13 February 2012
Clifford Chance successfully defends Poland from a claim for USD 400m in Energy Charter Treaty arbitration
An Arbitral Tribunal dismissed all claims of the Cypriot company, Mercuria Energy Group Limited, brought against the Republic of Poland for compensation for an alleged breach of the Energy Charter Treaty.
Mercuria Energy Group Limited, a parent company of the Polish company, J&S Energy S.A., claimed in total payment of nearly USD 400 million for the alleged breach of Article 10(1) of the Energy Charter Treaty arising out of the imposition of a fine on J&S Energy S.A for failure to maintain mandatory stocks of fuel oil.
The Arbitral Tribunal, constituted under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, dismissed Mercuria's claims in their entirety, concluding that the Republic of Poland did not breach the provisions of Article 10(1) of the Energy Charter Treaty in any way. In particular, the Tribunal stated that the Republic of Poland (i) did not breach the obligation to accord fair and equitable treatment to Mercuria Energy Group Limited's investment in Poland and (ii) did not discriminate against the investments of Mercuria Energy Group Limited in Poland.
The Tribunal also ordered Mercuria to pay (i) 75% of the costs of arbitration and (ii) to reimburse to the Republic of Poland all its costs, including the costs of experts, for the substantive phase of the arbitration.
Arbitral Tribunal :
Professor Pierre Tercier – Chairman
Professor Albert Jan van den Berg
Professor Vaughan Lowe, QC
The Republic of Poland was represented by Clifford Chance: partners Bartosz Krużewski in Warsaw and Audley Sheppard in London, associates Christina Schuetz in London and, Łukasz Rozdeiczer in Warsaw, assisted by counsel of the General Public Prosecutor's Office of the State Treasury: Andrzej Dąbek, Katarzyna Szostak-Tebbens and Robert Zajdler.
The Department of Oil and Gas of the Ministry of the Economy coordinated the support for the arbitration.