In the past decade, Spain’s generous incentive system for renewable energy production attracted substantial foreign and national investment. However, when the global financial crisis hit, and the consequent reduction of electricity consumption, the incentives began to cause a tariff deficit in the electricity system, leading the Spanish government to cut back and then eliminate the incentives. In the wake of losses, international investors turned to investment arbitration, while national investors could only present their claims before Spanish courts. The result was a potential for differential treatment between national and foreign investors. This paper examines the incentive regime and the government’s changes to it in order to understand the investors’ claims and the reasoning that resulted in their rejections, both in national courts and in the only arbitration award issued up to now. The paper concludes with a discussion of the effect of the renewable energies situation on the investment arbitration debate within Spanish civil society.

Launched in November 2014, this project addresses a central policy issue of contemporary international investment protection law: is investor-state arbitration (ISA) suitable between developed liberal democratic countries? The project will review legal and policy reactions to investor-state arbitrations taking place within these countries and summarize the substantive grounds upon which claims are being made and their impact on public policy making by governments. The project will review, critically assess and critique arguments made in favour and against the growing use of ISA between developed democracies — paying particular attention to Canada, the European Union, Japan, Korea, the United States and Australia, where civil society groups and academic critics have come out against ISA.