Petrochemical Holding GmbH has learned that Romania will appeal an award made by the International Centre for the Settlement of Investment Disputes in November 2024.
Petrochemical Holding GmbH brought a dispute to ICSID in July 2019, claiming the Romanian state had breached its obligations under the Energy Charter Treaty by sanctioning the unlawful sequestration of the company’s assets in RAFO Onești, a major Romanian petrochemicals plant.
An ICSID Tribunal ruled in favour of Petrochemical Holding GmbH, finding that that the Austrian company had been ‘denied the right to fair and equitable treatment established by this treaty [the Energy Charter Treaty]’.
Petrochemical Holding GmbH were awarded €85 million plus interest by ICSID, significantly less than the €837.2 million the company had requested. ICSID awards are final and binding, and can be recognised and enforced in any ICSID Member State.
ICSID is the world’s leading institution devoted to international investment dispute settlement. ICSID was established in 1966 by the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, which has been signed by 165 States.
Petrochemical Holding GmbH is an Austrian company that has invested in petrochemicals projects across central and eastern Europe. It is owned by Austrian businessman, Iakov Goldovskiy, who has previously invested in the petrochemicals sectors in several Central and Eastern European countries.
The company acquired RAFO from bankruptcy in 2007, reimbursing all of RAFO’s creditors in full for the first time in Romanian history.
Romania has filed for annulment of the award with ICSID. According to statistics published by the court, only 2.6% of registered arbitrations under the ICSID Convention were annulled.
In the meantime, the €85 million award in favour of Petrochemical Holding GmbH will continue to accrue interest. Romania also risks enforcement proceedings being made against Romanian assets that are not subject to sovereign immunity.
