Spain has lost the case at the International Centre for Settlement of Investment Disputes, which is a part of the World Bank Group, following a lawsuit from investors who suffered losses from reduction in state subsidies for renewable energy that had been guaranteed by the State. Now Spain has to pay EUR 128 million of the principal sum and interests. The Spanish newspaper El País reports this.
The article reads that the Government of Spain violated Article 10 of the Energy Charter Treaty and deprived investors of fair and equal regime. The lawsuit from the companies Eiser Infrastructure Limited and Energia Solar Luxembourg, which had invested in renewable energy on the territory of Spain, has been satisfied partially, as the sum of the stated claims was over EUR 300 million. The newspaper notes that the defeat at the international tribunal can essentially affect the investment environment of the country and can mean losses to the country's taxpayers, since it creates a dangerous legal precedent when Spain is the respondent in tens of similar cases.
Ukrainian News Agency has reported that Ukraine faces a risk of multimillion losses because of a possible similar lawsuit.
Late in 2016, CNBM International Corporation Co. Board Chairman Jinsong Zhang said the company would lodge lawsuits against Ukraine at international courts on a case, which is similar to the Spanish case, as it concerns retrospective reduction in the "green" tariff for the Ukrainian assets of the Chinese corporation.
In particular, in December 2016, the Verkhovna Rada of Ukraine adopted a bill, which was drafted by MPs from the People's Front faction, which cut the "green" tariffs by 44% for some of solar power plants in the country although Ukraine had guaranteed them until 2030. Moreover, the draftsmen did their best to see the reduction in the "green" tariff affect only solar power plants owned by CNBM. The tariff will remain the same for other companies. The Main Scientific-Expert Department of the Verkhovna Rada gave its negative assessment of the discrimination.
Ukrainian News Agency requested Viktor Kiktenko, the scholar of China and head of the Department for Far East at A.Yu. Krymskiy Institute of Oriental Studies of the National Academy of Sciences of Ukraine, to give his comments on possible actions of the Chinese corporation in the light of the Spanish precedent. Mr. Kiktenko says much will dependent on the context of the relations between the two states.
"The current relations between Ukraine and China should be taken into consideration. Formally, one could expect the same resolution of the situation and the same actions. But this is one of cases when comparison does not work," he said.
Mr. Kiktenko notes that China expects more specific positions from Ukraine in the relations between the States.
"I would say our current relations with China are complicated and there are expectations after virtually three years of silence. China is expecting that Ukraine will show its positions and the positions can be articulated at the top political level, I mean an official meeting of the President of Ukraine and the Chairman of the People's Republic of China, a meeting of prime ministers. Well, there was an unofficial meeting in America and one in Davos… To date, the official visit has not taken place, there has not been any exchange of official visits, and the level of the dialogue has not been restored," he said.
"At present Ukraine and China have to resolve questions in the trade and economic cooperation. The questions address investment mostly. China emphasizes that we won’t move further before these questions are resolved," the expert added.
Lawyer Dmitry Shemelin says over 20 claims have been lodged against Spain at arbitration tribunals. New cases have been initiated against Italy and the Czech Republic. This is the biggest series of lawsuits against western states in the history of the investment arbitration.
Unlike Ukraine, Spain did not revise "green" tariffs retrospectively. Spain introduced a number of technical changes, but those changes resulted in the ten-percent reduction in profits of the solar projects. In particular, in 2010 Spain introduced time limits for each season of the year when generation of electricity under "green" tariffs was allowed. In 2011, solar power plants were obliged to pay fees for access to the energy networks and to install systems preventing from power surges. In 2013, Spain refused to apply "green" tariffs at new power plants.
The investors challenged the actions of the government. Most likely, they saw in the actions violation of legitimate expectations that emerged from pledges of the State.
The thing is that in a number of cases the State has been found responsible if it creates legitimate expectations of investors and then break them, including in the que.
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