States don’t impliedly waive regulatory powers, deference shown in times of crisis

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Background: Deutsche Bank-owned companies invested in Spanish solar and wind projects shortly before Spain made significant changes to its renewable energy regime

Measures impacting BAN S.A. also caused a loss to the share value of the investor

MFN clause was used to bypass 18-month local litigation requirement

The dispute was legal in nature and arose directly out of the investment

Background: Financial crisis gave rise to claims by investor in natural gas venture

Tribunal rejects intra-EU objection, considers that the ECT prevails over EU law, and finds Achmea judgment “inapposite”

By contrast, solar investments did not receive a reasonable return under the new regime, majority finds

Tribunal rejects Spain’s jurisdictional objections related to indirect investments, parallel claims, definition of investment, and cooling-off period

Tribunal rejects European Commission’s request to intervene, but permits Spain to file Achmea decision in post-hearing submissions

Tribunal applies tax carve-out, but decides that the disputed tax measure will be relevant for the assessment of damages

Majority invites parties to reach agreement on damages

No discrimination or lack of transparency, majority says

Majority sees ‘margin of appreciation’ for states and no legitimate expectation of unchanging law for investors; umbrella clause also held inapplicable

Majority finds that the claimants’ wind farms received a reasonable return under the new regime

FET claim is inseparable from the assessment of damages

Tribunal stresses that only a radical transformation of the legal framework would violate the ECT, but considers that certain claw-back provisions of the new regulatory regime satisfied this test

Majority holds that the claimants’ legitimate expectations were limited to receiving a reasonable return

U.S. submits non-disputing party brief

Tribunal considers that “dominant and effective nationality” requirement only applies where an investor holds the nationality of the host State

Claimants are ordered to reimburse Costa Rica’s part of the arbitration costs, but each party bears its own legal costs

Arbitrators reject jurisdictional objections based on ownership structure and unpaid taxes

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