Romania’s biggest ICSID cases, and what they mean for foreign investment

Romania currently has nine pending cases with the International Centre for the Settlement of Investment Disputes. As the country looks to its economic and political future, here are three of three of the biggest cases in the last few years, and what they mean for foreign investors in Romania.

1. The Micula brothers

The long-running investment dispute between the Micula brothers and Romania, involving a bilateral investment treaty between Romania and Sweden, has spanned numerous jurisdictions and has ultimately become somewhat of a legal headache.

The Swedish Micula brothers took Romania to ICSID after the cancellation of promised tax-incentives for foreign investors. The brothers had relied on the incentives when making heavy investments into food production facilities in Romania. When Romania applied for accession to the EU in 2007, the incentives were cancelled in order comply with EU regulations. The subsequent ICSID arbitration saw the brothers claim breach of legitimate expectations and win an award of €178 million.

Romania agreed to pay this award only for the European Commission to rule that paying out on the award would violate state-aid rules. The case shows that Romania is willing to adhere to its legal obligations through its voluntary compliance with the ICSID arbitration, but has nevertheless significantly damaged Romania’s reputation as a destination for investment. The case has also raised questions about the tensions between EU law obligations and international investment arbitration in light of the Achmea judgement on voiding intra-EU BITs.

The ongoing nature of the Micula case means that it may be some time before we can say precisely how the case will impact the Romanian investment landscape, but investors will be sure to watch future rulings very closely.

2. Petrochemical Holding GmbH

Petrochemical Holding GmbH is an Austrian investment holding company that won an €85m arbitration at the International Centre for the Settlement of Investment Disputes after a tribunal found that Romania unlawfully sequestered Petrochemical Holding’s assets in RAFO, an expansive petrochemicals plant.

Petrochemical Holding GmbH won the award in November 2024, and Romania is yet to pay, despite ICSID ruling that the company was “denied the right to fair and equitable treatment” by the Romanian government as set out in the Energy Chater Treaty. The treaty includes provisions to protect foreign investment and ensure cooperation between signatories, and the unlawful seizure of Petrochemical Holding GmbH’s assets in RAFO was found to be in violation of this. The case has been raised in relation to Romania’s current political uncertainty, especially due the Romanian government’s failure to pay the award.

Nonetheless, if Romania was to pay the award voluntarily, it would signal its commitment to both its own citizens, who are facing extreme political and economic uncertainty, and to its international allies that it is serious about its future.

3. Gabriel Resources

Gabriel Resources initiated an ICSID arbitration against Romania in 2015, again in relation to violations of bilateral investment treaties. The Canadian-British mining company had sought to develop a large gold mine in Romania but faced staunch opposition from both environmentalists and historical activists.

The eventual cancellation of the project saw Romania reject permit applications on environmental grounds, and Gabriel Resources claimed that Romania had violated obligations regarding fair and equitable treatment under the bilateral investment treaty, seeking $4.4bn in compensation.

The ICSID tribunal found in favour of Romania in 2024, and rejected claims made by Gabriel Resources of improper conduct in the permitting process. The case highlighted the tension between foreign investment protection and environmental concerns, a feature that is likely to arise frequently given that 38% of new ICSID cases in 2024 involved the oil, gas and mining industry, all of which have to contend with complex environmental regulations.

The implication of such cases for the investment landscape in Romania may take a while to fully settle, but investor-state arbitration is vital to ensuring fair treatment of investors, particularly as investors watch ICSID compliance closely when deciding on whether to enter a market. Honouring arbitration awards is an excellent way of signalling adherence to the rule of law, especially as it is relatively cheap for states to do so and can provide an easy green-light to investors looking for new areas to do business.

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