The Federal Court of Australia has ordered Spain to pay over $375 million plus interest to solar companies from Luxembourg, the Netherlands and England, in a landmark decision that confirms Australia's responsibility to recognise binding international arbitral awards and enforce them as judgments of its national courts. But does that mean the companies will get their money, or not?

We wrote about the case of Eiser Infrastructure Ltd and Energia Solar Luxembourg SARL v Kingdom of Spain (Eiser) last year before the judgment came out.

An ICSID arbitration tribunal found that Spain breached its obligations to provide renewables rebates to foreign investors under the European Energy Charter Treaty (ECT), and ordered Spain to pay $205 million. In a later ICSID award by another tribunal Spain was also ordered to pay two other solar companies a total of $170 million.

Spain didn't pay. This is because, although an ICSID award is "binding", ICSID has no enforcement mechanism of its own.

The usual way of enforcing an ICSID award is if one of the 162 contracting parties to the ICSID Convention recognises the arbitral award in a national court.

The reason that the solar companies came all the way to Australia was likely out of concern about the effect of the recent Achmea case which found arbitration clauses in intra-EU investment treaties were not enforceable if they came into conflict with EU law. This made enforcement in Spain or other EU countries unattractive.

The solar companies relied on the International Arbitration Act 1974 (Cth) (Arbitration Act) which imports the ICSID Convention into Australian law and requires Australia to recognise and enforce its awards.

To resist recognition of the awards Spain relied on the Foreign States Immunities Act 1985 (Cth) (FSI Act) saying our Federal court couldn't enforce the ICSID award against Spain because Spain was immune from the court's jurisdiction.

For a number of reasons, the Federal Court said that wasn't quite right.

The Court held that in signing the ICSID convention, Spain had impliedly submitted to the jurisdiction of Australia's courts and in doing so waived its precious immunity. Australia had an obligation to recognise the ICSID award and enforce it as a judgment of the Federal Court.

But that is not the end of the battle for the solar companies. Waiver of immunity from recognition of the awards is not the same as waiver of immunity from execution. The solar companies still have to find commercial property owned by Spain in Australia to recover on their $375 million.

Our advice is to head over to your local tapas bar while you still can if it's owned by the Spanish government (unlikely) it might not be around for much longer.