When Spain hyped its 1997 incentives to renewable energy investors with the tagline: 'The sun can be yours', did that over-optimistic promise give rise to legitimate expectations? Some three-dozen arbitrations claiming €7.5bn turn on precisely that question. Along the way, these cases may resolve whether the international Energy Charter Treaty breaks EU law, and set key precedents for financial investors burned by Brexit.

Spanish courts never doubted Madrid’s right to roll back its solar subsidies after austerity hit in 2007, and to replace them with a less generous regime in 2013. In cases brought by purely domestic investors, the Spanish Supreme Court, Constitutional Court, and Council of State agreed that the state’s moves were amply justified by changes in the electricity market and shifts in the public interest. Indeed, they regarded the question as so obvious under EU law that they saw no need to ask the EU Court of Justice.

Investors based elsewhere in Europe have mostly brighter prospects in Energy Charter Treaty arbitration. Indeed, of the first six arbitral awards on Spanish renewable energy, four have come down hard against the country (Eiser Infrastructure, Masdar Solar & Wind, Novenergia and most recently Greentech Energy), with a collective provisional price tag of €275m.

The other two early arbitral tribunals (Charanne and Isolux) ruled that Spain treated renewable sector investors fairly and equitably. It is possible to distinguish these two awards on the facts, as Charanne excluded the 2013 regulatory reform, and the Isolux claimants only made their foreign investment in late 2013.

But it is also possible to divide the first half-dozen Spanish cases between two emerging lines of thought. Deferential arbitrators, such as the majority in Charanne, will respect the state’s right to tack a new regulatory course unless it gave investors specific assurances. (On this theory, Spain was wise to avoid the slogan: 'This particular ray of sun can be yours.') Activist arbitrators, such as those at Greentech, will protect even vague investor expectations if they think the state has wrought a “radical or fundamental change in the legal or regulatory framework”. (Sorry, the sun can’t be yours anymore).

All six panels agreed that intra-EU disputes under the Energy Charter Treaty may be arbitrated, notwithstanding the EU’s attempt to judicialise intra-EU disputes in Achmea v the Slovak Republic. Arbitrators find it significant that the EU itself signed the Energy Charter Treaty (in contrast to bilateral investment treaties). But arbitrators are unlikely to have the final word. Investors enforcing the Novenergia award have asked US courts to weigh in on the permissibility of Energy Charter arbitration under EU law. And most authoritatively, in its efforts to set aside Novenergia, Spain has asked Swedish courts to certify the question to the EU Court of Justice. One cannot help but wonder if the judges guarding their turf in Luxembourg will look askance at private adjudicators shackling state regulators while gifting foreign investors rights that domestic investors manifestly lack.

Until then, Spain’s solar cases will capture the state of arbitral thought on an advanced economy radically altering the regulation of a central economic sector. The foreign bankers of Canary Wharf were not exactly promised the sun, but neither were they promised London fog. At the moment of Brexit, they will queue up to test their own legitimate expectations. They are apt to find a receptive audience.

Michael D Goldhaber serves as US correspondent for the International Bar Association. He is author of the award-winning e-book Crude Awakening: Chevron in Ecuador, available on Amazon. E-mail: michael.goldhaber@gmail.com