he State’s right to regulate and the standard of fair and equitable treatment under the Energy Charter Treaty: Lessons from the Kingdom of Spain

Abstract

The standard of fair and equitable treatment that States must afford to foreign investment conflicts naturally with the States’ right to change their legislation. However, the onslaught of claims against Spain for breach of that standard, set out in Article 10(1) of the Energy Charter Treaty, following the reform of the rules governing renewable energies has brought this conflict to the forefront, calling for an analysis of how tribunals have dealt with this issue. After examining the evolution of the case law, we analyse the decisions rendered in relation to said reform to determine whether they fit into established patterns. We conclude that the standard of fair and equitable treatment is more relevant than ever, either through the protection of the investors’ legitimate expectations, or through the obligation on States to change the law in a reasonable and proportional manner and in pursuit of the public interest.