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Final victory for Romanian State against Ioan and Viorel Micula’s RON 9 billion claims

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Bucharest, 5 January 2022: In a decision released on 4 January 2022, an ad hoc annulment committee under the auspices of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) rejected  a  request for annulment of the arbitral award dated 5 March 2020 in which an international arbitral tribunal dismissed claims against Romania amounting to more than RON 9 billion brought by Ioan and Viorel Micula and several Romanian companies associated with them, including S.C. Scandic Distilleries S.A. (the “Claimants”).

The decision of the annulment committee concludes the proceedings initiated by the Claimants in 2014 on the basis of the Agreement between the Kingdom of Sweden and Romanian on the Promotion and Reciprocal Protection of Investments (the “Treaty”).  In the arbitration, the Claimants alleged that Romania had breached its international obligations under the Treaty by failing to adequately enforce its laws on the taxation of spirits, and by enacting a new pricing regime for mineral water.  However, the tribunal found that “Romania has engaged in ‘serious and visible’ efforts to enforce its taxation laws in relation to alcohol.” and that Romania “has established that it has a sophisticated mechanism for the enforcement of its laws, a strategy of ensuring that enforcement is cost-effective and a structure for enforcement at both the household producer and industrial producer levels, involving ANAF, Customs and DG Anti-Fraud”. At its turn, the ad hoc annulment committee ruled that, contrary to the Claimants’ allegations, the arbitral tribunal’s award did not depart from a fundamental rule of procedure, and addressed all the heads of claim presented by the Claimants in the arbitration.

Romania was defended in the arbitration by a consortium consisting of the law firms “Leaua Damcali Deaconu Paunescu – LDDP” in Bucharest and “LALIVE” in Geneva, Switzerland. The legal teams consisted of Prof Crenguța Leaua, Dr Gheorghe Matei, Prof. Stefan Deaconu, Marius Grigorescu, Raluca Popa and Corina Tănase of LDDP and Dr Veijo Heiskanen, Matthias Scherer, Laura Halonen (consultant), Sam Moss, and Alptug Tokeser, of LALIVE.

Commenting on the award, Crenguta Leaua of LDDP stated: “We are very pleased the positive outcome of the case, as the ICSID ad hoc committee dismissed the Claimants’ annulment request and confirmed the previous arbitral award stating that Romania did not breach the Sweden-Romania Treaty. We are now at the end of a dispute that lasted over 7 years, being one of the most complex cases where issues of substantive and procedural tax law, from the macroeconomics perspective, were brought in an investment arbitration. We are also very happy that this counts as the fifth victory of Lalive and Leaua Damcali Deaconu Paunescu – LDDP teams in defending Romania in investment arbitration.”

Dr Veijo Heiskanen and Matthias Scherer of LALIVE SA stated: “Our team was honored to act for Romania in this important matter, and we are very pleased with the result, which could not have been achieved without the seamless cooperation of the Ministry of Finance and other Romanian government agencies, and our co-counsel Crenguta Leaua and her team at LDDP.

 

About LDDP and LALIVE SA

Leaua Damcali Deaconu Paunescu – LDDP is based in Bucharest and ranked in GAR 100 as a top arbitration law firm worldwide, with many of its lawyers ranked as top specialists in commercial and investment arbitration. Other areas of expertise include tax law, construction law, technology law, energy and natural resources, environmental law, aviation law, commercial law and administrative law.

LALIVE is an international and independent law firm with offices in Geneva, Zurich and London, and is a global leader in international arbitration.  It advises and represents clients in proceedings conducted under all of the main international arbitration rules in a variety of sectors and is consistently ranked among the leading arbitration practices worldwide.  The firm’s involvement in a number of high profile multi-billion State-investor disputes has earned it recognition as one of the leading practices in this field.  The firm’s investment arbitration specialists regularly act as counsel for States and investors globally and are frequently appointed as arbitrators in disputes arising out of bilateral and multilateral investment treaties, investment contracts, and other instruments, and involving a wide range of industries, including energy, construction, mining, telecommunications, and transportation.

 

 

 

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