Nobody Expects the Spanish Arbitration

The economist: The phantom limb of a amputated globalized world flailing and wailing.

FT Alphaville is “the FT markets and finance blog”, so this is essentially an opinion piece and the Financial Times is not presenting it as news.

Leaving aside that this article is written very much from one point of view, it's worth drawing comparisons with Argentina and things like the pari passu bond litigation. That statement is probably hyperbole, but there is a real premium to be paid if investors start thinking that there is more risk than expected to their investment.

On the other hand, the CJEU is basically right, in a sense of legal sovereignty that both the US and UK will recognize in their own ways: countries should not be beholden to foreign court decisions if they can at all help it. The EU has a court system, the CJEU is at the top of it, and its decisions should be final.

The real problem is the ability of countries to enter into agreements that promise some investor return that turns out to be against subsequent public policy or even entirely ruinous. The most egregious case was https://theconversation.com/when-even-winning-is-losing-the-...

(some more background, clearly translated from Spanish https://microsegur.com/en/spain-lost-four-international-arbi... )

Heck, I'm the beneficiary of such a scheme myself: I'm the holder of a legacy UK feed-in-tariff agreement that means I get paid about £0.15 for each unit of electricity I generate, regardless of whether I use or export it and regardless of market price. Until this year that was a substantial subsidy - as intended by the policy!

As a counterpoint, please consider Spain is the only EU country to not have recovered the pre pandemic GDP in real terms. Growth in 2022 has been great, but mostly in the first semester, it was almost null in the second. It's the EU country with most unemployment. There is a lot of things to be happy about from Spain, but the economy is nothing to brag about.

As I understand, this is not case of abstract money, but most cases about investments to clean energy, for which EU guaranteed payments.

Sure, this is extremely bad, because next time investors will NOT make investments, if this will no been resolved, and Europe will again become vulnerable to energy empires like Russia.

So citizens will have really troubles, because critical investments where not safe.

FT Alphaville (the section this article is part of) describes itself as a "THE FT MARKETS AND FINANCE BLOG". It seems to be using ft's good name for adding credibility to their opinion pieces by serving it as part of their normal website.