On 17 August, the company filed a claim with the Washington-based International Centre for Settlement of Investment Disputes (ICSID) for the resolution of dispute under the rules of this international arbitration center, E Energija said in a press release.
E-Energija demands approximately 25 million litas (EUR 7.25m) in damages from Latvia. The company says that litigation costs of both parties may reach some 10 million litas.
E Energija said in the press release that it had been investing in the upgrade of the heating sector of the district of Rezekne since 2004 under the 30-year agreement concluded with the district’s local authority. In 2008, the local authority declared the state of emergency and terminated the lease agreement prematurely. Moreover, the local authority took by force both the assets upgraded and improved through the company’s investments and the assets owned by E Energija without any remuneration for investments.
The Lithuanian company spent two years negotiating the compensation with the Latvian government since the liability for the decisions of an individual local authority to nationalize a private investor’s assets without paying any remuneration goes to the state.
With no results achieved through talks, the Lithuanian company has decided to resort to international arbitration.
“We feel strongly before the arbitration proceedings. We are happy that London law firm Salans LLP has agreed to represent us...,” Strioga said in the press release.
E Energija demands reimbursement of all damages suffered through the actions or, in certain cases, inaction by Latvia’s authorities that failed to ensure full and adequate protection of private investments, which led to the destruction of once profitable and viable private business.
Back in 2000, E Energija leased the heating network in the Lithuanian district of Ukmergė. Ten years later, the district’s local authority unilaterally terminated the long-term lease agreement prematurely. The company then filed claims with Lithuania’s courts demanding reimbursement for investments and assets.
