The International Centre for Settlement of Investment Disputes (ICSID) has decided in favour of Hungarian oil and gas company MOL in an arbitration case involving the state of Croatia over breach of contract.
MOL notified the market of the verdict, delivered on Tuesday, in an announcement posted on the website of the Budapest Stock Exchange on Wednesday. MOL noted that it had filed a request for arbitration against Croatia in 2013 for breach of contract related to agreements concerning Croatian energy company INA signed in 2009.
MOL owns a little over 49 percent of INA and has management rights in the company. The state of Croatia is the other big owner in INA. “The ICSID award clearly states that Croatia’s bribery related allegations are unfounded,” MOL said. “The three-member council unanimously rejected Croatia’s objection that the 2009 agreements are a result of criminal conduct,” it added.
ICSID characterised the story of the witness testifying against accomplices in the Croatian criminal proceedings as “weak and full of contradictions” and expressed “strong doubts” about the truthfulness and reliability of both the arbitral and criminal proceedings in Zagreb, MOL said.
ICSID ruled that Croatia caused “substantial damages” to INA for failing to take over the energy company’s gas trading business as well as for breaching contractual obligations concerning gas pricing and royalties and awarded MOL 167.8 million dollars. The tribunal also awarded MOL 16.1 million dollars in damages caused by Croatia for forcing the sale of gas stored at INA subsidiary Prirodni Plin. Together with interest, MOL was awarded a total of around 236 million dollars.