ICSID tribunal upholds the claimant’s allegations in Mathias Kruck and Ors v. the Kingdom of Spain (Case No. ARB/15/23) in its recent decision issued on 14 September 2022.
Interestingly, the tribunal (except arbitrator Mr Zachary Douglas, appointed by the defendant) declined Spain’s arguments on the Energy Charter Treaty (ECT) incompatibility with EU law.
Therefore, Spain must compensate the claimants in a “classic” arbitration dispute against the country related to renewable energy investment supported by subsidies incentives, amended by regulation from 2010 onwards that dramatically reduced revenues and profits.
Kruck claimed against Spain in 2015, invoking the ECT under the arbitration rules of the ICSID Convention, and now has successfully obtained a winning decision on jurisdiction, liability and quantum, rejecting Spain’s argument on arbitration incompatibility with EU law according to the ECJ decisions.
As in the past, the main issue in this type of proceedings will result from the difficulty of enforcing an award in favour of claimants beyond the EU shore, being the common-law countries such as the USA, Australia or, more recently, the UK the preferred choice.