EU Investigates Romania's €42 Million Payment in Green Energy Arbitration Case
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TL;DR
- European Commission launched a probe into Romania's planned €42 million payout.
- The payout follows an arbitration award over a renewable energy dispute.
- The Commission is concerned the payment could breach EU state aid rules.
Overview
The European Commission has launched an investigation into whether Romania can proceed with a planned €42 million compensation payment to renewable energy investors. The payment was ordered by an arbitral tribunal, which found that Romania breached the Energy Charter Treaty by altering its green energy support scheme in 2011, causing financial damages to 10 solar photovoltaic project investors.
What Happened
On Wednesday, the European Commission formally opened a probe into a €42 million payout by Romania to renewable energy investors.
Ten investors brought claims after the Romanian government modified its 2011 renewable energy subsidy scheme.
An arbitral tribunal ruled in favor of the investors, finding Romania in breach of the Energy Charter Treaty requirements.
Following the arbitration ruling, the Commission stated that implementing the award as compensation could amount to state aid incompatible with EU internal market rules.
Context
Romania, like other EU countries, encouraged renewable energy investment through state-backed subsidies in the early 2010s. The subsequent change in support schemes prompted legal claims under investment treaties.
A similar situation has occurred in Spain, where investors are also attempting to enforce arbitration awards after policy changes.
Why It Matters
- The Commission's investigation could affect the enforceability of arbitration awards involving EU member states when state aid rules are at issue.
- The outcome may impact future investment arbitration enforcement against EU countries and shape the intersection between EU law and international arbitral decisions.