CMS has successfully defended hydropower producer Kooperatsiya Parallel 2000 in a post-privatization dispute initiated by Bulgaria’s Public Enterprises and Control Agency.
According to CMS, in 2020, the PEC Agency brought a claim against Kooperatsiya Parallel 2000, which had acquired a hydropower plant back in 2006 through privatization. "The Agency sought payment of liquidated damages amounting to 50% of the sale price, based on allegations of a breach of the obligation for non-disposal of the asset, stipulated in the privatization contract."
"The court fully agreed with our arguments and ruled that the obligation assumed under the privatization contract is null and void, as it is in direct contradiction to the constitutional right to private property and the rules for the protection of property provided for by the European Convention on Human Rights," CMS informed. "The court further stated that the specifics of the privatization process and the public interest defended by the post-privatization control do not substantiate any restrictions on the enjoyment of property that are not subject to reasonable time limits. On this basis, the court rejected all claims as unfounded on the merits with a final court judgment."
"This ruling is unique, although it is not a rare practice for such clauses to be included in contracts for the privatization of infrastructure assets. Thus, the ruling sets an important precedent for many post-privatization disputes that may be brought on the same grounds," the firm added.
The CMS team was led by Partner Assen Georgiev and Associate Yana Antonova.