HN: Solar arbitration with Natland cost Czechia CZK 735 million

A Swiss court this July rejected the Czech Ministry of Finance’s (MF) petition to annul the award in an arbitration with the Natland group, which sought compensation over investments in solar power plants in Czechia. The Hospodářské noviny newspaper (HN) reported this today. The arbitration tribunal issued its final ruling in mid-December last year, awarding Natland CZK 350 million in damages. The group had sought CZK 2.21 billion from Czechia. The ministry was unsuccessful in its petition to annul the award, which it filed in January this year with the Swiss Federal Supreme Court. Including the costs of the proceedings, Czechia must pay around CZK 735 million, HN reported.

“We are currently in talks with the investor to find a solution to the situation. The Ministry of Finance will not comment on the matter until these talks have concluded,” Petr Habáň from the ministry’s communications department told HN.

Natland also declined to comment, according to the newspaper.

The dispute concerned the introduction of a solar levy on photovoltaic power plants commissioned in 2009 and 2010. According to a 2017 arbitration ruling, Czechia breached the stability guarantee set out in the Act on the Promotion of Electricity Generation from Renewable Energy Sources. The subsequent phase of the dispute dealt with calculating the damages. The arbitration tribunal took into account the Czech side’s argument that the calculation of damages had to comply with EU rules governing the provision of state aid. It ruled that Natland was entitled to 15.8 percent of the amount claimed, as well as legal representation costs and the costs of the proceedings.

The investors, who built the power plants under the Energy21 banner, initially sought CZK 2.21 billion from the state. The solar levy had reduced the value of their investment by that amount. The fact that the tribunal ultimately cut the award to CZK 350 million may give the impression, the newspaper wrote, that the arbitration did not end up costing Czechia all that much.

“However, the opposing party’s costs of CZK 191 million must also be added to the final amount. The state’s own expenses have not yet been disclosed either. According to information obtained by HN, the cost of top lawyers, advisers and experts has risen over the years to USD 8.27 million, or almost CZK 200 million. The total bill is therefore approaching three-quarters of a billion crowns,” the newspaper wrote.