German company Sunflower cannot enforce in Israel a binding arbitration award requiring the Spanish government to pay it €18.4 million plus €1.5 million in costs.
The European Commission has referred Hungary to the Court of Justice of the European Union for refusing to comply with a key European Union ruling on investor-state arbitration under the Energy Charter Treaty.
The Spanish government made its first payment as a result of an arbitration decision in 2021 around the country’s move to change investor incentives tied to renewable energy projects, following a number of lengthy legal battles between Spain and various creditors.
The Energy Charter Treaty (“ECT”), the most widely used investment treaty, has become highly controversial for enabling investors to challenge national policies aimed at achieving climate goals through its ISDS mechanism, leading to a phenomenon known as “regulatory chill.
The Energy Charter Treaty not only locks countries into outdated fossil fuel investments but also hampers their ability to pursue sustainable, climate-friendly energy policies.
The European Commission handed Spain a victory when it instructed the country not to pay any compensation in a case related to claims amounting to billions of euros on renewable energy subsidies cut more than a decade ago.