Spain cannot claim immunity as a state in the UK dispute over renewable energy incentives

The United Kingdom's highest judicial court ruled that Spain could not claim immunity to prevent a'multimillion-euro' award for cuts in renewable energy incentives from being registered. This limits the ability of states to claim immunity when they are involved in disputes with investors.

Infrastructure Services Luxembourg and Energia Termosolar which invested in renewable energy in Spain brought Spain to arbitration more than 10 years ago under the Energy Charter Treaty for withdrawing subsidies.

The ICSID, the World Bank's International Centre for Settlement of Investment Disputes, awarded Infrastructure Services Luxembourg and 'Energia Termosolar' 101 million Euros. This award was later registered by London's High Court.

Spain tried to rescind the award, which was worth around 120 million euros plus interest and was registered in Spain in 2023. However, the High Court rejected this argument in 2023. This argument was also rejected in 2024 on appeal. The European country brought its case before the Supreme Court which ruled on Wednesday against Spain. It said that Spain had agreed to be subject to?the English court's jurisdiction when it signed the ICSID Convention.

The Supreme Court stated, however, states can still claim immunity with respect to?executions of arbitration awards against state property.

Spain's appeal, which was worth up to $125,000,000 in relation to the alleged expropriation land, was heard by the court in December. Zimbabwe's appeal has also been dismissed.

(source: Reuters)