Blasket Renewable Investments LLC v Kingdom of Spain
[2025] FCA 1028
•29 August 2025
FEDERAL COURT OF AUSTRALIA
Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028
File numbers: NSD 2169 of 2019
NSD 365 of 2020
NSD 449 of 2020
NSD 415 of 2023Judgment of: STEWART J Date of judgment: 29 August 2025 Catchwords: ARBITRATION – international arbitration – where foreign investors obtained the benefit of arbitral awards rendered by tribunals constituted pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (ICSID Convention) against the Kingdom of Spain – where award creditor investors are nationals of current or former European Union Member States – where those investors or their relevant assignees seek recognition and enforcement of those awards in Australia under s 35(4) of the International Arbitration Act 1974 (Cth) (IAA)
PUBLIC INTERNATIONAL LAW – foreign State immunity – where the respondent asserts immunity pursuant to s 9 of the Foreign States Immunities Act 1985 (Cth) (Immunities Act) from proceedings for the recognition and enforcement of arbitral awards in Australia – where respondent submits the position is not governed by Kingdom of Spain v Infrastructure Services Luxembourg Sàrl [2023] HCA 11; 275 CLR 292 and it consequently has not waived its immunity under s 10 of the Immunities Act by acceding to the ICSID Convention – where respondent submits the High Court decision did not concern a situation where the binding status of an award is disputed whereas the binding status of the awards is presently disputed – whether the High Court decision governs this case and if not whether the respondent has waived its immunity to jurisdiction
PRIVATE INTERNATIONAL LAW – assignment – where two of the applicants are the assignees of the original award creditor investors – where respondent disputes that the assignees can enforce their awards in Australia – where no dispute as to validity of deeds of assignment under governing law of the deeds – issue of which law governs the assignability of arbitral awards – whether under public international law, Australian domestic law or foreign domestic law the ICSID awards or the rights of enforcement of them are capable of being assigned – whether in terms of international law assignment of awards is permitted under the ICSID Convention or under customary international law
PUBLIC INTERNATIONAL LAW – European Union law – EU autonomous system – principle of primacy – where the Court of Justice of the EU in Republic of Moldova v Komstroy LLC [2021] 4 WLR 132 and related decisions held that intra-EU arbitration agreements are inapplicable and not binding as between EU Member States pursuant to the EU foundational treaties – where EU Member States party to ICSID arbitral awards are now faced with a conflict between complying with the terms of the awards and complying with the obligation under the EU foundational treaties to not submit disputes to extra-EU resolution – where conflict is also said to arise because payment pursuant to the awards is unlawful State aid for the purposes of EU law – where respondent submits that the conflict ought to be resolved by giving primacy to the EU foundational treaties – whether if so the consequence is that the awards are not binding on the respondent under the ICSID Convention – whether if so an assignee domiciled in the Bailiwick of Jersey is relevantly subject to EU law
PUBLIC INTERNATIONAL LAW – treaty interpretation – where the respondent submits the consequence of intra-EU awards being not binding on it under the ICSID Convention is that Australia has no concomitant obligation under Art 54 of the Convention to enforce the award on the request of the applicants – where the respondent in the alternative contends that the same result obtains from the inter se modification of the ICSID Convention as a result of entering into the Treaty of Lisbon (2007) effected in accordance with customary international law or under Art 30 of the Vienna Convention on the Law of Treaties (1969) – whether the consequence asserted by the respondent flows from the meaning and operation of the ICSID Convention or the subsequent treaties said to effect the modification – where Australia is party only to the ICSID Convention but not the EU foundational treaties – whether intra-EU law rules have an effect on international law obligations owed to and from States parties outside the EU system
CONSTITUTIONAL LAW – infringement of Ch III – where the respondent submits that ss 32 or 35(4) of the IAA are constitutionally invalid to the extent that they require the Court to recognise and/or enforce awards without looking to whether there was an agreement between the parties to submit their dispute to arbitration – whether the ICSID Secretary-General or the tribunal are impermissibly vested with Ch III judicial power as part of the arbitral enforcement regime under the IAA
EVIDENCE – proof of international law – admissibility of expert opinion evidence – whether issue to be treated as question of fact or question of law – approaches to proof of treaties and customary international law – whether proof of EU law is an issue of international law or foreign law
PRACTICE AND PROCEDURE – application to intervene – where European Commission applies for leave to intervene pursuant to r 9.12 of the Federal Court Rules 2011 (Cth) – where Commission seeks to make submissions on the content of EU law and says that it is uniquely placed to do so – whether leave should be granted
Legislation: Constitution, ss 55(xxix), 75(i), 76(i), (ii), 77(i), Ch III
Acts Interpretation Act 1901 (Cth), s 15A
Evidence Act 1995 (Cth), ss 136, 143, 144, 174
Federal Court of Australia Act 1976 (Cth), s 20(1A)
Foreign States Immunities Act 1985 (Cth), ss 9, 10
International Arbitration Act 1974 (Cth), ss 8, 16(1), 32, 33, 34, 35, Pt IV, Sch 2 (UNCITRAL Model Law on International Commercial Arbitration) Art 36
Judiciary Act 1903 (Cth), ss 38(a), 39B, 78B, 79
Federal Court Rules 2011 (Cth), rr 9.09(2), 9.11, 9.12
Conveyancing Act 1919 (NSW), s 12
Delaware Limited Liability Company Act 6 Del Code Ann § 18-101 et seq
Foreign States Immunities Act 28 USC § 1602 et seq
United States Code (US) Title 22 § 1650a
Statute of the International Court of Justice, Art 38(1)(c)
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Vienna Convention on the Law of Treaties, opened for signature 23 May 1969, 1155 UNTS 331 (entered into force 27 January 1980), Arts 4, 30, 31, 32, 41
ICSID Rules of Procedure for Arbitration Proceedings 2006, rr 41(5), 54(2), (3)
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Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Arbitration Number of paragraphs: 368 Date of hearing: 9, 10, 13, 14 and 15 May 2024 Date of last submissions: 8 November 2024 Counsel for the Applicants in NSD2169/2019, NSD365/2020, NSD449/2020 and NSD415/2023 J A Hogan-Doran SC and C Brown SC Solicitor for the Applicants in NSD2169/2019, NSD365/2020 and NSD415/2023 Norton Rose Fulbright Australia and Linklaters LLP Solicitor for the Applicants in NSD449/2020 A&O Shearman Counsel for the Respondent in NSD2169/2019, NSD365/2020 and NSD449/2020 S Robertson SC and P F Santucci (written submissions also by S Hoare) Solicitor for the Respondent in NSD2169/2019, NSD365/2020 and NSD449/2020 Johnson Winter Slattery Counsel for the Respondent in NSD415/2023 C H Withers SC and B Yin Solicitor for the Respondent in NSD415/2023 Thomson Geer Solicitor for the European Commission: N Gallus of LK Law
ORDERS
NSD 2169 of 2019 BETWEEN: BLASKET RENEWABLE INVESTMENTS LLC
Applicant
AND: THE KINGDOM OF SPAIN
Respondent
NSD 365 of 2020 BETWEEN: 9REN HOLDING S.A.R.L.
Applicant
AND: THE KINGDOM OF SPAIN
Respondent
NSD 449 of 2020 BETWEEN: BLASKET RENEWABLE INVESTMENTS LLC
Applicant
AND: THE KINGDOM OF SPAIN
Respondent
NSD 415 of 2023 BETWEEN: NEXTERA ENERGY GLOBAL HOLDINGS B.V.
First Applicant
NEXTERA ENERGY SPAIN HOLDINGS B.V.
Second Applicant
AND: THE KINGDOM OF SPAIN
Respondent
ORDER MADE BY:
STEWART J
DATE OF ORDER:
29 AUGUST 2025
THE COURT ORDERS THAT:
1.Within 14 days of the publication of these reasons, the parties provide to the Associate to Justice Stewart by email agreed or competing orders giving effect to these reasons.
2.The proceeding be listed for case management on 19 September 2025.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
STEWART J:
INTRODUCTION
[1]
REPRESENTATION
[19]
RELEVANT FACTS IN EACH PROCEEDING
[22]
The RREEF proceeding (NSD2169/2019)
[22]
The 9REN proceeding (NSD365/2020)
[37]
The Watkins proceeding (NSD449/2020)
[47]
The NextEra proceeding (NSD415/2023)
[68]
ISSUES IN DISPUTE AND SUMMARY CONCLUSIONS
[78]
THE EVIDENCE
[89]
Lay evidence
[89]
Expert evidence
[93]
The applicants’ experts
[93]
Spain’s expert
[94]
Other expert reports
[96]
The status of the expert reports
[97]
THE RELEVANT TREATIES AND LEGISLATION
[120]
The Energy Charter Treaty
[120]
The International Arbitration Act
[127]
The ICSID Convention
[129]
The Foreign States Immunities Act
[146]
SPAIN HCA
[148]
IMMUNITY AS A PRELIMINARY QUESTION
[156]
ICSID AS A CLOSED SYSTEM
[160]
SPAIN’S NON-WAIVER OF IMMUNITY CONTENTION
[176]
Spain’s submissions
[176]
Consideration
[180]
SPAIN’S LACK OF POWER CONTENTION
[185]
Spain’s submissions
[185]
Consideration
[187]
The EU Treaties
[187]
Achmea and Komstroy
[192]
State aid
[199]
Conflicts
[204]
SPAIN’S MODIFICATION CONTENTION
[223]
Spain’s submissions
[224]
Consideration
[231]
Inter se modification of treaties under customary international law
[233]
Introduction
[233]
Article 41(1) – sub-group of parties to the treaty
[240]
Article 41(2) – notice to the other parties
[242]
Article 41(1)(b)(i) – obligations erga omnes partes
[243]
Article 41(1)(b)(ii) – non-derogation from object and purpose
[270]
Conclusion
[271]
Article 30 VCLT
[272]
Introduction
[272]
Any incompatibility does not affect Australia
[274]
The earlier treaty and the later treaty
[275]
Relating to the same subject matter
[282]
Conclusion
[286]
ASSIGNMENT
[287]
Introduction
[287]
Submissions
[293]
Consideration
[299]
Introduction
[299]
International law
[304]
Domestic law
[321]
Conclusion
[326]
THE BAILIWICK OF JERSEY
[327]
Introduction
[327]
Consideration
[333]
THE CONSTITUTIONAL POINT
[338]
Introduction
[338]
Consideration
[340]
THE EUROPEAN COMMISSION’S APPLICATIONS TO INTERVENE
[351]
CONCLUSION
[365]
INTRODUCTION
Before the Court are four applications to enforce foreign arbitral awards under s 35(4) of the International Arbitration Act 1974 (Cth) (IAA). Each of the applications is brought by former investors in renewable energy projects in Spain or their assignees. The respondent to each application is the Kingdom of Spain, a sovereign State, which conditionally appears to assert foreign State immunity.
The arbitral awards were rendered by arbitral tribunals constituted by the International Centre for Settlement of Investment Disputes (ICSID) under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (ICSID Convention). Together, the awards amount to approximately €500 million, or AU$900 million.
Spain relies on s 9 of the Foreign States Immunities Act 1985 (Cth) to assert that it is immune from the Court’s jurisdiction in each of the proceedings. Its immunity case relies on arguments that are also relevant to the merits of the applications.
Spain’s assertion of foreign State immunity must be understood against the backdrop of the unanimous judgment of the High Court of Australia in Kingdom of Spain v Infrastructure Services Luxembourg Sàrl [2023] HCA 11; 275 CLR 292 (Spain HCA) which held (at [8]) that Spain’s agreement to Arts 53-55 of the ICSID Convention amounted to a waiver of foreign State immunity from the jurisdiction of the courts of Australia in the proceeding to recognise and enforce the ICSID award in that case, but it did not amount to a waiver of immunity in respect of any processes to execute any resultant judgment. Spain formally makes the submission before me that the High Court was wrong in reaching that conclusion. It does so in order to preserve its ability to apply to the High Court to reopen and reconsider its conclusion with regard to the effect of agreeing to the ICSID Convention.
Spain also advances arguments that were not advanced before or considered by the High Court and seeks to distinguish the present cases from the case decided by the High Court, including by making further arguments concerning the power of the Court to grant the relief sought that do not rely on foreign State immunity. In those circumstances, the outcome before me, regrettably, is not simply governed by the High Court decision.
The European Commission seeks leave to intervene in each proceeding pursuant to r 9.12 of the Federal Court Rules 2011 (Cth) (FCR). The applicants resist that intervention, although Spain supports it.
The applications are made in each of:
(1)NSD2169/2019 – Blasket Renewable Investments LLC v The Kingdom of Spain (which I will refer to as the RREEF proceeding because the award creditors were RREEF Infrastructure (GP) Ltd and RREEF Pan European Infrastructure Two Lux Sàrl and Blasket claims as their assignee);
(2)NSD365/2020 – 9REN Holding Sàrl v The Kingdom of Spain (the 9REN proceeding);
(3)NSD449/2020 – Blasket Renewable Investments LLC v The Kingdom of Spain (which I will refer to as the Watkins proceeding because the award creditors were Watkins Holding Sàrl and Watkins (Ned) BV and Blasket claims as their assignee); and
(4)NSD415/2023 – NextEra Energy Global Holdings BV & Anor v The Kingdom of Spain (the NextEra proceeding).
Although there is a considerable degree of commonality between them, it is necessary to set out in some detail the facts relevant to each individual proceeding. By way of high-level summary, the relevant common circumstances are as follows.
Since about 1997, Spain has adopted various regulatory measures intended to encourage the development of renewable energy in Spain. In 2007 and 2008, Spain promulgated a scheme known as “regimen economico primado” or premium economic scheme that provided premium feed-in tariffs for certain renewable energy producers. From about 2010 to 2014, the premium tariffs were altered by Spain. The applicant investors (including the assignors to Blasket) in these proceedings asserted that the alteration amounted to a breach of Art 10 of The Energy Charter Treaty (1994) (ECT), which requires Spain to accord investments of investors of other States parties fair and equitable treatment.
The applicant investors and assignors submitted the disputes between themselves and Spain to ICSID, as contemplated by Art 26 ECT, and ICSID established arbitral tribunals to determine each of the disputes. Spain participated in the tribunal proceedings, although it objected (and continues to object) to the jurisdiction of the ICSID tribunals. Ultimately the tribunals concluded that they had jurisdiction and rendered awards in the investors’ favour. The investors or, in some cases, their (purported) assignees, now apply to this Court to enforce the awards.
The ultimate question for the Court is whether the ICSID awards must be, or ought to be, enforced in Australia and whether judgment should be entered in favour of each of the applicants against Spain thereby enforcing the pecuniary obligations imposed by the awards.
Notwithstanding Australia’s apparent public international law obligation under Art 54 ICSID Convention as given force in domestic law under s 32 IAA, and the conclusion of the High Court in Spain HCA that by signing the ICSID Convention Spain waived its right to foreign State immunity in enforcement proceedings under the Convention, Spain asserts foreign State immunity and argues that the adjudicative jurisdiction of the Court is not engaged.
It is important to identify some key particulars of that submission. The argument is made at two levels, in addition to the formal submission of the incorrectness of Spain HCA mentioned at [4] above.
First, Spain says that its accession to the ICSID Convention did not amount to a waiver of foreign State immunity under the Immunities Act, where Spain is not bound to comply with such awards as a matter of public international law. This raises the question whether what was decided in Spain HCA was limited to situations in which the binding effect of an award is not in dispute or if the holding is “at large” such that I am compelled to reject this submission.
Secondly, if it is held that Spain waived its immunity, Spain again submits that as a matter of public international law it is not bound to comply with the ICSID awards in the current proceedings. In the main, Spain says that the consequence of this is that there is no binding “award” which is capable of being enforced under the terms of s 35(4) IAA, and therefore no power of the Court to do so. While strictly speaking this is not an immunity argument, as Spain repeatedly acknowledges, its merits dovetail with the argument based on what is said to be the consequence of public international law that is relied on to refute the waiver of immunity.
That is, Spain makes a number of contentions which are said to lead to the result that each of the applications for recognition and enforcement should be dismissed, either because the adjudicative jurisdiction of this Court is not engaged by reason of Spain having not waived its foreign State immunity in these proceedings, or because (for the same reasons) this Court does not have the power to enforce the awards in issue in these proceedings.
It is, of course, common ground that if Spain’s assertion of foreign State immunity is good, then the awards cannot be recognised or enforced.
As will be seen, an essential aspect of Spain’s case turns on Spain and the States of which the investors are nationals being, at material times, Member States of the European Union. The relevant Member States are the Grand Duchy of Luxembourg, the Kingdom of the Netherlands and the United Kingdom of Great Britain and Northern Ireland (before the UK left the EU on 31 January 2020). In respect of the UK, the relevant investor is a national of the Bailiwick of Jersey, a British Crown Dependency. There is an issue whether that status is sufficient to treat Jersey as an EU Member State for relevant purposes.
REPRESENTATION
Although several of the applicants in the different proceedings have different firms of solicitors, they adopted the laudable expedient of briefing the same counsel, namely Mr Justin Hogan-Doran SC and, with him, Professor Chester Brown SC. Counsel for the applicants accordingly addressed all matters across all four proceedings.
For reasons that have never became apparent to me, Spain has instructed one firm of solicitors in three of the proceedings and a different set in the fourth, and those solicitors have briefed different counsel. In the result, Mr Scott Robertson SC and, with him, Mr Philip Santucci appeared for Spain in the RREEF, 9REN and Watkins proceedings and Mr Christopher Withers SC and, with him, Mr Boxun Yin appeared for Spain in the NextEra proceeding. The arguments that they put overlapped in certain respects but diverged in others. Without making any criticism of either set of counsel for Spain, that approach has proved unhelpful and burdensome. Be that as it may, as I understand matters, the arguments advanced by Mr Robertson and Mr Withers are to be taken to be made in each proceeding to the extent that they are relevant (eg the assignment question which I will come to is relevant only in the RREEF and Watkins proceedings and the Jersey question is relevant only in the RREEF proceeding).
Resolution of the four proceedings has been further complicated by the way in which the proceedings have been advanced, with numerous separate and duplicative expert reports and submissions in each proceeding as well as consolidated submissions across various of the proceedings, and the parties’ submissions often not being responsive to other submissions or following a common structure. There are more than 20 separate documents containing the parties’ submissions, including further submissions and numerous updates to the parties’ outlines of argument well after the hearing. The burden on the Court has included being referred to around 700 separate authorities across innumerable jurisdictions and a court book of nearly 12,000 pages. Perhaps all of that is an inevitable consequence of the history of the different proceedings and how they eventually came to be heard together, along with what is at stake. I hope that I have done no injustice to the detailed and at times innovative submissions of the parties in what follows.
RELEVANT FACTS IN EACH PROCEEDING
The RREEF proceeding (NSD2169/2019)
The applicant in the RREEF proceeding, Blasket, moves on a further amended originating application dated 9 May 2024. Blasket is a company incorporated under the laws of Delaware, United States of America. The factual background to Blasket’s application is as follows.
On 22 October 2013, two private equity companies specialising in infrastructure investments, RREEF Infrastructure (GP) Ltd (incorporated under the laws of the Bailiwick of Jersey) and RREEF Pan-European Infrastructure Two Lux Sàrl (incorporated under the laws of Luxembourg) (together referred to as the RREEF parties), submitted a request for arbitration to ICSID pursuant to Art 26(4)(a)(i) ECT. The claimants alleged that Spain had breached its obligations under Art 10 ECT through the adoption of legislative and regulatory measures between 2012 and 2014 that affected electricity production from renewable sources and consequently changed the conditions for the claimants’ earnings on their investments in wind and solar power in Spain.
The ICSID arbitral proceeding is cited as RREEF Infrastructure (GP) Ltd and RREEF Pan-European Infrastructure Two Lux Sàrl v Kingdom of Spain (ICSID Case No ARB/13/30).
On 7 March 2016, the tribunal, comprising Professor Alain Pellet (President), Professor Pedro Nikken and Professor Robert Volterra, made its determination on Spain’s jurisdictional objections, and subsequently issued its Decision on Jurisdiction on 6 June 2016 which set forth its reasoning. The tribunal rejected all but one of Spain’s arguments that it did not have jurisdiction to hear the parties’ dispute and joined the remaining jurisdictional objection concerning tax measures with the merits. The tribunal concluded that it had jurisdiction to determine the dispute by reason of Art 26 ECT, particularly the claimants’ consent to arbitration by submitting a Request for Arbitration to ICSID and Spain’s consent to ICSID arbitration arising under Arts 26(3)(a) and (4)(a) ECT. The tribunal concluded that it also had jurisdiction under Art 25 ICSID Convention.
On 30 November 2018, the tribunal published its decision on the merits, being its Decision on Responsibility and on the Principles of Quantum. Professor Volterra publishing a Partially Dissenting Opinion. While upholding Spain’s remaining jurisdictional objection concerning a tax measure, the tribunal concluded that in relation to all other measures over which it had jurisdiction, Spain was in breach of its obligations under the ECT.
The tribunal found that Spain had breached its obligation under Art 10(1) ECT in respect of the retroactive application of the new legislative and regulatory measures and that Spain had also breached its obligation to ensure a reasonable return on the claimants’ investments.
The tribunal proceeded to issue an arbitral award on 11 December 2019 which was certified by the ICSID Secretary-General and dispatched to the parties on that date. By the terms of the award, the tribunal ordered Spain to pay the claimants €59.6 million in damages plus interest.
On 24 December 2019, the RREEF parties filed an originating application in this Court seeking recognition and enforcement of the ICSID tribunal’s award. On 24 March 2020, Spain filed a notice of appearance on the basis of s 10(7) Immunities Act for the limited purpose of asserting its immunity from suit pursuant to s 9.
In the meanwhile, Spain filed an application for annulment of the award pursuant to Art 52(1) ICSID Convention which was received by ICSID on 8 April 2020. Upon registration of Spain’s annulment application with ICSID on 15 April 2020, enforcement of the RREEF award was provisionally stayed, in accordance with r 54(2) of the ICSID Rules of Procedure for Arbitration Proceedings 2006 (ICSID Rules). In light of that application, on 22 April 2020, I ordered that the RREEF proceeding in this Court be stayed until further order.
On 28 October 2020, the ICSID ad hoc committee hearing Spain’s application for annulment of the award, comprising Professor Lawrence Boo (President), Professor Enrique Barros Bourie and Ms Bertha Cooper-Rousseau issued a decision on Spain’s request for continuation of the stay on enforcement of the award. The committee granted Spain’s request and ordered that the stay continue until the decision on Spain’s annulment application was rendered by the committee.
On 10 June 2022, the ICSID annulment committee issued the annulment award in which it dismissed Spain’s application for annulment, terminated the provisional stay on the enforcement of the award and ordered Spain to pay the claimants’ costs of the annulment proceeding.
On 19 October 2022, I ordered that the stay of the proceeding in this Court be lifted and granted the RREEF parties leave to file and serve an amended originating application, which they did on 26 October 2022. This application sought recognition and enforcement of both the original award and the annulment award.
During case management by me as the docket judge, Spain initially indicated that it would not be raising any substantive defence to the RREEF parties’ application following the handing down of the Spain HCA judgment on 12 April 2023. By late May 2023, that position had changed and the proceeding was programmed for final, contested hearing in tandem with the 9REN proceeding (see below at [46]).
On 21 June 2023, the RREEF parties filed an interlocutory application seeking orders that Blasket be joined as an applicant and be substituted for the RREEF parties with the RREEF parties being removed as applicants pursuant to rr 9.09(2) and 9.11 FCR. The basis for that interlocutory application was that on 27 October 2022, the RREEF parties entered into a deed of assignment which purported to irrevocably and unconditionally assign to Blasket all of their rights, interests and benefits under or in respect of the award. Spain had been notified of that assignment on 18 January 2023.
Spain opposed the interlocutory application, challenging the validity of the purported assignment. On 26 June 2023, I made orders joining Blasket and substituting Blasket for the RREEF parties on the basis that the making of those orders would not prevent Spain from disputing the validity or efficacy of the purported assignment at trial, which it now does. I granted leave to Blasket to file a further amended originating application on 9 May 2024.
The 9REN proceeding (NSD365/2020)
The applicant in the 9REN proceeding, 9REN Holding Sàrl, moves on a further amended originating application dated 9 May 2024. 9REN is a renewable energy company incorporated under the laws of Luxembourg. The factual background to 9REN’s application is as follows.
On 30 March 2015, 9REN submitted a request for arbitration to ICSID, which was received on 31 March 2015. It sought compensation for alleged breaches by Spain of the ECT arising out of 9REN’s investment in electricity produced by solar photovoltaic facilities in Spain, which it said was induced by Spain’s guarantee of a premium feed-in tariff and which was impaired by Spain modifying the regulatory and economic regime applicable to renewable energy products to 9REN’s disadvantage.
The ICSID arbitral proceeding is cited as 9REN Holding Sàrl v The Kingdom of Spain (ICSID Case No ARB/15/15).
On 31 May 2019, an ICSID tribunal comprising the Hon Ian Binnie CC QC (President), Mr David R Haigh QC and Mr V V Veeder QC issued an arbitral award recording its conclusions that the tribunal was competent to hear and determine 9REN’s claims against Spain, that Spain breached Art 10(1) ECT, and that 9REN is entitled to compensation in the amount of €41.76 million plus interest and costs.
On 15 July 2019, Spain submitted to the tribunal a request for rectification of the award under Art 49(2) ICSID Convention. On 6 December 2019, the tribunal issued its rectification award, in which it dismissed Spain’s request for rectification and ordered Spain to pay the tribunal’s costs and to pay 9REN US$6,103.01 for its portion of advances of the costs of the tribunal.
On 27 March 2020, 9REN filed an originating application in this Court.
On 3 April 2020, Spain applied to ICSID for annulment of the award, which under r 54(2) ICSID Rules had the consequence of enforcement of the award being provisionally stayed upon registration of Spain’s application with ICSID on 7 April 2020. In light of that application, on 22 April 2020 I stayed the 9REN proceeding in this Court until further order.
On 17 November 2022, the ICSID annulment committee comprising Professor Dr Dàrio Moura Vicente (President), Professor Dr Nicolas Molfessis and Dr Fernando Piérola-Castro issued the annulment award, in which it dismissed Spain’s application for annulment and ordered Spain to bear the costs of the annulment proceeding.
On 31 January 2023, Spain filed a notice of address for service in which it asserted immunity from suit pursuant to s 9 Immunities Act. On 1 February 2023, I made orders by consent that the stay of the 9REN proceeding be lifted.
As detailed above at [34], following the Spain HCA decision being handed down and Spain indicating that it nonetheless wished to assert substantive defences in opposition to the applications, the 9REN and RREEF proceedings were case managed together towards a final, contested hearing. I granted leave to 9REN to file a further amended originating application on 9 May 2024.
The Watkins proceeding (NSD449/2020)
The applicant in the Watkins proceeding moves on a second further amended originating application dated 9 May 2024. The factual background to the Watkins proceeding is as follows.
Watkins Holding Sàrl and Watkins (Ned) BV (the Watkins parties), incorporated under the laws of Luxembourg and the Netherlands respectively, were investors in the energy generation industry in Spain, in particular in connection with the purchase of seven wind farm sites.
On 26 October 2015, the Watkins parties (together with other claimants) filed a request for arbitration against Spain with ICSID. The Watkins parties alleged that Spain, in breach of its international obligations, adopted measures radically modifying and dismantling the legal and economic regime for renewable energy projects on which the Watkins parties relied when making their investment in the Spanish energy sector.
The ICSID arbitral proceeding is cited as Watkins Holdings Sàrl and others v Kingdom of Spain (ICSID Case No ARB/15/44).
On 21 January 2020, an ICSID tribunal comprising Mr Tan Sri Dato’ Cecil W M Abraham (President), Dr Michael C Pryles AO PBM and Professor Dr Hélène Ruiz Fabri issued an award in favour of the Watkins parties. The tribunal unanimously concluded that it enjoyed jurisdiction under the ECT and ICSID Convention over the Watkins parties’ claim (save in relation to an aspect of the claim concerning Spain’s tax measures) and concluded by majority that Spain had breached Art 10(1) ECT by failing to accord fair and equitable treatment to the Watkins parties. The Watkins parties were awarded damages in the sum of €77 million plus interest and costs.
On 6 March 2020, Spain submitted a request for rectification of the award to the ICSID tribunal.
On 17 April 2020, the Watkins parties filed an originating application in this Court seeking recognition and enforcement of the ICSID tribunal’s award. Spain filed a notice of conditional appearance to assert its immunity from the jurisdiction on 20 May 2020.
Given the immunity issues that were expected to arise, it was agreed that the Watkins proceeding would most sensibly proceed by way of a special case to be heard concurrently with then-pending appeals to the Full Court of the Federal Court in NSD328/2020 (Kingdom of Spain v Eiser Infrastructure Ltd & Anor) and NSD329/2020 (Kingdom of Spain v Infrastructure Services Luxembourg Sàrl) which concerned similar issues. A special case was stated on 22 June 2020 (and subsequently amended on 1 September 2020), the substance of which was concerned with whether Spain is entitled to immunity from the jurisdiction of the Federal Court under s 9 Immunities Act.
On 26 June 2020, Allsop CJ made a direction under s 20(1A) of the Federal Court of Australia Act 1976 (Cth) that the original jurisdiction of the Court be exercised by a Full Court in relation to the question whether Spain is immune from the jurisdiction of the Court pursuant to the Immunities Act in the Watkins proceeding. A Full Court comprising Allsop CJ, Perram and Moshinsky JJ was constituted to hear the proceeding concurrently with the appeals in the Eiser Infrastructure and Infrastructure Services matters on 24 August 2020.
On 13 July 2020, the tribunal issued its decision on Spain’s request for rectification of the award, dismissing Spain’s request and ordering Spain to pay the Watkins parties’ costs.
On 21 July 2020, Spain applied to ICSID for an annulment of the award and, in consequence, on 31 July 2020 the ICSID Secretary-General provisionally stayed the award.
Because of that intervening stay, the Watkins matter was not heard by the Full Court concurrently with the Eiser Infrastructure and Infrastructure Services appeals, but was rather adjourned on that day, 24 August 2020, to a future date.
On 21 February 2023, the ICSID ad hoc committee comprising Professor Lawrence Boo (President), Ms Olufunke Adekoya and Ms Dyalá Jiménez Figueres issued its decision on annulment in which the committee dismissed Spain’s application to annul the award and lifted the stay on its enforcement.
On 19 May 2023, Spain made an application to ICSID for revision of the award. As a result of that application, on 7 June 2023 the ICSID Secretary-General granted a provisional stay of the award.
In the context of the renewed agitation of the RREEF and 9REN proceedings in this Court and the view of the parties that the Watkins proceeding should travel together with those proceedings, on 7 June 2023 Mortimer CJ revoked the s 20(1A) direction made by Allsop CJ. The Watkins proceeding was docketed back to me for final, contested hearing together with the RREEF and 9REN proceedings.
On 17 August 2023, the Watkins parties filed an application under r 41(5) ICSID Rules requesting dismissal of Spain’s request for revision of the award.
On 21 December 2023, the Watkins parties and Blasket entered into a deed of assignment whereby the Watkins parties purported to irrevocably and unconditionally assign to Blasket the legal and beneficial title to all rights, interests and benefits of the Watkins parties under or in respect of the ICSID award (defined to include the award as well as the decisions on rectification, annulment and revision). The purported assignment was deemed to have taken place automatically upon the occurrence of any one of a number of triggering events which included, relevantly, the issuance of a decision that rejected or dismissed Spain’s application for revision of the award.
On 22 January 2024, an ICSID tribunal comprising Professor Dr Pierre Tercier (President), Dame Elizabeth Gloster and Professor Hélène Ruiz Fabri issued its decision on the Watkins parties’ application for dismissal of Spain’s revision request. In that decision, the tribunal rejected Spain’s request for revision of the award as manifestly without legal merit and noted that in accordance with r 54(3) ICSID Rules, the stay on the enforcement of the award was automatically terminated.
As a consequence of the issuance of that decision, the assignment referred to at [63] above became, on its terms, effective immediately (putting to one side Spain’s challenge to that efficacy to which I will return). The Watkins parties and Blasket jointly notified Spain of the assignment on 26 March 2024.
Subsequently, on 2 April 2024 the Watkins parties filed an interlocutory application in identical terms to the RREEF application described above at [35]. On 3 April 2024, I made orders joining Blasket to the Watkins proceeding and substituting it for the Watkins parties on the same basis outlined in [36] above, ie retaining Spain’s ability to contest the validity or efficacy of the assignment.
On 19 April 2024, with leave granted by consent, Blasket filed a further amended originating application seeking recognition and enforcement of the award and further relief arising from the ICSID tribunal’s revision decision. Then on 9 May 2024, with leave granted on that day, Blasket filed a second further amended originating application.
The NextEra proceeding (NSD415/2023)
The applicants in the NextEra proceeding move on an originating application dated 11 May 2023. The NextEra applicants are NextEra Energy Global Holdings BV and NextEra Energy Spain Holdings BV, both incorporated in the Netherlands.
On 12 May 2014, the NextEra parties submitted a request for arbitration against Spain to ICSID in connection with a dispute arising out of regulatory measures implemented by Spain modifying the economic regime for renewable energy investments in Spain.
The ICSID arbitral proceeding is cited as NextEra Energy Global Holdings BV and NextEra Energy Spain Holdings BV v Kingdom of Spain (ICSID Case No ARB/14/11).
On 12 March 2019, an ICSID tribunal comprising Professor Donald M McRae CC (President), the Hon L Yves Fortier PC CC OQ QC and Professor Laurence Boisson de Chazournes issued a Decision on Jurisdiction, Liability and Quantum Principles. The tribunal found that it had jurisdiction over the parties’ dispute and found Spain liable for breach of the fair and equitable treatment standard in Art 10(1) ECT.
On 31 May 2019, the ICSID tribunal issued an award in which it ordered Spain to pay to the NextEra parties €290.6 million in compensation for its breach of Art 10(1) ECT plus interest and costs.
On 26 September 2019, Spain applied to ICSID for annulment of the award. As a result, on 2 October 2019, pursuant to r 54(2) ICSID Rules, the acting Secretary-General informed the parties that the enforcement of the award had been provisionally stayed.
On 16 January 2020, Spain filed a request to continue the stay on enforcement of the award, which was opposed by the NextEra parties.
On 6 April 2020, an ad hoc committee comprising Professor Joongi Kim (President), Professor Lawrence Boo, and Mr Humberto Sáenz-Marinero issued a Decision on Stay of Enforcement of the Award. The committee decided that the stay of enforcement of the award should continue on a provisional basis on the condition that Spain provide an undertaking to the NextEra parties that in the event that an annulment was not granted it would recognise the award as final and binding and would comply with it terms, and Spain would unconditionally and irrevocably pay the pecuniary obligations imposed by the award to the NextEra parties.
On 18 March 2022, the same ad hoc committee formed in accordance with the ICSID Arbitration Rules issued a Decision on Annulment. The Committee unanimously dismissed Spain’s application for annulment of the award and ordered costs against Spain.
As mentioned, proceedings were initiated in this Court to enforce the award on 11 May 2023. Spain filed a notice of conditional appearance for the purpose of asserting its immunity from the jurisdiction on 14 November 2023. Spain has not complied with the award, or the annulment award, in whole or in part.
ISSUES IN DISPUTE AND SUMMARY CONCLUSIONS
At a high-level, Spain’s case is put as follows:
(1)Australia’s obligation to recognise and enforce an award under Art 54 only applies in relation to an award that is “binding” under Art 53, and Spain’s waiver of foreign State immunity by signing up to the ICSID Convention is thus similarly limited.
(2)The awards in these proceedings are not binding under Art 53 for either or both of the following reasons:
(a)The relevant dispute mechanism procedures under the ECT and the ICSID Convention are inconsistent with the principle of autonomy of the EU system of courts under the foundational treaties of the EU to which Spain and the States of the investors are parties. There is therefore an apparent conflict between Spain’s international obligations that it owes to Member States of the EU under the EU foundational treaties, on the one hand, and the obligations it appears to have under the ICSID Convention, on the other. That conflict ought to be resolved, it is argued, by applying the conflicts rule of “primacy” of the EU foundational treaties. If the rule of primacy is applied, it follows that Spain owes no public international law obligation to the States of the investors to comply with the purported awards; indeed, it may have a positive obligation not to comply as compliance may constitute prohibited State aid under the law of the EU.
(b)An alternative way to the same conclusion as to the purported awards’ non-binding nature is the contention that Spain’s agreement to the ICSID Convention has been modified by Spain’s agreement to the Treaty of Lisbon Amending the Treaty on European Union and Treaty establishing the European Union (2007) such that the EU court system has replaced the dispute resolution mechanisms under the ICSID Convention with respect to intra-EU investment disputes. It is said that that replacement means that intra-EU ICSID arbitral awards are not “binding” on EU Member States under Art 53 ICSID Convention. That modification is said to have been effected either in accordance with the requirements for modification under customary international law as reflected in Art 41 of the Vienna Convention on the Law of Treaties (1969) (VCLT), or by application of Art 30 VCLT.
(3)As a consequence of there being no “award” which is “binding” within the meaning of Art 53 ICSID Convention, the Federal Court has neither jurisdiction (because Spain enjoys foreign State immunity) nor power to grant the relief sought by the applicants, even if there is a submission to the jurisdiction.
(4)If the Court were to find that certification of a purported award by the ICSID Secretary-General is sufficient to prove that an award is binding, or that it precludes a Court from inquiring into whether an award is binding, then s 35(4) IAA is constitutionally invalid for infringement of Ch III of the Constitution.
The last point is raised by Spain in the NextEra proceeding by way of a notice of a matter arising under the Constitution under s 78B of the Judiciary Act 1903 (Cth). No Attorney-General has sought to appear in response to the notice. The constitutional matters raised by the notice are put as follows:
(1)Whether, upon the party seeking to recognise or enforce an arbitral award furnishing a copy of it as certified by the ICSID Secretary-General, do either or both of Art 54 ICSID Convention as implemented in Australia under s 32 or s 35(4) IAA, require the Court to:
(a)conclude that Spain has waived its immunity by agreement under s 10(2) Immunities Act?
(b)recognise and/or enforce any such award as binding within the territories of Australia as if it were a judgment or order of that court?
(2)If yes to (a) or (b), are either or both of those provisions constitutionally invalid on the basis that they:
(a)impermissibly vest Ch III judicial power in the tribunal and/or the ICSID Secretary-General to decide:
(i)whether Spain has waived its immunity by agreement under s 10(2) Immunities Act?
(ii)the substantive rights and obligations which were the subject of such award?
(b)substantially impair the institutional integrity of the Court as a court exercising judicial power under Ch III and s 75(i) of the Constitution by requiring it to:
(i)determine that Spain has waived its immunity by agreement under s 10(2) Immunities Act?
(ii)recognise or enforce, as a judgment or order of the Court, such award?
It may be noted that question 2(b) refers to the Court exercising judicial power under s 75(i) of the Constitution. That provision provides for the original jurisdiction of the High Court “[i]n all matters … [a]rising under any treaty”. This presents some difficulties. This head of jurisdiction has never been vested in the Federal Court – it is an omission from the otherwise broad scope of jurisdiction in s 39B Judiciary Act. From the agreed list of issues it is clear that the “matter” in contest between the parties is not limited to that arising under a treaty, but that it is also one “arising under … laws made by the Parliament”, ie the IAA (s 39B(1A)(c)), and, self-evidently from the s 78B notice, one “arising under the Constitution, or involving its interpretation” (s 39B(1A)(b)). That of course draws attention to ss 76(i)-(ii) and 77(i) of the Constitution, rather than s 75(i). Were it otherwise, there would be a jurisdictional problem in circumstances where s 38(a) Judiciary Act provides that “matters arising directly under any treaty” are exclusive (of the State courts) to the High Court and, again, the Federal Court has no express jurisdiction under or by reference to s 75(i). In light of this, I will ignore the reference to s 75(i) in question 2(b). Of course, this renders moot the (to some) tantalising, and as yet unresolved, issue of what a matter “arising under” or “arising directly under” any treaty means: as to which, see Leeming M, Cowen and Zines’s Federal Jurisdiction in Australia (5th ed, Federation Press, 2025) at 39-42; Australian Law Reform Commission, The Judicial Power of the Commonwealth (Report 92, October 2001) at [7.13]-[7.19]; and Leeming M, “Federal Treaty Jurisdiction” (1999) 10(3) Public Law Review 173; Jones O, “Federal Treaty Jurisdiction: A belated reply to Mark Leeming SC” (2007) 18(2) Public Law Review 94.
The applicants agree that whether Spain is immune from the adjudicative jurisdiction of this Court is a central issue in dispute in these proceedings. However, the applicants approach that question from a different premise. The applicants contend that in circumstances where there were in fact arbitral proceedings before tribunals constituted by ICSID which resulted in duly certified awards, where none of the relevant awards is subject to any stay or other remedy under Arts 50-52 ICSID Convention, such remedies having been exhausted, and where the authenticity of the awards is undisputed, Art 54 ICSID Convention is not contingent upon any examination by the Court into the binding effect of the awards. Essentially, the applicants contend that the ICSID arbitration system established by the ICSID Convention is a self-contained or closed-loop system which cannot be disturbed by a court presented with a certified, authentic award, except perhaps where exceptional circumstances such as fraud or corruption arise and these proceedings are not such a case. On that basis, the applicants reject the proposition that Spain’s waiver of immunity under the Immunities Act upon accession to the ICSID Convention could be qualified in the manner contended by Spain. This argument is the applicants’ answer to whether the Court has power to enforce the awards under s 35(4) IAA, in that the award referred to there, on this analysis, need only be an award on its face as certified.
In any event, the applicants dispute that the conflicts rule of primacy applies or that there has been any modification of Spain’s obligations under the ICSID Convention.
The applicants initially contended that Spain waived its foreign State immunity by conduct in the proceedings before this Court. In respect of the RREEF, 9REN and Watkins proceedings, that was said to have arisen by Spain having argued questions of power under the guise of immunity when in substance those questions go to the merits. It was said that to have adopted that course is inconsistent with the maintenance of the immunity. In the NextEra proceeding, the applicant relied on a letter written on behalf of Spain that contained no assertion of immunity. It was said that the letter, viewed objectively, amounted to a step in the proceeding which is inconsistent with the maintenance of the immunity. All those contentions were rightly abandoned during the course of the hearing.
There are two further issues peculiar to some of the proceedings and not others.
First, Spain contends that in the RREEF and Watkins proceedings, where Blasket is the purported assignee of the original investors’, and hence award creditors’, rights in and under the awards, the Court has no power under s 35(4) IAA to make orders in favour of Blasket to enforce the awards. That is said to be because the extent of the Court’s power under s 35(4) IAA is to make an order “which gives the award the recognised status of a judgment” and which makes it “enforceable as such”. It is said that there is no power under s 35(4) IAA to make an order that varies the terms, effect or beneficiaries of an award.
Secondly, in the RREEF proceeding, Blasket argues that Spain’s reliance on the foundational texts and laws of the EU cannot apply in respect of the award in favour of RREEF Infrastructure (GP) Ltd which was incorporated under the laws of the Bailiwick of Jersey, one of the Channel Islands. That is because, so it is said, for most purposes – including, relevantly, EU law against State aid – the Channel Islands, as Crown Dependencies, are not part of the UK except to the extent that the UK is responsible for their external relations. It is to be noted that the events relevant to this issue pre-date the UK’s exit from the EU, known as Brexit, with effect from 1 February 2020 (CET).
For the reasons that follow, I have concluded that Spain waived its immunity in all the proceedings, that the Court has power to recognise and enforce the awards in the proceedings, and that the awards must therefore be enforced as if they were judgments of the Court under s 35(4) IAA. The European Commission’s application for leave to intervene in the proceedings should be dismissed.
I will give the parties the opportunity to bring in agreed or competing orders giving effect to these reasons and the opportunity to address me further on relief in the event that that is required.
THE EVIDENCE
Lay evidence
The lay evidence before the Court was comprised almost exclusively of affidavits by solicitors acting for various of the applicants both in the proceedings in this Court as well as in the underlying arbitral and annulment proceedings and ongoing recognition and enforcement efforts in other jurisdictions. The main purpose of most of these affidavits was to annex the various relevant arbitral materials and provide further information about the applicant investors.
Spain did not adduce any lay evidence aside from an affidavit of service by its solicitor in the NextEra proceeding regarding the s 78B notices.
The European Commission also relies on two lay affidavits in support of its application for leave to intervene (see further below at [351]).
No lay witnesses were required for cross-examination.
Expert evidence
The applicants’ experts
The applicants rely on three expert reports each prepared by a different expert. Those experts and their respective reports are as follows:
(1)Professor Piet Eeckhout – Professor Eeckhout is a Professor of EU Law at University College London and Academic Director of the UCL European Institute. Professor Eeckhout holds a PhD in EU law from the University of Ghent. His academic interests revolve around EU law, in particular EU external relations law including the interaction between EU law and public international law. Professor Eeckhout has published extensively in this field and is the sole author of a leading monograph on EU external relations law. Professor Eeckhout’s expert report in these proceedings is dated 1 December 2023. It covers relevant rules and principles of EU law and the conflict between the EU treaties and the ECT and ICSID Convention.
(2)Mr Conor Quigley KC – Mr Quigley of King’s Counsel is a barrister of the Inner Bar of England and Wales. Mr Quigley was called to the Bar in 1985 by the Honourable Society of Gray’s Inn, London and was admitted to the Inner Bar in 2003. He specialises in the area of European law, particularly in EU State aid law, and has served as a Research Fellow at the University of Oxford and King’s College, London, a Senior Fellow at the University of Leiden and a Visiting Professor at the London School of Economics and Political Science. Mr Quigley’s expert report in these proceedings is dated 30 November 2023. It principally covers matters of EU State aid law and the status of the Bailiwick of Jersey and EU law.
(3)Professor Dan Sarooshi KC – Professor Sarooshi of King’s Counsel is a barrister at Essex Court Chambers and a Professor of Public International Law at the University of Oxford. Professor Sarooshi is also a Senior Research Fellow in Law at The Queen’s College, Oxford. He was called to the Bar of England and Wales in 2005 and admitted to the Inner Bar in 2018. He has been a Professor at Oxford since 2006. Professor Sarooshi is a specialist in public international law, investment treaty arbitration and public and constitutional law. Professor Sarooshi has prepared two expert reports in these proceedings. His first expert report is dated 30 November 2023 and deals principally with whether customary international law, the ICSID Convention or the ECT prohibit the assignment of the rights in relation to an ICSID award. Professor Sarooshi’s second expert report is dated 21 March 2024, and deals principally with the EU law of primacy and its possible application in the NextEra proceeding.
Spain’s expert
Spain relies on five expert reports each prepared by Professor Steffen Hindelang. Professor Hindelang is a Professor of International Investment and Trade Law at Uppsala University in Sweden. He is also a Director and co-founder of the CELIS Institute, a research enterprise dedicated to promoting better regulation of foreign investments, and senior fellow at the Walter Hallstein-Institute of European Constitutional Law at Humboldt-Universität zu Berlin. Professor Hindelang is a specialist in EU law, international and trade law and German public law.
Professor Hindelang’s reports are identified as follows:
(1)Expert Report dated 15 August 2023 which deals principally with relevant rules and principles of the EU legal order, the principles of autonomy and primacy as articulated by the Court of Justice of the EU (CJEU) and EU State aid law;
(2)Supplementary Expert Report dated 5 September 2023 which deals with the question of the assignability of the rights in and relating to ICSID awards;
(3)Second Supplementary Expert Report dated 14 February 2024 which is a response to the reports of Professor Eeckhout, Mr Quigley and Professor Sarooshi;
(4)Expert Report in Chief dated 28 February 2024 which deals with matters previously dealt with in the first Hindelang report dated 15 August 2023 but in this instance in relation to the NextEra proceeding; and
(5)Expert Report in Reply dated 28 March 2024 which replies to Professor Sarooshi’s second report of 21 March 2024 and the NextEra applicants’ reply submissions of 22 March 2024.
Other expert reports
As mentioned, the affidavits comprising the lay evidence annexed materials which were before the tribunals in the various arbitral proceedings. That evidence included five expert reports of Professor Eeckhout dated 9 July 2020, 19 November 2020, 9 February 2021, 29 April 2021 and 27 July 2021, and two expert reports of Professor Hindelang dated 30 October 2020 and 30 April 2021. Also annexed were four expert reports of Professor Ricardo Gosalbo, instructed by Spain, dated 13 April 2020, 8 September 2020, 25 October 2020 and 11 March 2021. As these expert reports have not been filed for use as such in the present proceedings, no affidavits of their authors confirming them were read and the parties have not made reference to them, I have not had regard to them.
The status of the expert reports
The applicants object to parts of Professor Hindelang’s various reports being received as expert evidence. Broadly, they submit that Professor Hindelang’s opinions, and those of their own experts, on public international law should instead be received as submissions. The applicants particularise their objections to Professor Hindelang’s evidence by reference to various categories which they submit are not properly the subject of expert evidence:
(1)Custom Objection: opinion as to content or application of customary international law;
(2)Treaty Objection: opinion as to interpretation of a treaty arising in the course of ascertaining the operation of Australian law;
(3)EU Law Objection: opinion of EU law possibly also expressing interpretation of application of the ECT or ICSID Convention;
(4)Foreign Law Objection: opinion of foreign law (eg US law, English law) including decisions of foreign courts outside area of expertise; and
(5)Form Objection: submission or conclusions as to content and effect of document, including from facts not in evidence, including opinion without foundation, and no specialised knowledge or expertise being applied.
The applicants did not seek to have any parts of Professor Hindelang’s reports struck out or ruled inadmissible; rather, they sought rulings under s 136 of the Evidence Act 1995 (Cth) that certain passages be treated as submissions, or that evidence be admitted only as an opinion as to the content of EU law and otherwise be treated as a submission.
In advance of the hearing, the parties agreed that I should deal with the expert evidence on the following basis:
(1)Subject to the applicants’ objections to evidence that are pressed, all of the expert witness reports served by the parties be received as material capable of bearing on the legal and factual questions to be decided but on the basis that, save in relation to credit or expertise, it is not necessary for any party specifically to challenge an expert witness in cross-examination on any particular opinion or proposition, or to put to the witness any contrary opinion or proposition, for that party to be able to submit that the witness’s opinion or proposition should not be accepted or that the contrary opinion or proposition should be accepted;
(2)The applicants’ objections to evidence that are pressed should be dealt with (if necessary) in the Court’s final judgment; and
(3)On that basis, no party requires any of the authors of the expert witness reports for cross-examination.
The parties were also agreed that the expert evidence should be treated as evidence in all proceedings notwithstanding the individual proceeding in which a particular report may have been filed.
I have ultimately not found the expert reports to be particularly helpful. That is no reflection on the experts, but rather reflects the approach of counsel before me to advance the arguments themselves with reference to the underlying authorities and other resources. No doubt counsel found the expert reports invaluable in preparing and advancing the parties’ various contentions, but for the most part I have focussed on counsel’s submissions rather than relying on the expert reports. Where those submissions reference the expert evidence, I have by necessity considered the content of that evidence where relevant. For that reason, I have not found it necessary to rule on any objections to the reports.
The dispute about the status of Professor Hindelang’s reports raises the question whether propositions of public international law are always questions of law of the forum on which evidence is inadmissible, or whether there will be cases where propositions of public international law are susceptible of proof by evidence
There is no doubt that domestic law is not subject to proof by evidence and that “foreign law is a question of fact to be proved by expert evidence”: s 143 Evidence Act and Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; 223 CLR 331 at [115] per Gummow and Hayne JJ. This rule is subject to s 174 Evidence Act (see Deputy Commissioner of Taxation v Shi [2021] HCA 22; 273 CLR 235 at [31] per Gordon J) and also is not applicable where the foreign laws in question are so well-known that their contents are “notorious” (Mokbel v The Queen [2013] VSCA 118; 40 VR 625 at [26] per Maxwell ACJ, Buchanan and Weinberg JJA, citing Saxby v Fulton [1909] 2 KB 208). The latter exception may best be considered an incident of judicial notice (see s 144 Evidence Act).
The question then is as follows: do the principles governing the establishment of the content of international law follow those for domestic law or for foreign law, or does proof of international law have its own rules?
In Trendtex Trading Corporation v Central Bank of Nigeria [1977] QB 529, in obiter Stephenson LJ stated at 569 that:
rules of international law, whether they be part of our law or a source of our law, must be in some sense “proved,” and they are not proved in English courts by expert evidence like foreign law: they are “proved” by taking judicial notice of “international treaties and conventions, authoritative textbooks, practice and judicial decisions” of other courts in other countries which show that they have “attained the position of general acceptance by civilised nations”: The Cristina [1938] AC 485, 497 per Lord Macmillan.
That decision (and the broader issue of proof of international law) was examined in detail by Perram J in Australian Competition and Consumer Commission v PT Garuda Indonesia (No 9) [2013] FCA 323; 212 FCR 406 (Garuda No 9) at [28]-[50]. Justice Perram distinguished what was said in Trendtex by noting that the Court there had considered sovereign immunity a matter of customary international law, as picked up by the common law of England (at [34]). That is, in cases where the common law overlaps with customary international law, “it was natural to think that the common law on the topic ought to align with the customary international law on the same issue” (at [38(a)]). While, of course, the common law does not require (or allow) proof by evidence, this meant that what was said in Trendtex was not, strictly speaking, relevant to the construction of a treaty, which was at issue in GarudaNo 9 (at [36]-[37]). Nor in its breadth was Trendtex convincing for the proposition that all international law was fully incorporated into domestic law (at [35]).
In saying this, Perram J partly disagreed with the position set out in Heydon JD, Cross on Evidence (9th ed, LexisNexis Butterworths, 2013) at 1383-1387 [41005], which regarded Trendtex as “as authority for the general proposition that public international law is part of domestic law for the purpose of proving its meaning and content” (at [35]). Notably, that divergence was to an extent subsequently remedied: see Heydon JD, Cross on Evidence (10th ed, LexisNexis Butterworths, 2015) at 1471 [41005]. In the latest edition of Heydon JD, Cross on Evidence (14th ed, LexisNexis, 2023), Garuda No 9 (at [38(a)]) is cited as authority for a number of propositions, including the narrower notion that where domestic common law is to the same effect as customary international law it does not require proof by expert evidence (at 1617 [41005]).
Justice Perram nevertheless observed more narrowly that “[g]iven its practical effect on domestic public law and the operation of s 51(xxix) of the Constitution, however, it is not inaccurate to view international law as perhaps one of the sources of domestic law” (at [44]) – noting that in referring to “public international law” Perram J is referring to “that part of the law of nations as consists of treaties” and thus excluding customary international law. It would be natural to expect that international law will be approached as a legal question in terms of proof at junctures where “local rules of interpretation and public law have the effect of picking up, or invoking, international law” (at [44]). His Honour therefore concluded his discussion in Garuda No 9 by saying that “before an Australian court a question as to the interpretation of a treaty which arises in the course of ascertaining the operation of Australian law is to be approached as a question of law rather than as one of fact” (at [48]).
That approach was followed in Ure v Commonwealth [2015] FCA 241; 323 ALR 164 by Yates J in the context of determining the content of customary international law. His Honour considered that Garuda No 9 stood only for the “more limited proposition” that treaty interpretation arising in the course of ascertaining the operation of Australian law was a question of law, and considered the dictum of Stephenson LJ in Trendtex persuasive in the exercise of giving content to customary international law: at [83]-[84]. On appeal from that decision, the Full Court (Perram, Robertson and Moshinsky JJ) in Ure v Commonwealth [2016] FCAFC 8; 236 FCR 458 discussed (at [29]-[41]) how customary international law was to be proved with reference to the International Court of Justice (ICJ) decision in the North Sea Continental Shelf Cases (North Sea Continental Shelf (Federal Republic of Germany/Netherlands; Federal Republic of Germany/Denmark) (Judgment) [1969] ICJ Rep 3). While not explicitly addressing the point, the Full Court referred to “evidence” being required for the content of a rule of customary international law, in the well-settled form of State practice and opinio juris (ie the conviction felt by States that the practice is required by international law). Implicit in the approach the Full Court took was an acceptance that evidence could be at least admissible on this point, and perhaps required in instances of uncertainty (see eg at [37]-[38]). See also, to similar effect, Barngarla Determination Aboriginal Corporation RNTBC v Minister for Resources [2023] FCA 809; 299 FCR 50 at [349]-[353] per Charlesworth J.
Further, in the appeal from Perram J’s judgment on the merits in the PT Garuda competition litigation (Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd [2016] FCAFC 42; 244 FCR 190), Dowsett and Edelman JJ made the following pertinent observation (at [254]), which aligns with the reasoning in Ure both at first instance and on appeal:
It was common ground that propositions of international law could be established without expert evidence and simply by way of submissions. That assumption was not the subject of any dispute but as an absolute proposition it is highly questionable. For instance, the recognition that a developing international principle has become a requirement of international law can require evidence of widespread and representative State practice and opinio iuris (an intention to be bound). It may be difficult, for example, for a party to establish without either expert or lay evidence, a pattern of State behaviour and the reasons why States have acted in that way. However, it is not necessary to explore the extent to which the assumption is justified in this case.
On the basis of those authorities, the following propositions can be identified:
·International law sourced in treaties that are part of, or a source of, the law of the forum is not susceptible to proof by way of evidence.
·International law sourced in treaties that do not have that relationship to the law of the forum, such as treaties to which Australia is not party or which are not sought to be given expression in domestic law, is akin to foreign law and is to be proved or established in like manner.
·International law sourced in customary international law may be susceptible to proof by way of evidence, and evidence of State practice and opinio juris will likely be required where the state of the law on the point in issue is unsettled.
I am not persuaded by that submission. Diplomatic protection is suspended in relation to the dispute from its inception if the parties “shall have consented to submit or shall have submitted” the dispute to ICSID arbitration. Diplomatic protection is no longer suspended from when the award debtor State “shall have failed to abide by and comply with the award rendered in such dispute”. At issue is the assignment of the rights in and in respect of the award. By then, the suspension of diplomatic protection has either already ended or it has nearly ended – the only time remaining being for the award debtor State to abide by and comply with the award before it is properly regarded as having failed to do so. It is hard to imagine what basis there would be for diplomatic protection in that period because the investor would have an award in its favour that the award debtor State had not yet failed to comply with and abide by. If the award has been effectively assigned during that period, then the investor no longer has any need or basis for diplomatic protection and the award debtor State has no need for the suspension of such diplomatic protection. Whether the assignee is entitled to any diplomatic protection, whether before the award debtor State has failed to comply with the award or thereafter, is a matter that falls outside the Convention.
In the circumstances, I do not consider that Art 27 ICSID Convention has any bearing on the assignment question.
Beyond Art 27, Professor Hindelang observes on diplomatic protection that States are “caught in a complex web of political and legal relationships and constraints” and that they are therefore loath to expose themselves to the risk of a shift in the identity of the State capable of providing that diplomatic protection to the counterparty. That is, the home State of an award creditor may resort to countermeasures such as asset freezes in order to support its national obtain compliance with an award against an award debtor State. As a practical and political matter, the award debtor State has an interest in knowing from where those countermeasures may originate. I am equally not persuaded by this. Professor Hindelang appears to advance this as a broad consideration which supports a restrictive view of assignability of ICSID awards; however, this factor is too far removed from the immediate operation of the treaty regime suggested by the text analysed above to bear on its interpretation.
Insofar as this is said to be expressive of customary international law, some support is drawn from two decisions of ICSID tribunals – however, the decisions comment on limitations to assignment in very different legal contexts and not concerning awards. They concern, respectively, the severability of ICSID claims from ownership of assets (in that claims do not automatically accompany a purchase of the underlying investment) and the ineffectiveness of assignment as a means of curing a lack of jurisdiction to bring an ICSID claim (where a party’s home State was not party to the ICSID Convention, so that party sought to assign the claim to its subsidiary in another State which was party to the Convention): cf Daimler Financial Services AG v Argentine Republic (Award) (ICSID Arbitral Tribunal, Case No ARB/05/1, 31 October 2023) at [144]-[145] and Mihaly International Corporation v Democratic Socialist Republic of Sri Lanka (Award) (ICSID Arbitral Tribunal, Case No ARB/00/2, 15 March 2002) at [24].
The object and purpose of the Convention would be better served by allowing assignment by award creditors. Recalling that the High Court in Spain HCA described the primary object of the Convention as including the mitigation of sovereign risk and provision of legal security (at [40]), it could hardly be the case that assignability would detract from this purpose from the perspective of investors. Assignment to third parties enables award creditors to recover the value of compensation due to them in circumstances where full recovery from award debtor compliance is not feasible or expected to be protracted – circumstances which resemble the present proceedings in light of Spain’s potential EU law obstacles to payment: see Gaillard E and Penushliski I, “State Compliance with Investment Awards” (2020) 35(3) ICSID Review 540 at 590.
Spain also submits that if it has waived its foreign State immunity in proceedings for the enforcement of ICSID awards on the basis found by the High Court in Spain HCA, that waiver or submission is only in proceedings brought by the original award debtor and not by an assignee. Spain submits the rights that are sought to be enforced arising under Arts 53 and 54 ICSID Convention vest only in the award creditor.
In truth, that submission is merely another way of saying the same thing. If, as I have found, the ICSID Convention allows, or does not prohibit, the assignment of the rights in an award in either of the way that I have postulated, then, by becoming a Contracting State to the ICSID Convention Spain has waived its foreign State immunity in respect of the enforcement of an ICSID award whether that enforcement is sought by the original award creditor or by a subsequent assignee.
Spain submits that that approach is highly problematic and prejudicial to Spain because if Spain pays Blasket, the assignee, under that analysis there would be nothing to stop the RREEF parties, the assignors, from still enforcing the award somewhere else. I do not accept that foreign legal systems are so unsophisticated as to ignore a payment to Blasket as discharging the obligation to the RREEF parties. Under Art 62, all Contracting States to the ICSID Convention are required to make it effective in their territories, with the result that one can expect other Contracting States to recognise payment to the assignee under an assignment that is recognised under the law of another Contracting State as discharge of the obligation. Spain’s objection in this respect is not peculiar to assignments. The RREEF parties could have sought enforcement of the award in all ICSID Contracting States. If satisfaction of the award in whole or in part was achieved in one State, that could doubtless be raised in defence to enforcement in another Contracting State. The same is true of the position Spain finds itself in where all the rights in respect of an award have been assigned – if it has paid the assignor prior to receiving notice of the assignment or it has paid the assignee thereafter, it is hard to imagine that that could not be raised in defence to not having to pay twice.
Domestic law
Alternatively, the question of assignment can be approached from the perspective of the rights that exist in the domestic law of the forum. As submitted by Blasket, the award in favour of the RREEF parties against Spain could have been enforced in this Court “as if the award were a judgment or order of [the Court]” (s 35(4) IAA). That provision is the fulfilment of Australia’s obligation to the other States parties to the ICSID Convention under Art 69 to make the Convention effective in its territory. “The phrase ‘as if’ contains the command to treat the different as real: the award as a judgment, and the incidents and consequences that flow as if the award were a judgment”: Spain FCAFC No 3 at [9] per Allsop CJ, Perram and Moshinsky JJ agreeing.
Initially, the RREEF parties as the award creditors had that right of enforcement of the award as if it was a judgment (even though it was not). That is to say, on the relevant award being made (and subsequently not subject to any further application for rectification or annulment), there existed rights of enforcement of the award in Australian domestic law. On this limb of the case, there is no dispute that the RREEF parties had that right. The “Assigned Rights” under the deed of assignment are defined sufficiently broadly to include such rights of enforcement, ie “all of the rights, interests and benefits of the Assignors under or in respect of the Award” (emphasis added). Under Australian law, the rights of enforcement which pertain to an arbitral award are choses of action capable of being assigned. More specifically, under the law of New South Wales, such property can be assigned under s 12 of the Conveyancing Act 1919 (NSW) or in equity: see Austino Wentworthville Pty Ltd v Metroland Australia Ltd [2013] NSWCA 59; 93 ACSR 297 at [14], [30] and [81] per Barrett JA, Beazley P and Meagher JA agreeing; Norman v Federal Commissioner of Taxation [1963] HCA 21; 109 CLR 9 at 27-28 per Windeyer J. With respect to the exercise of federal jurisdiction, s 12 Conveyancing Act is picked up and applied under s 79 Judiciary Act as federal law: Microsoft Corp v PC Club Australia Pty Ltd [2005] FCA 1522; 148 FCR 310 at [128] per Conti J. As mentioned above, the requirements for a valid assignment are met, and the assignment of the rights of enforcement that exist in domestic law is valid.
With reference to this general law, Spain refers to the principle that “the benefit of a contractual obligation cannot be assigned in cases where the identity of the person to whom the obligation is owed is a matter of importance to the person on whom the obligation rests”: Leveraged Equities Ltd v Goodridge [2011] FCAFC 3; 191 FCR 71 at [362] per Jacobson J, Finkelstein and Stone JJ agreeing, citing Tolhurst v Associated Portland Cement Manufacturers (1900) Ltd [1902] 2 KB 660 at 668 per Lord Collins MR. In Tolhurst, notwithstanding the general principle of assignability at will, Lord Collins MR contemplated that consent could be required where “there are mutual obligations still to be enforced and where it is impossible to say that the whole consideration has been executed” (at 669). His Lordship referred to “contracts involving special personal qualifications in the contractor”, such as a commission for an artist. That is already a very different circumstance from an award rendered in favour of an investor. It is difficult to see how the “character, credit, and substance” or “special personal qualifications” of the assignee to an award would be of much relevance to an award debtor – the obligation to pay would remain the same. Nor is there anything further for an award creditor or its assignee to “perform” such that Spain would have such an interest. I reject the submission that the rights of enforcement enjoyed by RREEF were of such a personal nature as to not be assignable.
Spain’s further argument focusses on Art 53 ICSID Convention rather than Art 54. Spain submits that its obligation to abide by and comply with the terms of the award under Art 53 is an obligation that it owes the original award creditors, the RREEF parties, and not the assignee, Blasket, and that the corresponding right cannot be assigned. Even if that analysis is correct and the RREEF parties’ rights under Art 53 cannot be assigned, that has no bearing on the analysis at the level of Art 54. As explained, the RREEF parties had the rights of enforcement of the awards under Art 54 and s 35(4) IAA in Australian domestic law and there is no reason why those rights could not be assigned.
But in any event, by the operation of s 32 IAA, Spain’s obligation (to the RREEF parties) under Art 53(1) to abide by and comply with the terms of the award had domestic legal effect. The RREEF parties were entitled to enforce that obligation in Australia under the domestic statutory law. There is no reason why such a statutory right could not be assigned.
Conclusion
For those reasons, I find that the assignments by the RREEF parties and Watkins to Blasket are valid and enforceable and that Blasket is entitled to pursue enforcement of the awards under s 35(4) IAA.
THE BAILIWICK OF JERSEY
Introduction
The issue here only arises in the RREEF proceeding, if I am wrong on my findings in relation to investor companies that are nationals of Member States of the EU. In that event, Blasket submits that Spain’s arguments do not apply to RREEF Infrastructure (GP) Ltd, which is incorporated under the laws of the Bailiwick of Jersey, as it is not a Member State of the EU. On that basis, Blasket submits that it is entitled to enforce the award in the RREEF proceeding.
Jersey is one of the Channel Islands, a British Crown Dependency. The Channel Islands are not part of the UK except to the extent that the UK is responsible for their external relations. They have their own parliaments, laws and courts.
Article 355(5)(c) TFEU provides that the foundational treaties of the EU apply to the Channel Islands and the Isle of Man “only to the extent necessary to ensure the implementation of the arrangements for those islands set out in the Treaty concerning the accession of new Member States to the European Economic Community and to the European Atomic Energy Community signed on 22 January 1972”. Article 1(1) of Protocol No 3 of the UK Accession Treaty provides that EU rules on “customs matters and quantitative restrictions ... shall apply to the Channel Islands and the Isle of Man under the same conditions as they apply to the United Kingdom”.
The EU rules on customs matters and quantitative restrictions are now embodied in Arts 28-37 TFEU – in Part 3 Title II “Free Movement of Goods”. It is only for the purpose of those provisions of EU law, relating to the free movement of goods, that Jersey and the UK are to be treated as one EU Member State (remembering that the relevant events were pre-Brexit so the UK is to be treated as a Member State). I accept, for the reasons explained by Mr Quigley, that Jersey is not to be treated as an EU Member State for any other purpose and no other provisions of EU law apply to Jersey.
Professor Hindelang opines that the application in Jersey of EU rules relating to free movement of goods renders its dispute with the RREEF Jersey company an intra-EU dispute attracting the application of the intra-EU objection because it is sufficient that a tribunal may have to apply and interpret EU law. Spain submits that “it would undermine the principle of autonomy for a dispute between a national of Jersey and a member state of the EU to be determined by a tribunal outside the EU system in the same way that that principle would be undermined in relation to a dispute between a national of a member state of the EU strictly so-called and a member state”. On that basis, Spain submits that the award in favour of the RREEF Jersey company raises the same conflict in apparent obligations as the other awards in favour of nationals of Member States of the EU.
In answer to Blasket’s submission that there was no issue of EU law relevant to or applicable in the dispute under the ECT between the RREEF parties and Spain, Spain submits that it is not for tribunals sitting outside of the EU system, “and certainly not for this Court”, to decide whether EU law was or was not relevant to the determination of the dispute; “[i]t follows that it is neither here nor there whether Blasket, RREEF Jersey, a tribunal sitting outside the EU system or even this Court think that EU law was or was not relevant to the determination of the dispute between RREEF Jersey and Spain. What matters, and what creates the relevant conflict, is that the CJEU has been denied the ability to decide that issue.”
Consideration
Mr Quigley explains, with reference to Iannelli & Volpi SpA v Meroni (C-74/76) [1977] ECR 557 at [9]-[10], [12], that whatever the scope of the free movement of goods restrictions are under the relevant articles of the TFEU, they do not include obstacles to trade covered by other provisions of the Treaty. Therefore, even if EU law preventing quantitative restrictions on imports and exports is applicable in Jersey, the State aid prohibition in Arts 107-108 TFEU cannot be contained within the scope of free movement of goods and thus are not applicable in Jersey. I accept that analysis.
Professor Hindelang refers to Jersey Produce Marketing Organisation Ltd v States of Jersey (C-293/02) [2005] ECR I-9543; [2006] All ER (EC) 1126 at [46]-[47] in support of a submission that resolving a dispute between Jersey and Spain may concern the application or interpretation of EU law. However, what was said in that judgment is restricted to the application of the rules on customs matters and quantitative restrictions and not broader questions of EU law such as State aid. The relevant paragraphs are:
[46] It must be observed, next, that it is stated in Article 1(1) of Protocol No 3 that the Community rules on customs matters and quantitative restrictions are to apply to the Channel Islands and the Isle of Man “under the same conditions as they apply to the United Kingdom”.
[47]Such wording suggests that, for the purposes of the application of those Community rules, the United Kingdom and the Islands are, as a rule, to be regarded as a single Member State.
The CJEU was not stating as a generally applicable rule that the Channel Islands and the UK are treated as a single Member State outside of this context. Thus disputes not involving the free movement of goods, arising with a claimant or defendant that is incorporated in Jersey cannot be said to be intra-EU disputes. That includes the dispute between the RREEF parties and Spain.
As Jersey was not a Member State of the EU, and it was not to be treated as a Member State of the EU save in respect of EU rules concerning the free movement of goods which are not implicated in the dispute between the RREEF parties and Spain, there was no occasion for the application of EU law in that dispute. I reject the submission that only the CJEU can make that assessment. Spain asserts that the relevant dispute falls within the Achmea/Komstroy principles. In those circumstances, it is for this Court to make the determination of whether that is so which turns on whether the EU foundational treaties and EU law were required to be applied in that dispute. They were not, because the dispute did not raise any issue with regard to the EU rules concerning the free movement of goods.
For those reasons, if called upon to decide the question, I would find that RREEF Infrastructure (GP) Ltd is not to be treated as a national of an EU Member State in relation to the award in its favour against Spain.
THE CONSTITUTIONAL POINT
Introduction
In the NextEra proceeding, Spain raises a constitutional issue as outlined above (at [78(4)] and [79]).
The starting point is Spain’s submission, in essence, that it did not validly agree to the arbitrations because Art 26 ECT under which it purportedly agreed does not apply to intra-EU disputes. Put differently, it submits that Art 26 was not an offer by it to arbitrate under the ICSID system that was capable of acceptance and thereby create a binding agreement to arbitrate. It then advances the following propositions:
(1)The tribunal’s power to quell the dispute between the parties depends on their agreement, usually embodied in a contract; the award is not binding of its own force: TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; 251 CLR 533 at [29] per French CJ and Gageler J quoting Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16; 203 CLR 645 at [31].
(2)A process, as contended for by the applicants, that disentitles the Court when called upon to exercise judicial power to inquire into whether there was an agreement between the parties such as to give the tribunal the requisite power, has the effect of vesting the judicial power of the Commonwealth in the tribunals and the annulment committees which is contrary to Ch III of the Constitution: Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; 183 CLR 245 at 269-270.
(3)The conclusiveness of an arbitral award does not offend those principles provided that there is an agreement between the parties for their dispute to be determined by arbitration and there is an ability to challenge the tribunal’s conclusion that there is such an agreement in a Ch III court: TCL at [17] per French CJ and Gageler J.
(4)In order to save Pt IV of the IAA from such constitutional invalidity, it should be interpreted so as to allow the Court under s 35(4), in particular with reference to the use of “may”, to inquire into whether there was agreement between the parties to submit their dispute to arbitration: s 15A of the Acts Interpretation Act 1901 (Cth).
Consideration
The starting point is that Spain is a Contracting State to the ICSID Convention, as is Australia. There is no dispute about that. Spain therefore agreed with, relevantly, Australia, that the closed loop ICSID system would apply in relation to it. It thus agreed not to litigate jurisdictional issues – such as whether it concluded an enforceable agreement to arbitrate – in an enforcing court in Australia as those issues are to be determined, by its agreement, in the closed loop system by a tribunal. Therefore, notwithstanding Spain’s contention that its agreements to arbitrate with the investors under Art 26 ECT are invalid as a consequence of EU law, for the purposes of proceedings in Australian courts it has waived its foreign State immunity in respect of proceedings for the enforcement of the awards.
For that reason, the contention that by the ICSID system the question of whether Spain enjoys foreign State immunity, or whether it has waived it, is removed from the ambit of decision-making by the Court and left in the hands of the ICSID system is a false premise and must fail. It cannot be the case that the tribunal or the Secretary-General has any role with respect to determining if there has been waiver of immunity under Australian law. I reject Spain’s contention. This means the answer to question 2(a)(i) of Spain’s s 78B notice (extracted at [79] above) is “no”.
The answer to question 1(a), ie whether “upon the party seeking to recognise or enforce an arbitral award furnishing a copy of it as certified by the Secretary-General” of ICSID the Court is required by Art 54 or s 35(4) to conclude that Spain has waived foreign State immunity, is “no”. That is because, as held in Spain HCA (as discussed earlier in these reasons), it is Spain’s entering into the ICSID Convention that requires the conclusion as to it having waived its immunity, not the presentation of the certified copy of the award. Spain has waived its immunity in a proceeding in which enforcement of an ICSID award is sought. In such a proceeding, an issue to be determined will be whether there is an ICSID award. That issue can be determined with reference to a certificate from the Secretary-General (Arts 49(1) and 54(2)), but the waiver of immunity comes before that.
The answer to question 1(b) is “yes”. As already canvassed at length in these reasons, Australia as a Contracting State is obligated to give effect to Art 54(1) ICSID Convention, as incorporated into Australian law under s 32 IAA. Section 35(4) is the means by which the enforcement of an award occurs by order of the Federal Court.
Turning to question 2, at its core, Spain argues that the jurisdiction conferred on this Court in an application for enforcement under s 35(4) and Art 54 is incompatible with Ch III of the Constitution, either because it impairs the institutional integrity of the Court or because it impermissibly vests the judicial power of the Commonwealth in arbitral tribunals. Those are the same arguments that were advanced and rejected in TCL albeit that that was in relation to the enforcement of an award under Art 35 Model Law and s 8 IAA with reference to the New York Convention. See TCL at [3] per French CJ and Gageler J and [56]-[57] per Hayne, Crennan, Kiefel and Bell JJ. Although the circumstances in which a court may refuse to enforce an ICSID award are far narrower than those under the New York Convention and the Model Law, there are nevertheless a multiplicity of such circumstances. The role of the Court in enforcing an ICSID award is not one of merely rubber-stamping the award in an administrative-type act. There are a number of matters that the Court may have to inquire into and determine depending on what issues are raised by the parties.
In relation to the award, the following matters might require determination: Is the award on which the applicant claims really an ICSID award as referred to in Art 53(2)? Is the purported award genuine? Is there a certificate from the Secretary-General as referred to in Arts 49(1) and 54(2)? Is the purported certificate genuine? Has the award been annulled under Art 52? Is the award stayed under Arts 50(2), 51(4) or 52(5)?
In relation to the parties, the following matters might require determination: Are the parties to the case the parties to the award? If the applicant is not a party to the award, does the applicant nevertheless have the right to enforce the award because it is the assignee of the rights to do so, or on some other basis? If by assignment, is the assignment valid and enforceable? If the applicant is a party to the award, does the applicant still have the right to enforce the award or has it transferred that right to another party, perhaps by assignment? If by assignment, is the assignment valid and enforceable?
In relation to the relief, the following matters might require determination: Is the relief that is sought the right relief as available under s 35(4) and does it enforce “the pecuniary obligations imposed by that award” under Art 54(1)? Has the award already been paid, whether wholly or in part? What interest, if any, is to apply, both before judgment and thereafter? What costs orders should be made, both on the basis of any costs award by the tribunal and in the enforcement proceeding?
In making those determinations and in enforcing the award, or refusing to enforce it, the court is exercising judicial power (TCL at [32] per French CJ and Gageler J and [104] per Hayne, Crennan, Kiefel and Bell JJ). In doing so, it quells a controversy between the parties and creates a new charter of rights and obligations expressed in the judgment of the court (TCL at [32]-[33] per French CJ and Gageler J). The existence of the multiplicity of circumstances in which a claim for enforcement of an award may fail, and the requirement that the enforcing court inquire into and make determinations in relation to those circumstances (ie “a determination of questions of legal right or legal obligation”: TCL at [33]), is an entirely appropriate and proper exercise of judicial power; the relative narrowness of those circumstances does not impair the integrity of the court as a Ch III court: TCL at [103]-[104].
Insofar as Spain’s point about delegation of judicial power is concerned, as between Spain and Australia, Spain has agreed that the claims made by the investors, including any question of the validity of the agreement to arbitrate, be determined in the ICSID system. That consensual foundation to the determination of those claims does not result in an unconstitutional delegation of judicial power: TCL at [106], [108]. Brandy is entirely different because there the exercise of power was not by agreement but by the coercive force of the legislation with the result that it was an unconstitutional delegation of judicial power: TCL at [108].
The result is that the answers to questions 2(a)(ii) and (b) are “no”.
THE EUROPEAN COMMISSION’S APPLICATIONS TO INTERVENE
As mentioned, the European Commission applied by interlocutory applications for leave to intervene in all the proceedings pursuant to r 9.12 FCR. It read two affidavits of Leo Flynn, Principal Legal Adviser to the Commission in Brussels, Belgium (at an address in the aptly named Rue de la Loi). The affidavits deal with EU rules in relation to State aid and the Commission’s role in relation to the possible contravention of those rules by Spain in the principal proceedings in the event that it pays the awards in these proceedings. By the parties’ consent, Mr Flynn’s affidavits were taken as read by Spain in the event that the Commission was denied leave to intervene.
The Commission also relies on brief written submissions on its intervention which, in two pages, contain the submissions that it makes in the proceedings in the event that leave to intervene is granted. Mr Nick Gallus, who appeared for the Commission on the intervention application, did not seek to make any oral submissions, either on the interlocutory applications or the substantive proceedings. Rather, he was available to answer any questions from the Court if there were any. There were not.
The Commission seeks leave to make two submissions:
(1)That Spain’s submissions constitute an accurate description of EU law, such that EU law ensures that there was no agreement to arbitrate under the ECT, and any payment of the awards would be illegal State aid.
(2)That the ECT awards are already being investigated as illegal State aid, and any payment by Spain would subject it to significant ongoing fines until the payment was recovered.
In addition to those two submissions, the Commission highlights relevant aspects of the CJEU’s decision in European Commission v UK, which concerned Micula UKSC (as discussed above).
Under r 9.12(2) FCR, the Court may have regard to the following considerations in determining whether to grant leave to intervene:
(a) whether the intervener’s contribution will be useful and different from the contribution of the parties to the proceeding; and
(b) whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceeding as the parties wish; and
(c) any other matter that the Court considers relevant.
Regarding r 9.12(2)(a), the Commission submits that its proposed contribution will be useful and different from the contribution of the parties as its proposed submissions reflect the EU’s official position, with the Commission being the external representative of the EU which speaks on its behalf before international and non-EU domestic courts and tribunals. Additionally, it submits that it has additional authority specific to the question of State aid pursuant to Art 108(2) TFEU which grants the Commission exclusive authority to identify illegal State aid and determine its compatibility with EU law.
As to r 9.12(2)(b), the Commission submits that it will not unreasonably interfere with the proceedings as its submissions are short and are capable of being addressed by the parties without imposing a significant burden.
The Commission raises two further matters supporting its application for leave to intervene. First, it argues that the EU has a substantial interest in the outcome of these proceedings, as they concern (according to the Commission) attempts by EU investors to enforce awards obtained against an EU Member State in contravention of EU law. Second, it notes that the Commission frequently intervenes in proceedings both within the EU and in other countries on matters of State aid, including in many similar arbitration-related proceedings against Spain before the US District Court for the District of Columbia.
Spain, in support of the Commission’s applications for leave to intervene, states that as the “guardian” of the EU foundational treaties, the Commission is in a better position than Spain to make submissions as to the systemic consequences of the applicants’ contentions.
The applicants oppose the Commission’s applications for leave to intervene.
The Commission’s first proposed submission merely affirms that Spain’s submissions on EU law accord with what the Commission says is the content and effect of EU law. That does not add anything to the case or offer any assistance. In the main, I have not come to a different view on the state of EU law in these reasons; rather, the crux has been the effect of EU law on public international law binding Australia.
As to the Commission’s second proposed submission about State aid, I accept the applicants’ submission that it concerns matters that do not arise at the stage of the proceedings in this Court. As Perram J noted in Spain FCAFC at [114], while the questions raised are no doubt interesting, as explained above, they are irrelevant on an application for recognition and enforcement of an arbitral award in circumstances where I have concluded, notwithstanding the identified consequences extant in and arising from EU public law, the Court is bound to give effect to the award in accordance with public international law and Australian domestic law. In any event, the Commission’s submission is no different from Spain’s.
Finally, I have dealt with the Micula saga above, including the most recent decision of the CJEU. The Commission’s submission adds nothing beyond what Spain has contributed in that regard.
In the circumstances, I would dismiss each of the Commission’s interlocutory applications to intervene with costs.
CONCLUSION
In the result, I find that Spain waived its foreign State immunity in all the proceedings for enforcement of the awards under s 10 Immunities Act. Also, Spain’s defences on the merits in all the proceedings fail. There should be judgments in favour of the applicants on each of the awards. As I understand the position (ie without deciding), assuming that no recoveries have otherwise been made, that means that the capital judgments in each proceeding will be:
(1)The RREEF proceedings: €59.6 million
(2)The 9REN proceeding: €41.76 million
(3)The Watkins proceeding: €77 million
(4)The NextEra proceeding: €290.6 million
To those amounts there will need to be added pre-judgment interest and costs of the arbitral proceedings where those were ordered.
As the applicants have been successful in these proceedings, they should have their costs.
I will allow the parties to bring in agreed or competing orders to give effect to these reasons and to deal with any outstanding matters of quantification, interest and costs. If necessary, I will also allow for further submissions to be made on those issues. In the meanwhile, the proceedings should all be listed for case management on a mutually convenient date within a few weeks from the publication of these reasons.
I certify that the preceding three hundred and sixty-eight (368) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart. Associate:
Dated: 29 August 2025
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