The European Commission is seeking permission from the European Council to defend Spain from a €106 million lawsuit brought in a US court under the Energy Charter Treaty (ECT) which could put Madrid in breach of EU state aid rules, according to a document seen by Euronews.
The ECT is a post-Cold War international agreement designed to protect investments in unstable, formerly communist states. It has since become a source of controversy because it allows energy companies to sue countries for measures that could harm their expected profits.
While the legal case is binding and can generally be enforced in courts under international investment treaty rules, the European Union argues that Spain could face conflicting legal obligations – at home and abroad – if a US court orders enforcement.
After Spain rolled back the state aid scheme set up in 2007 to promote electricity generation from clean power sources, the Japanese investor Eurus Energy claimed losses under the ECT and won the right to compensation, with Spain ordered to pay €106 million plus interest in November 2022.
The legal proceedings were initiated by the International Centre for Settlement of Investment Disputes (ICSID), an arbitral tribunal linked to the World Bank, which manages legal disputes between international investors and countries worldwide.
