#Romania government on arbitration alert from #Kazakhstan energy investors

International lawyers acting for Kazakh investors KazMunayGas International have issued a Notice of Investment Dispute to the Romanian  government regarding their treatment of the company's investments in their Romanian subsidiary Rompetrol, writes James Wilson. 

The Notice of Dispute details asset freezes totalling more than $2.1 billion and makes it very clear that the company is concerned the Romanian authorities have the intention seizing and nationalizing their assets. It sets out that, if an agreement cannot be reached, the case will be referred to and settled by the International Centre for Settlement of  Investment Disputes under the World Bank, headquartered in Washington DC or to the Arbitration Institute of the Stockholm Chamber of Commerce.

This arbitration would be allowed under international treaties existing between Romania and the countries of Kazakhstan and the Netherlands, as well as the Energy Charter Treaty. The document appears to remind the Romanian government that the company has already invested around $4 billion (including the acquisition price of the Group by KazMunayGas NC) of spending inside Romania.

The company also  points out that they had plans to direct billions more into Romanian plants, facilities and communities. In a statement on 27 July from Bucharest, Senior Vice-President of KMG International Azamat Zhangulov said: "We always stand ready to explain to the government of Romania the need for our investments to be protected as a matter of legal obligation under law. We are committed to continue investment in Romania and building on the significant work we have already done.

"However, we cannot put further capital at risk unless and until the  authorities demonstrate respect for rule of law. If no solution is found, we are compelled to use all legal means to defend our rights and obtain compensation and that includes international arbitration against the state. However, we sincerely hope that an amicable solution can still be found with a view to allow us to continue investments in Romania so as to contribute to Romania's objective of becoming a major energy hub in the Black Sea region."

Share this article: