Veolia And Lithuanian Ministry Of Energy Reached Eur 35M Settlement Regarding Municipal Heating Contracts
The Republic of Lithuania and Veolia have reached a 35 million euro settlement. This effectively ends the overwhelming majority of litigation pertaining to municipal heating contracts with Veolia subsidiaries. Under the agreement, Veolia agreed to withdraw its claims in international investment arbitration (ICSID) and pay a sum of 35 million euro to the Republic of Lithuania, which will retract its claim against Veolia and its subsidiaries filed in the domestic courts.
The settlement does not constitute an admission of liability by either party. It is a pragmatic decision to avoid further costly and time-consuming litigation, ending a decade-long dispute between the Republic of Lithuania and Veolia.
In 2016, Veolia initiated ICSID arbitration seeking 119 million euro from The Republic of Lithuania, alleging discrimination and losses since 2009 due to government actions. Lithuania counterclaimed against Veolia for damages. Following a change in European Court of Justice (ECJ) case law, Lithuania withdrew its counterclaim from ICSID, filing its 240 million euro claims against Veolia and other respondents in the Vilnius Regional Court. Lithuania argued Veolia was involved in corruption and collusion when obtaining and performing Municipal Heating Contracts. Veolia defended itself claiming the unfounded nature of the corruption allegations, which were previously dismissed by the prosecutors.
Minister of Energy Žygimantas Vaičiūnas said: “We are pleased about reaching this settlement, which not only closes prolonged litigations between the parties and recreates legal peace, but also opens new avenues for future cooperation between Lithuanian and French business entities based on mutual respect and long-term partnership and reflects the close cooperation between our governments. We aimed to ensure Lithuania’s interests were protected — and we succeeded. The funds will be allocated to energy consumers, as well as for support to Ukraine and reimbursement of arbitration costs.”
Eric Haza, Veolia Group Chief Legal Officer said: “Veolia looks forward to building a new relationship of cooperation with Lithuanian authorities. Throughout this dispute, Veolia has successfully defended its business and reputation against baseless allegations and fought for the rightful enforcement of bilateral investment treaties. We are proud of the excellent work completed in the service of Vilnius and other municipalities, efficiently and safely supplying heat, using the most advanced technology for the operation of municipal heating networks. Veolia invested more than 177 million euro in the Vilnius heating network for the renovation of cogeneration power plant pipelines, installation of heat substations, development of biofuel, and deployment of modern IT solutions. The investments and infrastructure projects implemented by Veolia continue to successfully benefit residents to this day.”