Croatia loses international arbitration against Hungary’s MOL over gas business

Euractiv | 7 July 2022

Croatia loses international arbitration against Hungary’s MOL over gas business

By Zoran Radosavljevic

Croatia has lost an international arbitration case launched by Hungarian oil and gas group MOL over Zagreb’s failure to fulfil obligations under an agreement about the gas business of the jointly owned Croatian oil company INA.

On Wednesday (6 July), a Croatian government statement said the Washington-based International Centre for Settlement of Investment Disputes had sent its ruling in the arbitration case of MOL vs Croatia, ending a process that started in December 2013.

“In its ruling, the court rejected most of MOL’s compensation claims, which totalled more than $1.1 billion, while accepting a smaller part of around $184 million,” the statement said.

MOL is the largest shareholder in INA with a 49.08% stake, while the Croatian government owns just under 45%.

MOL launched the arbitration saying the Zagreb government had failed to take over INA’s loss-making gas business and liberalise the gas market, allowing the application of market prices, which it had agreed to do in 2009.

Prime Minister Andrej Plenković, who spoke to reporters after a cabinet session, said the government and legal experts would analyse the arbitration decision and decide on further steps.

Croatia and MOL have crossed swords in several court cases, after being at odds over management rights in INA for years.

Croatia has accused MOL of using corruption to gain virtual control of INA despite not being a majority owner. It also indicted former Croatian Prime Minister Ivo Sanader and MOL Chief Executive Zsolt Hernadi, who was tried in absentia.

Croatia’s Supreme Court upheld in 2019 a ruling by a lower court, which found Sanader and Hernadi guilty of corruption. Sanader, who is in prison, and Hernadi, who never testified or acknowledged the court process, have both denied wrongdoing, and Sanader has appealed his verdict.

In 2016, an international body for commercial arbitration at the UN in Geneva ruled that there was insufficient evidence to prove corruption involving MOL and INA. Croatia appealed that arbitration in 2017 but without any success so far.

source: Euractiv