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    Reference: SG/F/2013/01
    Received Date: 30 April 2013
    Subject: Sulina Canal Bank Protection
    Complainant: Confidential
    Allegations: Alleged failure of the promoter to respect and implement an international arbitrage decision
    Type: F - Governance aspects of financed operations
    Outcome*: No grounds
    Suggestions for improvement: yes
    Admissibility*
    Assessment*
    Investigation*
    Dispute Resolution*
    Consultation*
    Closed*
    30/04/2013
    8/07/2013
    6/11/2014
    12/03/2015
    31/03/2015

    * Admissibility date reflects the date the case was officially registered. All other dates pertain to the date in which a stage was completed.

    Case Description

    Complaint

    On 27 April 2013 a complaint was lodged with the EIB Complaints Mechanism (EIB-CM) concerning the project Sulina Canal Bank Protection financed by the EIB. Following a bidding process in 2004 a contract was awarded to the complainant for the execution of works related to the project, namely the removal of the wreck of the Rostok from the Sulina channel, the clearing of the navigable waterway and the restoration of Bank Protection. The complainant alleged that, almost eight years after the removal of the wreck, it still has not been paid for the additional costs, despite a final and binding award in arbitration proceedings before the ICC International Court of Arbitration in Paris. The complainant stressed that EIB’s presence in the project would normally guarantee respect of each party’s obligations and would ensure the advancement of the project without problems and without a default event. The complainant requested the intervention of the Bank so that the promoter complies with the arbitration award and pays the complainant the due amounts.

    EIB-CM Action

    In the course of its enquiry, the EIB-CM reviewed the complaint together with the rest of the correspondence sent by the complainant, the project documents and the relevant regulatory framework. After having reviewed the complaint received and all the elements provided by the complainant, the EIB-CM held internal consultation meetings with the EIB services and had numerous contacts with the representatives of the complainant, the national authorities and several other stakeholders.

    Conclusions and Recommendations

    It appears that to this date, the promoter has not proceeded with the payment of the amount due as ordered by the ICC. In this regard, the borrower argued that the complainant should apply to the national courts in order to render the arbitral award binding and enforceable. The borrower affirmed that payment will be made upon fulfilment of the legal requirements. The complainant asserted that the award is binding and voluntary compliance is possible. The legal opinion requested by the EIB-CM confirms the complainant’s position while pointing to the existence of specific rules applicable to public institutions with respect to actual payment of money and judicial enforcement. Based on that opinion, it seems reasonable to conclude that the arbitral award is binding and voluntary implementation is possible. However, recognition and enforcement procedure is necessary in case that voluntary compliance is refused. In this context, it is very unfortunate that more than two years and a half after the final arbitral award, the latter is still not complied with and that, to the knowledge of the EIB, no recognition and enforcement procedure has been initiated so far by the complainant before the competent authority in Romania.

    As an international financial institution, the EIB attaches great importance to the respect of court decisions and arbitral awards. Non-compliance with arbitral awards can undermine the reliability of alternative dispute resolution mechanisms, including arbitration, and enforceability of contracts, which could seriously disrupt investment projects. For these reasons, since becoming aware of the issue (even before the official complaint), the EIB services have been interested and involved in solution seeking. After the submission of the complaint, the EIB-CM engaged in contacts with all the involved parties in order to gather information on the issue and explore the different aspects of the case. Nevertheless, the EIB-CM highlights that the EIB is not a party to the contract or the dispute between the complainant and the promoter. Its responsibility as well as its margin of action is therefore very limited. It is also important to note that it cannot be expected from the EIB to replace national courts in the protection of the contractors’ interests. In case the complainant wishes to enforce the arbitral award, it should consider addressing a request for recognition and enforcement of the arbitral award to the competent domestic court. As a result, the EIB-CM fails to see maladministration on the side of the EIB in relation to this matter.

    The EIB-CM recommends to the Bank to follow the developments of the issue under discussion by continuing its contacts on high political and institutional level. Additionally, it is recommended to be kept informed about the procedure of obtaining an exequatur in Romania, if such procedure is initiated in the future.    

    Project Information