Renewable Energy Arbitration - Quo Vadis?
In his most-recent monography dr Filip Balcerzak analyses the Spanish saga cases – unprecedented number of investor-state arbitrations filed against Spain, concerning the renewable energy sector. He presents generally applicable lessons for the future.
Is this publication universal and can it be useful for policy-makers and lawyers?
FB: The book is divided into chapters, corresponding to the typical stages of arbitral proceedings. Each chapter concludes with lessons learned which are of general applicability for the future. I have decided to organise the content of this monography in such a way so it can be read and used as a whole, or in parts.
To my knowledge, this is the most comprehensive analysis of what happened in the so-called “Spanish saga cases” – unprecedented number of arbitrations commenced in similar factual circumstances, concerning the renewable energy sector. The analysis zooms out from the finer details of each arbitration to reach a general plane of international investment law (or a “helicopter view”) so as to enable several general conclusions to be made.
The added value is that the monography is in open access. It can be downloaded free of charge, by just clicking on the website of the publisher.
What should investors take into consideration in light of the Spanish renewable energy cases?
FB: Energy transformation is ongoing, whether one likes it or not. This causes continued growth of renewable energy.
In the European context, the Spanish saga cases analysed in the book have caused significant changes in the legal landscape of investment protection. So should the behaviour of investors, if they want to safeguard their position in case of a possible dispute, and benefit from the maximum level of protection under international law in the future.
Could you briefly describe the case which you found the most impactful?
FB: I would not name one specific case. All the cases together set significant trends in the case law, and allow to reshape assessment of future adjudication of arbitrations in renewable energy sector, and even beyond, in energy sector in general.
What are your general conclusions?
FB: In the book, I present several lessons learned for the future concerning each stage of arbitration: jurisdiction, merits and remedies. I can give you some examples.
On jurisdiction, one lesson learned is that arbitral tribunals not only can, but must look whether a tax impacting the investment is a genuine tax. In other words, they must look beyond the “label” of a tax, to decide whether a disputed measure fulfils customary international law’s prerequisites.
On merits, one of the conclusions is that domestic regulatory frameworks can create legitimate expectations that are protected by international investment treaties, and the content of these frameworks is crucial to determine the scope of the protected, legitimate expectations.
On remedies, I would point as an example the conclusion on the methodology of calculating compensation. My analysis reveals that Discounted Cash Flow is the most common valuation method applied in the disputes concerning the renewable energy sector, because the highly regulated nature of the sector enables this methodology to be applied even regarding investments which have a shorter operating track record than would be required in other sectors.
I invite you to read the book to see other lessons learned, as well as the analysis which leads to them.