UK court rules Spain cannot claim state immunity in renewable energy incentives dispute
Supreme Court Decision and Its Implications
Background of the Dispute
LONDON, March 4 (Reuters) – Spain cannot claim immunity to stop a multimillion-euro award over cuts to renewable energy incentives being registered in Britain, the UK’s top court ruled on Wednesday, limiting states’ ability to claim immunity in disputes with investors.
The Supreme Court said, however, that states can still claim immunity in relation to the execution of an arbitration award against a state’s property.
Investment and Arbitration Proceedings
Infrastructure Services Luxembourg and Energia Termosolar, which had invested in renewable energy facilities in Spain, took Spain to arbitration under the Energy Charter Treaty more than 10 years ago for withdrawing subsidies for renewable energy.
The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) awarded Infrastructure Services Luxembourg and Energia Termosolar 101 million euros ($118 million), with the award later registered for enforcement at London’s High Court.
The claimants have also applied to register the award in Australia and the U.S., the Supreme Court said in its ruling.
Spain’s Legal Challenge
Spain tried to overturn the registration of the award – which is now worth around 120 million euros with interest – on the grounds it had sovereign immunity, but that argument was rejected by the High Court in 2023 and again on appeal in 2024.
Madrid took its case to the UK Supreme Court, which on Wednesday ruled against it, saying that Spain effectively agreed to be subject to the jurisdiction of the English courts when it signed the ICSID Convention.
Broader Impact and Reactions
Spain’s appeal concerned one of over 20 unpaid arbitration awards against Spain which, according to a September 2025 report by the International Law Compliance Institute, are worth a total of around 1.6 billion euros.
Richard Clarke, a lawyer at Kobre & Kim which represented the investors, said the ruling “adds further weight to the international consensus that ICSID awards must be complied with and enforced”.
Sources in Spain’s energy ministry said the government would need to consider the ruling and “other possible ways to continue defending within the UK the need to respect European Union law”.
Related Supreme Court Cases
The appeal was heard by the Supreme Court in December alongside one brought by Zimbabwe in a separate case worth up to $125 million concerning the alleged expropriation of land. Zimbabwe’s appeal was also dismissed.
Additional Information
($1 = 0.8588 euros)
(Reporting by Sam Tobin; Additional reporting by David Latona in Madrid; Editing by Kate Holton and Philippa Fletcher)
