CR wins arbitration suit with Swiss firm over Kc5bn

This is the second arbitration suit which the Czech Republic has won in a short time period, the ministry said. The last arbitration which the country won was the dispute with George Nepolsky.

"The arbitration tribunal complied with our proposal and ended the entire proceedings. This averted a threat for tax payers' money worth almost Kc5bn," Finance Minister Miroslav Kalousek said.

"Besides, the tribunal awarded full compensation of the costs of the proceedings to us," Kalousek added.

The dispute was led over a Kc5bn guarantee from the State Environmental Fund for the construction of waste incineration plant in Mlada Boleslav, central Bohemia, Finance Ministry spokesman Ondrej Jakob said.

After the company went bankrupt and the project was thwarted, the firm's owners demanded that the guarantees should be paid to them by the Czech Republic.

"This is another case when a foreign investor blames the Czech Republic for its business failure, and when the Finance Ministry has won the arbitration," Jakob said.

The Czech side's costs in the dispute reached Kc8m and they will be covered, according to Jakob. The Czech Republic was represented by a team of lawyers led by Karolina Horakova from law office Weil, Gotshal & Manges.

The Czech state is now facing more than ten arbitration disputes based on agreements on investment protection.

Two arbitration suits are now under way. The disputes involve tens of billions of crowns.

Besides, the Czech Republic is facing various disputes related to investment in photovoltaic power plants. Financial claims in these disputes, which are being dealt with out of court, have not been set yet.

Arbitrations are mostly an outcome of agreements on investment protection from the early 1990s which were mostly disadvantageous for the Czech Republic.

The Finance Ministry has been trying to end these agreements for some time already. In 2009, the state started to terminate bilateral agreements with EU states.

Author: ČTK
www.ctk.cz