Sapec, S.A. v. Kingdom of Spain

Case summary

At a glance

Parties: Sapec, S.A. (Belgium) v. Kingdom of Spain
Case no.: ICSID Case No. ARB/19/23
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules
Treaty: Energy Charter Treaty (per Spain's press release)
Tribunal: Justice David Unterhalter SC (President), The Honourable James Jacob Spigelman AC QC, Lord Brennan QC
Sector: Renewable energy
Outcome: Spain's proposal to disqualify Judge Spigelman was dismissed (25 June 2020). Spain's press release reports that the award of 11 October 2024 declined jurisdiction over the intra-EU dispute.
Amount: Claimed, according to Spain's press release: EUR 27.4 million plus interest, and almost EUR 4 million in costs. Awarded: nothing reported.

The dispute

Sapec, S.A. is a Belgian company. It brought an ICSID claim against Spain over Spain's changes to its regulatory regime for renewable energy. The challenge decision shows that the issues in the case matched those in Cube Infrastructure v. Spain: the intra-EU jurisdictional objection and the relevance of EU law, stabilisation commitments in the Spanish regulations, investors' legitimate expectations, and the use of the DCF method to value damages. Spain argued that, as investor and State are both in the EU, EU law prevails and the tribunal has no jurisdiction. Only two documents are published: a decision on Spain's challenge to an arbitrator, and a Spanish government press release on the award.

Key holdings

Standard for disqualification. Under Article 57, read with Article 14(1), of the ICSID Convention, the facts must make it clear and obvious that the arbitrator cannot be relied on to exercise independent judgment. Arbitrators must be both impartial and independent. The test is objective: whether a third party would reasonably apprehend, on the established facts, that the arbitrator cannot decide the dispute impartially or independently. ¶¶ 52–54
Spain argued that, in the Cube decision, Judge Spigelman had decided the key overlapping issues so firmly that there was no room for a different result here. The unchallenged arbitrators gave weight to his statement that he would reconsider Cube with an open mind. That reconsideration was needed in light of two later, fully reasoned decisions that took a different view: Stadtwerke München and BayWa. ¶¶ 58–60
Challenge dismissed. Judge Spigelman's views in Cube were not shown to be so entrenched that they could not change, and a reasonable third party could not apprehend that he lacked impartiality or independence. A decision on the costs of the challenge was reserved for a later stage. ¶¶ 63–66
According to Spain's press release, the award of 11 October 2024 found no jurisdiction over this intra-EU investment dispute. On the press release's account, the award accepted the reading of the Energy Charter Treaty put forward by Spain and the European Commission: the EU's participation in the Treaty brought the supremacy of EU law into its scope, in the areas of competence that member States have transferred to the EU. The award itself is not among the published documents. Press release, p. 1

Procedural history

6 August 2019ICSID registers the Request for Arbitration.
8 April 2020The Tribunal is constituted when Justice David Unterhalter SC, appointed by the Secretary-General, accepts the post of President.
14 April 2020Spain proposes the disqualification of Judge James Spigelman because of his role in Cube Infrastructure v. Spain. The proceeding is suspended.
25 June 2020The unchallenged arbitrators dismiss the disqualification proposal and reserve costs.
11 October 2024Award issued. According to Spain's press release, the Tribunal declined jurisdiction.
14 October 2024Spain's Ministry for the Ecological Transition issues a press release on the award.