The demands come as the Spanish Congress of Deputies prepares to vote on Thursday 10 March on a bill passed by the Spanish Senate on 23 February calling for the repeal of Spain's retroactive changes to the PV sector. The demands also follow official criticism of Spain's actions from the European Commission. On 22 February 2011, European Commissioners Gunther Oettinger and Connie Hedegaard sent a letter to the Spanish government condemning Spain's retroactive actions.
The investor demands are under the Energy Charter Treaty, a multi-lateral investment treaty designed to protect cross-border energy investments such as solar PV. Of the over 25 claims brought under the ECT since it came into force, only one has been brought against an EU15 country. The other claims have been predominantly brought against Eastern European or former Soviet Union countries.
Fifty-one countries, including all members of the EU and the European Community itself, are signatories to the Treaty. The Treaty was designed to protect foreign investors who have made investments in the energy sector of the signatory countries. The demands are the first step in a process that will allow investors to seek reparation from Spain before international arbitration tribunals if Spain does not repeal the offending provisions or provide compensation.
Stephen Jagusch, specialist international arbitration partner at Allen & Overy, said "the Energy Charter Treaty was created to foster long-term cross border energy investments and to protect foreign investors from improper government interference. The ECT gives investors legal rights above and apart from local law. The changes that Spain has made to the PV sector will cause substantial harm to these investors. Spain's actions appear clearly inconsistent with the investor protections afforded by the Energy Charter Treaty, which is why we and the investors believe there is very strong case for compensation."
Allen & Overy was chosen by the investor group following a rigorous selection process. Allen & Overy has one of the leading Energy Charter Treaty arbitration practices and, lead by Stephen Jagusch, brought the first case ever under the Treaty.
This is an important case for Spain and for investors in the energy sector in Europe more widely. Spain needs to maintain the confidence of foreign investors in all sectors, which it has jeopardized by its unlawful changes affecting existing investments. Further, renewable and low carbon energy is at the very heart of EU energy policy, and is also critical in the global battle against climate change. Approximately EUR1 trillion of investment is required in the EU alone over the next 10 to 20 years to achieve its low carbon targets. For that investment to happen, investors need clear and stable regulation.
Spain's actions have undermined investor confidence in Spain, and threaten to do so across Europe. Today's actions by investors are an important first step in enforcing their Treaty rights. It is also a clear warning to governments inside and outside the EU to provide a stable regulatory framework for investments and that they must comply with their obligations under the Energy Charter Treaty.
The International Investors participating in this action include: AES Solar, Ampere Equity Fund, Element Power, Eoxis Energy,European Energy, Foresight Group, GreenPower Partners, GWM-Lux Energia Solar, HgCapital, Hudson Clean Energy, Impax Asset Management, KGAL GmbH & Co. KG, NIBC Infrastructure Partners, Scan Energy, White Owl Capital and several others. These investors manage over $30 billion on behalf of more than 70 workers pension funds and other institutional and individual investors who collectively manage over $3 trillion in capital for global investment.
About the Energy Charter Treaty
The Energy Charter Treaty provides a multilateral framework for energy cooperation and investment unique under international law. The Treaty is designed to promote energy security and to protect foreign investments in the energy sector against key non-commercial risks, including discriminatory treatment, expropriation and unfair and inequitable regulatory change. The Energy Charter Treaty was signed in December 1994 and entered into legal force in April 1998. To date, the fifty-one countries, the European Community and Euratom have become bound by the Treaty.
The Treaty provides a comprehensive system for settling disputes on matters covered by the Treaty. In particular, it allows foreign investors to take host governments directly to international arbitration for violations of the Treaty. It creates separate supra-national legal rights. The fact that changes to investments may be legal under local law is not a defense under the Treaty. The supra-national legal rights coupled with the right to international arbitration is important in encouraging signatory countries to observe their Treaty obligations and in promoting a stable environment for investment in line with the aims of the Treaty.
About Retroactive Spanish PV changes
The investors are seeking reparation for retroactive changes introduced in recent months by the Spanish Government that materially affect the value of existing investments. Under the original law, PV projects were entitled to sell their entire output for the life of the installations - generally considered 40 years at the full tariff (including a certain tariff for the first 25 years and a lower tariff from year 26 onwards). In November and December 2010 the Spanish Government (i) capped the hours of production eligible for the tariffs at 20-30% below existing production for 2011-2013, (ii) imposed lifetime caps on production that affect a large number of projects and (iii) limited the tariff initially to 25 years (though with February amendments it was extended to 30 years). These changes, particularly the drastic cuts over the next three years, threaten the viability of many installations, including those of international investors and the over 200,000 Spanish citizens that have also invested in PV installations.
The Spanish government claims that it introduced these retroactive measures to generate cost savings in the energy sector and avoid increasing end-consumer power prices. The Government also made changes to the conventional power, wind power and solar thermal power sectors. However, the changes to those sectors were not retroactive, leaving the solar PV sector bearing a disproportionate burden. Mainly owned by foreign funds and over 200,000 small Spanish savers and international investors, the photovoltaic sector does not carry the political clout of the conventional power, wind power and solar thermal sectors which are dominated by domestic utilities and construction companies.
Originaltext: White Owl Capital AG digital press kits: http://www.presseportal.de/pm/78742 press kits via RSS: http://www.presseportal.de/rss/pm_78742.rss2
Contact: The investors request that any questions be directed to their legal counsel, Allen & Overy.
Primary Contact:
Stephen Jagusch Allen & Overy LLP (London) +44 (0) 203 088 3882 stephen.jagusch@allenovery.com
Secondary Contact:
Antonio Vazquez-Guillen Allen & Overy LLP (Madrid) +34 91 782 9800 antonio.vazquez-guillen@allenovery.com
© 2011 news aktuell
