Charanne case: investors defeated in first ECT solar claim arbitral award

Abstract

There are over thirty arbitrations based on the provisions of the Energy Charter Treaty (‘ECT’) registered against Spain and arising out of the photovoltaic solar electricity incentives granted by Spain to its investors in this renewable energy field. Promoted under the slogan ‘The sun can be yours’, the incentives granted by Spain attracted a record number of investments. The first arbitral award issued in this series of cases concerned the dispute between Charanne B.V. and Construction Investments S.à.r.l, as Claimants, and Spain, as Respondent. While the arbitral tribunal upheld jurisdiction, it rejected Claimants’ claim and dismissed the allegations of breaches of fair and equitable treatment and expropriation standards under the ECT. Although this arbitral award is not binding on subsequent arbitral tribunals, the reasoning of the tribunal in the Charanne case is of utmost importance as it confirms that the ECT is available for intra-European Union disputes. On the other hand, it is interesting to see how the other cases based on the same regulatory scheme will develop, as the tribunal in the Charanne case dismissed Claimants’ claims in full.