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Published: 17 october 2012 16:50

Washington arbitrators to hear E Energija's suit against Latvia

Latvijos vėliava
„Reuters“/„Scanpix“ nuotr. / Latvia

Washington-based International Center for Settlement of Investment Disputes (ICSID) will hear a 25-million-litas (EUR 7.25m) suit filed by E Energija, a Lithuanian energy company that is controlled by the European Bank for Reconstruction and Development (EBRD) and businessman Virginijus Strioga, against Latvia.

"This confirmation means that our company's suit against the Republic of Latvia over expropriation of private investments meets ICSID's formal requirements and, once arbitrators are appointed, will be heard at the ICSID," Strioga, the CEO of E Energija, said in a press release on Wednesday.

E Energija said that it had been investing in upgrading the heating sector of the Latvian district of Rezekne since 2004 under a 30-year lease agreement with the local government. In 2008, the local government declared a state of emergency and prematurely terminated the lease agreement. Moreover, without any compensation for the investments, the local authority took by force both the assets upgraded and improved through the company's investments and the assets owned by E Energija.

Since the liability for decisions of an individual local government to nationalize a private investor's assets without any reimbursement goes to the state, E Energija spent two years negotiating with the Latvian government for compensation.

With no results achieved through these talks, the Lithuanian company decided to resort to international arbitration.

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