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Cobalt Successfully Defends German Energy Company Against Lithuanian Ministry of Energy

Cobalt Successfully Defends German Energy Company Against Lithuanian Ministry of Energy

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Cobalt had successfully represented and defended the German company Danpower in an extraordinary case against the Lithuanian Ministry of Energy. In ruling for Danpower, the Supreme Administrative Court of Lithuania held that the Ministry of Energy had illegally suspended the German company’s investments in a new bio-fuel plant in Vilnius.

In its final non-appealable decision, the court stated that the Ministry of Energy had no legal or factual grounds for suspending and revoking the authorization granted to Danpower for the development of the plant.

Although, according to Cobalt, the company’s damages are still being assessed, preliminary estimates suggest that, because of the State’s actions, Vilnius residents overpaid more than EUR 4 million for heating.

Danpower invested about EUR 20 million in the biofuel CHP plant in Vilnius, after winning the auction for the feed-in tariff in 2013. The State committed itself for 12 years to buy in electricity at a higher price – 9.7 ct/kWh. However, according to Cobalt, the State failed to keep its promise to investors – the Ministry of Energy abolished the feed-in tariffs won in the auction. According to Danpower Board of Directors member Markus Suessmann, the investments therefore became loss-making.

“The treatment of the Ministry of Energy not only shook investors’ confidence in Lithuania’s commitments, but also harmed residents of Kaunas," said Suessmann. "Higher prices for electricity supplied to the grid could have allowed cheaper production of heat energy. If we had built the plant already in 2015, heating bills for residents would have been lower by at least EUR 4 million. The investment could have also reduced Vilnius’ dependence on gas heating."

According to Cobalt Partner Elijus Burgis, who represented Danpower in the litigation, the court's ruling gives the German investor not only the right to further develop the project in Vilnius but also to claim multimillion damages from Lithuanian authorities. Indeed, Suessman says Danpower is considering defending its interests in arbitration in Washington. Lithuania has been given a warning under the investment protection agreement with Germany, stating that damages total EUR 30 million.

In addition to Burgis, Cobalt’s team included Senior Associate Ruslanas Cerniauskas and Associate Simas Paukstys.

 

Lithuanian Knowledge Partner

COBALT is closely integrated alliance of top-tier law offices in Estonia, Latvia, Lithuania and Belarus, making us one of the largest law firms in the Baltic market. 

COBALT is a trusted partner for daily matters and complex large-scale transactions and disputes. The firm’s broad spectrum of expertise and established position as the market leader give a comprehensive basis for providing advice on special areas of business law.

We advise top international and regional businesses, financial institutions, state and local governments, and the region’s most promising start-ups. We offer leading-edge solutions in key industry sectors: Consumer Products, Trade & Distribution, Real Estate & Construction, Pharmaceuticals & Healthcare, Energy & Utilities, Communications, Media & Technologies, Financial Services, Transport & Logistics.

COBALT has been named Baltic Law Firm of the Year 6 times. We were recognized as the Most Innovative Law Firm of the Year 2019 in the Baltics at the IFLR European Awards in London. COBALT also won CEE Legal Matters Deal of the Year Award for Estonia, Latvia, and Lithuania, as well as the overall Baltic Deal of the Year, at the 2019 CEE Legal Matters Awards. We have received multiple awards from the Chambers Europe, IFLR, The Lawyer and Mergermarket and we are regularly listed amongst the top performing M&A legal advisors in the Bloomberg, Thomson Reuters and Mergermarket deal tables

More information on Cobalt can be found at www.cobalt.legal

All News about Cobalt can be found here.

 

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