správy Ekononika 21.12.2012 EN Economics 12/21/2012

The EuroGas Case: Slovakia trying to avoid billion dollar arbitration

21st December 2012, 15:21

They're already doing it! The Slovak Ministry of Finance began tackling its looming conflict with the mining company EuroGas, which is seeking over a billion dollars for failed talc mining investments.

The company referred to an intergovernmental agreement with the U.S., where it should be based. However, Slovakia has officially revoked its contractual benefits today.

EuroGas should have mined for talc in Slovakia, now they seeking damages.

Slovakia deprived them of their promised benefits.

Slovakia denies a breach of contract. According to the ministry, the agreement only covers investors with a connection to the countries in the contract, namely Slovakia or USA.

"Based on public information, EuroGas is not active in the United States, has no extensive business activity there, and is controlled by citizens of a third country", the ministry of finance claims on its website.

Complex litigation over Talc

The looming arbitration concerns the mining of talc in Gemerska Poloma. Eurogas announced that they are seeking damages in excess of one billion dollars from the Slovak Republic for failed investments.

"This is a complex dispute with several volatile connections that must be ensured and coordinated in advanced given the astronomical amount of compensation requested, which is only the principal amount, " the ministry added.

Unusual Media Presentation

According to attorney-at-law and arbitration expert Jana Martinková, the government regularly uses this strategy in investment disputes. She says, "The only strange thing is the media presence, even more so when you consider that the company is not yet officially familiarized with the objection".

She attributes this, In the context of the recent arbitration with shareholders of the insurance company, to the government being required to declare measures for preventing similar damages. But this does not suggest that Slovakia will automatically avoid conflict.