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Spain and the ECT: A Lesson in Enforcement

James Rogers, Partner at Jenner & Block, outlines the key takeaways from the backlash to international investment treaties and investor-state dispute settlements.

Since 2018, at least 22 arbitral tribunals have determined that regulatory changes in the Spanish renewable energy sector in the late 2000s violated Spain’s obligations to investors under the Energy Charter Treaty (ECT), resulting in Spain being held liable to the tune of billions of euros.  

However, the non-arbitrability of intra-EU investment treaty disputes flowing from the seminal Court of Justice of the European Union (CJEU) decision in Slowakische Republic v Achmea (Achmea) has left investors seeking enforcement of their awards outside of the EU.   

In this article, we consider: first, the general backlash against international investment treaties and investor-state dispute settlement (ISDS); and, second, what investors are doing to enforce against Spain (notwithstanding Achmea), to extract the key takeaways for the wider investor community.   

Backlash against ECT and ISDS  

The ECT is a multilateral framework with 54 signatories, principally engineered to liberalise energy markets. Central to the ECT are the protections afforded to foreign investors, including a prohibition on state expropriation of investments and an obligation on states to afford investors fair and equitable treatment. However, the ECT (much like investment treaties in general) has come under increasing scrutiny amid a growing dissatisfaction with the ISDS system.  

Investment treaties such as the ECT play an important role in protecting investments made in one country by investors from other countries. In so doing, they help ensure the stability of the investment environment and help attract investment. However, others consider the benefits to be outweighed by the limit that the system places on the ability of states to legislate freely in the national interest, particularly in relation to climate change and renewable energy targets. In addition, many states regard the ISDS system as having generated manifestly unfair awards in favour of multinational corporations to the detriment of national interests. It is not surprising that the most vocal states are those with a history of having breached their investment treaty obligations. 

In that context, the CJEU set a significant EU precedent in Achmea, in establishing that investor-state arbitration provisions in intra-EU bilateral investment treaties were inconsistent with EU law because they infringed upon the EU’s autonomy to determine matters of EU law. The subsequent 2021 CJEU decision in Moldova v Komstroy  extended the Achmea principle to multilateral agreements – including the ECT. In short, EU law now prohibits arbitration as a form of ISDS in investment treaties between or among EU states.   

In turn, many European states have indicated an intention to withdraw from the ECT. This includes Spain, which has indicated that it is unhappy with attempts to reform the ECT because the proposed reforms have not gone far enough in allowing states freedom to legislate against fossil fuel investments.  As we shall see below, Spain’s stance is particularly interesting as a serial offender of the ECT, its legislation against positive climate action and renewable energy targets giving it most-wanted-fugitive status. Spain’s motivation may be less to do with climate objectives and more to do with being a sore loser.  

Spain and the ECT 

In the late 2000s, in an effort to meet EU renewable energy targets, the Spanish government introduced a scheme to encourage investment in its renewables sector. The scheme generated a surge in investment; however, following the 2008 economic crisis, the Spanish government reduced the premiums being paid to investors, who in turn sought to recover their lost returns by invoking the ISDS arbitration provisions of the ECT. In other words, Spain was legislating to the detriment of renewable infrastructure investment; it was not pursuing an agenda in support of climate change objectives.  

Notwithstanding the Achmea line of cases, most of the Tribunals constituted to hear ECT arbitrations have, nonetheless, accepted jurisdiction, thereby upholding the commitment to arbitration made by Spain in the ECT. Multiple awards amounting to billions of Euros are now outstanding against the state, waiting to be enforced.  

However, Achmea has made enforcement of the resulting pro-investor awards effectively impossible in the European Union and Spain refuses to pay the piper. So, in the midst of such judicial and political obstacles, what are investors doing to enforce their multi-million Euro arbitral awards? Plenty it would seem, and Spain is fighting back leading to some very interesting court decisions. 

International enforcement action against Spain  

United States 

In 2019, tribunals separately constituted under the Rules of the International Centre for Settlement of Investment Disputes (“ICSID”) awarded €291 million (US$307 million) to two Dutch entities (subsidiaries of NextEra) and €42 million to a Luxembourg entity (9REN Holding). In view of Achmea, Spain rejected the jurisdiction of the tribunals to issue the awards and Spain sought anti-suit injunctions from European courts to restrain the investors from seeking to enforce the awards in the US; the investors subsequently sought ‘anti-anti-suit’ injunctions to restrain Spain’s actions in the EU.   

In February 2023, the US District Court for the District of Columbia held  that, in spite of Achmea, it had subject-matter jurisdiction by virtue of the arbitration exception under the US Foreign Sovereign Immunities Act. The exception provides that a sovereign state is precluded from claiming immunity from suit in the US in an action to confirm an arbitral award, provided that “the existence of an arbitration agreement, an arbitration award and a treaty governing the award” are all established, as was the case here. 

However, separately, on 29 March 2023, the same District Court dismissed Blasket Renewable Investments’ petition to enforce a €26.5 million UNCITRAL award against Spain. Inconsistent with the 9REN/NextEra decisions, the Court determined that, owing to Achmea, there was no valid arbitration agreement with the result that the Court lacked subject-matter jurisdiction. This is understood to be the first time that a US Court has acceded to Achmea, holding that Spain lacked the legal capacity to agree to arbitrate.  

The two sets of contrasting decisions have been appealed and are due to be heard together later this year. 

United Kingdom 

Blasket’s setback in DC was softened by the English Courts which, two days prior, granted: an interim third-party debt order; and interim charging orders, both in respect of assets ultimately controlled by Spain. 

The English Courts have been willing to take a pro-investor stance in the ECT context, having previously granted a third-party debt order in favour of Infrastructure Services Luxembourg SARL and Energy Termosolar B.V. (Antin Investors) supporting enforcement efforts regarding a €120 million ICSID arbitral award.  

In May 2023, the English Commercial Court dismissed Spain’s application to set aside the registration of that award. The English Court rejected Spain’s plea of sovereign immunity and its reliance on the Achmea principle, noting that the CJEU did not have primacy over the ICSID Convention. 


Spain has also been resisting enforcement by the Antin Investors in Australia on the assertion that it was immune, as a foreign state, from recognition and enforcement proceedings under the Australian Foreign States Immunities Act 1985. On 12 April 2023, the highest civil court in Australia found that, in acceding to the ICSID Convention, Spain had waived its immunity from recognition and enforcement of a valid ICSID award and that Achmea did not impinge on that conclusion.  

This judgment will be welcomed by three other investors who have sought to enforce arbitral awards in Australia. 

However, commentators have recognised that the High Court’s judgment does not interfere with Spain’s right to plead foreign state immunity in respect of any attempted execution of the award against Spain’s assets (i.e., the means by which a judgment enforcing an international arbitral award is given effect). That right is specifically preserved by Article 55 of the ICSID Convention. In order for the Antin Investors to take that further step of execution, they will have to successfully plead that Spain has also waived its immunity from execution. 


On 17 March 2023, the Swiss Federal Supreme Court declined Operafund’s application to attach various Spanish assets in Switzerland by way of enforcement in respect of a €31 million ICSID award.  In reaching its decision, the Court confirmed that an ICSID award would be recognised in Switzerland; however, the Swiss rules of state immunity dictated that where a party seeks to attach a foreign state’s assets, there must be a sufficient Swiss connection to the underlying debt (in this case, the ICSID award), which OperaFund had failed to demonstrate. Significantly: (i) the Court was not relying on Achmea in reaching its decision; and, (ii) commentators have questioned the compatibility of the decision with the ICSID Convention. Despite being considered an arbitration-friendly jurisdiction, Switzerland’s reluctance to permit enforcement against sovereign assets in such circumstances is a serious impediment to ECT investors seeking recovery in that jurisdiction.    

What does this all mean for investors? 

Notwithstanding Swiss barriers to enforcement and a single anomalous decision from the District of Columbia, there is judicial appetite outside of the EU to support investors in their ECT enforcement action. Perhaps unsurprisingly in a post-Brexit world, the English Courts appear particularly eager to confront the primacy of EU case law, as the UK itself looks to re-stablish its judicial sovereignty: the May 2023 Blasket decision unmistakeably reaffirms this intent.  

Alternative avenues to exert pressure exist outside of the court room. On 7 March 2023, (in correspondence that has since been made public) Blasket wrote to Chase Manhattan Bank as fiscal agent of one of Spain’s sovereign debt instruments, asserting that Spain’s failure to discharge its debt obligations under the Spanish ECT awards constitutes one or more events of default under that instrument, with the result that the corresponding debt had become immediately due and payable. This move has not been widely publicised but the allegation that Spain is in default on its sovereign debt undoubtedly brings additional pressure to bear and will likely generate significant interest in the coming year.  

This is a good reminder that litigants (including investors looking to pursue enforcement action against sovereign states) should seek to adopt both a holistic approach that considers all available avenues to redress (inside and outside of court) as well as a global strategy. If the claimant investors are to win the day and collect against Spain, that will be through sheer persistence and the accumulation of pressure across all available avenues. 

The article was co-authored by Johnny Robb, Associate in the International Arbitration team at Jenner & Block

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