The Arbitration Tribunal at the Vienna International Arbitral Centre (VIAC) of the Austrian Federal Economic Chamber has issued the final decision in the dispute between Alpiq Holding Ltd. (previously Atel) and PGE Polska Grupa Energetyczna SA.
In its ruling of 12 September 2012, the Tribunal ordered PGE to pay Alpiq 43.2 million euros plus interest. The awarded amount constitutes less than one third of Alpiq's original claim and half the provision made by PGE for accounting purposes. PGE was awarded 1.4 million euros from Alpiq for the costs of legal representation, witnesses, experts, and proceedings before the Court of Arbitration.
The amount originally claimed by Alpiq from PGE was 162.9 million euros, including interest and legal costs. The amount of the claim was changed a few times. For accounting purposes, in the previous years PGE established a provision. As at 31 August 2012 it equalled 95.2 million euros (the principal amount of 79.1 million euros).
The end of the arbitral proceedings and the settlement of compensation will result in the partial usage of the provision; its remaining part is to be reversed and recognized as other operating revenues in PGE’s statement of comprehensive income. In its decision, the Tribunal stated that the power delivery contract between PGE and Alpiq of 28 October 1997 expired on 28 February 2009. The dispute occurred in 2008 and concerned the contract (a long-term electricity export agreement), which PGE was unable to fulfil from March 2008 because of insufficient power transmission capacities at the Polish-Slovak border. Such situation was the result of the implementation of the EU law into the Polish legal system and consequent regulatory changes.
Alpiq brought the case before the Arbitration Tribunal at the Vienna International Arbitral Centre of the Austrian Federal Economic Chamber. The decision was given after more than three years of proceedings. During this period PGE claimed the occurrence of force majeure, i.e. thorough regulatory changes or, alternatively, the necessity to adjust the contract to new circumstances which the parties had not been able to foresee. PGE's Management Board will analyse the resulting situation and available legal measures which could be used to challenge the ruling.
Press Spokesperson PGE Polska Grupa Energetyczna S.A.
Lukasz_Witkowski@gkpge.pl I +48 695 883 873