The biggest legal battle in the entrepreneurial history of Spain

Expansión, a Spanish newspaper generally critical on renewables and very pro on conventional energies wrote yesterday that the latest Energy reform (The fifth or Sixth already, depending how you understand reform) would unleash the largest battle in terms of national and international litigation, arbitration included, in modern Spanish history.

The Spanish government as a measure of precaution has designated a special envoi ambassador for Energy Issues to cope with this (Full title & name: embajador en misión especial para Asuntos Energéticos a Antonio Muñoz-Rojas de Alarcón). 

We have done a first reading of the Royal Decree Lay 9/2013 (RDL9/2013), approved on Friday July 12th and published yesterday in Spain's BOE (Official State Bulletin), and are afraid that we can only confirm the fear expressed in the heading of this post. Spain has completely abolished feed in tariffs (FIT) with retroactive effect for all renewable energy plants on its territory with effect as of July 14th (today). The FIT is replaced by a very unsophisticated flat fee investment incentive. Our Lawyers are travelling tomorrow together with the New Energy Platform and ANPIER to Brussels to talk to Mr. Oettingers team about this reform, and about legal remedies against the previous four reforms, against which we had already filed complaints between last december and today.

RDL9/2013 has a clear retroactive application, much more pronounced than the effects of all previous reforms together. The Spanish government has totally lost its referential cadre of EU Law, inspired by its national courts that have never ever referred any prejudicial question to Court of Justice of the European Union in Luxembourg (One of the issues we will discuss tomorrow in Brussels). Article 1.2 of RDL9/2013 applies the new regime to "the regulatory lifespan of the installations", therefore this application will have retroactive effect as far back as pre 2004 plants. Theoretically these plants might find themselves in the situation of having to return FIT received in the past, although in practice this might "only" be an accounting problem, since the past will be compensated with remuneration still to receive. Only this is sufficient already to not withstand the legal certainty test of EU law (Cf. Marks&Spencer etc).

Apart from the aforementioned, this law is straightforward discriminative. All installations are to be remunerated applying a set of three standard criterions, capex is one of them, and the production capacity of the installations becomes irrelevant. If you have invested more in order to obtain higher production and thus more hours of FIT this is very bad news for you. You are now considered to fall outside the category of "efficient and well managed company". Bad luck for you. Different situations are treated equally, definitely food for (EU) lawyers. The devil is in the detail, and the detail here is in the word "standard" which is the adjective of each of the three criterions of article 2.1 a, b and c of RDL9/2013. No need to mention how horrendous the concept is of incentivating investments already done. Wicked and twisted, legal certainty made in Spain.

The largest legal battle in Spain has begun, we will be informing on this during the coming months and keep you posted on new developments. If you need legal assistance for you investments in Spanish Renewable Energy don't hesitate to contact us and join over 1200 Renewable Energy producers defended by our Firm.