TASR, 22.9.2014

Criminal Prosecution Against EuroGas Put on Hold

 Bratislava, September 22 (TASR) - A criminal prosecution for fraud against EuroGas that the company claims is linked to its dispute with Slovakia concerning the loss of a talc quarry has been put on hold, the EuroGas website has reported.

      "Slovakia informed us in a letter from September 5 that the Special Prosecutor's Office has halted the criminal prosecution against our company that is based on a criminal complaint by Peter Corej. The prosecution has been put on hold until the announcement of the verdict of an arbitration tribunal within the International Centre for Settlement of Investment Disputes (ICSID)," TASR was told by EuroGas managing board chairman Wolfgang Rauball.

      According to further information acquired by TASR, the respective ruling of the Special Prosecutor's Office states that certain obstacles had been encountered in the course of the criminal prosecution due to which it wasn't possible to proceed further until matters of a preliminary nature were dealt with. These are supposed to go beyond the scope of the present criminal prosecution and include, for example, a number of ongoing legal proceedings that should assess the steps taken by the District Mining Office in Spisska Nova Ves (Presov region) in 2005 in terms of their compliance with legislation.

      Rauball added that EuroGas was deprived of the talc quarry in Gemerska Poloma based on this verdict. "In addition to the [verdict] on halting the proceedings we were supposed to obtain nearly 16,000 pages of documents, computers and software with information related to EuroGas's subsidiary Rozmin that were seized during a police operation on July 2, 2014. Neverth eless, despite the decision of the Special Prosecutor's Office, we haven't received these to date," emphasised Rauball.

      The aforementioned raid was ordered by a judge of the Specialised Criminal Court in Banska Bystrica in order to collect evidence concerning suspicions of serious fraud. "We can confirm that items important for the purposes of the criminal prosecution, such as documents and electronic data, were secured during a house search. On conducting the house search, an indispensable measure, the respective investigator launched a criminal prosecution for the extremely serious crime of fraud," stated Police Corps spokesman Michal Slivka in July.

      EuroGas believes that the operation was related to its arbitration dispute and has already submitted an official complaint to the European Commission and ICSID.

      According to Leon Kopecky of Vienna-based law firm Specht Bohm, the Special Prosecutor's Office's move could be taken into consideration by the arbitration tribunal. "This doesn't represent a promising beginning in the investment dispute for the Slovak Republic," Kopecky told TASR.

      As the petitioner in the arbitration, EuroGas is demanding compensation of $3.2 billion (€2.3 billion) from the state of Slovakia for what it calls a marred investment in Gemerska Poloma (Kosice region) in 2004 concerning the loss of a talc quarry.

      Meanwhile, the names of those set to represent the respective sides in the dispute in the tribunal are already known. While Slovakia has selected Professor Brigitte Stern, EuroGas is due to be represented by Professor Emmanuel Gaillard, who is known from other arbitration proceedings related to Russian oil company Yukos, which obtained record compensation of $52 billion.

      The rules of the ICSID stipulate that both sides in the dispute have to approve of their arbiters before the president of the tribunal, who should come from a third, independent side, is selected. If the two sides fail to choose by October 8, the ICSID will pick its own name.

      It isn't possible to appeal against the ICSID's verdict at any court in the world, said Jana Martinkova of law firm Advocatus Martinkova.

      EuroGas began indicating its plans to take legal action for the loss of the talc quarry against Slovakia in 2010. At first, it demanded compensation of €500 million in 2011. One year later a company called EuroGas Inc., registered in the U.S.A., also began claiming compensation. EuroGas asserted that its rights related to a trade agreement between the erstwhile Czechoslovakia and the U.S.A. from 1991 had been violated. The Slovak Finance Ministry last year denied that any such agreement had been broken.

      The talc deposit in Gemerska Poloma was discovered accidentally during a search for tin in 1985. The talc from the deposit has high levels of purity, with experts viewing it as one of the most important in the world. The largest producer of talc worldwide is China, but significant deposits are also located in the U.S.A., Brazil and India, while Finland is a significant producer in Europe. In view of the wide-ranging options for the industrial use of talc, mainly in the pharmaceutical, chemicals, cosmetics and paper industries, market demand for this raw material is rising steadily.