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A US federal court has rejected Croatia’s application to challenge the enforcement of MOL’s 2022 arbitration award, allowing the Hungarian oil and gas company to recover damages, which have increased to $200 million. The lawsuit was filed back in 2013 after MOL claimed that Croatia had breached INA’s gas purchase contract, causing significant financial losses, Balk.hu reported.
The US federal court in Washington, D.C., did not grant Croatia’s request to dismiss MOL’s demand to enforce the 2022 arbitration award. At issue now was the compensation awarded more than two years ago by the ICSID (International Centre for Settlement of Investment Disputes) under the World Bank.
The arbitral tribunal ruled that the Croatian state had breached a contractual part of an agreement with the oil company INA, which is jointly owned with MOL.
The amount awarded was $184 million, which has since increased to $200 million due to interest. The Croats then challenged the arbitration decision, but lost, allowing MOL to recover its claim.
The litigation started in 2013, when the Hungarian company claimed damages of 2 billion kuna as a result of the Croatian state’s failure to fulfill its contractual obligation to buy up INA’s entire gas production in Croatia at market prices for 15 years.
The relationship between the Croatian state and MOL has been bad for years: this is the umpteenth arbitration between the two parties, Világgazdaság reports. The conflict goes back to the acquisition of INA, where the Croats claim that the Hungarian company illegally acquired a majority stake in INA.
The first lawsuit was filed by MOL against Croatia at the end of 2013, alleging that the Zagreb government had failed to fulfill certain contractual obligations and commitments.
In response, the Zagreb government referred the matter to the United Nations in early 2014. The Croatian reasoning was that MOL has gained control of INA through corruption and has failed to renovate the Sisak oil refinery, contrary to its promises. In doing so, they allege, MOL violated Croatian law on commercial companies. However, the courts found everything to be in order, and in all cases ruled in favor of the Hungarian side.
The case of the sale of INA was also heard by a Croatian court. In 2019, the Zagreb panel decided to convict both former Croatian Prime Minister Ivo Sanader and MOL Chairman Zsolt Hernádi.
The accusation was that the Hungarian businessman had promised a €10 million bribe for the majority stake in INA. Mr Hernádi was sentenced to two years in prison in Croatia, but Hungary has not extradited him, and he has since been taken off Interpol’s wanted list.
Via Balk.hu, Világgazdaság; Featured photo via molgroup.info
