RREEF v. Spain (ICSID Case No. ARB/13/30)
Summary by Natalia Charalampidou, citation details below.
The decision on jurisdiction was issued on June 6, 2016 and it is publicly available only in a redacted form. The present proceedings are still pending.
Invoked instruments, purported breaches & administering institution:
This is an ongoing arbitration under the ECT. The specific standards that have allegedly been breached by respondent are not stated in the decision on jurisdiction. The dispute was submitted to an ICSID arbitral tribunal according to Art. 26(4)(a)(i) of the ECT.
Any third parties:
The European Commission filed an application to intervene as non-disputing party under ICSID Arbitration Rule 37(2) on November 14, 2014 and December 9, 2015. Both were rejected on February 5, 2015 and January 14, 2016 respectively (¶¶ 16, 20, 31-32).
Claimants are RREEF Infrastructure (G.P.) Limited ("RREEF Ltd"), a company incorporated in Jersey, and RREEF Pan-European Infrastructure Two Lux S.à.r.l. ("RREEF Sarl") (¶ 1, 90). No further information on claimants is available at this stage of the proceedings. Yet, in Antin v. Spain (see under No. 25 below) it is mentioned that RREEF Ltd is a company of the Deutsche Bank group (see Antin v. Spain, final award ¶ 109). Respondent is the Kingdom of Spain ("Spain") (¶ 7). Nothing further on the factual background is explained.
The tribunal addressed the following jurisdictional objections put forward by respondent: (a) inapplicability of the ECT to disputes concerning intra-EU investments; (b) claim on alleged damages available solely to companies that own the plants and not claimants; (c) lack of claimants' qualification as investors under Art. 1(7) of the ECT and of the particular investment as investment under Art. 1(6) of the ECT; (d) tax measures excluded under Art. 21 of the ECT; (e) failure to comply with the amicable settlement and cooling-off period requirements under Art. 26 of the ECT (¶ 35).
Regarding the first objection, that of the "supremacy" of EU law, the tribunal noted that the main issue was whether such alleged supremacy prevailed over norms of international law (¶ 71). After clarifying, in alignment to Electrabel, that any question of "hierarchy" of laws applicable by tribunals must be determined by public international law and thus in any such event the ECT prevailed, the tribunal accepted the argument of treaty interpretation in such a way as not to contradict each other, contrary to Electrabel. It reached this conclusion on the base of the CJEU's judgment on Commission v. Germany of September 10, 1996 and on the fact that the - then - European Communities played a predominant role in promoting and negotiating the ECT. It also added that this approach is consistent with Art. 207(3) of the TFEU (¶ 76). Still, it did not explain the grounds supporting this deviation from the rules enshrined in the VCLT. Further, it did not find any disharmony or conflict between the ECT and EU law and therefore established no need for an implicit or explicit disconnection clause, citing Charanne (¶¶ 82, 83). In fact, it adjudged that "EU law does not and cannot trump public international law" (¶ 87).
The second objection contained two arguments, which the tribunal decided to address separately. The first one concerned the classical question about the standing of foreign shareholders to claim compensation (¶ 115). It referred to the restrictive definition of shareholders' rights adopted by Barcelona Traction and Diallo, whereas a wider approach was adopted by CMS and RosInvestCo, but Poštovà Banka v Greece illustrated a more cautious rule. Yet, in the present case it was unnecessary for the tribunal to take position in view of Art. 1(6) of the ECT, which removed any possible doubt regarding claimants' jus standi, citing Azurix (¶¶ 120-123). The second argument of the second objection referred to the avoidance of double recovery. This is a question for quantum, the tribunal decided. Thus, the "damages" objection was dismissed (¶¶ 126-127).
Turning to the objections ratione personae and ratione materiae the tribunal found that in this case claimants met the definition of investors and investment under the ECT. Respondent purported the application of additional criteria to the meaning of investment, although no textual or other basis was available. Therefore, this argument was rejected. Similarly, the argument of "shell company" was not convincing as no basis under international law exists to accord such commercial entities any less entitlement to the protections offered under an investment treaty than any other commercial entity, the tribunal noted (¶¶ 145, 147, 157, 160).
The tax objection based on Art. 21 of the ECT was referred to the merits, as a careful investigation of the circumstances and of the effects of the challenged measures was needed and such investigation could not be made at this preliminary stage (¶¶ 196-197).
Finally, after taking note of Ethyl Corporation and Enron (Jurisdiction), the tribunal decided that the amicable settlement and cooling-off period requirements had been met.
The factual background of this case, which is still pending, is not publicly available. Neither are the alleged violations of the ECT. With reference to the jurisdictional objections, the tribunal made the following findings. The objection based on the "supremacy" of EU law was not altogether successful. The tribunal, after accepting the argument of treaty interpretation in such a way as not to contradict each other without though providing the reasons for deviating from the VCLT, found no disharmony or conflict between the ECT and EU law. The tribunal also dismissed the second objection of shareholders having no standing for claiming compensation, in view of the clear language of Art. 1(6) of the ECT. On the same reasoning, the tribunal rejected the objection of claimants being a "shell company". It then deferred its decision on the tax objection (Art. 21 of the ECT) to the phase of the merits.
This summary comes from the following paper:
The paper is part of the joint OGEL/TDM/ArbitralWomen Special Issue:
TDM 7 (2018) - OGEL/TDM/ArbitralWomen - Strategic Considerations in Energy Disputes