Portigon AG v. Kingdom of Spain (ICSID Case No. ARB/17/15)

In 2010, the German financial services provider Portigon AG (Claimant) invested in three power plants as a part of a consortium of financial institutions. In the following years, Spain (Respondent) introduced a series of reforms to its renewable energy sector, which were the basis of several investor-state arbitration cases, including a claim brought by Portigon under the Energy Charter Treaty. Portigon argued that Spain’s changes to its renewable energy incentive regime adversely affected the cash flow from the projects, impairing their creditworthiness and, thus, the value of the financing.

In August 2020, in its decision on jurisdiction, the Tribunal found that Portigon’s project financing qualified as an “investment” and the Energy Charter Treaty and the ICSID Convention. This decision was the first time that an investor-state tribunal decided that project finance constituted a protected “investment” under an international investment treaty, and in which the project financing provided by a third-party lender to a project company (not directly to the state) was held to be a protected investment. Consequently, it opens the door for lenders who do not have a direct legal relationship with the state to have direct recourse against the state in case of reforms that adversely affect a financed project. In addition, this finding may be applied to other treaties, potentially enabling project finance investors to benefit from investment treaty protections.