FinMin: Slovakia Wins International Arbitration on Talc Mining Licence

Slovakia wins international arbitration on talc mining licence (photo by TASR)

Bratislava, August 22 (TASR) – Slovakia has won another international arbitration, this time with companies called EuroGas and Belmost Resources concerning a licence for talc mining in Gemerska Poloma (Kosice region), TASR learnt on Tuesday.

“Slovakia has an exceptionally high score in lawsuits with foreign investors. Our country is starting to be perceived as a strong state abroad thanks to these results,” reads a statement released by the Slovak Finance Ministry’s press department in reaction to the fact that the International Centre for Settlement of Investment Disputes (ICSID) accepted in its ruling jurisdiction objections raised by Slovakia.

“It has been shown during the arbitration that while the original US company called EuroGas (I) went bankrupt in 2004, a company of the same name, EuroGas (II) was founded in 2005, with the two companies having seemingly merged after the end of bankruptcy proceedings. However, 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.

Concerning the second plaintiff Belmost Resources, the tribunal by a 2:1 majority recognised a time limitation concerning the possibility of dealing with a dispute stemming from a new bilateral investment agreement between Slovakia and Canada dating from 2012. “The tribunal recognised that the dispute arose in 2005, when an amendment to the mining law should have been applied for the first time regarding the allocation of a respective mining area to another company. The sum that the aforementioned plaintiff wanted to sue Slovakia for was €239.7 million, and the tribunal made its decision based on procedural reasons,” added the Finance Ministry.

EuroGas managing board chairman Wolfgang Rauball admitted a failure in the firm’s arbitration proceedings with Slovakia earlier in the day. “The ICSID tribunal ruled last week that it’s not in its jurisdiction to decide on the case, thus granting Slovakia the ruling. Article 52 of its statutes, however, enables a request for the decision to be annulled, and we want to make use of this clause,” Rauball told TASR.

A 120-day period starts as of the day on which the request is submitted. “A commission will then make a definitive decision as to whether the tribunal’s verdict can be annulled or not,” said Rauball, adding that further relevant information in the case will be known by the end of the week. If EuroGas eventually suffers a definitive loss, it plans to file a lawsuit at the US federal court against Austrian company Schmid Industrieholding (SIH) and its subsidiary Eurotalc, which holds the Slovak talc mining licence in Gemerska Poloma. “We have collected enough evidence of criminal behaviour by the SIH owners and their links to the state mining authorities in Slovakia that have been damaging EuroGas and its shareholders for many years,” stressed Rauball.

Robert Schmid, owner of SIH, repeatedly rejected Rauball’s accusations. “Mr. Rauball likes to attack everyone, including me, the Slovak Republic, the mining authorities. I find all this to be constructions fabricated by him, and I don’t want to comment on them,” Schmid told TASR in reaction.

EuroGas AG has been threatening Slovakia with arbitration proceedings since 2010. As the petitioner in the arbitration, which was launched in 2014, EuroGas has demanded compensation of $3.2 billion (€2.9 billion) from Slovakia for what it calls a marred investment. 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.