Charanne v Spain and Eiser v Spain: Comparative Case Analysis on Legitimate Expectations and Fair and Equitable Standard
| Author | Kudrat Dev |
Charanne v Spain and Eiser v Spain:
Comparative Case Analysis on Legitimate
Expectations and Fair and Equitable
Standard
Kudrat Dev
The present Article analyses the two
landmark decisions of Charanne v Spain and
Eiser v Spain to analyse which arbitral
tribunal had legitimate expectations under the
Fair and Equitable Treatment Standard
(FET) when dealing with sovereign changes
in regulation and legislation. The present
Article challenges the existing dominant view
that both the tribunals gave a same holding
but just under different fact patterns. On the
contrary it concludes that the content of the
FET standard, particularly interpretation of
what constitutes legitimate expectation for
breach of the FET is contradictory and
incoherent as a result of the decisions of both
the tribunals. Analysis of both the decisions is
relevant for three primary reasons: investors
have moved for enforcement of the awards last
June and November outside the European
Union as the European Commission disagrees
with the Eiser Award, Spain considers
challenging the award and many countries
consider withdrawing from the Energy
Charter Treaty.
88 SLJ 5(2)
Introduction
Spain adopted Renewable Energy Support Scheme (RESs) to
incentivise investment in capital-expensive renewable energy
sector in exchange of subsidies to investors.1 Spain’s
experience regarding the RESs illustrates what is termed as
‘Obsolescing bargain cycle and the Price cycle’2. The former is
when the Host State which had incentivised heavy
investments by foreign investors decides to modify an
obsolete bargain by removing or reducing the subsidies after
the production, consumption and development targets for
the sector are achieved.3 The latter is when the Hosts State
* Kudrat Dev is a commercial dispute resolution lawyer
qualified in India and an accredited mediator and consultant in
the UK. She has represented clients in matters which have
resulted in landmark judgments by the Supreme Court of India
and State High Courts on issues involving environment laws,
mining laws, arbitration laws and administrative laws. She is
presently pursuing her Masters in Law as a Chevening Scholar.
She is grateful to Dr. Emilia Onyema and Mr. Baiju Vasani for
the valuable discussions on the Fair and Equitable Standard in
the International Investment Law and Arbitration Course and
feedback on the present article.
1 Tomas Restrepo, ‘Modification of Renewable Energy Support
Schemes under the Energy Charter Treaty: Eiser and Charanne
in the Context of Climate Change’ (2017) 8(1) GoJIL <
http://www.gojil.eu/issues/81/81_article_restrepo.pdf>accessed
17 April 2018.
2 Peter D. Cameron, International Energy Investment Law: the
Pursuit of Stability (OUP 2010) 4-7.
3Restrepo (n1) 104; Also see: Iuliana-Gabriela Iacob and Ramona-
Elisabeta Cirlig, ‘The Energy Charter Treaty and Settlement of
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