RAIFFEISEN LOSES ANY CHANCE OF BRINGING A LAWSUIT AGAINST ROMANIA WITH THE ICSID Romanian state defends itself against the blackmail of foreign banks

Raiffeisen Bank Internaţional is about to lose any chance of taking the Romanian state to the International Centre for Settlement of Investment Disputes (ICSID), after sending a notification to the Romanian institutions about the law of giving in payment, threatening to file a lawsuit against them with the ICSID.

Country president Klaus Iohannis has taken measures to protect the country against the blackmail from some foreign investors.

Two weeks ago, more specifically, on September 8th, president Klaus Iohannis signed a decree which annuls the bilateral investment protection agreements between Romania and other European countries.

Decree 799/2016 has been issued "to be submitted to the Parliament for approval in order to cause the expiration of the agreements concerning the mutual promotion and investment protection agreements, which Romania has concluded with the EU member states".

The decree is countersigned by prime-minister Dacian Cioloş.

In this context, liberal deputy Daniel Cătălin Zamfir stresses: "It is now obvious that Anca Dragu, the finance minister, is defending the banks' interests, as long as, even though this decree was even signed by Cioloş, she has provided inaccurate information to the Senate, by sending in a notification warning against the threat that the notice sent by Raiffeisen involves. This is by now a case of acting in ill-faith".

Lawyer Vasile Deleanu told us that the decree issued by the president has the following effect: "Lawsuits brought by European investors with the ICSID will no longer have any legal grounds, because the mutual investment guarantee agreements concluded with European countries have been annulled, according to the indications of the European Commission".

Raiffeisen Bank recently warned Romania that, if there is no intervention to amend the Law of giving in payment within three months, it will bring a lawsuit with the Arbitrage Court of the World Bank (ICSID). Raiffeisen Bank has demanded the amendment of the law, in order to eliminate the threat the law poses to the safety of the bank's investments in Romania.

Concerning this aspect, Daniel Zamfir, who initiated the law, told us: "Raiffeisen claims its right of ownership has been affected. But what does the bank own? Because bankers have constantly stated that the money doesn't belong to them, but their depositors. Raiffeisen also claims that its profit has been reduced because they have set up provisions. But these provisions do not mean lost money, they are amounts set aside, which will be released once the so-called threat passes.

As far as the alleged bilateral agreements are concerned, once it joined the EU, Romania has been working based on the Accession Treaty, which states that all bilateral treaties become inoperable if they haven't preserved through said accession. Thus, the bank is invoking these bilateral treaties, which are no longer in effect".

Daniel Zamfir thinks that the notification sent and the threats made by Raiffeisen Bank against the Romanian state represent a form of pressure against the Constitutional Court, which is going to issue a ruling on October 11th, on the notices sent by banks concerning the Law of giving in payment.

Raiffeisen Bank International (RBI) mentioned, in the letter sent to the state, that it is was unhappy with the "behavior" of the Romanian authorities in the case of the Law of giving in payment.

RBI claims that the investments of Raiffeisen Bank have been "heavily harmed" by the Law of giving in payment, as the bank has suffered significant losses "due to the way Romania has acted".

Among other things, the bank's document stresses: "Unfortunately, Romania's behavior and that of its various institutions, including the Government and the Parliament, towards our investments in Romania has led to a disagreement concerning investments, based on the Treaty, and we are writing to officially notify you of about this disagreement, according to art. 8 of the Treaty (The Agreement between the Republic of Austria and Romania concerning the promotion of investments, in effect since July 1st, 1997 - ed. note). (...) If we find ourselves unable to resolve this disagreement in an amicable manner, within three months from the date of the present notification, we will be forced to start the arbitrage proceedings against Romania, on grounds of the Treaty, to protect our investments".

The bank "is inviting Romania to engage in consultations and negotiations in order for an amicable resolution to be reached when it comes to the investor's requests": "The investor is proposing for the negotiations and the consultations to take place on a neutral location, on mutually agreed upon date, by September 30".

According to the quarterly report of Raiffeisen Bank, the financial institution has set up provisions of 42.5 million Euros for possible losses as a result of the coming into effect of the Law of giving in payment. In this context, the bank has posted a net profit of 36 million Euros, in the first half of the year 2016, down from 48 million Euros YOY, a result which was also influenced by the set up of provisions made for the giving in payment, as mentioned by the representatives of the bank.