EuroGas to Claim at Least €8 bn from Slovakia in New Talc Mining Arbitration

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talc mining (photo by TASR)

Bratislava, January 11 (TASR) – Within the next two months, the company EuroGas will sue the Slovak Republic again within international arbitration proceedings for the alleged illegal withdrawal of a licence for talc mining in Gemerska Poloma (Kosice region), EuroGas managing board chairman Wolfgang Rauball told TASR on Thursday.

The company was encouraged to do so by a recent victory over Slovakia in proceedings at the bankruptcy court of the State of Utah. It wants to claim higher compensation for the licence’s withdrawal, as the talc deposit is reportedly much bigger than what was originally assumed.

“We recently acquired evidence of there being a greater extent of the depository in Gemerska Poloma than we have thought until now. Therefore, our claim will be ranging from €8 billion up to the astronomical €22 billion,” said Rauball, not specifying what analysis his claim is based on.

EuroGas lawyers will file a request for damage compensation at the International Centre for Settlement of Investment Disputes (ICSID) within two months. Rauball insists that Slovakia has lost a case concerning the validity of a claim it had against EuroGas (I) within the bankruptcy proceedings, a claim that Slovakia had bought from Swiss citizen Heinz Oftinger. “This verdict means EuroGas (I) can be viewed as if bankruptcy proceedings against it were never launched. According to the US court, it is thereby still a holder of the talc deposit in Gemer, stated Rauball.

The Slovak Finance Ministry explains its involvement in the proceedings and the purchase of the claim by the need to ensure Slovakia’s position in the reopened bankruptcy proceedings against plaintiff Eurogas Inc., running concurrently with the arbitration proceedings. “The justification for Slovakia’s involvement in the bankruptcy proceedings can be verified by the publicly available arbitration verdict itself. Slovakia appealed the US bankruptcy court’s verdict in December 2017. In the given bankruptcy proceedings, Mr. Rauball’s company is striving to buy assets in the bankruptcy of its own company Eurogas Inc., which he himself brought into bankruptcy in 2004. Subsequently, he established a company of the same name in 2005, through which he is striving to gain the assets of the original bankrupted company,” the Finance Ministry told TASR.

Eurogas lost its case in the arbitration proceedings, which lasted several years, as ICSID in its ruling last August accepted the jurisdiction objections raised by the Slovak side. “The tribunal came to the unanimous conclusion that the plaintiff Eurogas’s (II) merger with EuroGas (I) was illegal, and so no rights that it might claim in this arbitration could have been passed on to the plaintiff EuroGas (II),” wrote the Finance Ministry in its position.

However, Rauball claims that this argument is no longer valid thanks to the US court’s verdict and that the arbitration is not over yet. The company Belmont, which sued Slovakia along with EuroGas, made use of a clause that enabled the decision to be annulled. “A commission will then make a definitive decision as to whether the tribunal’s verdict can be annulled or not,” said Rauball. “If the verdict is annulled, the arbitration proceedings against Slovakia will be resumed and Belmont will continue in it. Slovakia will thus face two arbitration proceedings,” stressed Rauball.

The arbitration proceedings at ICSID were launched in 2014. No appeal against ICSID decisions is possible, although they can be overturned due to serious procedural flaws.

EuroGas began indicating its plans to take legal action against Slovakia over the loss of the talc quarry in 2010. At first, it demanded compensation of €500 million in 2011. One year later a company called EuroGas Inc., registered in the USA, also began claiming compensation. The total sum of required compensation thus climbed to €1.5 billion. EuroGas asserted that its rights related to a trade agreement between the erstwhile Czechoslovakia and the USA from 1991 had been violated. The Slovak Finance Ministry has denied that any such agreement was broken.