Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028

On 29 August 2025, the Federal Court of Australia handed down its decision in Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028 (Blasket), once again rejecting Spain’s challenge to enforcement. Justice Stewart’s judgment carries significant implications, not only for the global campaigns being pursed by a number of investors to enforce awards against Spain across multiple jurisdictions, but also for numerous EU-based ICSID award holders seeking to recover their investments.

The judgment, and its connection to ongoing litigation in the United States and the United Kingdom also illustrates the extent of the procedural hurdles investors must overcome before realising an arbitral award.

Background

The saga began in 2007, when the Spanish government launched a program that promised above-market prices for electricity generated from renewable sources. This scheme was designed to attract foreign investment into Spain’s renewable energy sector by offering investors stable and predictable returns. The program succeeded in drawing significant international capital. However, following the global financial crisis and the subsequent EU sovereign debt crisis, this program became economically unattractive for Spain and so Spain drastically restructured the scheme, retroactively cutting incentives and leaving investors facing substantial losses.

A number of investors impacted by Spain’s restructuring brought claims against Spain under the Energy Charter Treaty (1994) (ECT). The ECT is a multilateral treaty designed to promote cross-border cooperation in the energy sector, offering investment protections such as fair and equitable treatment, protection against expropriation, and access to international arbitration to resolve disputes between investors and States. The investor may choose to commence arbitration under the framework of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (ICSID Convention). By invoking the ECT together with the ICSID arbitration clause, investors were ensured that any dispute with Spain relating to legislative and policy changes or other actions by Spain that had an adverse impact on their investment in renewable energy projects and were covered by the protections afforded by the ECT could be resolved through arbitration rather than domestic courts.

Many investors brought claims in ICISD arbitration, alleging that Spain had breached its obligation under the ECT to provide fair and equitable treatment and/or to not expropriate their investment except in certain limited circumstances. It is reported that as of 2024, Spain faced more than 50 claims under the ECT with damages totalling over USD 10 billion. There are currently 24 unpaid awards worth at least USD 1.5 billion that have been issued by arbitral tribunals against Spain.¹

Some investors have embarked on a global enforcement campaign to have their award recognised, enforced and executed against Spain in multiple jurisdictions, including Australia. In an earlier case involving a different group of investors, Kingdom of Spain v Infrastructure Services Luxembourg Sàrl [2023] HCA 11 (Sàrl), the High Court of Australia held that Spain’s agreement to the ICSID Convention constituted a waiver of foreign state immunity for the purposes of recognition and enforcement of ICSID awards in Australia.² Foreign state immunity is a legal principle that insulates foreign states from the jurisdiction of Australian courts.³ However, the Court confirmed that Spain had not waived its immunity from execution of the award.⁴ The ruling paved the way for other award creditors, including the plaintiffs in Blasket, to pursue recognition and enforcement proceedings in Australia.

It is important to note that while the ICSID framework provides a process for recognition and enforcement of ICSID Awards, it does not cover the subsequent (and critical) execution phase. The subsequent execution phase of recovery is subject to the enforcement state’s domestic law on execution. Article 55 of the ICSID Convention provides that the Convention does not derogate from the enforcement state’s domestic law concerning immunity from execution. Therefore, the type of waiver of sovereign immunity that was upheld in Sarl will not apply to execution, and the enforcement state’s domestic law may provide for such immunity and provide any applicable waiver.

Spain’s arguments to resist enforcement

In Blasket, the plaintiffs sought recognition and enforcement of an ICSID award that ordered Spain to pay the plaintiffs USD 520 million in damages for breach of the ECT. Spain again asserted foreign state immunity, on three bases. First, that the High Court’s decision in Sàrl was wrongly decided.⁵ Second, that Sàrl was confined to situations where the binding effect of an award is not in dispute.⁶ The third argument introduced a new layer of controversy: Spain asserted that the award was invalid because the investors are nationals of EU Member States, and under EU law, arbitration between EU investors and EU Member States under the ECT is prohibited. Spain contended that this alleged invalidity should undermine recognition and enforcement proceedings in Australia.⁷

The Court rejected Spain’s argument regarding the correctness of the High Court’s decision in Sàrl, noting that a court of first instance is bound to follow established precedent.⁸ In support of its argument that Sàrl should not be followed because, unlike in Sàrl, the validity of the award in Blasket was contested, Spain relied upon two decisions by the Court of Justice of the European Union (CJEU), concerning the relationship between EU Member States to contest the validity of the award.⁹ The EU’s position was that disputes under the ECT between EU Member States should be resolved within the EU legal framework, and any resort to arbitration is prohibited – a stance that, from Spain’s perspective, casts doubt on the validity of such awards. Although Spain did not raise the validity issue in Sàrl, these two CJEU decisions were invoked in that case to advance the argument that Spain did not submit to the jurisdiction of the Australian courts. The High Court rejected this argument, holding that, irrespective of EU law principles in those decisions, “the relevant agreement arose from Spain’s entry into the ICSID Convention, which included its agreement as to the consequences of an award rendered pursuant to the ICSID Convention.”¹⁰ In light of this reasoning, Stewart J concluded that Sàrl should be applied broadly and accordingly rejected Spain’s second argument.¹¹

The most significant aspect of the case concerns Spain’s third argument regarding the validity of the ICSID award. Spain submitted that the two CJEU decisions establish a principle in EU law that EU Member States should not arbitrate disputes under the ECT, as alternative remedies are available within the EU legal system.¹² Spain argued that this principle should apply to the investors in the present case as they are EU Member States, thereby rendering the award invalid.¹³

The Court first rejected Spain’s claim that the award was invalid, emphasising that ICSID operates as a closed and self-contained system.¹⁴ Unlike the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), which specifies several grounds on which domestic courts may refuse recognition and enforcement of an arbitral award (such as lack of jurisdiction, irregular tribunal composition, or public policy), the ICSID Convention provides its own exclusive review mechanism. Under Articles 50 to 52, challenges to an ICSID award—such as annulment, revision, or interpretation—must be pursued within ICSID’s internal framework (and referred to an Annulment Committee), and there is no mechanism for challenge to the courts. There are also no grounds for challenging enforcement of an ICSID award under the ICSID Convention.

It should be noted that the much more limited availability of award debtors to challenge enforcement of ICSID Awards is one of the key attractions of the ICSID framework for international investors seeking compensation for host state’s interference with their investments, whereas arbitral awards being enforced under the New York Convention may be subject to a wider range of potential challenges as mentioned above.

The Court held that the ICSID Convention does not require that a tribunal’s determination of its jurisdiction be proven correct for an ICSID award to be “binding” and subject to the obligations imposed on Contracting States under Articles 53 and 54: “An ICSID award issued by a tribunal remains binding and enforceable (subject to any stay of enforcement) unless annulled under Article 52”.¹⁵ This view is reinforced by sections 33 and 34 of the Internation Arbitration Act 1974 (Cth), which provide that an ICSID award is binding, not subject to challenge or appeal except as provided in the ICSID Convention, and that the ICSID Convention prevails over other laws on recognition and enforcement.¹⁶

The Court then considered and rejected Spain’s submission that the impugned ICSID award was not an “award” under the ICSID Convention because it was allegedly not binding on Spain due to a conflict between Spain’s obligations under public international law and its obligations under EU law as an EU Member State.¹⁷ The Court acknowledged the EU law principle and that Spain may owe obligations to other EU Member States. However, Spain’s obligations under EU law apply only within the EU. Spain nonetheless remains bound by its international obligations under the ICSID Convention, which are unaffected by its legal commitments under EU law. Even if such conflicts arise, it is for Spain to resolve them—such as by withdrawing from certain treaties or conventions. These conflicts do not alter the status of the award as an “award” under the ICSID Convention, as Spain’s public international law obligations remain intact.¹⁸

Spain’s final argument was that Article 53 of the ICSID Convention had been modified by treaties among EU Member States, and that the tribunal therefore lacked jurisdiction. The Court rejected this submission, referring to the self-contained nature of the ICSID system.¹⁹ An ICSID award, once issued by the tribunal, is binding and enforceable. It is not subject to any appeal or to any other remedy, otherwise than in accordance with the ICSID system itself. National courts are obliged to enforce the award, and enforcement cannot be resisted on any procedural, jurisdictional grounds or grounds of public policy. It further dismissed the notion of modification by invoking principles of international law and Spain’s broader obligations to all Contracting States under the ICSID Convention.²⁰ Most importantly, even if such a modification existed, it would not affect Australia’s obligation owed to all Contracting States under the ICSID Convention to recognise and enforce a valid ICSID award.²¹

Assignment of awards

What makes this case particularly noteworthy is that it is the first case in Australia to decide whether an ICSID award can be assigned to a third party, with Stewart J affirming that it can.

However, on 10 November 2025, the English High Court reached the opposite conclusion regarding the same award and assignee and found that the ICSID awards are not assignable.²²

The resolution of that issue is significant because, for years, selling and assigning arbitration awards has been a common exit strategy and business model for award creditors – especially those who do not want to spend years in enforcement battles.

The English High Court has now ruled that ICSID awards cannot be assigned (at least in ECT disputes), after interpreting the ICSID Convention as a whole under strict principles.²³ This does not make the selling awards business impossible, but it does make it far less convenient: the original award creditor must remain the party enforcing the award, even if they have sold the economic interest to an assignee. In practice, that means investors who buy awards may lose direct control over enforcement and timing, which undermines the simplicity of the traditional model. This can potentially affect the extent of an investor’s overall recovery.

Once an award creditor obtains recognition and enforcement of an arbitral award (which in the case of an ICSID award is ordinarily intended to be a straightforward administrative process and not a judicial process), it must identify specific State-owned property that is free from sovereign immunity and execute the award judgment against that property. 

Conclusion

The decision reinforces fundamental principles of international law in Australia, particularly the primacy of treaty obligations under the ICSID Convention, which is given force in Australia under the International Arbitration Act 1974 (Cth). Australia continues to stand out as an attractive jurisdiction for the enforcement of ICSID awards including those involving EU Member States under the ECT. Blasket also raises the broader question of whether the purpose of the ICSID Convention can be undermined by the internal rules or policies of regional supranational organisations. Spain has confirmed its intention to appeal the decision.²⁴

The case also illustrates the global interplay of ICSID award enforcement with varying domestic recognition, enforcement and execution frameworks of domestic states where recognition, enforcement and execution are sought. For example, the present judgment has influenced enforcement proceedings before the Supreme Court of the United States, where the parties filed supplemental briefs in response to this decision.²⁵

Meanwhile, the UK Supreme Court is scheduled to consider the issues raised by Spain in Sàrl in December 2025.²⁶

The path to final enforcement and recovery of the award will be protracted, given that early this year the EU Commission concluded that paying the arbitration award to EU creditors would violate EU state aid rules.²⁷ On top of that, recovering the funds will involve navigating multiple jurisdictions and likely resistance from the debtor state.

Regarding the assignment of awards, appeal courts in other jurisdictions will almost certainly have to weigh in, and if the UK approach stands, it could reshape the secondary market for ICSID awards—still viable, but with more complexity and risk for buyers.

Robin Chai, Associate, also contributed to the publication of this briefing.

Footnotes:

1. AM Editorial Team, ‘Spain’s renewable energy reckoning: A case study in non-compliance with investment treaty awards’
   <https://arbitrationmonitor.com/spains-renewable-energy-reckoning-a-case-study-in-non-compliance-with-investment-treaty-awards/> accessed 24 November 2025.
2. Kingdom of Spain v Infrastructure Services Luxembourg Sàrl [2023] HCA 11 [8].
3. See the Foreign States Immunities Act 1985 (Cth).
4. Kingdom of Spain v Infrastructure Services Luxembourg Sàrl [2023] HCA 11 [9].
5. Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028 [15]-[18].
6. Ibid [14].
7. Ibid [15].
8. Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028 [176].
9. Slovak Republic v Achmea BV [2018] 4 WLR 87; Republic of Moldova v Komstroy LLC [2021] 4 WLR 132. Stewart J also considered European Commission v European Food SA, Grand Chamber, ECLI:EU:C:2022:50 (Case C-638/19 P) (25 January 2022), and DA v Romanian Air Traffic Services Administration (Romatsa), Tenth Chamber, ECLI:EU:C:2022:749 (Case C-333/19) (21 September 2022).
10. Kingdom of Spain v Infrastructure Services Luxembourg Sàrl [2023] HCA 11 [79]; Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028 [182]-[183].
11. Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028 [183].
12. Ibid [195]-[198].
13. Ibid [185].
14. Ibid[167].
15. Ibid [171].
16. Ibid [173].
17. Ibid [186].
18. Ibid [222].
19. Ibid [232].
20. Ibid [233]-[270].
21. Ibid [274].
22. Operafund Eco-Invest Sicav Plc & Anor v Spain [2025] EWHC 2874 (Comm) [79].
23. Ibid [71].
24. Operafund Eco-Invest Sicav Plc & Anor v Spain [2025] EWHC 2874 (Comm) [4].
25. Seethe supplemental brief filed on 12 September 2025 and 29 September 2025
    < https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/24-1130.html> accessed 10 November 2025.
26. Infrastructure Services Luxembourg S.A.R.L and another (Respondents) v The Kingdom of Spain (Appellant) <https://supremecourt.uk/cases/uksc-2024-0155> accessed 10 November 2025.
27. Reuters, ‘EU Commission tells Spain not to pay up in long-running renewable subsidies case’ (24 March 2025) <https://www.reuters.com/sustainability/climate-energy/eu-commission-tells-spain-not-pay-up-long-running-renewable-subsidies-case-2025-03-24/> accessed 10 November 2025.