A tribunal for the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) recently ruled that The Kingdom of Spain (Spain) must pay Masdar, Abu Dhabi’s leading clean energy company, 64.5 Million EUR plus interest for loss of earnings caused by the country’s policy changes.

Between 2008 and 2009, Masdar invested in three of Spain’s concentrated solar projects relying on the feed-in tariff regime adopted by Spain in 2007. Shortly thereafter, Spain began to reduce financial incentives for existing facilities in the solar power sector in order to reduce a large tariff deficit.

Masdar believed Spain violated the Energy Charter Treaty (ECT) which requires fair and equitable treatment of foreign investors, when Spain replaced its regulatory regime with a completely new one. Masdar was just one of several entities to bring forth such a dispute against Spain for retroactive changes on the original feed-in tariff regime. At present, Spain faces more than 40 international arbitration lawsuits initiated by renewable investors as a result of the reform of the financial incentives affecting photovoltaic, concentrated solar, wind and small hydro installations from 2010.

In 2014, Masdar requested arbitration and hired The Brattle Group for their expertise in these matters. Brattle’s assessment of damages found Masdar lost more than 70% of its investment as a result of the changes in renewables policy.

Both parties, and their experts, disagreed about the monetary figure lost. However, in the tribunal’s view, Brattle’s compensation approach was not only better suited to provide Masdar full restitution, but also displayed greater consistency in the use of hindsight. The tribunal accepted Brattle’s primary discounted cash flow model, set forth in its rebuttal report as a realistic and credible basis for valuing Masdar’s loss.

In May 2018, ICSID agreed to the award of 64.5 million EUR based largely on Brattle’s economic and monetary analysis.