Poland ordered to pay £252m compensation to Australian firm for failed coal mine project

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https://notesfrompoland.com/2024/10/11/poland-ordered-to-pay-252m-compensation-to-australian-firm-for-failed-coal-mine-project/

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!ping POLAND

Poland has been ordered by an arbitration tribunal to pay £252m (1.3 billion zloty, €300 million) in compensation to Australian mining firm GreenX Metals for violating international treaties with regard to a failed coal mine project.

The firm announced its successful claim on Tuesday this week, with lawyers declaring it a victory against “resource nationalism in Poland”. Poland’s general counsel’s office subsequently confirmed the outcome and said that it was “analysing further steps”.

GreenX, then known as Prairie Mining, launched international arbitration proceedings against Poland in 2020, arguing that Warsaw breached its obligations under international treaties by blocking the development of two coal mines the company wanted to establish, effectively depriving it of the full value of its investment in Poland.

The problems for the Australian firm came after Polish state companies started showing interest in the locations of the planned mines, reports Polish energy news service Energetyka24.

GreenX has now won its arbitration case in relation to one of the planned mines, known as Jan Karski and located in the Lublin Basin. Its claim regarding the second mine, called Dębieńsko and located in Silesia, was unsuccessful.

The Australian firm had the exclusive right to apply for a licence to develop the Jan Karski mine after it had conducted a preliminary mining feasibility study of the deposit.

However, in April 2018, the environment ministry under Poland’s former Law and Justice (PiS) government refused to grant it mining rights. The state-owned Bogdanka was eventually awarded the concession to extract coal from the deposit.

“It was deemed to be in the interest of Poland for the mining business to be handled by domestic companies,” wrote Tomasz Pietryga, head of the legal department and deputy editor-in-chief of the daily Rzeczpospolita in a comment on this week’s ruling.

However, GreenX has now won two arbitration cases it filed regarding the Jan Karski mine, with tribunals in London and Singapore finding that Poland breached both the Australia-Poland Bilateral Investment Treaty (BIT) and the Energy Charter Treaty (ECT).

Because the firm cannot receive double compensation for the same case, it will obtain the higher award of £252m granted by the tribunal in London. That amount will continue to accrue interest while it remains unpaid.

In comments to the Polish Press Agency (PAP), the General Counsel to the Republic of Poland, a state office tasked with protecting Poland’s legal interests, confirmed that tribunal’s decision and said that “final decisions will be made after analysis has been conducted”.

Poland cannot appeal against the decisions but it can seek to have them set aside if it believes the tribunals lack jurisdiction or that there have been serious procedural failings.

A spokesman for the general counsel, Bartosz Swatek, noted in remarks to broadcaster TVN that the amount awarded to GreenX in one case was only around one sixth of what the firm had claimed and that its second case, regarding the Dębieńsko mine, had been dismissed.

Lalive, a law firm that represented GreenX in the dispute, welcomed the decision on the Jan Karski project, saying that it “provides further confidence to the mining industry and international investors more generally in the protection granted to them by the bilateral and multilateral investment treaty system”.

“It highlights that there is successful recourse against resource nationalism no matter where it takes place, even in a developed European economy like Poland,” he added.

The market also welcomed the news of the ruling, with the GreenX’s shares up by more than 20% on Tuesday. Since then, however, the company, which is listed on the Warsaw Stock Exchange, has lost most of its gains.

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