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Foreign control and ICSID jurisdiction on Energy Charter Treaty Claims of Local Companies: The Eskosol Case

Published on June 12, 2017        Author: 

The ICSID tribunal in Eskosol in liquidazione v. Italy rejected Italy’s Rule 41.5 application to have the claim thrown out for being “manifestly without legal merit.” I offer a summary and some reflections on two interesting aspects on the tribunal’s jurisdiction.

Background

The claimant challenged, under the Energy Charter Treaty (ECT), Italy’s 2011 regulatory rollback regarding a feed-in tariffs (FIT) scheme (check this report by the claimant’s lawyers). Investment connoisseurs are familiar with the topic, litigated in Charanne, Eiser and other exhausted or pending cases, some confidential. The claimant is an Italian company, Eskosol in liquidazione (bankruptcy receivership). Eskosol claims to have invested in a 120-megawatt photovoltaic energy project, expecting to benefit from the 20-year FIT scheme. At the time of the rollback, the Belgian company Blusun held 80% of Eskosol. Eskosol alleged that this change rendered its business unviable. It abandoned its projects, became insolvent and entered bankruptcy receivership in November 2013. In December 2015, the tribunal-appointed receiver brought the ICSID claim, on the company’s behalf.

Blusun, the Belgian company controlling 80% of Eskosol, had brought ICSID proceedings  in 2014, under the ECT, against the same measures. Eskosol attempted to file a non-party submission in that arbitration, asserting that Blusun had usurped its claim and sought damages owed to Eskosol alone. Blusun’s abusive claim would prejudice the rights of Eskosol, its creditors and its minority (non-Belgian) shareholders, since Blusun showed no intention to channel any potential gain to Eskosol. Eskosol’s request was denied. Blusun’s claim failed on the merits in December 2016, and in May 2017 Blusun launched annulment proceedings.

The Decision 

In Eskosol, Italy raised four Rule 41.5 objections for expedite consideration (i.e., invoking glaring legal impediments and not hinging on disputed facts [36; 98]; see Álvarez y Marín [95]). The tribunal considered Eskosol’s claim not “manifestly” meritless. This conclusion does not prejudge the defendant’s full preliminary objections, which the tribunal shall examine, jointly with the merits, in the next phase. Read the rest of this entry…