Spain’s supreme court has ruled retroactive cuts in renewable subsidies introduced in 2013 may have been unconstitutional, opening the door to EU legal action.
The supreme court found evidence of unconstitutionality, not in the cuts themselves but in the government’s failure to enact measures to prevent "companies from having to operate without reference to any legal or retributive regime during a transitional period".
The court’s decision also opens the way for a definitive ruling on the issue by Spain’s constitutional court. Plaintiffs have now been told to produce arguments to support taking the case to the EU court.
An EU court case could be embarrassing for EU energy commissioner Miguel Arias Cañete, who was a member of the government that implemented the cuts to tackle a €28bn deficit in Spain’s electricity sector.
It is also likely to weaken the Spanish government’s case in international arbitration tribunals to which international investors have resorted.