Madrid/Brussles: The European Commission has ruled that Spain is not required to pay compensation in a long-standing legal battle over renewable energy subsidies that were reduced more than a decade ago. The decision comes as a significant victory for Spain, potentially saving the country billions of euros in claims from foreign investors.
The dispute stems from policy changes made in 2013, when Spain’s then-conservative government cut renewable energy subsidies in an effort to curb a growing power tariff deficit. This move led to a wave of legal action from foreign investors, predominantly investment funds, who had anticipated continued financial incentives.
One of the most prominent cases involved French infrastructure-focused private equity firm Antin, which won an arbitration ruling in 2018 under the Energy Charter Treaty. The treaty, an international agreement, allows energy companies to sue governments for policy shifts that negatively impact their investments. Antin was awarded 101 million euros ($109.39 million) in compensation. However, Spain challenged the ruling, and Antin later sold the compensation rights to another fund, according to Spain’s Energy Ministry, which did not disclose the fund’s name.
After a prolonged investigation, the European Commission concluded that paying the arbitration award would violate EU state aid regulations, which prohibit governments from providing selective advantages to certain companies over their competitors. As a result, the Commission instructed Spain not to honor the compensation payment and to prevent any alternative means of claiming the award.
Spain’s Energy Ministry welcomed the decision, stating that it could bolster the country’s defense against similar claims.
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Foreign investors have filed a total of 51 arbitration cases against Spain related to the subsidy cuts, with claims amounting to 10.6 billion euros. While many cases have been resolved, eight remain pending. To date, Spain has been ordered to pay approximately 1.5 billion euros across multiple rulings. Some investment funds have attempted to enforce arbitration awards through lawsuits outside the EU, including in the United States, Australia, and the United Kingdom.
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In a related case, a London court ruled two years ago that investors could seize Spanish assets to enforce a 120-million-euro judgment. The European Commission’s latest ruling strengthens Spain’s position in ongoing legal battles and reinforces the EU’s stance on the primacy of state aid regulations within the bloc.
