Gov't says Swiss court refuses to revoke arbitration ruling in MOL-INA case

The Croatian government has stated that the Federal Supreme Court of Switzerland turned down Croatia's request for the revocation of an arbitration ruling whereby Croatia lost its case against MOL regarding management over Croatia's biggest oil and gas group INA.

The latest decision will be implemented through keeping the existing corporate governance in INA, according to a press release issued by the government on Friday.

The government stated that on 26 October its legal representatives informed the cabinet of the Court's decision of 17 October about turning down Croatia's request for the annulment of the ruling of the United Nations Commission on International Trade Law (UNCITRAL) Arbitral Tribunal of 23 December 2016, which dismissed as unfounded Croatia's claims against the Hungarian oil and gas group regarding the jointly owned oil company INA.

The Swiss federal court has not delved into the assessment of the merits of Croatia's claim, and the court pointed to excerpts of the Croatia-MOL agreement on managing MOL's peer in Croatia, the government's press release reads.

Croatia insisted on the annulment of the agreement, claiming that the document was a result of corruptive activities.

In January 2014, Croatia launched the proceedings before UNCITRAL, requesting the revocation of agreements regulating the management of INA.

In November 2013, the Hungarian energy company MOL launched proceedings against the Croatian government at the International Centre for Settlement of Investment Disputes (ICSID) in Washington. Currently, the proceedings involving Croatia and MOL Group are under way before the Washington-based ICSID international arbitration institution.

MOL contends that the government failed to fulfil its obligations from the 2009 Gas Business Master Agreement and its annexes. Under the agreement, the Croatian government undertook to take over from INA the storage and sale of gas supplies and buy the entire domestic gas output from INA at the market price in the next 15 years. MOL claims Croatia's noncompliance with that provision caused damage to MOL in the amount of at least two billion kuna (approx. 263 million euros).

After MOL launched arbitration proceedings before the ICSID, the Croatian government launched arbitration proceedings against MOL before the UNCITRAL in Geneva on 17 January 2014, asking for the annulment of amendments to a 2009 shareholders' agreement which gave MOL control over INA and the Gas Business Master Agreement. Croatia also sought compensation for the damage caused by the two agreements, which were signed during the term of former Croatian Prime Minister Ivo Sanader.

Croatia's main argument is a sentence against Sanader for taking bribes from MOL Board Chair Zsolt Hernadi in exchange for MOL gaining a dominant position in INA.

Croatia has a 44.84% stake in INA, while MOL holds 49.1%. MOL first bought a stake in INA in 2003, increasing it with the 2009 agreement.

Text: Hina

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