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News 12 Sep 14

Croatia and MOL Resume Battle in Washington

Croatia and the Hungarian energy company MOL have taken their dispute over the fate of the Croatian energy company INA to Washington for arbitration.

Sven Milekic
Croatian national energy company INA

Arbitration over the fate of the Croatian national energy company, INA, between the Republic of Croatia and the Hungarian energy company, MOL, started on Friday before the International Centre for Settlement of Investment Disputes, ICSID, in Washington.

The ICSID, which a part of the World Bank Group, is tasked with facilitating arbitration of legal disputes between international investors.

MOL intiated the arbitration in Washington in November 2013, claiming that Croatia purposely broke its obligations and procedures in connection with MOL’s investments in INA, which were specified in the agreement on gas business.

According to MOL, Croatia was obliged to store, sell and buy out all the gas production from INA for 15 years. MOL claims that breaking the contract resulted in a loss for the company of at least 265 million euro.

Proceedings before the ISCID are secret and nothing will be revealed until a decision is issues. The tribunal comprises three arbitrators, with Britain's Franklin Berman as tribunal president.

MOL is represented by MOL’s General Council and by the legal company Weil, Gotshal & Manges from the US.

Croatia is represented by the legal office Squire Patton Boggs, from the US, along with the Croatian lawyer Luka Misetic who works for the same office.

Misetic and Squire Patton Boggs are known for having represented three former Croatian generals, Ante Gotovina, Mladen Markac and Ivan Cermak, before the Hague war crimes tribunal.

They also represented the Croatian government in a case against MOL over INA management rights before the International Chamber of Commerce in Paris.

Croatia started the arbitration process in Paris in January 2014 to stop MOL from selling INA’s shares and to nullify the shareholders’ agreement existing between the two.

MOL bought 25 per cent of the shares in INA in July 2003, and an additional 22.15 per cent in October 2008. A controversial shareholders’ agreement was signed in January 2009.

In the meanwhile, however, a court in Croatia jailed Croatia's former Prime Minister, Ivo Sanader, for 8.5 years, aving found him guilty of receiving a bribe from the MOL chairman Zoltan Hernadi, who is also wanted by the Croatian State Attorney Office, DORH.

Between September 2013 until July 2014, Croatia and MOL tried to reach an agreement in five stages of negotiation, but without any success.

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