The UK Supreme Court has ruled that Spain cannot rely on state immunity to block the registration of a multimillion-euro arbitration award related to cuts in renewable energy incentives. The decision marks a significant development in long-running disputes between governments and foreign investors. The ruling was first reported by Reuters.
In its judgment, the court said Spain had effectively accepted the jurisdiction of British courts when it signed the International Centre for Settlement of Investment Disputes (ICSID) Convention. As a result, the country cannot use sovereign immunity to prevent the arbitration award from being registered for enforcement in the United Kingdom.
However, the judges clarified that states may still invoke immunity when it comes to enforcing awards against state property.
Long-running dispute over renewable energy subsidies
The case stems from a dispute between Spain and investors Infrastructure Services Luxembourg and Energia Termosolar. The companies invested in renewable energy projects in Spain and later filed arbitration claims under the Energy Charter Treaty after the government withdrew subsidies designed to support clean energy production.
More than a decade ago, the investors initiated arbitration proceedings. The ICSID tribunal ultimately awarded them 101 million euros (about $118 million) in damages.
The award was later registered for enforcement in London’s High Court. According to the Supreme Court, the claimants have also sought to register the award in Australia and the United States.
Spain attempted to overturn the award’s registration in Britain by arguing that sovereign immunity shielded it from the process. The High Court rejected that claim in 2023, and the Court of Appeal upheld the decision in 2024.
Madrid then appealed to the UK Supreme Court, which dismissed the argument in its ruling this week.
The award is now estimated to be worth about 120 million euros with interest. The case is part of a broader series of arbitration disputes involving Spain’s overhaul of renewable energy incentives during the past decade.
According to a report by the International Law Compliance Institute published in September 2025, Spain faces more than 20 unpaid arbitration awards tied to similar disputes, totaling around 1.6 billion euros.
Richard Clarke, a lawyer at Kobre & Kim who represented the investors, said the judgment reinforces a growing international consensus that ICSID arbitration awards must be respected and enforced.
Officials at Spain’s energy ministry said the government would study the ruling and consider other legal options to continue defending its position in the United Kingdom, including arguments related to European Union law.
In a separate case heard alongside Spain’s appeal, the UK Supreme Court also dismissed an appeal by Zimbabwe in a dispute worth up to $125 million concerning alleged land expropriation.
