One of the things that the winner of the next elections on July 23 is certain is that some of the most battle-hardened lawyers on the planet will call at the door of Moncloa to demand payment of at least 1,300 million euros. They are those that Spain has pending payment in international arbitration courts, according to the International Arbitration Compliance Index carried out by Nikos Lavranos, founder of the Dutch consultancy NL Investment Consulting and legal adviser to international law firms. Only Venezuela and Russia are at a similar level of debt, he notes.
The Spanish debt derives from the 50 arbitration cases against the Spanish State in international organizations, such as the ICSID (of the World Bank), presented by international funds that demand compensation for the photovoltaic investments made in 2007, during the presidency of José Luis Rodriguez Zapatero. They arrived attracted by the generous premiums that the State granted for investing in photovoltaic projects, but what seemed like a round deal turned out to be a fiasco with the change of tenant in Moncloa.
The new president of the government, Mariano Rajoy, changed what was legally established with a stroke of the pen, and in 2013 that guaranteed profitability became a dead letter. Thousands of small investors saw their savings volatilize due to the cut in the profitability of those projects.
A decade later, big investors are still litigating. Spain has barely won a couple of cases. The international funds are also claiming 250 million for default interest and sentences on costs and expenses disbursed, as well as compensation of more than 10,000 million euros.
“In the end, Spain is going to have to pay. The later, the more expensive”, warned Nikos Lavranos last week in Madrid. Next to him, Nick Cherryman, partner of the New York law firm Kobre
Cherryman has managed to get the British and Australian courts to accept the possibility for their clients to collect through seized assets to the Kingdom of Spain. 2,000 potentials have been identified, including the headquarters of the Instituto Cervantes and the Agència per a la Competitivitat de l’Empresa in London, Navantia’s assets in Australia or the outstanding debt of the Prestige insurer with Spain for the environmental tragedy of 2002. “If that is executed, Spain would fall into technical bankruptcy for an amount of 0.2% of its GDP. And their credibility in the markets would collapse”, says the New York lawyer, who has redoubled the pressure in the face of the imminence of the elections.
The argument of the State lawyer for not paying is that these amounts would be considered by the European Union as State aid to a sector and could be penalized for it. Lena Sandberg, Esq., Gibson Law Firm, Dunn
During the last week they have used these arguments before the economic and political powers of the capital. But everything indicates that the matter must be resolved by the next government before the end of the year. It would be ironic if he returned to the party roof that caused the problem.
