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Natland Investment Group N.V., Capamera Limited, G.I.H.G. Limited and Radiance Energy Holding S.À.R.L. v. The Czech Republic - judgment

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Natland Investment Group N.V., Capamera Limited, G.I.H.G. Limited and Radiance Energy Holding S.À.R.L. v. The Czech Republic - ruling

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Background: 
This case concerns investments made in the Czech Republic’s photovoltaic (PV) or solar energy sector, which were encouraged by a legal and regulatory framework established by the Respondent to promote Renewable Energy Sources (RES). This framework led to a rapid expansion in solar energy capacity, termed the “solar boom,” which subsequently created what the Tribunal acknowledged as a “legitimate policy issue” for the Czech Republic due to its financial and systemic implications. The dispute arose when the Claimants, who had invested in the solar sector through Energy 21, alleged that subsequent modifications to the RES Regime, including the introduction of a "Solar Levy," dismantled the support system and breached the Respondent's international obligations.



Merits: 	
In its reasoning on the merits, the Tribunal acknowledged that the "solar boom" presented a genuine policy challenge for the Czech Republic, stemming from the rapid growth of the PV sector encouraged by the RES regime. The Tribunal determined that the Solar Levy, despite its formal presentation, was substantively a measure designed to reduce the financial support payable to solar energy producers under the RES scheme, rather than a general tax. While recognizing the State's need to address the policy issues arising from the solar boom, the Tribunal found that the Claimants could legitimately expect the stability of the RES support for plants commissioned in 2009 and 2010, as there was no clear indication that changes would retroactively affect them until late 2010. The Tribunal concluded that amending the Act on RES Promotion to lift this stability guarantee for investments made in 2010 was incompatible with this intrinsic guarantee, thus breaching the FET standard. However, the Tribunal also considered that any investor in an EU country must be aware of potential EU Commission intervention in incentive schemes like the Czech RES regime, and factored this into the damages assessment, noting that cash flows would likely have been reduced under EU State aid rules, albeit differently than by the Solar Levy.



Decision:
Ultimately, the Tribunal decided that the Respondent had breached the fair and equitable treatment standard under the Energy Charter Treaty (ECT) and relevant Bilateral Investment Treaties (BITs) by imposing the Solar Levy in a manner that was incompatible with the specific stability guarantee provided under the Act on RES Promotion for solar plants commissioned in 2009 and 2010. This decision recognized the negative impact of the measure on investments made in the renewable energy sector under the expectation of a stable support framework. However, the Tribunal dismissed claims related to other measures like the repeal of an Income Tax Holiday. While finding a breach of FET concerning the Solar Levy, the Tribunal also concluded that the Respondent’s overall actions to address the consequences of the solar boom pursued a rational and legitimate governmental objective and did not constitute an "unreasonable" impairment of investments under the ECT, thus not breaching the non-impairment standard in that regard. 

The Claimants were awarded damages, calculated by considering a "but-for" scenario that included the likely impact of EU State aid rules on the RES support 34 26, with a total compensation amounting to CZK 249.46 million 35.



Follow on proceedings: 
The follow-on proceedings consisted of judicial reviews by the Swiss Federal Tribunal, which in both instances upheld the original arbitral awards. The first decision, issued in French on 7 February 2020, and the second, in German on 13 June 2024, confirmed the validity and enforceability of the awards, with no successful challenge by the parties.

Natland Investment Group N.V., Capamera Limited, G.I.H.G. Limited and Radiance Energy Holding S.À.R.L. v. The Czech Republic

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

This sector involves the wholesale and retail selling of goods.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

A subsidy is a direct or indirect payment to individuals or businesses, typically provided as a government cash payment or a specific tax reduction.

A ban is a legal action that prevents the sale or supply of a product or service, or that recalls a product from the market. Examples are bans on SF6, greenwashing, fossil fuel advertisement or single-use plastics.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

Energy derived from biological compounds that are renewable due to their short life cycle within the carbon dioxide cycle.

Direct investments by the governments using public funds. This can be to support climate initiatives or integrate climate into other projects.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

A tax advantage is an economic benefit applied to certain accounts or investments that are, by law, tax-reduced, tax-deferred, or tax-free. This can apply to investments in areas such as green energy projects or the agricultural sector, where tax advantages can help manage financial risks.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

Activities that provide lodging, food, and entertainment services to guests, including hotels, restaurants, and resorts.

This sector creates and distributes information and entertainment through television, radio, print, and digital platforms.

Financial support to help individuals manage the effects of unexpected events, securing their livelihoods and increasing the resilience of people and businesses to the changing climate. It’s especially vital in developing regions where everyday risks, climate-related weather extremes, or crop failures can push people into poverty. Without insurance, people may have to resort to selling assets or cutting consumption to cope with losses.

Activities of industries that extract natural resources, such as mining, oil, and gas, for commercial use.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

Heat extracted from the ground, usually in the form of hot water or steam and typically referred to as hydrothermal fluid.

A financial institution that manages a country's currency and can promote climate-related initiatives through green monetary policy and other means.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Electrical energy generated from mechanical devices driven by flowing fresh water.

Production of electricity and heat from solar irradiation.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

Kinetic energy of airflow transformed into useful energy, mostly electrical energy.

A policy instrument designed to support the development and acceleration of renewable energy sources by providing a guaranteed, above-market price for producers.

A loan is a policy instrument where funds are provided to a borrower with the expectation of repaying the principal plus interest.

This sector provides communication services, software development, and IT solutions.

Zoning and spatial planning are both methods for guiding the distribution of people and activities in a space, and are regulatory restriction.

Activities of government agencies and institutions that provide public services, enforce laws and manage public resources.

The processes through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts. Due diligence is the idea that reasonable precautions should be taken to avoid causing harm to people, the environment, or society. It also involves identifying and mitigating risks before they occur.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

Natland Investment Group N.V., Capamera Limited, G.I.H.G. Limited and Radiance Energy Holding S.À.R.L. v. The Czech Republic - judgment

Target

Policy instrument

Renewable energy

Fossil fuel

Economic sector

Finance