A European court ordered the retrial of a case that saw two Romanian-Swedish beverage moguls receive 178 million euros compensation from Romania.
The money was paid to Ioan and Viorel Micula in December 2019.
The case stems from investments by their soda and energy drink business in an economically disadvantaged region that secured it government assistance up until Romania joined the European Union.
The European Court of Justice ordered a lower court to reconsider if Romania’s payment which was ordered by an arbitration tribunal amounted to illegal public support of a private company.
The dispute dates back to when Romania joined the European Union in 2007.
A decade before that, the Romanian government offered incentives to encourage investment in economically disadvantaged regions.
The program included reimbursement for some investments and a reduction in taxes for participating companies.
EU regulations bar governments from supporting private companies, however, to prevent market distortions across the bloc.
Romania’s government phased out the program by 2005.
European Drinks & Foods, based in the economically disadvantaged western Transylvania, benefited from the program.
The company which produces soda and other soft drinks took advantage of the tax benefits in 2000 on the promise that they would last for 10 years.
But when the benefits were axed, the Miculas brought legal complaints in Romania, Belgium, France, Luxembourg, Sweden, the United Kingdom and the United States to try and get compensation.
In 2013, they won their case at the International Center for Settlement of Investment Disputes, which arbitrates in legal disputes between investors and states.
Romania and Sweden had signed a bilateral investment treaty in 2002, which allowed the brothers to pursue Romania. They were awarded 178 million euros in compensation.
This triggered a complaint by the European Commission which argued that paying the award violated state aid rules.
This month Romania defeated another effort by the brothers to revive a 2 billion dollar claim accusing Romania of sabotaging their spirits business by failing to adequately protect their investments.
The Washington International Arbitration Tribunal rejected the brothers’ request in March 2020. The Ad Hoc Cancellation Committee which is under the authority of the International Center for the Settlement of Investment Disputes of the World Bank on January 4 upheld that ruling.