ČR won the arbitration with the developer ECE

Prague - The Czech Republic has won the arbitration case against the German developer ECE. They sought compensation for damages of approximately 1.8 billion crowns with interest due to the alleged thwarting of an investment in the construction of the Galerie Liberec shopping center. The Ministry of Finance informed about this on the internet.
    "The International Arbitration Tribunal based in Paris ruled that the Czech Republic did not violate the investment protection agreement between the Czech Republic and Germany, and dismissed the claim for damages in its entirety. The investor will have to cover most of the costs for legal representation and arbitration proceedings for the Czech Republic," stated the Ministry of Finance.
    The ECE Group sought compensation due to the decision of the Ministry for Regional Development regarding the planned construction of the Galerie shopping and social center in Liberec. The ministry canceled the zoning decision for the construction after acknowledging the objections of the Dutch company Multi Development, which claimed it had not participated in the building proceedings.
    The dispute is part of a series of arbitrations that the Ministry of Finance managed to win even under former Finance Minister Miroslav Kalousek. Most recently, the Czech Republic won an arbitration last June over nearly four billion crowns with the German company InterTrade Holding. This company accused the Czech Republic, i.e., the Ministry of Agriculture and Lesy ČR, of deliberately thwarting an investment represented by the company CE Wood through allegedly manipulated tenders.
    According to available information, the arbitration with ECE was one of the last initiated international arbitrations. Furthermore, according to information from the Ministry of Finance at the beginning of this year, the Czech Republic potentially faces nine arbitrations with claims up to 20 billion crowns. However, no lawsuits have been filed regarding these disputes, which have posed a threat for several years, before the expiration of the set deadlines.
    The potentially largest damages of more than 12 billion crowns could threaten the Czech Republic in the arbitration with Washington Investment Company LLC (WIC), which accuses the Czech Republic in two cases of thwarted investment related to IT contracts for the state enterprise Lesy ČR.
    In addition, the Czech Republic is also facing 22 different submissions related to investments in photovoltaic power plants. However, no lawsuits have been filed in these disputes yet.
    Due to the confidentiality obligation imposed in arbitration proceedings, the Ministry of Finance cannot provide further details regarding the justification of the arbitration award, stated the office.
    So far, the state has had to pay over 15 billion crowns in arbitrations that it lost or in which it reached a settlement agreement. The most the state has paid to CME for the devaluation of the investment in TV Nova was 10.6 billion crowns.
    Arbitrations are mostly a result of investment protection treaties from the early 90s. These treaties have mostly been disadvantageous for the Czech Republic. The Ministry of Finance has been working for some time to abolish these treaties. In the summer of 2009, the state began to terminate bilateral agreements with EU countries. Although arbitration proceedings are faster and more efficient than court proceedings, they cost significantly more money.