×
Logo

Rule of Law Index

  • The second edition of the Report on Compliance with Investment Treaty Arbitration Awards 2023 confirms the general trend of the increasing refusal by States to pay adverse Awards, thereby failing to comply with their international law obligations.
  • Spain stands out again: the total amount of Awards unpaid by Spain has almost doubled to at least USD 1.3 billion / EUR 1.2 billion (excluding interest rates, lawyers’ fees and arbitration costs that Spain has been ordered to pay as well).
  • In addition, Spain has incurred interest rates and legal fees totalling USD 270 million / EUR 250 million, plus about EUR 70 million for own legal fees.
  • Spain is facing 51 Energy Charter Treaty (ECT) claims all of them concerning the renewable energy sector.
  • The damages claimed total more than USD 10 billion, with interest rates continuing to be added to that number.
  • No fewer than 5 EU Member States are in the top 20, which includes Spain, Italy, Czech Republic, Croatia and Poland, all refusing to pay the adverse Awards rendered against them.
  • Indeed, Spain ranks number 1 of the most delinquent Respondents in the world when it comes to the refusal to pay these Awards – equal to Venezuela and ahead of Russia.
  • Our analysis illustrates that most unpaid ISDS Awards relate to disputes arising out of the renewable energy sector and rendered under the ECT.
  • The announced common withdrawal of the EU and its Member States from the ECT will not make the final awards and pending disputes “simply go away”.
  • The meltdown of the ECT casts serious doubt on the EU’s stated goals of leading the global energy transition as per the Paris Agreement and the EU Green Deal.
  • It is also noteworthy that awards resulting from disputes in the traditional, or “unclean”, energy sector are settled significantly more often than renewable energy awards.
  • Given the anti-arbitration attitude within the EU, the enforcement of Awards is increasingly successful outside the EU, in particular, in the UK, Australia and the US.
  • In summary, by refusing to pay the ISDS Awards, Spain and the other EU Member States undermine the international legal order and effectively throw into doubt the whole system of international investment treaties and arbitration.
  • The full 2023 Report, containing a detailed analysis of the top 20 countries is available here or at: internationallawcompliance.com

The Saga