The Authority of State Assets Management AAA, formerly AVAS, went to court against one of the largest Romanian law firms, Muşat & Asociaţii, asking for a compensation of USD 8.7 million following a legal dispute between the Romanian state and Noble Ventures. The law firm, which is being accused of not fully respecting the contract with the state, said the state's request is absurd and absolutely unjustified.

Muşat & Asociaţii represented AVAS in the investment settlement dispute with Noble Ventures, which had accused the Romanian state of not respecting the bilateral investment treaty between Romania and US. Noble Ventures had bought Combinatul Siderurgic Reşiţa in a privatization process, and had taken the EUR 350 million case to the International Center for Settlement of Investment Disputes ICSID in Washington.

The Romanian state is now saying that the USD 8.7 million it is asking for from the law firm represents the damages caused by not respecting the obligation to go to court with a litigation against Noble Ventures, part of the larger dispute, which also included the ICSID arbitration which started in 2001.

The dispute between Romania and Noble ventures made headlines in the early 2000s, as the Romanian state won the dispute, the privatization was canceled and the Resita factory was re-privatized, the winner being TMK. Romania spent some USD 8.9 million in this international investment dispute, while Noble Ventures, USD 3.14 million, while the international court decided the costs will be equally split.

In 2011, the Romanian state started the legal action against Musat, its former lawyers, which had helped it win the dispute against Noble Ventures back in 2005.

The American investor Noble Ventures, which had bought the Resita steel plant in 2000, and a year later started the dispute at ICSID, had claimed that it suffered unfair, arbitrary and discriminatory treatment, because Resita Steel Plant (CSR) would not have benefited of the restructuring of budgetary debts to the state claimed to have been promised through the privatization contract and its investment in CSR was expropriated. The investor wanted a compensation of USD 447 million, but ICSID decided against it in 2005. In 2003, the privatization of Resita Steel Plant was canceled, after the investor did not pay two successive installments of the purchasing price.

The state's unexpected decision to go to court six years later against the lawyers who had helped it win the case back in 2005 is, according to the government authority AAA, based on the contract signed with Muşat & Asociaţii, which failed to take Noble Ventures to a regular court after the settlement dispute.

editor@romania-insider.com