The fair and equitable treatment standard and the revocation of feed in tariffs—foreign renewable energy investments in Crisis-Struck Spain

Abstract

This contribution explores a highly topical issue in international investment law—the protection of foreign investors’ legitimate expectations through the Fair and Equitable Treatment standard (FET) in case of a repeal of renewable energy support schemes. On the grounds of the Spanish case of disruptive cuts, particularly regarding Feed in Tariff regulation supporting photovoltaic energy since 2008, a possible violation of legitimate expectations is being assessed. The investors may rely on the stability of the Spanish régimen especial, despite their own conduct and the State’s right to regulate. Even in times of crisis the State may not justify changes in the regulation to the point of stripping away the very raison d’être of the initial investment. Such measures could constitute a breach of legitimate expectations. Regarding the current global trend of revoking renewable energy support schemes, the present case may initialize a cascade effect for a number of claims.