Spain's Sovereign Immunity Challenge in Renewable Energy Dispute Rejected
The UK's Supreme Court ruled that Spain cannot claim immunity to prevent the registration of an arbitration award related to renewable energy incentive cuts. This decision limits states' ability to assert immunity in investor disputes, with the award now enforceable in Britain's courts.
In a landmark decision, the United Kingdom's top court has restricted the ability of states to claim immunity in disputes with investors, specifically concerning a multimillion-euro award against Spain over renewable energy incentive cuts.
The Supreme Court affirmed that while states can maintain immunity concerning the execution of an arbitration award on state's property, Spain's specific appeal to overturn a 101 million euro award, given to Infrastructure Services Luxembourg and Energia Termosolar, was unsuccessful. This arbitration stemmed from Spain's withdrawal of subsidies for renewable energy under the Energy Charter Treaty over a decade ago.
The International Centre for Settlement of Investment Disputes had supported the claimants, and their award had been registered in London's High Court. Despite Spain's efforts citing sovereign immunity, the appeal was twice dismissed, culminating in the UK Supreme Court's latest ruling against Madrid. According to Richard Clarke of Kobre & Kim, the decision underscores growing global adherence to enforcing ICSID awards.
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