Renewable energy projects in Spain: The Spanish government launches a legal proposal for a solution to international arbitration proceedings
Richard Wicke
DIKEOS ABOGADOS
Madrid, 18 January 2019
The Socialist government of Spain, led by Pedro Sánchez, has presented a legal regulation which sets the value of the so-called “reasonable profitability” of existing installations at 7.09% for the new remuneration period 2020 to 2025.
On the other hand, the bill contains a special regulation for renewable energy systems that went on stream before June 2013. For these plants, it is planned that the value of 7.39% fixed for the current remuneration period (2014-2019) cannot be changed in the two following remuneration periods (2020-2025 and 2026-2031). The current remuneration parameters “RinV” and “Ro” thus remained unchanged until the end of 2031.
The background to this is the large number of national and international court and arbitration proceedings against the extensive modifications of the original remuneration regime for renewable energy plants in 2007 and 2008. At the international level alone, foreign investors have meanwhile initiated over 40 arbitration proceedings against the Kingdom of Spain, five of which have already been decided (predominantly) in favour of the investors.
The Spanish Government intends to freeze ‘reasonable profitability’ by the end of 2031 in order to create a situation in which investors will no longer suffer economic damage as a result of the introduction of the new remuneration regime in 2013. In this way, new international arbitration proceedings are to be rendered irrelevant.
For the current proceedings, the planned new rules attempt not to treat successful plaintiffs better than national – i.e. Spanish – investors. It provides that such amounts paid by the Spanish State to plant operators in compliance with final (arbitration) court rulings are deducted from the continuous remuneration payments.
In this way, the claims of the plaintiffs in the international arbitration proceedings are supposed to run into nothing. Thereby, the Spanish state spends more money within the framework of the new remuneration system, but not specifically for the fulfillment of payment obligations from international arbitration proceedings.
It remains to be seen whether the planned scheme will enter into force. In any event, it is very doubtful that the plaintiffs in the international arbitration proceedings will be satisfied with the freezing of the remuneration parameters until the end of 2031, since their claim is based on the fact that they suffered economic losses as a result of the introduction of the new remuneration system, even at the currently established “reasonable” profitability of 7.39%. In any case, they will have to react procedurally should the new regulation come into force.
Read here the whole Preliminary draft law
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