On 18 February 2026, an ad hoc committee constituted under the ICSID Convention (the “Committee”) unanimously dismissed Romania’s application for annulment of the Award rendered in an arbitration brought by LSG Building Solutions GmbH and nine other claimants (the “Claimants”). Annulment is a limited form of review for specific fundamental defects. It is not an appeal and does not give the losing party a second opportunity to challenge the Tribunal’s legal conclusions. In its Decision on Annulment (the “Annulment Decision”), the Committee also terminated the stay of enforcement and ordered Romania to bear the full costs of the annulment proceeding and to reimburse the Claimants USD 855,274.69 in legal costs and expenses.[1]
Romania raised issues concerning jurisdiction, EU law, multiparty claims, corporate nationality, treaty interpretation, and investment protection.[2] The Committee did not reconsider the merits of the issues. Instead, it confined its review to the grounds listed in Article 52 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”). The central question was therefore whether the Tribunal had manifestly exceeded its powers or failed to state reasons for its conclusions.[3]
I. Facts
Romania created a renewable-energy support scheme based on mandatory quotas and tradable Green Certificates (“GC”). Between 2010 and 2013, LSG Building Solutions GmbH and nine other investors invested in five solar photovoltaic plants in Romania. Romania changed the scheme through measures adopted in 2013 and 2014 and again in 2017 and 2018 (the “Disputed Measures”). The Tribunal later found that several of the Disputed Measures changed key features of the GC regime that the Claimants had relied on when deciding to invest.[4]
The original arbitral tribunal (the “Tribunal”) held that it had jurisdiction under the ICSID Convention and the Energy Charter Treaty (the “ECT”). It also declared that Romania had breached Article 10(1) of the ECT, including its obligation to provide fair and equitable treatment. The Tribunal directed the parties to try to agree on damages and reserved its decision on damages, interest and costs.[5]
Romania sought annulment of the Award in its entirety or, annulment insofar as the Award concerned Anina Pro Invest Ltd. and Giust Ltd. Romania relied on two grounds for annulment under the ICSID Convention: a “manifest excess of powers” under Article 52(1)(b) and a “failure to state reasons” under Article 52(1)(e).[6]
II. Issues
Four principal legal questions arose. First, was the Committee confined to the grounds for annulment set out in Article 52 of the ICSID Convention, or could it reconsider the Tribunal’s legal conclusions?[7] Second, did the Tribunal manifestly exceed its powers by exercising jurisdiction over an intra-European Union dispute, collectively adjudicating the claims of ten Claimants, or accepting jurisdiction over the claims brought by Anina Pro Invest Ltd. and Giust Ltd.?[8] Third, did the Tribunal fail to apply the relevant provisions of the ECT, the ICSID Convention, the rules of treaty interpretation or other applicable rules of international law when deciding questions of jurisdiction, treaty conflict and liability?[9] Finally, did the Award provide adequate and consistent reasons on jurisdiction, the relationship between the ECT and EU law, or Romania’s alleged breach of Article 10(1) of the ECT?[10]
III. Holding
The Committee rejected all of Romania’s grounds for annulment. It explained that a “manifest excess of powers” exists only when the Tribunal went beyond its authority in a way that was “obvious” or “clear”. The Award could not be annulled simply because another interpretation was possible, so long as the Tribunal’s reasoning was “reasonable”, “tenable” and “not arbitrary”.[11]
The Committee also distinguished between failing to apply the correct law and applying that law incorrectly. A legal error was not enough for annulment unless it was so serious that the Tribunal had, in effect, failed to apply the law at all. The Tribunal met its duty to explain its decision if the reader could understand the reasoning that led to the result. The Committee did not have to decide whether that reasoning was correct or persuasive, only whether it was sufficiently explained.[12]
The Committee found no grounds to annul the Award based on the intra-EU objection, the inclusion of ten Claimants in a single proceeding, the nationality of Anina and Giust, the applicable law, treaty conflict, or liability. It also rejected Romania’s arguments that the Award failed to give reasons on jurisdiction, treaty conflict, and liability.[13]
Therefore, the Committee dismissed Romania’s application in its entirety, terminated the stay of enforcement, ordered it to bear the full costs of the proceeding and awarded the Claimants USD 855,274.69 for their legal costs and expenses.[14]
IV. Reasoning
The Committee began by emphasising the limited function of annulment. Annulment addresses fundamental defects in an award, rather than the correctness of its outcome. Article 53(1) of the ICSID Convention provides that ICSID awards are “final”, “binding” and “not subject to appeal”. Article 52(1) sets out a limited and exhaustive list of grounds on which an award may be annulled. An annulment committee therefore cannot reassess the correctness of an award, evaluate the persuasiveness of the Tribunal’s reasoning, substitute its own judgment for that of the Tribunal, or reconsider the merits of the dispute. Even where a ground under Article 52 is established, Article 52(3) of the ICSID Convention gives the Committee discretion to decide whether the award should be annulled, in whole or in part.[15]
The Committee adopted a two-stage inquiry to determine whether the Tribunal had manifestly exceeded its powers. First, it had to determine whether the Tribunal had exceeded its authority and, if so, whether that excess was “manifest”. The second requirement imposed a “very high” threshold: the error had to be “obvious, clear or self-evident”. The Committee could review the Tribunal’s decision on jurisdiction, but it could not reconsider the issue from the beginning or replace the Tribunal’s interpretation with its own.[16]
The Committee then addressed Romania’s jurisdictional objections. Romania argued that Article 26 of the ECT did not cover disputes between an investor from one EU Member State and another EU Member State. In its view, the Claimants were not investors from “another Contracting Party”, the investments were made within the EU rather than in a separate treaty area, and the obligations at issue belonged to the EU rather than to Romania. Romania also maintained that Article 26 of the ECT conflicted with the Treaty on the Functioning of the European Union (the “TFEU”) and that the EU Treaties should prevail.[17]
The Committee did not revisit the Tribunal’s interpretation of the treaties. It asked only whether the Tribunal had considered the main legal issues and reached a reasonable conclusion. The Tribunal had addressed the relevant ECT provisions, the status of the Claimants, the location of the investments, and the division of powers between the EU and its Member States. The Committee therefore found no “obvious, clear or self-evident” error that could justify annulment.[18]
The Tribunal had further reasoned that Article 26 of the ECT concerned investor-State disputes, whereas Article 344 of the TFEU addressed disputes concerning the interpretation or application of the EU Treaties between Member States or EU institutions. On that basis, it found no treaty conflict. The Tribunal concluded that Article 351 of the TFEU was inapplicable and held that the ECT and the TFEU addressed different subject matter. It added that, even if there were a conflict, Article 26 of the ECT would prevail because the Tribunal considered it more “favourable” than the TFEU. The Committee expressly acknowledged that other legal views were possible but held that it could not substitute its judgment for a reasonable and tenable analysis adopted by the Tribunal.[19]
Romania also relied heavily on the Court of Justice of the European Union (the “CJEU”) judgment in Komstroy. The Tribunal did not consider the Komstroy judgment decisive, partly because it was issued after the parties’ consent to arbitration had already crystallised. The Committee held that the Tribunal had considered the relevant authority and articulated a coherent basis for its conclusion. Romania’s disagreement therefore concerned the application of the law, not a failure to apply it or a failure to give reasons.[20]
Romania’s next objection concerned the claims brought collectively by ten Claimants. The Committee agreed that a State must consent to arbitration, and such consent must be demonstrated through “objective indicators”. However, it rejected Romania’s argument that the Tribunal had inferred consent merely from silence.[21]
The Tribunal first concluded that Article 26 of the ECT constituted Romania’s “unconditional” consent to arbitrate qualifying investment disputes. It then considered the wording, object and purpose of the ECT; the text and context of Article 25 of the ICSID Convention; as well as the use of multiparty claims in ICSID proceedings. It concluded that several investors could accept Romania’s offer to arbitrate in the same proceeding. The Tribunal’s conclusion was based on the wording and context of the relevant treaties, rather than on an assumption of Romania’s consent, so the Committee found no clear excess of powers.[22]
A further objection concerned the nationality of Anina and Giust. Romania argued that Anina and Giust were Romanian-controlled shell companies and that allowing them to invoke the ECT and the ICSID Convention effectively transformed a domestic dispute into an international one.[23]
The Tribunal determined the companies’ nationality by looking at where they were incorporated. It also considered whether their corporate status should be disregarded because of “fraud or abuse” of the treaty, but found no compelling evidence of either. The Committee held that the Tribunal’s treaty interpretation was reasonable and that its factual finding concerning the absence of “fraud or abuse” was not open to re-examination in annulment proceedings. Thus, Romania’s disagreement with the Tribunal’s approach was not enough to show a “manifest excess of powers”.[24]
Romania’s remaining arguments concerned the governing law. The Committee distinguished between failing to apply the applicable law, which may amount to an excess of powers, and applying that law incorrectly, which ordinarily does not. A mistake in applying the law is not normally enough to justify annulment under Article 52(1)(b) of the ICSID Convention. Annulment can be justified only if the Tribunal had effectively ignored the applicable law, not simply because it had failed to discuss every relevant legal provision.[25]
On jurisdiction and treaty conflict, the Tribunal had expressly applied the Vienna Convention on the Law of Treaties (the “VCLT”), the ECT, the ICSID Convention and the relevant rules of public international law. It had also addressed the EU law provisions and cases relied on by Romania. Romania’s objections therefore concerned the Tribunal’s interpretation and application of the governing law, rather than a complete failure to apply that law.[26]
The same applied to liability. The Tribunal had analysed Article 10(1) of the ECT, including its requirements of “fair and equitable treatment” and the prohibition of “unreasonable or discriminatory measures”. It considered the treaty text, the ECT’s stability objective, the Claimants’ asserted legitimate expectations, Romania’s right to regulate, academic commentary, and previous arbitral decisions. The Committee found that those authorities were used to help interpret the ECT, not to replace it.[27]
The Tribunal had also separately considered whether Romania’s measures unreasonably harmed the investments. It examined Romania’s explanations for the measures and their effect on the Claimants’ expected revenues. The Committee concluded that, even if the Tribunal’s reasoning could be questioned, it had still applied Article 10(1) of the ECT.[28]
The Committee also rejected Romania’s argument that the Award failed to state reasons. Under Article 52(1)(e), the Tribunal had to give enough reasons for the reader to understand how it reached its conclusions. Its reasoning did not have to be perfect, persuasive, or free from legal or factual error. “Contradictory reasons” could justify annulment only if they cancelled each other out or made the result impossible to understand.[29] The Committee’s task was not to assess the adequacy of the Tribunal’s reasoning. An omission or missing explanation could justify annulment only if it concerned a decisive, outcome-determinative argument.[30]
The Committee found that the Tribunal had explained the main steps leading to its conclusions on jurisdiction, treaty conflict and liability. It was not required to address every version of every argument if it identified the key issues and connected them to its ruling. Because the Tribunal’s reasoning could be followed and was not internally contradictory, the Committee rejected Romania’s claims that the Award contained missing or contradictory reasons.[31]
Finally, the Committee addressed costs. It applied the principle that the losing party should pay the costs, unless the circumstances justified a different result. Because the Claimants prevailed on every ground advanced by Romania and because their claimed legal costs and expenses were reasonable, the Committee ordered Romania to bear all costs of the annulment proceeding and to reimburse the Claimants USD 855,274.69.[32]
The Committee declined to award post-decision interest. Although it recognised that Romania had pursued the annulment proceedings seriously, it found that its costs award adequately reflected the parties’ relative success.[33]
V. Conclusion
The Annulment Decision reinforces the distinction between appeal and annulment. The Committee did not reconsider the dispute or independently endorse every conclusion reached by the Tribunal.[34] It found only that Romania’s objections, including those concerning intra-EU jurisdiction, consent, EU competence, Komstroy, multiparty claims and corporate nationality, did not establish a ground for annulment under Article 52.[35]
The Decision also makes clear that annulment requires more than a possible legal error or a different interpretation of the law.[36] In this case, annulment required either a “manifest excess of powers”, which could include a failure to apply the governing law, or a failure to state reasons that prevented the reader from following the Tribunal’s reasoning.[37]
[1] LSG Building Solutions GmbH et al. v. Romania, ICSID Case No. ARB/18/19, Decision on Annulment, 18 February 2026, ¶¶ 1, 37-40, 207-212.
[2] Id. ¶¶ 41, 51-61, 93-94, 104-105, 113-117, 126-127, 136-139.
[3] Id. ¶¶ 5, 37-40, 48-50.
[4] Id. ¶¶ 2-3, 143, 147.
[5] Id. ¶¶ 4, 143-147.
[6] Id. ¶¶ 5, 32.
[7] Id. ¶¶ 37-40.
[8] Id. ¶ 41.
[9] Id. ¶¶ 113, 126, 136-138, 143-145.
[10] Id. ¶¶ 5, 161-163, 175-176, 182-186.
[11] Id. ¶¶ 48-50, 212.
[12] Id. ¶¶ 111, 157-158, 160.
[13] Id. ¶¶ 92, 103, 108, 125, 135, 153, 174, 181, 196.
[14] Id. ¶ 212.
[15] Id. ¶¶ 36-40.
[16] Id. ¶¶ 48-50.
[17] Id. ¶¶ 51-61.
[18] Id. ¶¶ 71-85.
[19] Id. ¶¶ 89-92.
[20] Id. ¶¶ 130-135, 179-181.
[21] Id. ¶¶ 97-98, 103.
[22] Id. ¶¶ 99-103.
[23] Id. ¶¶ 104-105.
[24] Id. ¶¶ 107-108.
[25] Id. ¶¶ 48-49, 111.
[26] Id. ¶¶ 122-125, 130-135.
[27] Id. ¶¶ 142-149.
[28] Id. ¶¶ 150-153.
[29] Id. ¶¶ 157-159.
[30] Id. ¶¶ 156, 160.
[31] Id. ¶¶ 171-174, 179-181, 190-196.
[32] Id. ¶¶ 201-210.
[33] Id. ¶ 211.
[34] Id. ¶¶ 37-39, 50.
[35] Id. ¶¶ 92, 103, 108, 125, 135, 212.
[36] Id. ¶¶ 48-50, 111.
[37] Id. ¶¶ 48-49, 111, 156-160.