MOL unexpectedly withdraws lawsuit against Croatia in INA case

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Total Croatia News | 19 December 2018

MOL unexpectedly withdraws lawsuit against Croatia in INA case

ZAGREB - The Hungarian oil and gas company MOL has unexpectedly and without any explanation withdrawn its lawsuit against Croatia filed with a Washington district court, the Večernji List daily of Wednesday reports.

The Hungarian company in 2017 asked the US court to recognise and accept a ruling by the United Nations Commission on International Trade Law (UNCITRAL) in Geneva which two years ago ruled in favour of MOL and against Croatia.

The lawsuit in that case was launched in 2014 by the Zoran Milanović government, and Croatia requested UNCITRAL to annul changes to a 2009 agreement on management rights in the INA oil company, jointly owned by MOL and Croatia, as well as a master gas business agreement, signed during the term of the Ivo Sanader government.

Sanader is currently on trial on the charges that he received a bribe from MOL company CEO Zsolt Hernadi, who is beyond the reach of Croatian authorities, in exchange for ceding management rights in INA to the Hungarian company. Also indicted in this case is Hernadi.

According to documents from the Washington court, MOL asked that the United States confirm, recognise and apply UNCITRAL’s final ruling of 23 December 2016, referring to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, of which Croatia is a signatory.

This would mean that the US judiciary should treat the Geneva tribunal’s ruling as if it had been made by a US court and its enforcement was subject to US laws.

In the first version of its lawsuit, MOL also asked that Croatia should pay 14.5 million euro in costs it was ordered to pay by the court, which Croatia did, after which MOL confirmed that Croatia had settled the debt but not the interest and proceeded with the case.

The US court on 13 November 2017 informed the Croatian Economy Ministry that a lawsuit had been filed against it.

The penultimate document on this case from the US court was released on April 18, 2018, when Croatia was given an extension of the deadline until 28 September to prepare for the case, but five days before the deadline expired, on September 24, information arrived from the court that the plaintiff had voluntarily withdrawn the complaint, Večernji List says, stressing that MOL officials did not want to comment on the withdrawal of the lawsuit.

Many see the withdrawal of the lawsuit as a tactical move whereby MOL wants to additionally strengthen its position in ongoing arbitration proceedings it launched in Washington in 2013.

Croatia’s launching arbitration proceedings before UNCITRAL in 2014 was a response to MOL’s arbitration lawsuit.

Večernji List notes that it is an interesting coincidence that on September 12 European Parliament members from the Croatian Democratic Union (HDZ) supported Hungarian Prime Minister Viktor Orban in the European Parliament, after which Hungary lifted its blockade of Croatia’s bid to join the Organisation for Economic Cooperation and Development (OECD), while on September 24, MOL withdrew its lawsuit against Croatia before the US court.

Following the decision by UNCITRAL to dismiss Croatia’s motion to nullify the 2009 agreement on management rights in INA and the master gas business agreement, incumbent Prime Minister Andrej Plenković said that the government had decided to claim back full ownership of INA by buying MOL’s stake in it.