2013] A SPANISH CASE ANALYSIS 865
This Note explores a novel situation in international investment law
that arguably fits within the constructs of indirect-expropriation arbitral
jurisprudence. For years, States have passed regulations that protect the
environment by constraining environmentally detrimental foreign direct
investments (“FDI”), such as hazardous-waste landfills and the use of certain
fuel additives.1 Now, situations are emerging in which the State is cutting the
economic incentives it used to attract foreign investors who protect the
environment by investing in clean energy.
Spain, for instance, has revoked such incentives, in particular many of
its feed-in-tariff-system benefits, to the detriment of its foreign investors.
These investors are now attempting to claim compensation under the
Energy Charter Treaty in PV Investors v. Spain.2 This is the first arbitral case
under a multilateral trade agreement wherein foreign investors in clean
energy are demanding compensation for the revocation of economic
benefits. The decision in this case has the potential to provide guidance for
the many similar cases that will surely arise in the future as States strive to
meet clean-energy goals. This Note argues that under international law, the
revocation of clean-energy investment economic-support systems can
constitute indirect expropriation, requiring that compensation be paid to
Prior to such an analysis, it is important to understand the following:
(1) the definition of “clean energy” as referred to in this Note; (2) a basic
history of bilateral and multilateral investment agreements; (3) the barriers
to and types of economic support for clean-energy investment; (4) the
evolving definitions of indirect expropriation; and (5) the results of
Nykomb—an earlier investment dispute which involved a more
environmentally friendly fossil-fuel powered electricity generating station.3
A. CLEAN-ENERGY INVESTMENT
“Clean-energy investment,” as referred to in this Note, comprises the
renewable energy subcategories defined by the International Sustainable
Energy Assessment (“ISEA”).4 These include hydropower, solar, geothermal,
1. See infra Part III.B.1.
2. See Investor–State Dispute Settlement Cases, ENERGY CHARTER, http://www.encharter.org/
index.php?id=213&L=0#PV (last visited Sept. 13, 2012) (listing PV Investors v. Spain).
3. Nykomb Synergetics Tech. Holding AB v. Republic of Latvia, Case No. 118/2001,
Award (Arb. Inst. of the Stockholm Chamber of Comm. 2003), http://www.
4. See Lakshman Guruswa my & Kevin Doran, The Effectiveness and Impact of International
Energy Treaties, in F
ROM BARRIERS TO OPPORTUNITIES: RENEWABLE ENERGY ISSUES IN LAW AND
POLICY 89, 96–106 (Parker et al. eds., Pre-Publication Draft 2007), available at