The European Commission on Tuesday initiated an in-depth probe into an arbitration award that required Spain to make a €23.5 million ($27.04 million) payment to Japanese engineering firm JGC Holdings (TSE:1963).
The examination will assess whether the compensation runs afoul of EU state aid regulations. The arbitration finding stems from adjustments Madrid made to a renewable energy support programme established in 2007.
An arbitration tribunal determined in 2021 that Spain must reimburse JGC Holdings for losses the company sustained after the Spanish government altered terms of its renewable investment support scheme. According to the Commission, Spain has already executed the payment, transferring the funds to Blasket Renewables Investment, a U.S.-based fund that acquired the rights to the arbitration award.
In announcing the probe, the Commission said its preliminary assessment indicates that the arbitration award appears to constitute state aid and that it provided an economic advantage to both JGC Holdings and Blasket Renewables Investment. The in-depth investigation will examine the circumstances of the award and the transfer of payment rights to determine whether EU state aid rules were breached.
Details released by the Commission confirm the sequence of events: revisions to the 2007 renewable power support scheme led to an arbitration claim, a 2021 ruling in favour of JGC Holdings, and the subsequent payment to the U.S. fund holding the award. The probe now seeks to establish whether this outcome is compatible with the EU's state aid framework.
The Commission's initial statement stops short of a final finding, indicating that the in-depth probe is required to clarify whether the arbitration award and the later transfer of funds resulted in an unlawful advantage under EU law. The investigation will determine the legal classification of the payment and whether corrective or remedial measures are warranted under the state aid rules.
At this stage, the Commission has not announced a timeline for the probe's conclusion. The initiative underscores the EU's scrutiny of measures and outcomes tied to national renewable support schemes where cross-border or third-party transfers of awards have occurred.
Contextual note: The information in this article is limited to the Commission's announcement and the sequence of events it described; no additional developments beyond those statements are included here.