In a significant development, the US judiciary has asserted that it has the authority to recognise and enforce arbitration awards related to Spain’s renewable energy sector.
This ruling opens the door for the potential seizure of Spanish state assets in the United States, marking a new phase in the ongoing dispute over unpaid arbitration awards totaling €355 million.
Background on Spain’s renewable energy arbitration cases
The disputes date back to Spain’s 2014 decision to reduce the returns on renewable energy investments. This move led to numerous lawsuits from foreign investors who claimed that the cuts violated the terms of their agreements with Spain. Various international arbitration courts have ruled in favour of these investors, awarding them substantial compensation. However, Spain, led by Vice President Teresa Ribera, has refused to pay these awards, which are now nearing a total of €2 billion, including legal costs and interest.
US court ruling and potential asset seizures
The recent US court decision affirmed that district courts have jurisdiction under the Foreign Sovereign Immunities Act (FSIA) to enforce these arbitration awards. While the ruling does not automatically mean that enforcement will occur in every case, it establishes a legal pathway for investors to seek the seizure of Spanish assets in the United States.
At the same time, the US court offered Spain some relief by overturning a previous decision that had prevented Spain from seeking protective measures in foreign courts to avoid enforcement of the awards. Nonetheless, the ruling fundamentally increases the risk of asset seizures in the United States.
Recent seizures of Spanish assets in Europe
The US decision is part of a broader pattern of legal actions against Spanish assets abroad. Recently, the UK judiciary ordered the provisional seizure of Aena’s usufruct rights over London’s Luton Airport. Aena, controlled 51% by the Spanish public entity Enaire, is involved in a case with the American company NextEra Energy, which is also pursuing enforcement of its arbitration award in the US. This particular case revolves around Spain’s failure to honor a $290 million award.
In another instance, the UK courts authorised the seizure of four bank accounts belonging to the Instituto Cervantes, a public institution that promotes the Spanish language worldwide. The total amount seized was €805,808, also related to unpaid renewable energy arbitration awards.
Similarly, in Belgium, courts have ordered the confiscation of payments from Eurocontrol to Enaire, amounting to approximately €80 million. This action is tied to another arbitration award enforcement.
Implications for Spain’s international reputation
The enforcement of these arbitration awards in the United States could have significant implications for Spain’s international standing, particularly with the US and other global investors. The Spanish government, along with the European Union, has been working to address the situation, but so far, legal maneuvers to prevent enforcement outside the EU have been largely unsuccessful.
The US court’s assertion of jurisdiction sets a precedent that could encourage more investors to seek enforcement of their awards in the United States, potentially leading to further legal and financial challenges for Spain.