The European Commission has opened an in-depth investigation to determine whether a €23.5 million arbitration award ordering Spain to compensate JGC Holdings Corporation aligns with European Union State aid rules. The case stems from modifications Spain made to its 2007 renewable energy support scheme, an unnotified measure that was subsequently altered in 2013. Although the Commission approved the revised 2013 scheme in 2017, it explicitly stated that any arbitration awards granting compensation for adjustments to the original framework would constitute State aid subject to EU notification.
JGC Holdings Corporation, a Japanese engineering company that invested in Spanish renewable assets under the 2007 rules, initiated arbitration after the legal framework changed. In 2021, an arbitral tribunal found Spain in breach of the Energy Charter Treaty and ordered it to pay damages alongside interest and legal fees. Spain formally notified the Commission of the award after making a payment to Blasket Renewables Investment, a US fund that acquired the award rights and pursued enforcement across multiple jurisdictions.
In its preliminary assessment, the European Commission views the arbitral award—and its execution—as potential State aid under Article 107(1) of the Treaty on the Functioning of the European Union. The Commission cautions that enforcing the payout effectively grants JGC an advantage equivalent to the non-notified 2007 scheme while benefiting Blasket. Preliminary concerns center on whether the tribunal overstepped CJEU case law and the principle of EU legal autonomy by substituting its own assessment for the Commission’s exclusive authority over State aid approval.
Furthermore, the regulator expresses doubts regarding the necessity, proportionality, and incentive effect of the compensation, noting that JGC’s facilities already received support under the approved 2013 scheme. The investigation will examine potential market distortions, non-discrimination principles under Article 18 TFEU, and general treaty compliance. The opening of this formal probe provides Spain and interested third parties an opportunity to submit comments without prejudging the final regulatory outcome.
