Facts
“It’s a fair deal. If you don’t accept it, there’s no point in our continuing. We will buy your British competitors’ and you will regret it in the long run. It’s our last offer.”
The clock struck 10:30 p.m. on Thursday, March 5, 2020, and Anastasia Valdemínguez had just received a new email – the umpteenth that week – from Eugenio Acerero. Anastasia and Eugenio had been negotiating for months a contract for the supply of photovoltaic modules (the “Modules”) that was potentially very attractive for their respective companies.
Anastasia, a 29-year-old lawyer, is the head of the legal department of Solar Sharing, S.L. (“Solar”), a Spanish company specialized in the manufacture and international distribution of products related to the photovoltaic industry. Eugenio, who is also a lawyer (but already has a few grey hairs), holds the same position at World Solar Charger Besloten Vennootschap (“WSC”), a Dutch company specialized in the development, design, construction, maintenance and operation of photovoltaic plants.
Solar is a company that has been experiencing strong growth in recent years. Solar is part of a multinational group of companies whose parent (a holding company) is Panamera Lumbre, Sociedad Anónima de Acciones (“Panamera”), domiciled in Panama. Panamera indirectly controls Solar by holding 100% of the capital stock of two intermediate companies, which in turn hold 20% and 80% of Solar’s shares.
Eugenio was particularly interested in signing the supply contract as soon as possible. WSC’s intention was to use Solar’s Modules for the construction of a new photovoltaic plant in Almeria, taking advantage of the fact that this is one of the European regions that enjoys the most hours of sunshine per year (the “Plant”). For this purpose, a week before, WSC had entered into a turnkey or EPC (Engineering, Procurement and Construction) contract with a German company (the “EPC Contract”), under which WSC was obliged to build, develop and commission the Plant, which was to be fully operational by April 1, 2022.
Anastasia and Eugenio finally reached an agreement. Thus, after completing the respective internal procedures, Solar and WSC finally signed the supply agreement, under which Solar would supply the Modules to WSC (the “Supply Agreement”). Specifically, Solar would manufacture the Modules in Palermo (Italy) and they would then be transported by sea to Almeria, where WSC would build the Plant under the terms of the EPC Contract.
Of the 22,500,000 euros agreed in clause 7 of the Supply Contract as consideration for the delivery of the Modules, 10,000,000 euros would be paid at the time the Notice to Proceed was issued (the “Advance Payment”), while the remaining amount (12,500,000 euros) would be paid upon receipt of the Modules by WSC. Pursuant to clause 6 of the Supply Agreement, delivery would take place on January 1, 2022 (the “Delivery Date”). Clause 8 of the Supply Agreement, on the other hand, provided for a waiver of liability for non-performance in the event of supervening causes that made the execution of the agreement excessively onerous. The clause contained a list of events that would be understood to be included in the exemption from liability, among which a pandemic was not included.
The Supply Agreement was subject to Spanish law, without exclusion of the 1980 Vienna Convention on Contracts for the International Sale of Goods. The parties also agreed to include a clause for the final resolution of any dispute by institutional arbitration administered by the Madrid International Arbitration Center (the “CIAM”). No emergency arbitrator stipulation was included. It was agreed that the place or seat of arbitration would be Madrid.
WSC sent the Notice to Proceed on October 25, 2021, when it also made the Advance Payment. Everything seemed to be going according to plan. However, on December 1, 2021, Solar’s Operations Manager informed Anastasia – so that she could inform her counterpart at WSC – that the Modules would be shipped one month late, as a result of the distortion of supply chains and shipping caused by the expansion of the Omicron variant of COVID-19.
So Anastasia sent Eugene an e-mail that same day telling him the bad news. Eugenio could not believe it: if what he was told was true, WSC’s own commitments under the EPC Contract were being jeopardized. His astonishment was even greater when, just a couple of days later, he discovered a news item in a Panamanian newspaper reporting that Panamera, i.e., the business group to which Solar belonged, was carrying out a systematic strategy of cash pooling and divestment in different countries. In particular, the news reported that Panamera had already closed several of its operating subsidiaries in Asia and Latin America.
On December 4, 2021, Eugenio sent Anastasia a registered letter stating that WSC could not accept the change in the Delivery Date, as this would irremediably affect the construction schedule foreseen in the EPC Contract. In fact, WSC would be obliged to pay penalties for each day of delay from the agreed start-up date.
On December 15, 2021, Anastasia sent a new email to Eugenio letting him know that there was going to be an additional indefinite delay in delivery and that, due to an unexpected increase in raw material prices, Solar was forced to increase the price of the Supply Contract. Anastasia claimed to attach to its communication the mail sent by one of its suppliers informing of the price increase of the supplies. However, Eugenio’s surprise when he opened the attachment was great: instead of correspondence from a supplier, Anastasia had attached an internal mail from Solar, the subject of which was “Spain – Divestment”. The body of the message simply read: “Just to inform you that the operation is already underway.
Thus, on December 21, 2021, Eugenio replied to Anastasia stating that WSC strongly rejected any increase in the price or delay in the Delivery Date, as both modifications constituted a clear breach of the Supply Agreement. Eugenio then made no reference to the mysterious attachment received on December 15, 2021, but, in January 2022, he called Anastasia to ask for an explanation. The latter told him that she was going into a meeting and did not know which email she was referring to. The WSC representative replied forcefully asking her “what are you playing at”, to which Anastasia told him that his skeptical attitude was not acceptable, and that she did not understand how he dared to make “this kind of insinuations”. The only record of this conversation that remains is a WhatsApp message, dated January 15, 2022, in which Eugenio tells what happened to the manager of WSC.
Since then, the situation has continued to escalate: Solar did not (and has not) delivered the Modules; as an immediate consequence, WSC declared the Supply Agreement terminated in March 2022 and requested Solar to return the Advance Payment. There has been no response from Solar since then, despite the fact that WSC has already sent formal notice of the commencement of negotiations prior to the initiation of arbitration proceedings.
As a consequence of the COVID-19 pandemic and other adverse events, Solar is in financial difficulties. In fact, it is bordering on the zone of insolvency: it has recently entered into several debt refinancing agreements and its creditors are uneasy. Also, as noted above, in recent months Panamera has continued to carry out asset divestitures (although to date it is not known to have done any of this in Spain).
In Spain, Solar has a current account with a Spanish financial institution, Banco Aquiles, Héctor y Homero, S.A. (the “Homeric Bank”). As of May 27, 2022, this account has a positive balance of approximately 3,000,000 euros. WSC, which has retained the services of a private detective, is also aware of this information and believes that the closure of this current account is imminent, which, in the event that Solar is finally condemned in the framework of the future arbitration that WSC intends to initiate, would greatly hinder its possibilities of satisfying its claim. In view of this situation, WSC understands that the only way to guarantee its – according to it – more than likely future claim against Solar is precisely to prevent the latter from being able to withdraw its money from Spain, which is why it decided to request the adoption of precautionary measures as a matter of urgency.
Consequently, on the same May 27, 2022, Friday, at 7:50 p.m., WSC requests the ICSID to take urgent precautionary measures: 50 hours, WSC requests CIAM to appoint an emergency arbitrator to adopt, inaudita parte, an interim injunction known under English law as Mareva injunction (an order of prohibition to dispose, also known as freezing injunction or freezing order), by virtue of which it is agreed (i) to order the freezing of all assets, securities and cash deposited by Solar in the account of Banco Homérico and (ii) expressly ordering Solar to refrain from making any movement of money, funds or any other asset deposited in said account (except for those of strict economic and functional necessity, for which it must have the prior authorization of the arbitral tribunal that may be constituted).
The CIAM, after receiving WSC’s letter dated May 27, 2022, proceeds to appoint the emergency arbitrator on May 30, 2022, in accordance with the procedure provided for such purpose in its Rules.