Invenergy LLC, along with other international companies forming the energy conglomerate, has submitted a letter to senior Polish government officials, including its president and prime minister, alleging unlawful and coordinated acts “tantamount to an expropriation” that have destroyed the financial viability of Invenergy’s investments in several wind farms. The company claims damages amount to approximately $700 million.
According to Invenergy, the letter serves as a formal notification of dispute under the U.S.-Poland Bilateral Investment Treaty (U.S.-Poland BIT) and the Energy Charter Treaty (ECT), signatories of which include 52 countries and the European Union.
The notification letter accuses Polish government authorities of orchestrating the unlawful termination of long-term commercial contracts. In 2010, Invenergy entered into fixed-price, long-term energy contracts with Polish state-controlled utility companies. Invenergy accepted what were then below-market prices for renewable energy from its wind farms in return for the stability provided by the long-term contracts. The government later directed its state-controlled energy companies to terminate Invenergy’s long-term contracts under various pretexts, the company alleges.
Invenergy claims the Polish government took deliberate actions to depress renewable energy market prices to unsustainable levels. Due to the government’s termination of the contracts in combination with these actions, Invenergy says it was forced to sell its production into the market at prices significantly lower than the contracted amounts, resulting in major financial losses.
Invenergy’s notice letter states that the coordinated actions by the Polish authorities constitute a breach of investment protection obligations arising under the U.S.-Poland BIT and the ECT. Invenergy has stated its intent to submit the dispute to international arbitration if no settlement is reached within six months.
Invenergy is actively pursuing several other legal actions in the Polish courts against state-controlled entities. The Polish Supreme Court has already ruled in Invenergy’s favor in the case of Energa-Obrót S.A.; it found that the state-controlled utility acted unlawfully in attempting to terminate its contractual obligations with Invenergy.
“Bilateral investment treaties protect investors whose rights have been violated by another country, and that is what has happened to Invenergy in Poland,” says Invenergy’s chief legal officer, Michael Blazer. “While the Polish government’s disregard for the rule of law continues to escalate, we are working to secure our rights, and other investors are watching.”