Immediately after the US Government and Israel started the military operation against Iran, Spanish Prime Minister Pedro Sánchez heavily criticized the action as illegal and in violation of international law. He also denied the US the use of Spanish military bases to assist Operation Epic Fury.
He was supported by EU Council President Costa who said that the EU and Spain “reaffirm their commitment to the principles of international law and the rules-based order everywhere in the world”.
In this way, Spain and the EU position themselves as the ultimate defender of international law. While this is praiseworthy, this sounds very hypocrite in the context of the $2billion outstanding investment treaty awards, which Spain – supported by the EU – is consistently refusing to pay. More specifically, Spain has been found in breach of the Energy Charter Treaty (ECT) in dozens of arbitration cases, which have been initiated under the ICSID Convention. All of these awards are due to Spain failing to honour renewable energy contracts between 2007-2013.
As the UK Supreme Court held in its recent judgment in Antin v. Spain and Border Timbers and others v. Zimbabwe, by signing and ratifying the ICSID Convention Spain has waived its sovereign immunity and thus cannot escape the enforcement of those outstanding ICSID awards.
Consequently, if Spain really wants to be seen as a credible defender of international law, it must first act accordingly by fulfilling its international law treaty obligations under the ECT and the ICSID Convention, which it had voluntarily signed many decades ago.
Otherwise, it is simply hypocrite to lecture the US to observe international law, while Spain is failing to do exactly that for more than a decade now.
The same applies to the EU, which has not only been supporting Spain in its attempts to avoid paying those outstanding awards, but has adopted decisions which are aimed to provide EU Member States grounds for not paying such awards because that would violate EU law. Instead, the EU should encourage EU Member States to fulfil their international law obligations by paying outstanding awards.
That would be a concrete contribution to upholding and protecting the international legal order from further demise.
Indeed, zooming out from the investment arbitration context, it is a no brainer that the international legal order as it has been established since WW II has served States, investors and citizens very well by providing legal certainty and predictability, which in turn has stimulated unprecedented economic wealth and peace on a global scale.
That is certainly worth fighting for and thus Spain and the EU should act accordingly by honouring their international treaty obligations rather than undermining the international legal order.
Prof Lavranos is Prof. Dr. Nikos Lavranos is an international legal expert specialising in international investment law, arbitration, and EU law. He is the Secretary General of the European Federation for Investment Law and Arbitration (EFILA) and has played a leading role in promoting dialogue on investor–state dispute settlement and investment protection in Europe. He is the author of the annual International Law compliance Index. https://www.nl-investmentconsulting.com/international-law-compliance/
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