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Dechert Secures Victory for MOL in Corruption Arbitration with Croatian Government

Dechert Secures Victory for MOL in Corruption Arbitration with Croatian Government

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On December 24, 2016, Dechert secured a victory for MOL Hungarian Oil & Gas Plc in what Dechert describes as "a bet-the-company, multi-billion dollar arbitration."

The Republic of Croatia had commenced the Geneva-based arbitration against MOL in 2014 under the UNCITRAL rules, alleging that MOL (the largest company in Hungary and the second largest in Central and Eastern Europe) had acquired controlling rights in Croatia’s national energy company, Ina Industrije Nafte d.d (INA), by paying a EUR 10 million bribe to former Croatian Prime Minister Ivo Sanader. Croatia also alleged that MOL had mismanaged INA, causing billions of dollars in damages to the Croatian economy. Finally, Croatia alleged that MOL’s management structure in INA was illegal under Croatian corporate law.

According to Dechert, "the UNCITRAL Tribunal, presided over by Neil Kaplan QC (Hong Kong) with Professors Jan Paulsson (Miami) and Jaksa Barbic (Croatia) as co-arbitrators, completely cleared MOL of Croatia's bribery allegations and dismissed every claim brought by Croatia against MOL. The UNCITRAL Tribunal also awarded almost the totality of MOL's legal fees and costs – in excess of USD 15 million – which Croatia is required to pay to MOL immediately."

Dechert is also representing MOL in an arbitration against Croatia under the Energy Charter Treaty arising largely from the same facts. MOL’s ECT arbitration, which seeks nearly USD 1 billion in damages, is set for hearing in February 2017 at the International Centre for Settlement of Investment Disputes at the World Bank in Washington, D.C.

The Dechert team was led by International Arbitration Partner H. Arif Ali, and included Partner Alexandre de Gramont, Counsel Erica Franzetti, Senior Associate Daniel Dozsa, Associates Erin Yates, David Attanasio, Michael Losco, Harsh Sancheti, and a team of additional lawyers in Paris.

Squire Patton Boggs represented Croatia in the UNCITRAL arbitration and is representing it in the ICSID arbitration as well.

Image source: mol.hu