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Infrastructure Services Luxembourg S.À.R.L. and Energia Termosolar B.V. (formerly Antin Infrastructure Services Luxembourg S.À.R.L. and Antin Energia Termosolar B.V.) v. Kingdom of Spain - decision

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In 2011, Antin Infrastructure Services Luxembourg S.À.R.L. and Antin Energia Termosolar B.V. invested in Spain’s renewable energy sector by acquiring a 45% stake in two concentrated solar power (CSP) plants, Andasol-1 and Andasol-2, located in Granada. At the time of their investment, Spain had a regulatory framework under Royal Decree 661/2007 (RD661/2007), which guaranteed a stable Feed-in Tariff (FiT) for the lifetime of renewable energy installations. This policy was designed to attract foreign investment and provide financial security for renewable energy projects. Antin conducted extensive due diligence through legal, financial, and technical experts, confirming that Spain’s regulatory framework was stable and supportive of CSP projects.

Beginning in 2012, Spain implemented significant reforms in the renewable energy sector, citing concerns over the sustainability of its subsidy program. The first major regulatory change was Law 15/2012, which introduced a tax on the value of electricity production (TVPEE) and excluded CSP plants using natural gas from the FiT scheme. This was followed by Royal Decree-Law 2/2013 and Royal Decree-Law 9/2013, which abolished the FiT scheme entirely and replaced it with a new “special payment” mechanism. This new scheme was based on a reasonable rate of return rather than a guaranteed price, drastically altering the economic conditions under which Antin had made its investment. Antin argued that these regulatory changes wiped out the fundamental incentives that had made their investment viable.

In late 2013, Antin initiated arbitration under the Energy Charter Treaty (ECT), Article 10(1), arguing that Spain’s regulatory overhaul, among others, violated the Fair and Equitable Treatment (FET) standard by eliminating key regulatory protections; breached investors’ legitimate expectations, as Spain had repeatedly assured regulatory stability. Antin argued that this deprived Antin of the economic value of its investment, amounting to an effective expropriation.

The tribunal rejected Spain’s intra-EU objection, following previous Charanne, Isolux, and Eiser cases, which had confirmed that intra-EU disputes under the ECT were valid. It further ruled that Antin had a protected investment under the ECT, as its shareholding in the CSP plants constituted a qualifying investment. However, regarding the TVPEE tax, the tribunal upheld Spain’s objection, ruling that taxation measures were exempt from ECT jurisdiction under its tax carve-out provision.

Following the tribunal’s acceptance of jurisdiction over most of Antin’s claims, the case proceeded to the merits and damages phase, ultimately leading to an award in favor of Antin.

Merits:
I.	Breach of the Fair and Equitable Treatment (FET) Standard
The tribunal found that Spain violated the Fair and Equitable Treatment (FET) obligation under Article 10(1) of ECT. The key issue was whether Spain’s regulatory changes eliminated the essential features of the legal framework that investors had relied upon when making long-term investments in the CSP sector. The tribunal held that while states retain the right to regulate, they must do so in a manner that respects investors’ legitimate expectations and does not create legal instability.
Antin successfully demonstrated that Spain had repeatedly assured investors that its regulatory framework for renewable energy would remain stable. These assurances were conveyed through laws, official statements, policy documents, and promotional materials. The tribunal ruled that Spain’s drastic regulatory changes, particularly the elimination of the Feed-in Tariff (FiT) system and its replacement with a less favorable compensation scheme, undermined investor confidence and violated the FET standard.

II.	Legitimate Expectations and Regulatory Stability
The tribunal emphasized that investors’ legitimate expectations must be based on objective criteria. In this case, Antin had relied on Spain’s explicit commitments when making its investment. The tribunal noted that Spain had actively promoted the stability of its renewable energy regime, and that the elimination of the original incentive structure effectively deprived investors of the financial benefits they had anticipated.
Spain argued that regulatory changes were necessary to address its growing tariff deficit and to ensure the sustainability of the energy sector. However, the tribunal was not convinced that CSP plants like Andasol-1 and Andasol-2 significantly contributed to the tariff deficit. Moreover, the new regulatory framework lacked identifiable criteria for determining the revised compensation, making it unpredictable and arbitrary.

III.	Rejection of Spain’s Key Defenses
Spain attempted to defend its actions by arguing that:
1.	Regulatory changes were necessary for economic and public policy reasons.
2.	Investors should have only expected a “reasonable return”, not a fixed tariff.
3.	The changes did not eliminate all economic benefits, as the new regime still provided compensation.
The tribunal rejected these arguments, stating that the issue was not whether a reasonable return existed, but whether the new system upheld the principles of stability and predictability. It found that Spain had eliminated key features of the previous regime, thus breaching the FET standard.

Damages and Compensation Awarded:
The tribunal awarded Antin EUR 112 million in compensation, based on a discounted cash flow (DCF) valuation of future lost profits. Spain had opposed the use of the DCF method, arguing that it was too speculative. However, the tribunal upheld the DCF approach, noting that the unpredictability stemmed from Spain’s own regulatory changes, not from flaws in the valuation method.
Additionally, the tribunal awarded:
•	Pre- and post-award interest at 2.07%, compounded monthly.
•	60% of Antin’s legal costs and arbitration expenses, given that Spain’s regulatory actions had forced Antin to seek legal recourse.
Antin had also sought:
•	A “tax gross-up” to offset potential Luxembourg corporate taxes, which the tribunal denied due to lack of evidence on the actual tax impact.
•	Compensation for historic losses prior to the complete regulatory overhaul, which the tribunal also denied, ruling that the damages should be calculated from the time the original regulatory framework was fully dismantled in 2014.
The tribunal’s decision reaffirmed that states cannot drastically alter regulatory regimes in ways that fundamentally undermine investor expectations without breaching international investment law. Spain was held liable for failing to ensure stability, predictability, and fairness in its treatment of investors. However, the tribunal limited damages to the actual financial harm caused after the final regulatory changes took effect, rejecting additional claims for indirect losses and tax adjustments.
In conclusion, the tribunal found that Canada breached NAFTA Article 1105 by failing to clarify the regulatory uncertainty caused by Ontario’s moratorium on offshore wind projects. However, it dismissed claims of expropriation (Article 1110) and discrimination (Articles 1102 & 1103), ruling that Windstream had not been substantially deprived of its investment and was not in “like circumstances” with favored energy developers.
As a remedy, the tribunal awarded CAD 25.2 million in damages and CAD 2.9 million in legal costs to Windstream but denied pre-award or post-award interest. The Government of Ontario fully complied with the ruling, settling the award in 2017.

Post Award Proceedings- Annulment 

I.	Rectification of the Award
The Tribunal rectified its award after Spain submitted a request under Article 49(2) of the ICSID Convention, alleging clerical errors in the damages calculation. Spain claimed that the Tribunal mistakenly included EUR 28 million in the awarded sum due to an error in referencing figures from the expert reports. The Claimants agreed that an error had occurred but asserted that the correct amount to be deducted was EUR 11 million rather than 28 million. The Tribunal analyzed the dispute and determined that the actual error stemmed from the Tribunal’s incorrect reference to total claim figures, which led to an overstatement of the awarded damages. Consequently, the Tribunal rectified the amount in paragraph 725 of the Award, reducing the compensation from EUR 112 million to EUR 101 million.
Beyond this specific correction, the Tribunal dismissed Spain’s broader claims for rectification. Spain had argued that additional rectifications were necessary regarding the methodology used for calculating damages, particularly concerning the estimated lifetime of the power plants, which affected the compensation amount. However, the Tribunal found that Spain’s argument went beyond the scope of rectification proceedings, as defined under Article 49(2), which is strictly limited to correcting clerical, arithmetical, or similar errors. The Tribunal also rejected Spain’s request to adjust the allocation of costs, holding that Spain had not demonstrated any specific error warranting rectification. Ultimately, the Tribunal confirmed the corrected compensation amount of EUR 101 million but refused to modify its findings on methodology or cost allocation.

II.	ICSID Decision on Annulment 
The ad hoc Committee rejected Spain’s application for annulment of the ICSID arbitral award in Infrastructure Services Luxembourg S.À.R.L. and Energia Termosolar B.V. v. Kingdom of Spain (ICSID Case No. ARB/13/31). Spain had advanced multiple grounds for annulment, arguing that the tribunal had manifestly exceeded its powers, seriously departed from a fundamental rule of procedure, and failed to state the reasons for its conclusions. The Committee reaffirmed that annulment is not an appeal process and does not allow a de novo review of the tribunal’s factual or legal findings. It concluded that Spain’s objections did not meet the high threshold required for annulment under Article 52 of the ICSID Convention, as the tribunal had provided sufficient reasoning and had not committed any manifest excess of power.
Spain had also contended that the tribunal had wrongly refused to admit certain key documents, such as the Achmea decision and the European Commission's Decision 7384 on state aid, arguing that this constituted a serious departure from fundamental procedural rules. However, the Committee found that Spain had been given a full opportunity to present its case, and that the exclusion of these documents did not amount to a fundamental procedural breach. The Committee further held that the tribunal’s jurisdictional reasoning regarding intra-EU disputes under the Energy Charter Treaty was comprehensible and aligned with prior arbitral decisions, rejecting Spain’s claim that the tribunal had failed to state reasons. Accordingly, the Committee upheld the finality of the arbitral award and ordered Spain to bear the full costs of the annulment proceedings, including €2,310,379.38 in legal fees and expenses.

Infrastructure Services Luxembourg S.À.R.L. and Energia Termosolar B.V. (formerly Antin Infrastructure Services Luxembourg S.À.R.L. and Antin Energia Termosolar B.V.) v. Kingdom of Spain

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Infrastructure Services Luxembourg S.À.R.L. and Energia Termosolar B.V. (formerly Antin Infrastructure Services Luxembourg S.À.R.L. and Antin Energia Termosolar B.V.) v. Kingdom of Spain - decision

Policy instrument

Renewable energy

Fossil fuel

Economic sector

Finance