Hungarian oil and gas company MOL has initiated another international arbitration procedure against Croatia, in which it claims that the Croatian Government unjustifiably raised fees for hydrocarbon exploitation in the 2011-2015 period, thus causing financial damage to the company.
At the moment, there is no official information on the launch of arbitration against Croatia, but, unofficially, it is related to a lawsuit which MOL has already filed against Croatia as part of the proceedings initiated in December 2013 before the International Center for Settlement of Investment Disputes (ICSID) in Washington.
In that dispute, MOL claimed that Croatia violated the Energy Charter Treaty and the rights it guarantees to MOL as a foreign investor. Croatia lost that dispute, and in July of this year the Government received the final verdict.
The ICSID found that the Croatian Government did not take over the gas operations of the company INA, despite the contractual obligation to do so, causing damage of 167.84 million dollars to the company and thus indirectly to MOL. According to the decision, Croatia caused additional damage to MOL by forcing INA’s subsidiary Prirodni plin to sell stored gas for which MOL was awarded 16.1 million dollars, which, with the addition of interest and compensation of the part of the arbitration costs, amounts to 235.8 million dollars. At the time, the Croatian Government announced that the court rejected most of MOL’s claims for damages, which reached 1.1 billion dollars, accepting only a smaller part of them, namely 184 million dollars.
In relation to the hydrocarbon fee, ICSID declared itself incompetent, and gave MOL a deadline of three months from the receipt of the verdict to file a lawsuit against Croatia before the competent court. It is sill not known how much compensation MOL is asking for, but it is said to be a significantly smaller amount than the one awarded by arbitration in Washington.
