Infrastructure Services Luxembourg S.A.R.L. (formerly Antin Infrastructure Services Luxembourg S.A.R.L) v The Kingdom of Spain

Hearing dates: 27 th January 2023

APPROVED JUDGMENT 1

( 11:49am)

Friday, 27 January 2023

Judgment by Mrs Justice Cockerill

In this matter the European Commission has applied by an application dated 25 October 2022 to be joined as a party or to be permitted to intervene in this case. It is a case in which the claimants seek to enforce an ICSID award of about €100 million against Kingdom of Spain. The Kingdom of Spain has applied to set aside registration of the award based on CJEU authority regarding the effect in EU law of the relevant provisions of the underlying treaty.

The only description of the background which needs to be made has been given in paragraphs 2 to 4 of the skeleton argument served on behalf of the Commission:

“2. … the underlying dispute concerns investments made by the Claimants in solar power installations in Spain. At the time the investments were made, they qualified for certain subsidies which were reduced a series of acts between 2013 and 2014. It followed from a ruling of the Court of Justice of the European Union (“CJEU”) in 2014 in relation to a similar energy sector subsidy scheme in Spain that those initial subsidies amounted to State aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union (“TFEU”).

3. The Claimants, which are companies registered in the Netherlands and Luxembourg alleged that the changes to the regulatory regime in Spain for subsidies to solar power damaged the value of their investments, in breach of the protection afforded to investors by the Energy Charter Treaty (“ECT”) …], Article 10(1) requiring fair and equitable treatment for investments made in one contracting State by nationals of other contracting States. The ECT, Article 26(4) (a) …, provides that, in the event of a dispute, where the Contracting Party of the Investor and the Contracting Party State to are both parties to ICSID, the investor shall consent to the dispute being submitted to ICSID. The Netherlands, Luxembourg and Spain are all signatories of both the ECT and ICSID (as is the United Kingdom) and the Claimants, relying on the ECT submitted a request for arbitration to ICSID in October 2013. The Tribunal was thereafter constituted under ICSID rules and held the arbitration in Paris. Spain contested the Tribunal's jurisdiction, by reason of the rules of EU law referred to below but these arguments were rejected by the Tribunal.

4. … the Tribunal rendered its Award in June 2018, ruling essentially in favour of the Claimants, which was confirmed in annulment proceedings by an ad hoc committee on 30 July 2021. In June 2021, the Claimants applied ex parte to register the Award pursuant to the Arbitration (International Investment Disputes) Act 1966. On 29 June 2021 the Award was registered by Cockerill J and on 28 April 2022 Spain applied to set aside the registration ….”

Before me this morning there has been a certain amount of argument in relation to the underlying points which may or may not arise. This is said potentially to be relevant to the underlying purpose of the intervention. In particular, the parties made submissions on the issue of the relevance of:

a. Slovak Republic v Achmea BV v PCA Case C-284/16

b. Republic of Moldova v Komstroy LLC Case C-741/19

c. the Supreme Court's decision in Micula v Romania (European Commission intervening) [2020] UKSC 5, [2020] 1 W.L.R. 1033.

The Commission says that the Komstroy argument goes beyond being a contention and that their interest cannot be simply swept away by reference to the Supreme Court's decision in Micula, not least because Komstroy and the Achmea case, which preceded it, effectively started before Micula. It is also said that the Achmea point was not in issue before the Supreme Court because permission had been refused on that. So the particular issue which arose in the Achmea case was not dealt with. It is said, therefore, that the point about prior accession, which is at the heart of the Micula decision, is a distinct point which does not directly impact on the decision in Achmea and then subsequently in Komstroy.

It is said that Micula is very different from the point which would arise here, which was that there has never been any valid consent. So one is not looking at a contest between obligations between an EU treaty and another treaty. It is not, therefore, a case of overlooking Micula, but of an entirely differently configured case. That is obviously a contentious submission, with the claimants saying that the Supreme Court approach in Micula to the pre-existing ICSID obligations does impact the range of arguments in the invalidation argument pointing to two hurdles. First, that the arguments have been run before the ICSID tribunal and have been effectively dismissed and the UK's obligation to provide automatic enforcement means that the matter has been finally resolved.

Secondly, there is a hurdle that, as a result of Micula, there is no scope for any EU obligation to trump the international law obligations as incorporated in the 1966 Act to accord enforcement.

I rehearse those arguments simply so that it is clear that there has been that debate on them and that there is a vibrant argument between the parties to the application before me today as to the scope of the arguments which may be before this court ultimately. I will revert to those arguments as I deal with the application before me, but I can just pause to say that I am not persuaded that, however interesting those arguments are and however understandable it is that the focus of those involved in them is very much on those arguments, the arguments themselves have a major impact on the application which I have to consider.

The principal basis for the argument which I have to consider is CPR 19.2(2)(a). That provides that:

“The court may order a person to be added as a new party if —

(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings …”

There is a second sub-paragraph to CPR 19.2(2), but the Commission does not rely on that and so I need not consider it.

When looking at the court's power to add parties under CPR 19.2, a starting point is obviously the decision of Etherton MR in Pablo Star [2017] EWCA Civ 1768 (Ch). In that case he made clear that the words are to be given a wide interpretation and at paragraph 60 he noted that on this question:

“… the two lodestars are the policy objective of enabling parties to be heard if their rights may be affected by a decision in the case and the overriding objective in CPR Pt 1.”

In this matter it is not a question of rights being affected as such. I think it would be common ground between the parties, so they did not particularly look at it in this terms, that one must be looking at the slightly broader approach. So although I identified a two-stage test in the Uganda case, I am not sure to what extent that two-stage test is as useful as it is in relation to sub-paragraph (b).

One may perhaps best look at the citation from PDVSA Servicios SA v Clyde & Co, a decision of Snowden J (as he then was) [2020] EWHC 2322 (Ch), where the question which was posed of the party who makes the application that:

“… its presence before the court is desirable in the broader interests of justice and the overriding objective so that the court can resolve all the matters in dispute in the proceedings between the existing parties.”

Now, that question and the formulation that is within CPR 19.2(2)(a) is effectively a fact-specific question. It is, therefore, a question on which authorities and other cases should not really be necessary be cited and are unlikely to be helpful.

One has to look at this as a matter of first principles. As I have indicated, although I identified a two-stage test in the Uganda case, either it is not particularly useful in this case to look at the first stage or it is not really in issue that one might say that it falls within (2)(a) jurisdictionally. One is really looking at the desirability in the light of those points identified by the Master of the Rolls and by Snowden J.

So looking at the test on the basis of first principles, one might put it this way. Question one: will the presence of the Commission ensure the resolution of all issues where those would not be resolved otherwise? The answer to that is plainly no. There is no suggestion that Spain is going to be unable to deal with any. The points which that the Commission outlines itself as being in a position to wish to make will be amply dealt with by Spain. Despite careful submissions, I am not persuaded that the background or the ambit of the dispute...