LUXEMBOURG (CN) — The European Union's executive body had the authority to challenge arbitration payments in a dispute between a pair of beverage moguls and the Romanian government, a magistrate for the bloc's highest court said Thursday.
Advocate General Maciej Szpunar wrote in a nonbinding opinion for the European Court of Justice that the EU's lower court, the General Court, was wrong when it held the European Commission did not have the power to investigate Romania’s payment of an arbitration award that the commission said violated regulations on state aid.
"As that measure was adopted after Romania’s accession to the European Union, EU law was applicable and the Commission was competent to examine it....the General Court therefore erred in law when it held that the aid measure had been granted before accession and that the Commission was therefore not competent," Szpunar wrote.
The European Commission, the EU’s executive branch, is appealing a 2019 decision from the General Court in a case alleging Romania’s partial payment of a $200 million award ordered by an arbitration tribunal amounted to illegal public support of a private company. EU regulations prevent governments from supporting private companies on the grounds that it creates market distortions across the bloc.
The dispute, the legal fallout of which has led to multiple lawsuits across Europe and in the United States, involves a 1998 Romanian program to encourage investment in economically disadvantaged regions of the southeastern European country. The program included reimbursement for some investments and a reduction in taxes for participating companies.
The western Transylvania region of Ștei-Nucet was among the areas declared disadvantaged. It is also home to European Drinks & Foods, one of Romania’s largest food and beverage producers and distributors. The company, which makes soda and energy drinks, was founded in 1993 by two Swedish-Romanian brothers - Ioan and Viorel Micula. In 2000, the Miculas availed themselves of the tax benefits, which were intended to last for 10 years.
However, at the same time, Romania began talks to join the EU and the bloc required Bucharest to do away with this and other programs to conform to state aid regulations. The Romanian government phased out the benefits, fully ending the program in 2005. The Micula brothers sued, both in Romanian court and before the International Centre for Settlement of Investment Disputes, an arbitration institution for legal dispute resolution between investors and states.
In 2013, the brothers won their arbitration case and were awarded 178 million euros ($211 million) in compensation, which the Romanian government began to pay in 2014, triggering an EU crackdown.
The Miculas, who are some of Romania’s wealthiest residents, brought a flurry of legal complaints in Romania, Belgium, France, Luxembourg, Sweden, the United Kingdom and the United States in the hopes that national courts would turn Romanian state assets over to them to fulfill the compensation obligation.
They also filed a complaint with the General Court in 2015 challenging the European Commission's investigation and ultimately won, prompting the commission's appeal to the Court of Justice.
In its decision, the General Court held that the commission overstepped its authority by holding Romanian to account for legislation passed before it joined the EU.
However, Szpunar noted in Thursday's advisory opinion that the arbitration award was made after Romania joined the EU and thus the commission had the authority to regulate it. He went on to say that the commission's decision supersedes the arbitration order.
“Arbitration proceedings, such as those at issue in the present case, are not in my view capable of adversely affecting the autonomy of EU law, even after accession,” the Polish magistrate wrote.
The Court of Justice follows the legal reasoning of its advocates general in about 80% of cases and a final decision is expected later this year.
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