Summary

Reproduced from www.worldbank.org/icsid with permission of ICSID.

This documents contains:

• The Award
• Separate Opinion of Mr. Judd L. Kessler
• Decision on Jurisdiction, Liability, and Certain Issues of Quantum - 30 December 2019

Award, Table of Contents

INTRODUCTION AND PARTIES
PROCEDURAL HISTORY
THE REMAINING ISSUES ON QUANTUM
The Parties' Positions
The Claimants' Position
The Claw-back
Tax Treatment of Damages
Additional Sensitivities to Damages. No Res Judicata
The Respondent's Position
The Alternative Legal Interpretation of the Tribunal's Decision
Claw-back
Amounts Related to the Coverage Ratio
Amounts Related to the Income Tax
Additional Sensitivities to Damages. Res Judicata
The Tribunal's Analysis
Res judicata
The Tribunal's determination with respect to the repayment of any sums already
paid to the Claimants in the period between the adoption of RDL 9/2013 and
Order IET 1025/2014
Damages arising out of the finding of breach through the disproportionate nature
of the new measures adopted
Conclusion in relation to the heads of damage ordered in the Decision
RESIDUAL ISSUES ON QUANTUM
The Tax Gross-Up
The Parties' Positions
The Claimants' Position
The Respondent's Position
The Tribunal's Analysis
Interest
The Parties' Positions
The Claimants' Position
The Respondent's Position
The Tribunal's Analysis
Costs
The Parties' Positions
The Claimants' Position
The Respondent's Position
The Tribunal's Analysis
AWARD

INTRODUCTION AND PARTIES

This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Energy Charter Treaty which entered into force on 16 April 1998 for Germany and the Kingdom of Spain (the "ECT or "Treaty") and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on 14 October 1966 (the "ICSID Convention").

The claimants are RWE Innogy GmbH ("RWE"), a company incorporated under the laws of Germany, and RWE Innogy Aersa S.A.U. ("RWE Innogy Aersa"), a company incorporated under the laws of the Kingdom of Spain (together, the "Claimants"). The respondent is the Kingdom of Spain ("Spain" or the "Respondent").

The Claimants and the Respondent are collectively referred to as the "Parties." The Parties' representatives and their addresses are listed above on page (i).

This dispute relates to measures implemented by the government of Spain modifying the regulatory and economic regime of renewable energy projects.

The Tribunal refers to section IV of its Decision on Jurisdiction, Liability, and Certain Issues of Quantum, dated 30 December 2019 (the "Decision"), for the legal and factual background of the case.

PROCEDURAL HISTORY

On 30 December 2019, the Tribunal issued its Decision on Jurisdiction, Liability and Certain Issues of Quantum (the "Decision"). The Decision is attached to this Award, and constitutes an integral part of it.

In the Decision, the Tribunal ruled:

"For the reasons set out above, the Tribunal decides as follows:

(1) That it lacks jurisdiction to hear the claims of breach of Article 10(1) ECT with respect to the two Taxation Measures introduced by Law 15/2012 of 27 December 2017, but that the jurisdictional objections of the Respondent are otherwise rejected.

(2) That the Respondent has breached Article 10(1) ECT (i) to the extent that it has procured repayment by the Claimants of sums previously paid by the Respondent under the regime in place prior to adoption of the Disputed Measures, and (ii) the disproportionate nature of the new measures that it has adopted, with specific respect to Urano, Grisel II, Bancal I and II, Siglos I and II, and Cepeda.

(3) All other claims and requests of the Parties are dismissed.

(4) The Parties are directed to attempt to reach an agreement on the amount of compensation to be paid by the Respondent to the Claimants in respect of its breaches of its obligations as identified in paragraph (2), in accordance with the Tribunal's findings. In a first phase, the Parties are invited to agree by January 23, 2020 on a reasonable schedule within which to attempt to reach agreement. If the Parties are unable to agree on such a schedule, such will be fixed by the Tribunal through further directions.

(5) Insofar as the Parties fail to reach an agreement in accordance with (4) above, the Tribunal will, following consultation with the Parties, fix a calendar for further submissions of the Parties on the damages due to the Claimants.

(6) The decision on the final determination of the damages due is thus reserved and will be fixed in the Award, along with the Tribunal's decisions as to interest, tax and costs."1

The Tribunal refers to section II of the Decision for the prior procedural history.

On 6 February 2020, pursuant to sub-paragraph 748(4) of the Decision, and following the Tribunal's granting of a two-week extension, the Parties communicated to the Tribunal their agreement on the schedule within which to attempt to reach agreement on the amount of compensation. The Parties proposed to do so in the form of a joint expert report, and included a proposed schedule for the preparation and submission of the experts' joint report.

The Parties disagreed on the modality of the Parties' eventual submissions (if any) on matters directly relating to the experts' joint report. On 6 February 2020, the Claimants expressed their view that the submissions should be simultaneous, whereas the Respondent submitted in its communication of 13 February 2020, that they should be filed sequentially.

On 15 February 2020, the Tribunal informed the Parties that the above indicated submissions, if any, should be simultaneous, with the possibility for the Parties to request leave from the Tribunal for a responsive (simultaneous) round, if necessary.

On 17 April 2020, the Parties supplied to the Tribunal the Experts' Joint Report in Response to the Tribunal's Decision on Jurisdiction, Liability and Certain Issues of Quantum, dated 16 April 2020 (the "Experts' Joint Report").

On 1 May 2020, the Claimants filed Comments on the Experts' Joint Report ("Cl.

Comments"), together with Legal Authorities CL-194 to CL-206.

On the same date, the Respondent filed Observations on the Experts' Joint Report ("Resp. Observations"), together with Legal Authorities RL-0101 and RL-0102.

On 19 May 2020, the Claimants filed their Responsive Submissions on the Experts' Joint Report ("Cl. Response"), together with Exhibit C-0347 and Legal Authorities CL-0207 and CL-0208.

On the same date, the Respondent filed its Responsive Observations on the Experts' Joint Report ("Resp. Response").

On 20 May 2020, the Respondent filed a "conditional" request in the event that the Tribunal follows the "alternative legal interpretation" as suggested by the Respondent, in which case the Respondent requests to be afforded opportunity to verify the Claimants' new evidence and to submit brief observations on the figures submitted by the Claimants in their submission of 19 May 2020.

Also on 20 May 2020, (i) the Tribunal took note of the Respondent's request of the same date, noting that it would consider it whilst studying the Parties' responses; (ii) the

Claimants filed observations on the Respondent's request of 20 May 2020; and (iii) the Tribunal acknowledged receipt and took note of the Claimants' communication of 20 May 2020 in response to the Respondent's communication of the same date, and noted that the Tribunal would consider the Parties' respective communications of 20 May 2020, as appropriate, whilst studying the Parties' responses.

On 16 November 2020, the Tribunal declared the proceeding closed in accordance with ICSID Arbitration Rule 38(1).

THE REMAINING ISSUES ON QUANTUM

The Tribunal refers to paragraphs 685 and 729-747 of the Decision. As noted there, the Tribunal has found a breach of Article 10(1) ECT so far as concerns -

i. the procurement of repayment of any sums already paid to the Claimants in the period between the adoption of RDL 9/2013 and Order IET 1025/2014;

ii. disproportionality with respect to certain of the Claimants' plants, i.e. the wind plants Urano, Grisel II, Bancal I and II, Siglos I and II, and the hydro plant Cepeda.

As to breach (i), the Tribunal found at paragraph 731 of the Decision that: "the Claimants say that EUR 19.4 million had to be repaid, which has not been challenged. All that is required is verification and precise quantification of amounts paid."

As to breach (ii), the Tribunal found at paragraphs 732-746 of the Decision that it is compensation with respect to the breach concerning the disproportionate impacts to Urano, Grisel II, Bancal I and II, Siglos I and II, and Cepeda that the Tribunal must assess, using as a base Table 10 to the second report of Compass Lexecon and the spreadsheet that underlies it.

Consistent with the Decision and the Tribunal's directions, the Tribunal now has the benefit of the Experts' Joint Report and also the Parties' submissions as summarised below.

...

AWARD

For the reasons stated in its Decision on Jurisdiction, Liability and Certain Issues of Quantum of 30 December 2019 and the body of this Award, the Tribunal hereby declares, orders and decides:

a) The Respondent shall pay to the Claimants a sum of EUR 28,080,000 as compensation for the damages resulting from its wrongful acts as determined in the Tribunal's Decision on Jurisdiction, Liability and Certain Issues of Quantum.

b) The Respondent shall pay interest on the sum awarded above from 30 June 2014 to the date of payment in full of all sums due pursuant to this Award at a rate of 2.07%, compounded monthly.

United Nations. Arbitrator Joubin-Bret was subject to certain restrictions from the UN as to the fees she could charge in the present case, and did not claim payment for time spent on the case during 2017. Subsequently, given the numerous additional submissions made by the Parties and the time spent on the case, after discussing the matter with her co-arbitrators and seeking advice from the Secretary-General of ICSID, she asked for authorization by the Legal Counsel of the United Nations to record her time at a reduced hourly rate of 1 US$/hour, and so informed the Parties by letter of 29 November 2018.

c) The Respondent shall bear 100% of the costs of the arbitration. The Respondent shall thus pay the Claimants USD 623,886.96 for the expended portion of the Claimants' advances to ICSID.

d) The Respondent shall reimburse the Claimants EUR 2,373,909.24 in respect of the Claimants' legal fees and other costs and expenses incurred in connection with the jurisdiction and liability phase.

e) Subject to paragraph c) above, each Party shall bear the legal fees and other costs and expenses which it incurred in connection with the quantum phase.

f) All other claims and requests of the Parties are dismissed.

[Signed]

Mr. Judd L. Kessler
Ms. Anna Joubin-Bret
Mr. Samuel Wordsworth QC

Date: December 15, 2020

Footnotes omitted