The Evolution of the Fair and Equitable Treatment Standard through the Spanish Renewable Energy Saga.

The article examines the intersection of international investment law and the energy transition, focusing on investor-State dispute settlement (ISDS) cases brought by renewable energy (RE) investors against Spain, Italy, and the Czech Republic under the Energy Charter Treaty (ECT). Central to these disputes is the Fair and Equitable Treatment (FET) standard, particularly investors’ claims of legitimate expectations based on Spain’s regulatory incentives for renewable energy established by Royal Decree 661/2007 and related legislation. The analysis highlights how tribunals balanced the State’s right to regulate in the public interest with investor protections, considering factors such as the timing of investments, types of renewable technologies, and the nature of government assurances. Drawing on the extensive Spanish case law, the article discusses ongoing reforms to the ECT’s FET clause aimed at clarifying legitimate expectations and strengthening States’ regulatory space to better align investment protection with sustainable development and climate goals. It also addresses practical challenges, including enforcement difficulties of arbitral awards within the EU and the evolving policy landscape as States modernize investment treaties in response to the lessons from these RE arbitration sagas.