BR Exclusive! Ioan Micula, European Food: The amount the state owes us is three times bigger, due to penalty interest

The amount the Romanian state needs to pay to Ioan and Viorel Micula, Romanian citizens with Swedish citizenship owners and of European Food, after winning a case at the International Center for Settlement of Investment Disputes (ICSID) is three times bigger, due to the penalty interest which added up, Ioan Micula told Business Review.

In 2013 the ICSID ruled that Romania needs to compensate the Micula brothers for violating the bilateral treaty on mutual protection of investments between Romania and Sweden. According to ICSID, by withdrawing in 2005 a scheme to encourage investment through tax incentives four years before its scheduled expiry in 2009, Romania violated a bilateral treaty on mutual protection of investments between Romania and Sweden and harmed investors, forcing the Romanian state to pay more than RON 376 million plus penalties and interest.

In the meanwhile, the Romanian state has attempted to appeal the Micla brothers’ request and asked the United States District Court for the District of Columbia to annul the 2013 decision. In arguing for the dismissal of the petitioners, Romania said the way they notified the Bucharest authorities on their US lawsuit was not in accordance to the law, Profit.ro writes.

Specifically, the representative of Romania said that the Micula brothers sent the notification by post, namely using a DHL courier, and argued that this was contrary to the Hague Convention. Moreover, the Romanian side argued, the petitioners had not sent it to the appropriate institution, had not translated the documents into Romanian and had not provided the lawyers representing Romania with copies of it.

However, the US court has ruled against Romania’s request. The court argued that, by virtue of ratifying the Hague Convention, Romania does in fact agree with the procedure used by the petitioners to notify the Romanian side on the US lawsuit.

Moreover, the US court accused the Romanian side of a lack of transparency and of trying to buy time by challenging the way its lawyers were notified, and thus, delay proceesings. “Romania is wrong on both counts. And, in trying to convince the court otherwise, Romania’s candour to this tribunal is suspect. The court finds that petitioners successfully served Romania both under Article 10 (a) and under Articles 3,5 and 6. Accordingly, Romania’s Motion to Dismiss for Insufficient Service of Process is denied.”

As for the question “Why does Romania now take the position that it has “never authorised service by alternate means as envisaged by by Article 10 (a),” the court argues, “Romania offers no satisfactory answer. “It does not, for instance, offer a Romanian law expert to support its position,” the court argues.

Moreover, the US court said that “Romania has affirmatively stated to the world that it accepts service from abroad via private courier, yet hides that from this court.” That is why, the US court concluded, ”either Romania has not been forthcoming with its lawyers about the state of Romanian law, or the sole purpose of Romania’s objection to service under Article 10 (a) is to delay the commencement of these proceedings. Either way, Romania and its counsel are on thin ice with this court and will have to answer for their lack of candour.”