VCI Legal – December 20, 2025

In the context of the country pursuing the goal of “The era of raising” to promote Vietnam’s economic development, many policies have been extensively reformed to attract investment. Among these, the renewable energy industry is growing rapidly, as each additional GDP growth requires corresponding electricity supply. Many foreign investors have also seen great prospects in this field and decided to “pour money” into Vietnam. However, in 2023, after inspecting several renewable energy projects that did not have Certificate of Completion of Constructions (CCA) before the Commercial Operation Date (COD), the Ministry of Industry and Trade issued a new circular — Circular 10/2023/TT-BCT to regulate this activity. This raised the reality that many projects would be affected as they would not enjoy the initial FIT price level. This article will briefly outline similar international lessons on Investor-State Dispute Settlement (ISDS) by Spain when sued by investors through the International Centre for Settlement of Investment Disputes (ICSID).

Eurus Energy v. Spain (ICSID ARB/16/4): Retroactive Application and Reduction of Investor FIT

During the 2000s, Spain established a generous Feed-in Tariff (FIT) scheme (under Royal Decree 661/2007 – RD 661/2007) to quickly position the country as a leading player in the clean energy field. Foreign investments made based on reliance on this stable FIT regime, were expected to ensure long-term profitability.

However, the generosity of these subsidies led to a massive “Tariff Deficit,” threatening the financial stability of the national power system. To address this financial crisis, the Spanish Government implemented a series of regulatory adjustment measures during 2013-2014.

One recent typical case is the lawsuit between Eurus Energy Holdings Corporation, a Japanese subsidiary affiliated with the Toyota Group, and the Spanish Government, arguing that the Government had completely eliminated the economic benefits of the investment, violating their “Legitimate Expectations.”

Eurus Energy Holdings Corporation invested in 15 wind power projects in the Galicia and Asturias regions of Spain. These investments were made during the period when Spain applied the favorable FIT regime under RD 661/2007. Subsequently, to address the financial deficit issue of the power system, Spain implemented adjustment measures. Royal Decree 413/2014 (RD 413/2014), which took effect in 2014, is the centerpiece of the lawsuit. RD 413/2014, along with Royal Decree Law 9/2013 and Energy Sector Law 24/2013, established a new remuneration scheme.

This new mechanism involved replacing the FIT with a more complex remuneration system. These measures not only reduced subsidies but also imposed a 7% tax on electricity producers’ revenues and had the indirect effect of reclaiming subsidies previously paid. Eurus argued that they had legitimate expectations that the management mechanism would not change throughout the lifetime of the projects. However, Spain argued that this special mechanism was based on the principle of reasonable profit (profit limited to a reasonable level, not to be exceeded), meaning producers would only be guaranteed sufficient capital to offset investment costs and operating costs while achieving reasonable market-level profits. Eurus countered that the incentives for these facilities aimed to ensure minimum profits, not to limit the ceiling.

The lawsuit was initiated by Eurus Energy at the International Centre for Settlement of Investment Disputes (ICSID). The legal basis applied was the Energy Charter Treaty (ECT), with allegations of violations of core investment protection provisions: Fair and Equitable Treatment (FET).

In the Eurus case, the Arbitral Tribunal found that Eurus had invested based on a stable and predictable legal regime. Spain’s implementation of RD 413/2014 fundamentally changed the economic model, breaking the State’s implicit commitment to stability. This case confirmed that FET protects the stability of the underlying legal framework, not merely contractual terms. Spain argued that the capacity to adjust always existed, but the Tribunal found that the change to the entire profit calculation model, applied to operating projects, exceeded the limits of legitimate policy adjustment rights, as this change was unpredictable and substantially harmful.

The retroactive nature of these measures was a key factor leading to FET violation. Although RD 413/2014 took effect prospectively, the application of the new remuneration scheme to recalculate financial compensation for already-operating facilities that had previously enjoyed the initial FIT created an implicit “claw-back” effect.

The Spanish Government argued that the measures were implemented under the Right to Policy Adjustment to address the financial crisis and the massive tariff deficit—a legitimate public interest. This right allows the State to change laws for public interest purposes.

However, adjustment measures, even when serving public purposes, must be proportionate to those objectives. In the case of Eurus, the retroactive application and excessive profit reduction were deemed disproportionate, unfairly shifting the burden of resolving the national budget deficit to international investors. The Tribunal rejected most of Spain’s defenses and concluded that the violation of Fair and Equitable Treatment (FET) obligations under the ECT meant Spain’s reform measures could achieve the policy adjustment objective without resorting to retroactive elements.

In November 2022, ICSID issued a compensation award. Spain was ordered to pay $106.2 million USD (equivalent to €91.2 million) in compensation, plus accrued interest from June 1, 2021, and approximately $4 million USD in legal costs. Spain’s total debt from this single case reached approximately $113 million USD (approximately €97 million).

Subsequent renewable energy cases after Eurus have reinforced the standard of “substantially and detrimentally modified” as the threshold for FET violation. The modification need not constitute 100% confiscation of assets; it is sufficient to cause significant economic harm compared to initial expectations to constitute a violation, exceeding normal business risk thresholds.

Lessons for Vietnam

In Vietnam, the success of the favorable FIT mechanism has attracted enormous investment capital into renewable energy. However, Circular 10/2023/TT-BCT from the Ministry of Industry and Trade requires renewable energy projects that have not achieved the Commercial Operation Date (COD) before the circular’s effective date to re-determine their electricity purchase prices. This is done through renegotiation of prices with Vietnam Electricity Group (EVN).

The threat is the economic retroactivity of this measure. Investors have requested that the retroactive application of Circular 10/2023/TT-BCT not apply to projects that already have initial COD approval decisions or have completed substantial investment.

The Eurus v. Spain case provides a direct template for assessing Vietnam’s legal risks. Both cases involve: (1) a state attracting investment through attractive FIT commitments; (2) subsequent changes to the legal regime due to system/financial stability reasons; and (3) application of measures that significantly reduce profits for already-invested projects.

The greatest danger to Vietnam is not only the extent of price cuts but the lack of transparency and stability in the legal transition process. The profit reduction in the Eurus case was considered “substantially harmful modification”. Considering the Eurus case, the reduction of electricity purchase prices in Vietnam from the FIT1 level of 9.35 cents/kWh (equivalent to approximately 2,231 VND/kWh) to the FIT2 level of 7.09 cents/kWh (approximately 1,692 VND/kWh), or lower if the transitional project rate of merely 4.8 cents/kWh is applied—amounting to a 24% to 47% reduction from the initial preferential rate—could constitute conduct that may result in an FET violation under established international precedent.

Some investors that have been announced to be disadvantaged by the new FIT policy are listed as follows:

• ACEN Vietnam Investment (Philippines)1 with 14 projects with a total capacity of 852MW
• Super Energy Corporation (Thailand)2 with 8 projects with a total capacity of 686,7MW
• Shikoku Electric Power (Japan)3 with capacity of 256MW
• B. Grimm Renewable (Thailand)4 with capacity of 496MW
• Mitsubishi HC Capital (Japan)5
• Chubu Electric Power (Japan)6
• SP Group (Singapore)7 with 14 projects including Europlast Phú Yên Solar with capacity of 165MW

Given the capital investment of USD 1-1.3 million per MW and an anticipated around 25% reduction in electricity prices compared to past levels (Specifically, the electricity purchase price can be transferred from FIT1 9.35 cents/kWh to FIT2 7.09 cents/kWh or lower if the price of transitional projects is applied, reaching only 4.8 cents/kWh). Along with the FIT price reduction, EVN also temporarily withheld payments because it believed that businesses had not met legal requirements. This creates a risk of debt default for investors, especially when these projects have been financed based on the initial FIT price level. While precise impact figures for each company are not yet available, preliminary estimates suggest aggregate losses could amount to hundreds of millions of USD. Business estimates suggest the total loss could result in nearly over $13 billion USD.

Spain had to pay $113 million for just one Eurus lawsuit. Vietnam has many affected renewable energy projects with diverse investor nationalities. If only 5 to 10 major international investors file lawsuits simultaneously under different BITs, total compensation damages could reach billions of USD. Beyond the direct costs of compensation and indirect costs on future capital costs, if Vietnam loses many ISDS cases, its national governance credibility and investment environment will be seriously damaged. International financial institutions, banks, and investment funds will view Vietnam as a country with high legal risk, leading to higher interest rates on future project loans. This increase in capital costs will slow Vietnam’s long-term energy and economic development objectives, imposing financial burdens many times greater than maintaining legal stability for current projects. Applying retroactive measures without adequate compensation is considered a “self-defeating” strategy in the international investment environment. Vietnam needs to draw deep lessons from this precedent to protect national investment capital and credibility.

Practical steps for investors

• Treaty map & structuring check: Confirm treaty coverage for ultimate owners; consider re-routing or protections for future capital injections.
• Reliance file: Assemble contemporaneous evidence (government circulars/letters, PPAs, financing models, lender covenants) showing investment decisions based on FIT benefits.
• Damages & financing stress test: Update cash-flow models for 7.09/4.8¢ scenarios; document loan covenant pressures and payment delays for mitigation and (if needed) claims.

If you’d like a confidential project-by-project assessment – including treaty coverage, reliance evidence, and quantified remedies—contact VCI Legal Investment Dispute Team. We can (i) review permits/acceptance and PPAs, (ii) model tariff scenarios and payment-delay impacts, and (iii) outline dispute-prevention and ISDS pathways with timelines and budgets.

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