Australian mining firm trumps Poland in arbitration
iclg | 9 October 2024
Australian mining firm trumps Poland in arbitration
Invoking the Australia-Poland bilateral investment treaty, together with the Energy Charter Treaty, Green X has been awarded hundreds of millions of dollars over a thwarted mining project.
The Australian critical minerals company GreenX Metals has been awarded USD 330 million in an against the Polish government, following a four-year dispute over two blocked. GreenX, formerly known as Prairie Mining and which is quoted on the London Stock Exchange, filed the claim under the Australia-Poland Bilateral Investment Treaty (BIT) and the Energy Charter Treaty (ECT), accusing Poland of obstructing its development of two coal-mining sites.
The award, issued by the Permanent Court of Arbitration in The Hague under United Nations Commission on International Trade Law (UNCITRAL) rules, determined that Poland had violated its obligations concerning its agreement to green-light GreenX’s Jan Karski coking-coal project in Poland’s Lublin province. However, the company did not have it all its own way, with the tribunal – comprising Klaus Sachs (Germany, presiding), Brigitte Stern (France) and Peter Rees (England) – rejecting the company’s claims regarding a second project, known as Dębieńsko.
RESOURCE NATIONALISM
In a statement issued following the award, GreenX hailed the decision as a “successful outcome”, despite having originally sought over USD 1 billion. Green X’s legal representative, LALIVE’s Marc Veit, added in a further statement: “The tribunal’s unanimous decision relating to GreenX’s Jan Karski project provides further confidence to the mining industry and international investors more generally in the protection granted to them by the bilateral and multilateral investment treaty system,” adding that “[the award] is successful recourse against resource nationalism no matter where it takes place, even in a developed European economy like Poland".
The claim was originally filed in 2020 after Poland refused to grant GreenX a mining agreement for the Jan Karski project. Instead, the Polish government later awarded the concession to a local competitor prompting GreenX to pursue damages under both treaties.
Poland withdrew from the ECT in December 2023, reflecting a growing trend within the European Union to distance itself from the controversial framework. Earlier this year, the European Parliament, citing concerns about its impact on efforts to combat climate change and transition to cleaner energy sources.
FUNDING
The case was funded by a USD 11.3 million investment from Australian asset manager Litigation Capital Management (LCM), with the firm explaining that “this investment comprises AUD 4.2 million (USD 2.8 million) from LCM’s own balance sheet and AUSD 12.4 million (USD 8.5 million) of third party capital from Fund I. In line with our usual practice LCM’s returns are calculated as a rising multiple of invested capital over time”.
LCM CEO Patrick Moloney added: “This announcement represents a very significant milestone in this investment. Subject to any challenge to the very favourable and unanimous award we now move to an enforcement stage.” He added that the investment, which was part of LCM’s Fund I, could become one of the most successful in the company’s history due to performance fees.
While GreenX has welcomed the tribunal’s decision, the enforcement of the award may present further challenges, particularly if Poland decides to contest the ruling.
THE PARTIES
In Green X v Republic of Poland, GreenX was represented by Marc Veit, Joachim Knoll, Robert Bradshaw, Adam Grant, Riccardo Loschi and Stela Negran of LALIVE, and Timothy Foden of Boies Schiller Flexner. Poland was represented by its own government lawyers and Wordstone Dispute Resolution.