Slovak Republic won a dispute with Polish investor Muszynianka

Last update: 09.10.2020 14:00

Slovak Republic won a dispute with Polish investor Muszynianka

On October 07, 2020 the final decision of the arbitral tribunal composed of prof. Gabrielle Kaufmann-Kohler (president of the tribunal), prof. Robert G. Volterra and Mr. J. Christopher Thomas QC was rendered in the international investment arbitration commenced by the Polish company MUSZYNIANKA SPÓŁKA Z OGRANICZONĄ ODPOWIEDZIALNOŚCIĄ against the Slovak Republic based on the Bilateral Investment Treaty between the Slovak Republic and the Republic of Poland. It is already the twelfth investment arbitration in line, in which the Slovak Republic has successfully defended its interests. Arbitration tribunal has not awarded any damages to the claimant. The Slovak Republic henceforth remains as one of the few countries in the world which have so far not been adjudged to pay any damages to the claimants.

The subject matter of the dispute was the question of utilization of mineral water sources located in the Slovak village of Legnava, which were supposed to be transported by a pipeline to the Republic of Poland and bottled in Polish town Muszyna. The claimant requested from the Slovak Republic the payment of damages amounting nearly 170 millions EUR arguing that amendment of the Slovak Constitution regulating the export of unbottled water (para article 4 paragraph 2 of the Slovak Constitution) is in breach with the Bilateral Investment Treaty between the Slovak Republic and the Republic of Poland.

Arbitration tribunal has confirmed that regulation established by the amendment of the Slovak Constitution is not arbitrary and does not constitute the breach of the bilateral investment treaty. Decision of the arbitration tribunal comprises an utmost important precedent also for other EU member states since it declares that the Slovak Republic has a full extent right to protect its natural sources. From the view of legal theory, this decision forms a precedent related to imposition of liability for breach. Slovak Republic herewith successfully defended legality and proportionality of the Constitutional amendment. Arbitration tribunal has neither granted the rightfulness of claimant’s alleged legitimate expectations to the issuance of mineral water utilization permit and the realization of the project itself. Formally, it has been acknowledged that there was a breach of fair and equitable treatment in relation to the administrative procedure relating to the issuance of mineral water utilization permit, however, regardless of such breach, the planned project for export of mineral water to the Republic of Poland could not have been effectively realized, therefore this breach could not and does not result in any damages on the claimant´s side.  

The Slovak Republic was represented by in-house legal team of the Ministry of Finance of the Slovak Republic together with legal office Squire Patton Boggs LLP.

Press Department
Ministry of Finance of the Slovak Republic