Spain: Commission opens in-depth investigation into arbitral compensation award
The Commission is assessing whether an arbitration award ordering Spain to pay compensation to JGC Holdings Corporation (‘JGC’) for changes to a renewable electricity support measure is in line with EU State aid rules.
JGC is a Japanese engineering holding company which invested in Spain and benefitted from a scheme established in 2007 to support the production of electricity from renewable sources. The scheme was modified in 2013 and approved by the Commission in 2017. JGC initiated arbitration proceedings to claim compensation for the benefits that would have obtained on the basis of the 2007 scheme.
In 2021, an arbitral tribunal found that Spain had infringed the Energy Charter Treaty (ECT) and ordered Spain to pay EUR 23.5 million, plus interest and additional cost to JGC. Spain notified this award to the Commission and informed that it had made the payment Spain notified this award to the Commission under State aid rules. Spain also informed the Commission it had made a payment under this award to Blasket Renewables Investment (‘Blasket’), a US fund that was assigned the rights to the award and had prepared and envisaged enforcement in the Netherlands and attempted enforcement in the United States and Belgium.
The Commission’s preliminary view is that the arbitration award and its implementation constitute State aid within the meaning of Article 107(1) TFEU. It will further investigate its compatibility with the internal market and with the criteria of the applicable State aid guidelines. Furthermore, the Commission will analyse whether a decision by an investor-State arbitration is in accordance with the principle of autonomy of the EU’ legal order.
For more information, see the Commission’s PR.