Croatia wins arbitration against Austrian firm

Croatia is celebrating after a United Nations (UN) court rejected an Austrian company’s demand for 80 million Euros compensation over a failed gambling venture.The gambling project was set up by the Croatian Lottery together with the Austrian firm Adria Beteiligungs GmbH (Adria) which suffered during the independence war and was eventually scrapped over management differences.The Austrians were eventually awarded compensation of 4.5 million Euros which was paid in full but they then pursued a separate claim for lost earnings against both the Croatian lottery and Croatia itself.The claim finally ended up at an arbitration tribunal constituted organised bythe United Nations Commission on International Trade Law (UNCITRAL) Rules which has now finally dismissed Adria’s claims “in their entirety”.Croatia was represented by the Office of the Attorney General and assisted by Latham & Watkins’ public international law group, led by partners Stephen Fietta, Robert Volterra and Sebastian Seelmann-Eggebert.The joint ventures’ economic fortunes suffered a severe downturn during the Croatian War of Independence. The business relationship between Adria and the Croatian Lottery deteriorated when Adria tried to seize management control of the joint ventures. Croatian Lottery terminated the joint ventures in 1994 due to economic performance and management deadlock.Adria continued to pursue a separate claim against the Croatian Lottery for lost profits, which is still pending before the Croatian courts, but the latest ruling rejects Adria’s claims against Croatia itself.The award confirms that the dispute between Adria and the Croatian Lottery was of a commercial nature and did not involve any legal responsibility on the part of the Republic of Croatia.The tribunal further noted that the Republic of Croatia’s courts had provided Adria with a full and fair hearing of its claims and had already ordered the Croatian Lottery to pay substantial compensation to Adria for its loss.Croatian Times reports Croatian officials are “more than satisfied” with the Tribunal’s decision that Adria’s claims are groundless and that it had been proved the country had not violated any of its international obligations owed to foreign investors.