NextEra Energy Global Holdings B.V. v. Kingdom of Spain, No. 19-cv-01618 (D.D.C. Feb. 15, 2023) [click for opinion]
Petitioners NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. (collectively, "NextEra") are private limited liability companies incorporated under the laws of the Netherlands. After Spain enacted legislation in 2007 to encourage investment in solar power projects in its territory, NextEra invested in projects in Spain costing approximately €750 million. According to NextEra, between 2012 and 2014, Spain fundamentally and radically changed the investment regime, causing NextEra significant harm.
The Netherlands and Spain are parties to the Energy Charter Treaty ("ECT"), which requires arbitration of any disputes between contracting parties and investors from contracting parties, to be carried out under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention"). Relying on the ECT, NextEra brought an ICSID arbitration against Spain.
In 2019, the ICSID tribunal issued a decision in NextEra's favor and ordered Spain to pay NextEra €290.6 million in damages plus interest. By federal statute, ICSID arbitral awards are given full faith and credit in U.S. district courts. NextEra accordingly petitioned the D.C. district court to confirm its ICSID award.
Spain moved to dismiss NextEra's petition for lack of jurisdiction, claiming immunity under the Foreign Sovereign Immunities Act ("FSIA"). In response, NextEra asserted that the court's jurisdiction over its petition and Spain was rooted in two of FSIA's enumerated immunity exceptions: first, because NextEra sought to confirm an arbitral award governed by treaty or international agreement and second, because Spain had waived its immunity.
Spain argued that the arbitration exception did not apply because the ECT's arbitration clause was invalid, relying primarily on two decisions issued by the EU's high court, Achmea and Komstroy. Together, those EU decisions nullified the ECT's arbitration clause as a violation of EU sovereignty insofar as it allowed arbitrators to interpret the EU laws that governed the ECT's contracting parties without review by EU courts. Absent a legally valid agreement to arbitrate, Spain argued, the D.C. district court lacked jurisdiction to confirm NextEra's ICSID award.
While its motion to dismiss was pending, Spain also filed an action in the Netherlands (the "Dutch action") where it sought an order requiring NextEra to withdraw its petition in the D.C. district court and prevent it from enforcing the ICSID award around the world. In response, NextEra moved in the D.C. district court for injunctive relief of its own, requesting a preliminary injunction and temporary restraining order to stop Spain from pursuing the Dutch action, which, if granted, would foreclose NextEra from confirming the award in the U.S.
The court denied Spain's motion to dismiss and held that NextEra established a factual basis for the court's jurisdiction under the FSIA's arbitration exception because it had produced evidence of the existence of the underlying treaty, the notice of arbitration, and the tribunal decision. Spain's assertion that NextEra "lacked a legal basis to enter or invoke an arbitration agreement" was not a challenge to the jurisdictional fact of that agreement's existence but rather "a challenge to that agreement's arbitrability." The court considered that an issue going to the award's merits, and would not allow it to be used as a backdoor challenge to FSIA jurisdiction. Because the court held that the jurisdictional requirements under FSIA's arbitration exception had been met, it did not consider whether Spain waived its immunity.
Spain also moved to dismiss NextEra's petition under the doctrine of forum non conveniens. The court rejected this attempt, explaining that the D.C. Circuit had plainly stated that "forum non conveniens is not available in proceedings to confirm a foreign arbitral award because only U.S. courts can attach foreign commercial assets found within the United States." Accordingly, any alternative forum would be inherently inadequate.
Finally, the court granted NextEra's request for injunctive relief and issued a preliminary anti-suit injunction ordering Spain to stop its efforts in the Dutch action. While the court recognized that the anti-suit injunction was "strong medicine"—appropriate only to prevent an irreparable miscarriage of justice—it further noted that Spain initiated the Dutch action without prior notice and the "primary purpose" of the action was to terminate the proceedings in the U.S., effectively eliminating the court's jurisdiction over NextEra. Indeed, the court distinguished NextEra's request for injunctive relief by characterizing it as "purely defensive" in that it sought to preserve the court's jurisdiction, while Spain's offensive injunction in the Dutch action sought to eliminate the court's jurisdiction and foreclose NextEra from confirming the award in any forum.
Byron Tuyay of the Los Angeles office contributed to this summary.