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Legal offensive of the Government with almost five million for renewable arbitrations

Date: March 29, 2024 Time: 00:38:44

The Government is immersed in a legal offensive to defend the interests of Spain in international arbitrations that are resolved at the International Center for Settlement of Investment Disputes (ICSID) due to cuts in renewables. The Institute for Energy Diversification and Saving (IDAE), under the Ministry for Ecological Transition, has accumulated almost fifteen contracts so far this year between law firms, legal advisors and experts.

According to data from the public sector contracting platform collected by La Información, the awards add up to a total amount of 4.8 million euros. The most recent, dated May 8, is for 363,000 euros (with taxes) and has been taken by the MLL Legal firm. Specifically, the Executive has hired his services for the defense of the Kingdom of Spain in the procedure for annulment of the EDF Energies Nouvelles award before the Swiss courts.

For its part, the largest amount was opened on April 20 with the firm Curtis, Mallet-Prevost, Colt & Mosle LLP, based in the United States, for the recognition and enforcement procedure of the award with the British InfraRed, which the June 10 of last year received a favorable decision in an annulment proceeding filed by Spain. The value of the contract is 1.7 million euros.

Trust in Simmons & Simmons

It was on August 2, 2019 when an award was issued that ordered Spain to compensate InfraRed together with a group of British investors in renewable energy with 28.2 million euros (the company’s claim amounted to 92 million euros). . The plaintiffs invoked the breach of the Energy Charter Treaty, as a consequence of the damage to their investment from the energy reforms promoted by the Spanish Government between 2010 and 2014. Spain requested its annulment, but the ICSID, an organization that belongs to the World Bank I reject the arguments of the State Attorney.

On its side, the international firm Simmons & Simmons has been contracted for arbitration proceedings with PV Investors, for 142,780 euros; to provide specialized legal assistance to the State Attorney General in the procedure for the Interim Order of Third Party Debt on the occasion of the recognition and execution procedure of the award Antin Infraestructure Services Luxembourg and Antin Energia Termosolar, for 706,640 euros; and for the study, preparation and presentation of opposition writings to the requests for recognition and execution of the award rendered in the arbitration proceeding Operafund Eco-Invest Sicav and Schwab Holding, for 623,150 euros. In total, only this office has been awarded 1.47 million euros.

The State lost the first of the arbitrations in 2017. The award sided with the British firm Eiser Infrastructure Limited and its Luxembourg subsidiary Energía Solar Luxembourg. Eiser was a partner in Spain of Elecnor and of the engineering firm Aries. In total, 935 million euros were invested in three plants in 2007, the year in which Royal Decree 661/2007 was discovered, the application of which was not a rapid use of ‘green’ energies. However, the sector was subsequently subjected to pay cuts.

The first of these occurred at the end of 2010, with the PSOE, and then in 2013 with the approval of the reform of the electricity sector by the Popular Party. For this specific case, the IDAE has contracted the services of BDO Auditores for 137,940 euros, as financial economic expert, and of the University of Zaragoza for 42,350 euros. Also noteworthy is the hiring of the expert in international public law Steffen Hindelang, for 36,239 euros.

Pearl Cohen Zedek Latzer Baratz (292,820 euros), K&L Gates (169,531 euros), Pinheiro Neto Advogados (121,000 euros), SZA Schilling, Zutt & Anschütz (193,600 euros) and Hannes Snellman (276,704 euros with two contracts) are other law firms. you are chosen ICSID continues to issue favorable pronouncements to the companies affected by the retroactive withdrawal of premiums for renewables. The last one that has been known is the one that affects the German BayWa, which must receive compensation of 22 million euros. The Government will also have to face the payment of 480,000 euros for default interest (a figure that differs if it does not occur in the short term) and 370,000 euros for the order on costs.

With this sentence there are already 22 procedures on which there is no appeal, which has a total debt of 1,208 million euros (plus 250 million legal and financial costs). The complaints focus on the cuts in solar energy and solar thermal energy and demand from the country close to 10,000 million euros in different international arbitration instances for the damages supposedly caused by the cuts in the premiums for renewable energies.

With Royal Decree 661/2007, a system was established that guaranteed renewable energy investors the collection of a remuneration throughout the useful life of the plant, whether it was wind, solar thermal or photovoltaic. It is what is known as premiums for renewables, aid charged to the electricity bill that guaranteed the profitability of this type of energy. With the promise of very high rates of return, national and foreign investors with interests in the sector responded to the call.

In this sense, and thanks to the financing of large banks, there was a ‘boom’ of photovoltaics in a few months. However, in 2010, the Executive began to apply the first cuts. The deficit in the electricity sector led him to reduce the advantages of ‘clean’ energy in order to collect more and offset the losses. Another blow came in 2013: a tax was added to the generation of electricity and the announcement of non-compensation for all new renewable energy installations after 2012. The reform of the electricity sector led to a 40% cut in premiums that if following current Foreign investors could take advantage to make their demands within the framework of the Energy Charter, a treaty created to guarantee international agreements in the sector and from which Spain has confirmed its withdrawal.

The IDEA is left out

Since April 28, according to the Official State Gazette (BOE), everything related to the administrative, accounting, budgeted and financial management of expenses and contracts that are necessary for the defense of the country’s interests in arbitrations of renewables are in the hands of the State Attorney’s Office. IDAE sources explain to this medium that the days of lag with respect to the publication of the last contract closed in May are due to technical reasons when uploading the documentation on the public procurement platform.

In the last ‘mega-decree’ with measures in response to the economic consequences of Russia’s invasion of Ukraine, which occurred in December, the Executive introduced an article that left the IDAE out of the procedures in the face of a “serious” problem of lack of staff. Industry sources stress that it makes no sense for the body, whose main objective is to promote the use of ‘green’ energy, to consume resources on litigation issues.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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