Hungary: MOL vs Croatia INA, Arbitration settles the dispute over INA’s gas too

23. September 2014. / SEE Energy News

International Centre for Settlement of Investment Disputes (ICSID) started arbitration proceedings that Hungarian MOL commenced against Croatia Government as INA’s co-owner.

In arbitration request filed in November 2013, MOL as the owner of 49% of INA’s shares claims that government didn’t fulfill duties about gas business as provided by the Master agreement and its appendixes from 2009.

Master agreement obliged the state to overtake form INA gas storage and sales, and to purchase all INA’s domestic gas production at market prices in the following 15 years. This, however, did not happen, and INA, more specifically its daughter company Natural gas, kept on selling gas to local distributors at regulated prices, and buying it from INA as a producer at a higher price.

MOL considers losses accumulated this way as state’s debt and claims in its arbitration request that they suffered 2 billion HRK of damage. In March this year, the government ‘’cemented’’ regulated prices at which INA will sell its domestic gas, and to HEP as well, which sells that gas further to local distributors, at regulated prices too.

In January this year, the government responded to MOL by filing its arbitration request to United Nations Commission on International Trade Law (UNICITRAL) in Geneva. The government requested Master agreement on gas business and amendments to the Shareholder’s agreement from 2009. to be declared null and void.

Government also claims for compensation of damages occurred as a result of those contracts, while its main argument in Geneva dispute is final judgment of Ivo Sanader for taking bribe money from Zsolt Hernadi, MOL’s President of management board.

Minister Ivan Vrdoljak’s assistant for energy, Sabina Škrtić, went to a judicial hearing in Washington, stating on late Thursday night that in Washington the government expects conviction in accordance with international law.

‘’From arbitration court I expect accurate conviction in harmony with all regulations and international law. That is the only thing we can expect at this moment, and that is why we are here’’, pointed out assistant Minister, after first judicial hearing in Washington, without revealing details.

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