Slovakia wins international arbitration on talc mining licence

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Slovak Spectator | 23 August 2017

Slovakia wins international arbitration on talc mining licence

The company EuroGas cannot mine talc in Gemerská Poloma in the Košice Region for now as it has failed in an arbitration proceeding with Slovakia.

The firm complained over the allegedly illegal withdrawal of a licence for talc mining, but the International Centre for Settlement of Investment Disputes (ICSID) has accepted in its ruling jurisdiction objections raised by Slovakia, the TASR newswire reported.

“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,” the Slovak Finance Ministry informed, as quoted by TASR. “However, the tribunal came to the unanimous conclusion that the plaintiff Eurogas’ (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).”

The failed arbitration was meanwhile confirmed also by Wolfgang Rauball, managing board chairman at EuroGas.

“The ICSID ruled last week that it’s not in its jurisdiction to decide on the case, thus giving Slovakia the ruling,” Rauball said, as quoted by TASR. “Article 52 of its statutes, however, enables a request for the decision to be annulled and we want to make use of this clause.”

A 120-day period starts as of the day 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, as quoted by TASR, adding that further relevant information regarding the case will be known by the end of the week.

The dispute may not be over

If EuroGas eventually suffers a definitive loss, it plans to file a lawsuit with the US federal court against the Austrian company Schmid Industrieholding (SIH) and its subsidiary Eurotalc, which holds the Slovak talc mining licence in Gemerská Poloma.

“We’ve 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,” Rauball stressed.

Robert Schmid, owner of SIH, has meanwhile rejected Rauball’s accusations.

“I find all this to be constructions fabricated by him, and I don’t want to comment on them,” Schmid told TASR.

EuroGas AG has been threatening Slovakia with arbitration proceedings since 2010. As the petitioner in the arbitration, which was launched in 2014, EuroGas has been demanding compensation of $3.2 billion (€2.9 billion) from Slovakia for what it calls a marred investment. No appeal against the ICSID decisions is possible, although it could be overturned if serious procedural flaws were detected, TASR reported.

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 has 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, TASR wrote.

The Slovak Finance Ministry has denied that any such agreement was broken.