IPOL | Policy Department for Citizens’ Rights and Constitutional Affairs
38
PE 703.592
In practice, the regulatory framework in force at the time of the investment is entrenched. For instance,
in the case
Greentech and NovEnergia v. Italy
,
144
the dispute arose because the Italian government took
some
measures, which changed the regulatory framework in force. Namely, the government
prematurely cut tariff incentives for photovoltaic plants originally offered for 20-year period, it modified
the taxation regime and minimum guaranteed price scheme, it canceled
inflation adjustment and
finally, it imposed new fees.
The exchange between the claimants and the respondents on this issue is illustrative. On the one hand,
claimants argued that ‘[i]t is common ground in investment treaty jurisprudence that when an
investor’s expectations are based on explicit assurances from the State – as in the present case – the
State has accepted limitations on its right to regulate in ways that undermine those assurances.’
145
On
the other hand, the Respondent, on behalf of the Italian Government claimed that the meaning of
legitimate expectations within the context of investments must accord ‘due relevance to the sovereign
right of States to progress their legislation.’
146
Eventually, the tribunal sided with the claimants holding that ‘[h]ost
states certainly retain the
sovereign prerogative to amend their laws. However, if the state gives an investor express assurances
that no amendment would occur, the investor must be fairly compensated if those assurances are
violated.’
147
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