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Procedural Background and Mandate
This final Award concludes the ICSID arbitration initiated by Mathias Kruck and Others against the Kingdom of Spain under the Energy Charter Treaty (ECT). The Award incorporates by reference the Tribunal's prior decisions on jurisdiction, admissibility, liability, and principles of quantum, and renders a final determination on the calculation of compensation and the allocation of costs.
The Tribunal previously found, by a majority, that Spain breached the fair and equitable treatment (FET) standard under ECT Article 10(1) by repudiating its commitment to maintain the stability of the regulatory regime established by Royal Decree 661/2007 for photovoltaic (PV) facilities. This Award quantifies the reparation due for that breach.
Tribunal's Analysis on Quantum
The Tribunal's primary task was to calculate the compensation due as of the date of breach, 21 June 2014, based on the difference between the revenues Claimants would have received under the pre-existing regime (the 'but-for' scenario) and the revenues received under the New Regulatory Regime (the 'actual' scenario). The Tribunal resolved several key disagreements between the parties' quantum experts.
The Tribunal determined that the 'but-for' scenario must incorporate the 2010 regulatory modifications (RDL 14/2010), including the cap on operating hours, as these did not constitute a breach of the ECT. Crucially, the Tribunal rejected the Claimants' argument for a 'neutralisation' of the 7% TVPEE tax (Generation Levy), holding that ECT Article 21(1) explicitly carves out taxation measures from the Treaty's protections, thereby precluding jurisdiction over such claims. The Tribunal also declined to make adjustments for alleged losses from O&M contract renegotiations or cash collection delays, finding these were not direct consequences of the specific breach identified. On the issue of inflation, the Tribunal accepted the Claimants' approach, using the general Consumer Price Index (CPI) rather than the 'Adjusted CPI' proposed by the Respondent. Based on these findings, the Tribunal calculated the total damages payable to the DSG Claimants to be €15,000,000.
Decision on Costs
In allocating costs, the Tribunal considered the mixed success of the parties. It noted the dismissal of the claims brought by the 'TS Claimants' on jurisdictional grounds (the 'multi-party' objection) and the partial success of the 'DSG Claimants' on the merits, who recovered approximately three-fifths of their initial claim amount. The Tribunal found that both parties had pursued their cases reasonably. Balancing these factors, it ordered the Respondent to bear its own costs and to pay three-fifths of the Claimants' total costs, including their contribution to the costs of the arbitration.
Operative Decision
The Tribunal ordered the Kingdom of Spain to pay the DSG Claimants €15,019,540 as compensation for the breach of the ECT. It further ordered that pre- and post-award interest on this amount shall accrue at a rate of 1.16% per annum, compounded monthly, from 21 June 2014 until full payment. Finally, the Tribunal ordered Spain to pay the Claimants €2,885,356.85 and US$340,151.73 for their costs, with interest at 1.16% from the date of the Award.
