Foresight Luxembourg Solar 1 S.A.R.L. v. Kingdom of Spain

Background

The petitioners are Foresight Luxembourg Solar 1 S.A.R.L., Foresight Luxembourg Solar 2 S.A.R.L., Greentech Energy Systems A/S, now known as Athena Investments A/S, GWM Renewable Energy I S.P.A., and GWM Renewable Energy II S.P.A. They sought confirmation in the United States of an arbitral award issued by an arbitration tribunal of the Stockholm Chamber of Commerce in Sweden.

The arbitration proceeded under Article 26 of the Energy Charter Treaty, which provides for arbitration of certain investor-state disputes. The petitioners had acquired three Spanish companies operating solar power plants. Spain later changed its renewable-energy program by, among other things, imposing a 7% tax on electricity-generation revenue, limiting the hours eligible for certain payments, and changing the support system. The petitioners alleged that these measures reduced the value and profitability of their investments.

On November 14, 2018, the arbitral tribunal found that Spain breached the Energy Charter Treaty and awarded the petitioners €39 million, plus costs and interest. Spain later applied to a Swedish appellate court to set aside the award, meaning to have the award annulled under Swedish law. That court temporarily suspended the award.

The petitioners filed this confirmation action in New York state court under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly called the New York Convention, and the relevant provisions of the Federal Arbitration Act. Spain removed the action to the Southern District of New York. Spain argued that the court lacked subject-matter and personal jurisdiction and, alternatively, asked to transfer the case to the District of Columbia or stay the case while the Swedish set-aside proceeding continued.

Transfer Analysis

The court considered transfer under 28 U.S.C. § 1404(a), which permits transfer for the convenience of the parties and witnesses or in the interest of justice. The court first determined that the action could have been brought in the District of Columbia. It then weighed factors including the convenience of the parties and witnesses, access to evidence, the location of operative events, familiarity with governing law, the petitioner’s forum choice, trial efficiency, and the interests of justice.

The court concluded that most convenience factors were neutral because the parties were foreign, the events underlying the dispute occurred outside the United States, and confirmation proceedings are generally summary proceedings. The court gave particular weight to judicial economy because related proceedings were pending in the District of Columbia, including a New York Convention case involving Spain that had been stayed pending the Swedish set-aside proceedings.

The court also found that New York had little connection to the dispute. The New York Convention supplied the only link between the parties and the Southern District of New York. The petitioners were European Union nationals, Spain was a foreign state, and the award had been issued in Sweden under the Energy Charter Treaty. The court therefore determined that the balance of convenience and the interests of justice favored transfer.

Disposition

The court GRANTED Spain’s motion to transfer the case to the United States District Court for the District of Columbia. The court did not decide the application to stay the case; it respectfully referred that application to the transferee court. The clerk was directed to terminate the motions and transfer the case. The opinion did not resolve Spain’s jurisdictional objections or the parties’ underlying dispute over confirmation of the arbitral award.