Originally from Investment Treaty Arbitration and International Law Volume 17

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I. INTRODUCTION

Two judges in the United States District Court for the District of Columbia recently issued contradictory opinions on the enforceability of “intra-EU” arbitration awards in the United States. In particular, the judges came to different conclusions as to whether the Kingdom of Spain is immune from the jurisdiction of U.S. courts under the Foreign Sovereign Immunities Act (FSIA). In both cases, this question turned on the validity (or lack thereof) of Spain’s arbitration agreement with foreign investors under the Energy Charter Treaty (ECT), an issue that has become increasingly contested in the aftermath of the Court of Justice of the European Union’s (CJEU) decisions in Achmea and Komstroy.  

The cases in question are 9REN Holding S.À.R.L.  v. Kingdom of Spain  and Blasket Renewable Investments, LLC v. Kingdom of Spain.  Both concern renewable energy investors from EU Member States seeking enforcement of their arbitral awards against Spain, after the latter made changes to its regulatory scheme that adversely impacted foreign investors. The district court’s decisions—rendered in February and March 2023, respectively—are significant in that they represent a newfound divide in U.S. courts on the question of intra-EU arbitration. Indeed, Blasket is the first time a U.S. court has refused to enforce an ECT award against Spain on the basis that in light of the CJEU’s rulings, the State lacked the legal capacity to extend an offer to arbitrate to investors from any other EU Member State.   

Spain’s argument, of course, is not new. Over the past several years, it has been considered and almost unanimously rejected by numerous courts and arbitral tribunals.  Both Blasket and 9REN have been appealed and, as of the time of this writing, are pending before the U.S. Court of Appeals for the D.C. Circuit. How they fare at the Circuit level—and at the Supreme Court level, should the question go up further—will have implications for the fate of over a dozen outstanding awards against Spain, as well as for other investors seeking to enforce intra-EU awards in the future.