The AVAS will escape the need to pay "exorbitant" damages

• High Court of Cassation and Justice: The AVAS will not be required to compensate companies at the market value, for retroceded buildings

• A privatized company had requested the foreclosure of the AVAS for 27 million Euros

The damages which the AVAS will need to pay to the privatized companies, from the patrimonies of which they retroceded buildings, were capped through a decision of the High Court of Cassation and Justice.

As a result, the institution will escape the need to pay the "exorbitant" damages, which it had been sentenced to by certain courts, which had ruled that the damages to be paid would have to take into account the market value of the buildings.

For example, in the case of "BIT" SA, the Authority for the Recovery of State Assets, in February was sentenced to the payment of a compensation of approximately 27 million Euros, after the privatized company returned a plot of land to its former owner. The AVAS challenged the foreclosure, as well as the decision of the court, and the lawsuits are still on trial.

A stake of 70% of the company"s capital was sold by the state in 1994, for the amount of 36,905 RON.

The decision of the High Court of Cassation and Justice stipulates that the compensations awarded to the companies by the public institutions involved in the privatization process, following the retrocession of buildings, are based on the book value of the property, the way it is reflected in the balance sheet at the time the asset left the patrimony of the company, which needs to be adjusted based on the inflation index in effect at the time the compensation was paid, rather than at their market value, as the courts ruled many times, a press release sent by the AVAS states.

According to the law, the value of the compensation package will be set by the public institution in agreement with the companies which are claiming the buildings which have already been retroceded, and in the event of a discrepancy between the two, the amount which must be paid will be set by the court.

The damages calculated by the state have been challenged in court by several companies, which asked to receive damages equal to the market value of the building.

The actions of the AVAS "were motivated by the need to construe and apply in a consistent manner" the provisions of the law by all the courts of law, given the fact that up to now they had interpreted the law differently, the press release of the Authority states.

According to the AVAS, some of the courts ruled that the public institutions involved in the privatization process would be forced to pay exorbitant compensations, equivalent to the market value of the retroceded buildings, whereas other courts have considered that the damages to be paid may not exceed their inventory value, based on the inflation index at the time of the effective delivery of the asset or the reevaluation coefficient for buildings and plots of land.