ARBITRATION INFORMATION
JSC "Vilniaus energija" press release of December 18, 2023
“Veolia“ fulfilled its financial obligations and transferred almost 35 million to the Vilnius city municipality
On December 15, Veolia transferred the amount of EUR 34.8 million to the deposit account specified by the legal representatives of the Vilnius City Municipality and VŠT (Vilnius District Heating Company) in Paris. This amount covered the balance of the sums awarded to each party by the Stockholm Arbitration.
On November 30th of this year, an Arbitral tribunal constituted in accordance with the rules of the Stockholm Chamber of commerce put an end to a seven-year-long dispute involving Veolia and Vilnius Energy, on the one hand, and the Vilnius City Municipality along with its subsidiary, VST, on the other hand. During the dispute, both parties had claims against each other following the termination of the Vilnius heating network lease agreement.
The tribunal decided that Vilnius and VST had to pay EUR 26.8 million to Veolia, and Veolia had to pay EUR 44.8 million (out of the more than EUR 850 million claimed by Vilnius and VST), which represents less than 5% of Vilnius’ total amount of claims. After offsetting the amounts awarded to each party, Veolia paid EUR 17.9 million and almost the same amount of interest accumulated during seven years of litigation, for a total of EUR 34.8 million.
The tribunal dismissed all of Vilnius’ allegations of corruption, secret agreements, overpayments for services and work, and purportedly excessive invoices made by the municipality and VŠT against Veolia. The tribunal also confirmed that Veolia has returned the leased facilities to VST in the same or in better condition that it had received them and more generally that Veolia fully complied with its investment obligations under the lease agreement.
JSC "Vilniaus energija" press release of December 7, 2023
"Veolia": We won the Stockholm arbitration tribunal, and the Vilnius municipality continues to deceive the public with their false victory
Veolia's position remains unchanged: we are extremely pleased with the arbitration decision. Instead of the approximately 850 million euros and interest demanded by the municipality, "Veolia" and "Vilniaus energija" will pay the municipality and "Vilniaus šilumos tinklai" (VST) only 17.9 million euros and interest," says Pawel Orlof, the company director responsible for Veolia's operations in Lithuania.
The final decision in the case not only defended the company's reputation in Lithuania but also confirmed that the services provided by “Veolia” to their customers in Lithuania were fully provided.
Out of the demanded payment of about 850 million euros and interest:
-The tribunal rejected the municipality's and VST's claims exceeding 300 million euros for “Veolia's” alleged non-investment according to the lease agreement.
-The tribunal also rejected all the municipality's and VST's claims regarding corruption, secret agreements, allegedly inflated bills, and prices. All these claims were for more than 500 million euros and interest.
- due to the dismissed claims, the municipality and VST will have to pay Veolia 15 million euros in litigation costs, while Veolia will only pay 2 million euros in litigation costs.
The sums of litigation costs do not lie - for unsuccessful litigation, Vilnius municipality will pay 7 times more than Veolia.
Loud accusations and demands to "Veolia" and "Vilniaus energija", the sum of which reaches almost a billion euros, will cost Lithuanian taxpayers. After rejecting more than 95 percent of the claims, the municipality and VST will have to pay Veolia 15 million euros in litigation costs. Having won more than 50 percent of the claims, "Veolia" and "Vilniaus energija" will only have to cover 2 million euros in litigation costs.
The fact that one party has to cover the majority of legal costs shows who won the Stockholm arbitration and it certainly was not the Vilnius municipality and VST, no matter how they would like to present it to the public differently.
The arbitration tribunal acknowledged that "Veolia" managed Vilnius heat economy well
The arbitration decision confirms that "Veolia" returned well-maintained heat networks to VST, according to the lease agreement. This decision confirms that "Veolia" fulfilled all investment obligations according to the concession agreement. This was achieved due to excellent work of "Veolia", good management, and experience in the sector.
From 2002 to 2017, "Veolia" managed Vilnius heat economy using the most advanced technologies, invested more than 177 million euros, and ensured that the residents of Vilnius had an efficient heating system and the opportunity to use it.
Who, how much, and what is still owed and how is the final payable amount calculated?
The tribunal awarded "Veolia" 26.8 million euros (and interest), including 10.9 million euros for disputed property.
In total, the tribunal awarded the other party 44.8 million euros (and interest), including 41.7 million euros for turnover pollution permits. This amount was awarded based on a technical and legally controversial requirement related to who should own the pollution permits, which has nothing to do with the services provided by "Veolia".
After covering the amounts awarded to each party, "Veolia" and "Vilniaus energija" will pay 17.9 million euros with interest, i.e., 34.7 million euros. It is clear that this amount does not even come close to the amount announced by the Vilnius municipality at a press conference held on Friday, during which they shared completely false numbers and misleading statements, trying to hide such poor results for Lithuanian taxpayers.
Eventually, the municipality and VST will be left with only about 11 million euros, after paying for legal costs to return money to the investment company that financed this seven-year litigation.
"Veolia" is ready to immediately pay the remaining net amount payable to the municipality and VST and is currently waiting to receive the necessary information.
JSC "Vilniaus energija" press release of December 1, 2023
After seven years of proceedings, an independent and impartial arbitral tribunal ruled in favour of Veolia
On 30 November 2023, after seven years of proceedings, an arbitral tribunal constituted in accordance with the rules of the Stockholm Chamber of Commerce (the “SCC Tribunal”) has rendered an unanimous final arbitral award acknowledging the legitimacy of Veolia’s claims and rejected the vast majority (more than 95%) of the claims of the Municipality of Vilnius and the municipally-owned Vilniaus Šilumos Tinklai ("VŠT"), notably the ones based on alleged acts of corruption.
The dispute opposing Veolia Environnement and its subsidiary Vilniaus Energija to the Municipality of Vilnius and VŠT related to a contract signed more than 20 years ago for the modernization and operation of the municipal heating network of Vilnius.
Despite the Vilnius Municipality and VŠT's relentless efforts to depict Veolia as a corrupting company during the course of the proceedings, manipulating facts and spreading falsehoods, the SCC Tribunal has rejected all of these claims.
The final award also confirms the findings of previous decisions from Lithuanian authorities who had already cleared Veolia of any wrongdoing, following in-depth investigations of the facts.
This decision ultimately rendered justice to Veolia who efficiently and safely supplied heat to the residents of Vilnius between 2002 and 2017, using the most advanced technology for the operation of the Vilnius municipal heating network. During those years, Veolia invested more than EUR 177 million in the heating network for the renovation of cogeneration power plants pipelines, installation of heat substations, development of biofuel and deployment of modern information technology. The investments and works carried out by Veolia continue to successfully serve residents of Vilnius to date.
The award is final and not subject to any appeal.
