Romania Ordered to Pay €85M Plus Interest to RAFO’s Russian Former Owner

An arbitral tribunal at the International Centre for Settlement of Investment Disputes (ICSID) under the World Bank in Washington has ruled that the Romanian state must pay the former owner of the RAFO Onești refinery a total of nearly €85 million in compensation and arbitration costs, plus interest, the Ministry of Finance confirmed to Profit.ro.

This is the Austrian group Petrochemical Holding GmbH, controlled and led by Russian businessman Iakov Goldovski, which until 2016 owned 96.5% of the capital of the bankrupt RAFO SA company, the former operator of the refinery, which was shut down in 2008.

Goldvoski’s group had asked for much more, namely over 837 million euros.

“The arbitral tribunal ruled in file no. ARB/19/21 and decided that Romania violated the Energy Charter Treaty, holding that, through the ANAF decisions of December 21, 2015 and January 4, 2016, establishing a seizure of RAFO’s assets, the plaintiff was denied the right to fair and equitable treatment established by this treaty and by Government Emergency Ordinance no. 92/1997,” Finance officials said.

GEO no. 92/1997 details, among other things, the forms of legal protection enjoyed by foreign investments in Romania, as well as the state facilities from which they can benefit. Consequently, the Arbitral Tribunal ordered Romania to pay almost 85 million euros.

“The amount of damages requested by the claimant was approximately 887.5 million USD (equivalent to 837.2 million euros – ed.) – representing material damages corresponding to the net present value of the refinery modernization plan that it claims it was unable to carry out and the related foreseeable revenues derived from it,” the Ministry of Finance stated.

“Romania does not oppose the publication of the arbitral award. If the Claimant in case ARB/19/21 does not consent to the publication, ICSID will publish an extract from the award on the institution’s website, in accordance with art. 62 para. (4) of the ICSID Arbitration Rules,” the Ministry of Finance concluded.