Invenergy Files for International Arbitration Against the Republic of Poland for Violations of the United States-Poland Bilateral Investment Treaty
CHICAGO (April 24, 2018) – Invenergy Renewables and other companies forming theInvenergy group (“Invenergy”) today submitted a Notice of Arbitration against theRepublic of Poland (“Poland”) citing violations of Invenergy’s rights as a foreign investorand clear breaches of Poland's obligations under the United States-Poland BilateralInvestment Treaty (“BIT”) and international law. The case relates to Poland’s actionsand omissions that have caused wind energy projects developed, owned and operatedby Invenergy affiliates to suffer significant financial losses. Arbitration proceedings havebeen commenced pursuant to the Arbitration Rules of the United Nations Commissionon International Trade Law (UNCITRAL).
Beginning in 2005, Invenergy affiliates entered into several binding, long-termagreements with Polish State-controlled energy companies, and Invenergy investedhundreds of millions of dollars of equity capital to develop and construct its windprojects based on expectations that these contracts would be honored. In addition tothat equity investment, Invenergy’s affiliates obtained financing from nine banks,including the European Bank for Reconstruction and Development and also from PolishState-owned banks, who also made lending decisions based on the sanctity of the long-term contracts. Shortly after Invenergy completed the construction of the wind projects,Poland initiated a series of coordinated actions intended to terminate or avoidobligations under the Invenergy contracts and destabilize the broader renewable energyenvironment for investors.
“We of course first turned to the Polish courts for relief from these actions. But in thosecases, multiple Polish State-controlled entities have openly disregarded final andbinding decisions by the Polish Courts, including the Supreme Court, leaving Invenergyhelpless to enforce its rights within the Polish system,” said Michael Blazer, InvenergyChief Legal Officer. “Given the disregard of fair and equitable treatment of a foreigninvestor in Poland, Invenergy has no choice but to seek relief through internationalarbitration under the Bilateral Investment Treaty.”
The Polish State-controlled energy conglomerates’ actions have included devisingpretexts to evade their contractual obligations towards Invenergy, for example:
In 2014 and 2015, State-controlled energy company Tauron Group attemptedunsuccessfully to liquidate its wholly-owned and controlled subsidiary that wasparty to certain of Invenergy’s long-term contracts. The Tauron subsidiary thencompletely disregarded a final and binding court injunction to perform thecontracts and disrupted the enforcement proceedings.
More recently, in 2017, State-controlled energy company Energa-Obrót S.A.(EO) declared all long-term certificate purchase agreements it entered into withInvenergy's affiliates to be invalid, premised on the claim that EO itself had failedto apply public procurement rules in concluding the agreements. Tellingly, theseproceedings were initiated in relation to all of Invenergy's affiliates, despite thatfact that the Polish Supreme Court had already ruled in one case that thecontract remains in force and its termination by EO was illegal.
The path to the arbitration proceedings began when Invenergy provided writtenNotification of Dispute to Poland on October 16, 2017. In the Notification, Invenergyinvited Poland to engage in negotiations to settle the dispute amicably. That invitationhas been met with continued denials by the Polish Government that the Polish State-controlled entities are in fact State-controlled – despite clear admissions to the contraryin court filings by those same entities.
“The Polish Government’s lack of willingness to cooperate and denials of establishedfacts are a major threat to the bedrocks of foreign investment and international law,”said Blazer.
The Notice of Arbitration was delivered to the President, Prime Minister, Minister ofInvestments & Development, Minister of Energy and Minister of Infrastructure of Poland.Under the UNCITRAL Arbitration Rules, following a Notice of Arbitration, an ad hoctribunal with a default number of three arbitrators will be formed, with each partynominating one arbitrator and a neutral third appointed. The proposed location is Zurichor Geneva.
As of this filing, Poland is currently party to at least fourteen international arbitration orpost-arbitration proceedings in industries spanning energy, defense, insurance,consumer products and others. The U.S. State Department, in its 2017 InvestmentClimate Statement on Poland, specifically notes legal, regulatory and investmentuncertainty in the energy sector “in terms of how the Polish judicial system deals with questions and disputes around energy investments by foreign investors, and in foreigninvestor interactions with State-owned or affiliated energy enterprises.” The StateDepartment also addresses negative impacts to the broader wind industry: “New lawsregulating wind farm construction caused sharp valuation drops in wind energy sectorassets – more than half of which are owned by foreign investors—and curbed newinvestments in wind energy infrastructure.”
For additional background on Invenergy’s international investment claims against the Republic of Poland and State-controlled energy companies, please click here.
About InvenergyInvenergy drives innovation in energy. Invenergy and its affiliated companies develop,own, and operate large-scale renewable and other clean energy generation and storagefacilities in the Americas, Europe and Asia. Invenergy's home office is located inChicago and it has regional development offices in the United States, Canada, Mexico,Japan, Poland and Scotland.
Invenergy and its affiliated companies have developed more than 19,400 megawatts ofprojects that are in operation, construction or contracted, including wind, solar, naturalgas-fueled power generation and energy storage projects. For more information, pleasevisit www.invenergyllc.com.
Poland: Michał Leksiński, CEC, (+48) 881 910 920, ML@CECGR.comInternational: Patrick Whitty, (+1) 312 582 1436, PWhitty@invenergyllc.com