Abstract
The Spanish renewable energy “saga” offers a graphic account of the structural biases of international investment law. Like other countries, Spain introduced economic incentives in support of photovoltaic energy, attracting sizable national and foreign investment. When this regime proved too burdensome on public finances, the government changed it drastically. Around 60,000 Spanish investors were affected. When these investors sought justice, they faced a different fate from their foreign counterparts. While foreign investors had the option to submit their claims to international arbitral tribunals, domestic investors were limited to national courts.
The outcome was a textbook example of unequal treatment of similar situations: while more than 30 tribunals found that Spain breached the fair and equitable treatment standard and frustrated investors’ legitimate expectations, the Spanish supreme and constitutional courts held that reforms complied with the constitutional principles of legitimate expectations, legal certainty, and the prohibition of retroactivity. Spanish investors made the same type of investment and suffered the consequences of the very same legal measures but were subject to different adjudicatory bodies under distinct regulatory frameworks—the Spanish Constitution and the Energy Charter Treaty. The application of investment protection standards based upon claimants’ nationality resulted in a distributive injustice: local investors not only failed to see their losses compensated but also (as taxpayers) helped to foot the bill of the payments awarded to foreign investors. This is an unfair allocation of the costs and benefits of the energy transition. This article calls for the creation of a legal framework specifically devoted to investments in the renewable energy field that overcomes the foreign/domestic dichotomy and protects the legitimate expectations of all citizens and investors. This would boost the scale effect of community engagement and unlock the potential of social innovations such as crowdfunding, energy cooperatives, and startups. Investments in renewable energy, even if motivated by the individual search of profit, yield communal benefits and justify special treatment due to the climate emergency. This new approach would also promote “just transition,” a development model in which energy transition happens equitably, leaving no one behind.
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