In the Matter of an Arbitration Under the 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (Icsid Convention)
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GOVERNMENT ATTORNEY’S OFFICE DIRECTORATE FOR STATE LEGAL SERVICES SUBDIRECTORATE-GENERAL OF LITIGATION SERVICES IN THE MATTER OF AN ARBITRATION UNDER THE 1965 CONVENTION ON THE SETTLEMENT OF INVESTMENT DISPUTES BETWEEN STATES AND NATIONALS OF OTHER STATES (ICSID CONVENTION) AND PURSUANT TO THE ENERGY CHARTER TREATY (ICSID ARBITRATION No.ARB/14/1/) BETWEEN: MASDAR SOLAR & WIND COOPERATIEF U.A. Claimant - and – THE KINGDOM OF SPAIN Respondent COUNTER-MEMORIAL ON THE MERITS AND MEMORIAL ON JURISDICTION ARBITRATORS: Submitted on behalf of the Respondent by: Mr. John Beechey Mr. Gary Born Abogacía General del Estado Prof. Brigitte Stern C/ Ayala, 5 28001 Madrid Spain 16 September 2015 TABLE OF CONTENTS I. LIST OF MAIN ABBREVIATIONS ............................................................................................ 10 II. INTRODUCTION ........................................................................................................................ 14 III. PRELIMINARY OBJECTIONS ................................................................................................. 19 A. Lack of Jurisdiction ratione personae of the Arbitral Tribunal under Article 25 of the ICSID Convention and Article 26 of the ECT. The dispute is not between a Contracting State and a national of another Contracting State, but rather between two States: United Arab Emirates, to be precise the Emirate of Abu Dhabi, and the Kingdom of Spain. ....................... 19 (1) Introduction ............................................................................................................................. 19 (2) Assertions shared by the parties to the present arbitration. ..................................................... 20 (3) Although the Claimant is private, it follows the instructions of the Emirate of Abu Dhabi. .. 22 (4) The Claimant is controlled by the Emirate of Abu Dhabi in order to achieve a result. ........... 23 (5) Under International Law Masdar Solar makes a public investment. ....................................... 25 (6) Conclusion ............................................................................................................................... 28 B. Lack of Jurisdiction of the Arbitral Tribunal as Masdar Solar & Wind Cooperatief U.A. did not make an investment in the Kingdom of Spain according to Articles 26 and 1 (6) of the ECT and Article 25 (1) of the ICSID Convention. ....................................................................... 28 (1) Introduction ............................................................................................................................. 28 (2) Articles 26 of the ECT and 1(6) of the ECT require the existence of an investment in the objective sense of the word to determine the Jurisdiction of an Arbitral Tribunal ....................... 29 (3) Article 25 (1) of the ICSID Convention subjects the jurisdiction of its Arbitral Tribunals to the existence of an investment in the objective sense of the word ................................................ 34 (4) ) Masdar Solar has not made an investment either for the purposes of Article 1(6) of the ECT or of Article 25 of the ICSID Convention: Masdar Solar has not made a contribution of funds nor has it assumed the risks characteristic of an investment. .............................................................. 35 (5) Conclusion ............................................................................................................................... 38 C. Lack of Jurisdiction of the Arbitral Tribunal ratione personae to hear the dispute raised by the Claimant owing to absence of any investor protected in accordance with the ECT. The Claimant does not come from the territory of another Contracting Party as the Netherlands, just like the Kingdom of Spain, are Member States of the European Union. The ECT does not apply to disputes pertaining to intra-EU investments. ................................................................ 39 (1) Introduction: need for the existence of an investor “from another Contracting Party” ........... 39 (2) The EU system grants the investor who is an EU Citizen an specific and preferential protection which is granted by ECT and any BIT ......................................................................... 40 2 (3) The preferential application between EU Member States of their own protection system is reflected in the wording, context and purpose of the ECT ............................................................ 42 (3.1) The actual wording of the ECT envisages that between EU Member States the EU system is preferably applied. .................................................................................................... 42 (3.2) Article 26 of the ECT prevents arbitration between an intra-EU investor and an EU Member State ........................................................................................................................... 43 (3.3) The purpose of the ECT confirms our interpretation. ...................................................... 45 (4) Spain’s position is confirmed by the European Commission and by doctrine ........................ 46 (4.1) Spain’s position is confirmed by the European Commission .......................................... 46 (4.2) The position of Spain and the European Commission is confirmed by the doctrine ....... 48 (5) Conclusion ............................................................................................................................... 50 D. Lack of jurisdiction rationae voluntatis of the Arbitral Tribunal through the denial of the Kingdom of Spain in this report of the Claimant, Masdar Solar & Wind Cooperatief UA, and the application of Part III of the ECT in concurrence with the circumstances of Article 17 of the ECT. ........................................................................................................................................... 50 (1) Introduction ............................................................................................................................. 50 (2) Article 17 of the ECT as a limit of consent granted by the Contracting Parties to submit the controversies to the International Arbitral Tribunal. ..................................................................... 52 (3) Circumstances that justify the application of Article 17(1) of the ECT of the Claimant ........ 55 (3.1) Masdar Solar is a Legal Entity incorporated into the territory of a Contracting Party other than that against which the dispute is brought ......................................................................... 56 (3.2) Masdar Solar is a Legal Entity owned and controlled by Abu Dhabi (United Arab Emirates), a State that is not a Contracting Party of the ECT .................................................. 56 (3.3) Masdar Solar has no business activity in the Netherlands or in any other place. ............ 58 (a) Masdar Solar has no business activity ............................................................................ 58 (b) Masdar Solar has no employees ..................................................................................... 60 (c) Location of Masdar Solar registered office in a seedbed of companies. ........................ 60 (d) Conclusion ...................................................................................................................... 61 (4) Applying Article 17(1) of the ECT to the Claimant ................................................................ 61 (5) Conclusion ............................................................................................................................... 62 E. Lack of jurisdiction of the Arbitral Tribunal to hear about an alleged breach by the Kingdom of Spain of obligations derived from Article 10(1) of the ECT through the adoption of taxation measures, in particular, through the introduction of the TVPEE by Act 15/2012: absence of consent of the Kingdom of Spain to refer this issue to arbitration given that, pursuant to Article 21 of the ECT, section (1) of Article 10 of the ECT does not generate obligations regarding taxation measures of the Contracting Parties ......................................... 63 (1) Introduction ............................................................................................................................. 63 3 (2) Taxation measures disputed by the Claimant: the TVPEE created by Act 15/2012 ............... 63 (3) The Kingdom of Spain has only consented to submit to arbitration disputes related to alleged breaches of obligations derived from Part III of the ECT ............................................................. 65 (4) The ECT does not generate obligations or rights with regard to taxation measures of the Contracting Parties, with certain stipulated exceptions ................................................................. 66 (5) Article 10(1) of the TCE does not impose obligations on the Contracting Parties with respect to taxation measures ...................................................................................................................... 68 (6) The provisions relating to the TVPEE of Act 15/2012 are a taxation measure for the purposes of the ECT ..................................................................................................................................... 69 (6.1) According to Article 21(7) of the ECT, for the purposes of Article 21 of the ECT the term taxation measure includes