What European Law will not allow to be done against renewable energies in Spain

We're in the first days of the new year: 2014. On the brink of it the Spanish Government approved a new Electricity Sector Law (Ley24/2013) which will bring even more chaos to the Spanish Electricity sector: it merely cuts back without structurally improving thing. We will publish shortly about why we think that also this Law will not stand the test of EU Law, in the meantime we republish an article that was published in Renewable Energies Magazine to recap what has happened sofar. Especially for those readers interesting in attening our informative session in Madrid on January 13th this will be a good read.

The Court of Justice of the European Union in a judgment of a Belgian case C-195/12 (IBV) dated September 26, 2013 has confirmed that the Member States of the European Union cannot discriminate when defining support schemes for renewable energies, or when changing these, which for this purpose is the same. This judgment confirms a central argument of our legal strategy against the cutbacks of successive governments in Spain since 2010. 

With this brief introduction we started with the most important aspect: European Law is the law applicable to this set of causes, and this law prohibits discrimination in incentive systems for renewables. The same is true of legitimate expectations, defined by the judgment C-201/2008, Plantanol. It turns out that, once clarified this applicability, this set of reforms or cutbacks and patches have to be analyzed and judged by applying European Law in its entirety, and separately evaluating each element of the set.

Why taking the applicability of EU Law as a whole? 

The question of applicability is no incidental matter because with this applicability occurs the same as with pregnancy: a woman can be pregnant or not, but she cannot be just a little bit pregnant. As a result, a phenomenon takes place that we have christened "The transversal effect of European Law". The Spanish Supreme Court, in its settled jurisprudence, states that it is necessary to analyze all measures of support schemes and therefore all amendments thereto, to check whether the resulting profitability for the operator is reasonable. This doctrine implies that any judge hearing a case involving these cuts necessarily must also check the legality of each of these changes, and removing them if they contradict applicable European Law or otherwise. The Spanish National Court (Audiencia Nacional) and the Court of Justice of the European Union are in line with the Supreme Court in this judgment.

The Court of Justice of the European Union (CJEU) added, since the case Kühne & Heitz, C-435/2000, that the fact that there is a final judgment (ie. when one of these causes is res judicata as an erroneous interpretation of European Law) does not prevent subsequent correct application of EU law. In practice, this results in the fact that the CJEU has the last word. 

Where the Spanish courts do not coincide with the CJEU is in the development of case law on legitimate expectations and discrimination. For both principles, the ECJ jurisprudence develops a more nuanced case law, which implies more guarantees for operators in Member States. That is why we attach so much importance to reaching this Court.

Who do we represent?

Before going into the merits of the case we give you some background: this entire court battle has been unleashed on behalf of more than 1,200 small and medium photovoltaic facility owners from 5 kW to multi-MW blocks together totaling roughly 130 MW. They are primarily Spanish owners, but there are also French, English, German and Dutch owners. This representation has been made possible by the linear distribution of the general costs, making possible a very ambitious litigious deployment for all producers, the smallest included. In addition, we are volunteer advocates of the Platform for a New Energy Model, besides representing APPA in the challenge of RDL2/2013.

The strategic importance of the various legal channels

To date we have contested or claimed five cases before the various administrative and judicial bodies of Spain and the European Union. A number are already closed and others have pending cases before the Council of Ministers, the European Commission, the European Parliament, the National Court, the Supreme Court, the Constitutional Court and the European Court of Human Rights in Strasbourg, with the intention of reaching the Court of Justice of the European Union in Luxembourg. Until the closing date of this writing, we have not received any judgment on the merits of the issues raised. And besides, there is a tremendous shirking on the aforementioned application of European Law.

The effective judicial protection, the effectiveness and direct effect of European Law are the subjects in which we are far more concerned with regards to these legal procedures. We are in a battle, on the one hand, between the Spanish doctrine of reasonable profitability developed outside the European Law, and, on the other hand, the growing discomfort that the progress of the case law in Luxembourg causes.

The court conformism in Spain feeds the status quo at home, and not by chance. We find statements with more political than legal criteria. However, we also insist in the battle over an effective remedy, because with every umpteenth "final" reform, this battle gains more relevance. These last two sentences may be slightly cryptic without the proper context. In the following paragraphs we review the practical work we have done in court to illustrate. Afterwards, we will analyze this work to set about doing our work.

Chronology of the actions put in place

1. 2011, claim for State liability

On November 22, 2011 we submitted a claim for liability of the State to cut in one stroke the RD1565/2010 compensation to photovoltaic down to 25 years. This cut was later to be used by the government to offset the cut in hours of RDL14/2010. A real scam operation. We turned the negative administrative silence by the Ministry into an administrative litigation to the Supreme Court, considering that in this way we would be exempt from court fees. In retrospect, the RD1565/2010 has to be identified as the beginning of the continuous expropriation, or the photovoltaic plundering in Spain. We then denounced this fact before the European Commission in December 2012. The latter complaint was drafted as lawyers of the Platform for a New Energy Model, involving the participation of Fundación Renovables and APPA.

2. 2011, provisional settlements under the RDL14/2010 

Since 2011 we appealed before the National Court against the provisional settlements adapted to RDL14/2010, limiting the yearly hours which benefit from feed-in tariffs for photovoltaic installations. This court rejected our argument following a hyper-formalist approach, which we afterwards contested by appealing to the Constitutional Court, claiming that the National Court had overthrown our arguments with the aid of arguments that can only be classified as Kafkaesque. Let me explain: the problem with this hyper-formalist approach is on the label "provisional" of the settlements. 

Materially they have nothing provisional as they already contain all the features of a definitive act. This is what Spain itself has fairly defended before the Court of Justice of the European Union in a very similar case that the European Commission had initiated against our country: that our formalistic system in similar circumstances allows appealing such acts. Therefore in our proceeding, we have received from the National Court a more formalist ruling than the approach of the Government itself when called to give explanations in Luxembourg. This is why we call it hyper-formalist. It seems that they compel us to insist and go to Luxembourg every time this situation takes place.

We have insisted on the issue of the provisional settlements up to the European Court of Human Rights in Strasbourg and, at the same time, we filed a complaint about the lack of effective judicial remedy before the European Commission, together with another complaint regarding the breach of Directive 2009/28/EC, already mentioned in this article in the section on RD1565/2010. The central issue in our complaint is that you cannot use procedural arguments in order to avoid the application of European Law, as the National Court did, and if you want to do so, you need to raise separate a preliminary ruling of European Law in order to determine its legality. Failure to do so would violate the access to the competent judge (Luxembourg) and would be a mockery of the Spanish legal system. 

The complaint is still pending final assessment by the European Commission. In the closing day of the writing of this article we got the news that a PV producer from Lleida (who is also an UNEF member) had contested a 2012 provisional settlement before the National Court and had been declared admissible. Once this news is confirmed, of course, we will challenge all provisional settlements. Maybe someone has thought that there will probably not be any final settlement adapted to RDL14/2010 by the system of RD661/2007 during the validity of both, which will be repealed on January 1, 2014. 

3. 2012, the moratorium of renewables RDL 1/2012 

In March 2012, we contested the moratorium of the RDL 1/2012 directly against the Supreme Court. We followed that path because the moratorium limited itself, even by preventing its indirect challenge by the interested party -thus this law disposes the withdrawal of the interested party from its projects. 

As a result, the interested party that follows the letter of the law has to sacrifice its active legitimation to contest it. It is thereby impossible to obtain any administrative act able to be contested afterwards. This cause is pending to be admitted by the Constitutional Court of Spain, due to the fact that a prejudicial issue of European regulation that clarifies if this reinforcement is concealable with its direct effect has still not been presented. 

4. 2013, the electricity tax of the Law 15/2012

In February 2013, we filed a complaint against Law 15/2012 before the European Commission and we also sent a report on behalf of our clients to the cabinet meeting, which is responsible of the accomplishment of State aids procedures. In particular, we argued that the transfer of the bills of renewables to the public budgets constitutes a forbidden aid to the former ordinary regime, since the State offsets its negative externalities with the renewables. 

The European Law obliges to inform about this type of aids properly and Spain will not be able to do so until obtaining the European Commission approval. This Commission, following our complaint, has made an information requirement to Spain.  The Ministry, for the time being, has sent the acknowledgement of receipt.

5. 2013, the new consumer prices index of RDL2/2013

Last July we brought a lawsuit to the Supreme Court as incidental lawyers of APPA against the ministerial order, IET221/2013. In October the National Court proceeded to establish a specific term to suit for the same issue, this time on behalf of the photovoltaic producers. We decided to go to both courts in different qualities, since both of them might be able to deal with this particular issue.

A shot in the dark

In the meantime, the European Commission started proceedings last September against Spain for not having informed about the measures that had been adopted to transpose the well-known Directive 2009/28/EC. This cause is certainly related to a number of our reports, but this is an informal relationship, since we did not deal with this particular deficiency in Spain, but we decided to focus our reports on material breaches. It is nevertheless encouraging, since its influence can solve all those material breaches from the Directive. 

Pending actions

Final settlements of 2011 -drawn in the enforcement of the cutback in hours of the RDL 14/2010- still remain to be contested, most likely in the spring of 2014. The payments and electric tax are also pending to be contested, respectively in November 2013 and 2014. To contest the electricity reform of RDL9/2013 next year, we will proceed against the decrees and ministerial orders that will develop it, as well as against any administrative act that individual producers will receive. We will also challenge the final settlements of 2013 by implementing the CPI of the RDL2/2013, which will probably be in 2017.

A complaint on behalf of the Platform for a New Energy Model for lack of competition in the electricity sector is pending to be presented to the European Commission –although it is already drafted-, and the drafting of other complaints are pending: one denouncing the RDL9/2013 Reform and the other denouncing the actions of the Government against efficiency and self-consumption.

Why so many legal tricks and who is afraid of Europe?

It turns out that the infringement of the effective judicial protection translates into an armor that effectively avoids analyzing the real substance of the matter in the light of its regulation. 

Let us ponder on this issue: ¿Is it merely a reflex or is it a premeditated strategy? The structure and quality of the replies of the State legal profession up until today have consisted in the improvised criteria against the preliminary rulings approach, certainly copying and pasting from other causes and usually naming outdated references. It is a way to avoid reaching Europe at all costs, to avoid the collapse. It seems to be a reflection if we take into account the disparity of the quality and types of arguments between the different State attorneys. 

The logic of the Government and the logic of a defense against everything

The Government has long maintained a particular methodology, probably pretending to postpone a real reform "ad infinitum”, since it finds itself endorsed by the Supreme as well as by European Law. The Administration retro-aliments itself with the Supreme Court to come up with ideas for new reforms, in an even more grotesque detachment from Europe. In the national press an observer used a few words of Churchill on the Soviets to characterize the new reform: “a riddle wrapped in a mystery, inside an enigma". These words also typify the current status of the provisional settlements and the effective judicial protection for photovoltaic producers.

The time to reach the Court of Justice of the European Union will mark the expiration date of this hoax. In the musical chairs of the governments of the nation, someone will be left without a chair when this happens.