Spain has suffered another legal setback in the wave of international arbitrations over retroactive cuts to renewable energy incentives. The International Centre for Settlement of Investment Disputes (ICSID), an arbitration tribunal of the World Bank, has dismissed the Spanish State’s bid to annul the award requiring it to compensate Eurus Energy Holdings Corporation, a Japanese subsidiary linked to the Toyota group, with more than USD 106 million (EUR 91 million).

The decision comes only weeks after an asset seizure in the RREEF case — another dispute linked to the withdrawal of renewable subsidies — confiscated air traffic control revenues that Spain receives from Eurocontrol via Enaire.

The ICSID committee reviewing the case found that the Spanish Government’s arguments did not meet any of the grounds set out in the ICSID Convention for annulling an award. The original ruling, issued in February 2021, concluded that Spain had breached the Energy Charter Treaty (ECT) by retroactively altering the regulatory framework that had encouraged foreign investment in wind power.

According to the tribunal, Eurus invested on the basis of a stable and predictable regulatory regime which was substantially and detrimentally modified, severely affecting the profitability of its projects. These facilities were instrumental in positioning Spain as a leading player in clean energy.

In November 2022, the ICSID set the compensation at USD 106.2 million (EUR 91.2 million), plus interest accrued since 1 June 2021 and legal costs of around USD 4 million (EUR 3.4 million). Including these amounts, Spain’s total debt now stands at approximately USD 113 million, equivalent to just over EUR 97 million.