A subsidiary of the Spanish technology group Abengoa has recently filed a request for arbitration under the SCC Rules at the Permanent Court of Arbitration in The Hague.
Background
CSP Equity Investment is a Luxembourg entity which owns six thermo solar power plants in Spain and based on that subsidiary Abengoa is bringing its case to arbitration. The claim filed on June was disclosed after the listing of the company on the NASDAQ exchange last October.
The dispute is based on the recent energy reforms of the Spanish government. The government initiated a reform on the energy sector last year. Under the reform, a 7 per cent tax on the revenue of power generation and a reduction in the subsidies that previous governments had granted to renewable energy providers were included. Therefore, Abengoa claims that the reforms have broken the legimite expectations and do constitute an expropriation.
It has not been disclosed how much Abengoa is claiming. Nonetheless, the Spanish newspaper “El Pais” reported that a 60 million for each year until the settlement of the dispute was being claimed. Given the fact that concessions of solar thermal plants can be up to 40 years, the figure in dispute might be billionaire.
The arbitration
The arbitration has been filed under the SCC rules and under the Energy Chapter Treaty. The arbitration will be run by 3 arbitrators and the seat will be The Hague. Rumors suggest that the Spanish group has already appointed the well known Professor Brigitte Stern as their arbitrator.
This would be the third request for arbitration to which the Spanish Government faces after the energy reforms that apparently constitute a violation of the Energy Chapter Treaty. The other two have been driven by international investment funds and include claims up to 600 million Euros. Some experts believe that the Spanish government will face more arbitration. Time will let us know…