Svea Court of Appeal declared the award invalid under section 33(1)(2) of the Swedish Arbitration Act. Following Achmea, Komstroy (République de Moldavie) and PL Holdings, upholding an intra-EU ECT award would be manifestly incompatible with the basic principles of the Swedish legal order. Judge Edwardsson concurred on other reasoning; Judge Pleiner dissented on costs. Svea Court of Appeal judgment, pp. 11–13

Procedural history

7 July 2015Request for Arbitration filed with the SCC under ECT Article 26(4)(c).
16 November 2015SCC confirms Prof. William W. Park, appointed jointly by the co-arbitrators, as chairman.
17 January 2017Order granting the European Commission limited leave to intervene and again refusing bifurcation.
26–30 June 2017Hearing on jurisdiction, merits and quantum in Paris.
23 December 2018Final Award: Italy liable for the Spalma-incentivi tariff reduction; EUR 11.9 million awarded. Prof. Sacerdoti's dissenting opinion is dated 5 December 2018.
28 March 2019Svea Court of Appeal stays enforcement of the award pending Italy's challenge.
5 April 2019Claimants petition the New York Supreme Court to confirm the award. The case is later removed, transferred to the US District Court for D.C. and consolidated with the CEF Energia case.
23 July 2020US District Court for D.C. (Judge Ketanji Brown Jackson) stays the confirmation proceedings pending the Svea Court's decision.
24 November 2021Svea Court of Appeal withdraws its March 2021 request for a preliminary ruling from the CJEU (C-155/21) and lifts the stay of its own proceedings.
17 June 2024Svea Court of Appeal declares the award invalid and orders the investors to pay Italy's court costs. Appeal to the Supreme Court permitted. The published documents do not show whether an appeal was brought.
10 February 2025US District Court for D.C. (Judge Colleen Kollar-Kotelly) holds that Italy's immunity argument is colorable and orders briefing on jurisdiction first. The published documents do not show the outcome.

Tribunal, counsel and experts

Decided by: William W. Park President — chosen by the co-arbitrators
David R. Haigh Co-arbitrator — appointed by the claimant
Giorgio Sacerdoti Co-arbitrator — appointed by the respondent (dissented on the Spalma-incentivi liability findings)
Ulrika Beergrehn Judge, Svea Court of Appeal — appointed by a court
Göran Söderström Judge, Svea Court of Appeal — appointed by a court
Eva Edwardsson Judge, Svea Court of Appeal — appointed by a court (dissented on reasoning in the 2024 judgment)
Annika Malm Judge, Svea Court of Appeal — appointed by a court
Ulrika Ihrfelt Judge, Svea Court of Appeal — appointed by a court
Mattias Pleiner Judge, Svea Court of Appeal — appointed by a court (dissented on costs)
Ketanji Brown Jackson Judge, US District Court for the District of Columbia — appointed by a court
Colleen Kollar-Kotelly Judge, US District Court for the District of Columbia — appointed by a court
For the claimant: King & Spalding LLP · Orrick, Herrington & Sutcliffe · Mannheimer Swartling Advokatbyrå AB · Gaillard Banifatemi Shelbaya Disputes
For the respondent: Avvocatura Generale dello Stato · Legal Service of the Ministry of Foreign Affairs · Advokatfirman Vinge KB
For other participants: Legal Service of the European Commission
Experts: Richard Edwards (claimant) · Boaz Moselle (claimant) · Dora Grunwald (claimant) · Antonio D'Atena (claimant) · Enrico Laghi (respondent) · Mauro Paoloni (respondent) · Corrado Gatti (respondent) · Giovanni Serges (respondent) · Vincenzo Zeno-Zencovich (respondent)