Compass Lexecon’s Client NextEra Awarded €292 Million in Investment Arbitration Dispute Against Spain

Compass Lexecon experts Dr. Manuel A. Abdala and Professor Pablo T. Spiller were retained by NextEra Energy (Claimant) as regulatory and quantum experts in an Energy Charter Treaty arbitration against the Kingdom of Spain, held under ICSID rules. The dispute focused on several claims affecting the value of Claimant’s investments as developer and operator of two concentrated solar plants, due to the overhaul of Spain’s regulatory regime for renewables, which started in mid-2013.

The Tribunal found that the overhaul of the renewables regulatory framework in mid-2013 was a fundamental and radical change of regime that “…went beyond anything that might have been reasonably expected by Claimants when they undertook their investment”, concluding that there was a denial of fair and equitable treatment. To determine damages, the Tribunal relied exclusively on the regulatory and quantum analysis put forward by Dr. Abdala and Professor Spiller, based on providing Claimant’s solar plants with a reasonable rate of return aligned with the promises and expectations of the original regulatory framework. Such rate of return was based on the industry’s WACC plus a premium, which the Tribunal set at 2%. The Tribunal also sided fully with Compass Lexecon’s experts on the measurement of the asset base, which at €720.6 million was computed on the basis of actual investment costs, as opposed to standardized costs, as argued by Spain’s economic experts.

Dr. Abdala and Professor Spiller were supported by a team led by Julian Delamer that included Alan Rozenberg, Jack Ghaleb, James Wong and Vladimir Tsimaylo. Compass Lexecon worked with Karyl Nairn, David Herlihy and George A. Zimmerman of Skadden, Arps, Slate, Meagher & Flom LLP.