Eureko vs. Poland: Insurance privatization
Ryan Poplin CC BY-SA 2.0
  • Amount demanded: US$10 billion
  • Outcome: case settled (investor obtained US$4.4 billion)
  • Treaty invoked: Netherlands - Poland BIT
  • Sector: insurance, services
  • Issue: financial stability, health

by Public Citizen

In 2003, Eureko, a Netherlands-based company, filed a claim against Poland under the Netherlands-Poland BIT for prohibiting it from taking a controlling stake in PZU, Poland’s first and largest insurance company. Facing significant public and political opposition to a previous administration’s decision to sell a controlling share of Poland’s public insurance firm to a foreign corporation, the Polish government reversed its privatization plans.

Eureko argued that the government’s actions amounted to a violation of its BIT-mandated obligation to provide “fair and equitable treatment.” While divided, the majority of the tribunal held in a 2005 decision that Poland indeed violated that obligation, in addition to the prohibition against uncompensated expropriation. The tribunal also decided that the government’s actions had violated a private contract with Eureko, and that this alleged contractual violation itself constituted a violation of the BIT. The tribunal determined that it was able to use the BIT to enforce the terms of a private contract through what is known as an ‘umbrella clause’ – a BIT provision that empowers foreign investors to elevate contractual disputes to BIT investor-state cases. The dissenting tribunal member noted that empowering a firm to transform a contractual dispute into a BIT case “created a potentially dangerous precedent.”

Poland also took issue with the appointment by Eureko of the arbitrator Judge Stephen Schwebel, who had a working relationship with a law firm that was launching other investor-state cases against Poland. After Poland’s attempt to challenge the appointment of Schwebel failed, the arbitration was expected to proceed to the damages phase, when a settlement was reached instead. Under the settlement, Eureko obtained $4.4 billion for Poland’s decision to maintain domestic control of the country’s largest insurance firm.

Last update: April 2021