EU allows Romania to pay EUR 200 mln compensation to Romanian-Swedish investors

Romania Insider

EU allows Romania to pay EUR 200 mln compensation to Romanian-Swedish investors

20 June 2019

The European Court of Justice on June 18 canceled a European Commission decision dating 2015, which established that Romania’s payment of compensation to Romanian-Swedish investors Ioan and Viorel Micula constituted illegal state aid. The European Commission also ordered the Romanian Government to recover the money already paid to the investors following an international court’s decision.

The European Court’s rule is not final and can be appealed. The decision seems to be in favor of the Micula brothers since it opens the door for the enforcement of a ruling by the World Bank’s arbitration court, which decided they should get compensation worth EUR 200 million. Notably, the European Court of Justice (in first instance) did not rule on the request of compensation, but canceled the Commission’s decision on the grounds that it was not competent to establish its incompatibility with EU law since the relevant legal facts took place prior to Romania’s EU accession, law experts explained for

The lawsuits between the Micula brothers and Romania have lasted for a decade already, and they have developed both in Europe and at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). The lawsuits are related to Romania’s decision to cancel the preferential tax regime previously granted to companies owned by the Micula brothers, in 2005, as part of the EU accession process.

The investors asked for EUR 85 million worth of compensations and approached ICSID invoking a bilateral agreement between Romania and Sweden for the mutual protection of foreign investors. At the same time, the Miculas’ firms owed money to the state budget (some EUR 76 million). While ICSID consistently ruled in their favor and supported their claims for up to EUR 200 million (principal plus interest and penalty) in 2015, the European Commission has banned the payment of compensations and urged the Romanian state to recover the EUR 76 million debts the respective companies owed to the budget.

source: Romania Insider