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US Investor seeks 700 million dollars in damages from Poland


Atch 17 | 2,861
17 Oct 2017  #1
The company is Chicago based Invenergy LLC, a renewable energy supplier, who have invested over 2 billion zloty in Poland since 2005. They claim that Poland has violated a US-Poland bilateral investment agreement signed in 2005 by cancelling long term contracts. The U.S. company said it accepted what were below-the-market prices for energy from its wind farms in 2010 in exchange for the stability that long-term contracts provide.

"We saw it as a new EU member, and a party looking to embrace the concepts of the EU, including renewable energy," Jim Murphy, Invenergy's president, said in an interview Monday. But now, "we would be hesitant to invest new money in the country until we could see support for rule of law and honoring long-term contracts."

Breaking contracts, refusing to honour agreements, going back on your given word,ignoring international law, EU law, and even your own law, very much a feature of PIS policy.
Ziemowit 12 | 3,509
17 Oct 2017  #2
Did they file a lawsuit against Poland or is it just some ranting on their part?
Sparks11 - | 335
17 Oct 2017  #3
windpowermonthly.com/article/1438590/invenergy-begins-polish-lawsuit
jgrabner 1 | 71
17 Oct 2017  #4
very much a feature of PIS policy.

Tauron is majority-owned by the Polish state... In July 2014, Tauron began proceedings to liquidate the subsidiary, thereby annulling any power deal, which Invenergy challenged in court.

wasn't PO in power back then?
OP Atch 17 | 2,861
17 Oct 2017  #5
That's a different law suit by the same company against Tauron. This one is about the changes made by PIS which have impacted those who signed long term contracts.
Dougpol1 30 | 3,036
17 Oct 2017  #6
Tauron.

Not surprised in the slightest. Well known by Katowice sub-contractors as absolute scum to do business with. I thought it was only me, until I asked around.
Dirk diggler 9 | 4,386
17 Oct 2017  #7
@Atch

Everyone knows that the people who write the laws and the politicians are the biggest breakers of it. Just look at Clinton. Nothing new here. It seems these two have quite a history spanning years of lawsuits with pis and po. Yawn

No problem there's plenty of other companies more than happy to add to the FDI totals
gumishu 11 | 5,012
17 Oct 2017  #8
That's a different law suit by the same company against Tauron. This one is about the changes made by PIS which have impacted those who signed long term contracts

not that's not a different lawsuit - the move to cancel long-term contracts with sister companies of Invenergy is the subject of the current lawsuit and the move was made already in 2014 - you are fast at throwing accusations at PiS, aren't you Atch?
OP Atch 17 | 2,861
17 Oct 2017  #9
Well as I understand it the lawsuit against Tauron is for 1.2 billion PLN (something over 300 million dollars) and began in 2014. The case I referred to is a separate action against the present government and is for the amount of 700 million dollars. Invenergy say that if it's not settled within six months they will take it to international arbitration. I'm quite certain it's a separate case.
johnny reb 17 | 3,530
17 Oct 2017  #10
Invenergy has invested $595million in 11 operating wind farms in Poland since 2005.
Invenergy CEO Michael Polsky said: "We made a long-term investment in Poland with confidence that a legal framework existed to protect our investments from this type of behaviour.

"This case will test the assumptions of our original investment decision and signal to the market whether Poland is a country where investors can rely on the sanctity of contracts."

Why would Poland shoot themselves in the foot if they want foreign investors to continue to invest in Poland to help improve their country ?
gumishu 11 | 5,012
17 Oct 2017  #11
I'm quite certain it's a separate case.

it is a separate case but the subject is the same as the earlier lawsuit against Tauron - Invenergy can't actually help the changes introduced by PiS government from what I can understand - they took a risk with relying on the so called 'green certificates' as they major source of income from their investment in Poland - Poland doesn't guarantee the same income from green energy sources for a long time persepective like Germany does - with the current prices of carbon based fuels green energy has to be heavily subsidies to be economical from what I can gather and Poland can hardly afford it

Why would Poland shoot themselves in the foot if they want foreign investors to continue to invest in Poland to help improve their country ?

because Poland cannot afford heavy subsidising of green energy like Germany does
mafketis 20 | 7,249
17 Oct 2017  #12
Why would Poland shoot themselves in the foot if they want foreign investors to continue to invest in Poland to help improve their country?

the party leader has already explained he'd rather a poorer Poland under his sphere of influence than a richer Poland outside it.
gumishu 11 | 5,012
17 Oct 2017  #13
oh did he? can you give a source? it can be in Polish of course

and no heavily subsidising green energy doesn't make Poland richer

this forum is ****** up recently - quotes vanishing - editing bits appearing in new comment windows - dno
gumishu 11 | 5,012
17 Oct 2017  #14
oh did he? can you give a source? it can be in Polish of course

and again the move to cancel long term contracts with sister companies of Invenergy which is the subject of the current and previous lawsuits filed by Invenergy came before PiS took power so your remark is completely void here
Dirk diggler 9 | 4,386
17 Oct 2017  #15
Why would Poland shoot themselves in the foot if they want foreign investors to continue to invest in Poland to help improve their country ?

They do - this just happens to be one particular case that didn't work out. Another one was Poland's purchase of French helicopters and military hardware but they went with the superior American tech. Of course the French complained. These guys have been duking it out in courts, messing with lawsuits and all sorts of sh!t for over 7 years. This is just one of many disagreements between this particular US company and their counterparts in Poland.

Poland's law and bureaucracy is messy. It's no wonder a Chicago based company with little experience and knowledge of operating in the Polish market got hosed. They're dealing with cwaniaczki afterall...
Ziemowit 12 | 3,509
17 Oct 2017  #16
the current and previous lawsuits filed by Invenergy came before PiS took power so your remark is completely void here

The business weekly "Puls Biznesu" tells about the lawsuit filed by Invenergy against Tauron under the date of 3 July 2017.

But yes, Tauron started to act against their interests in 2014 and then continued in March of 2015 acting against the interest of Invenergy, Polenergia (Polish) and In.ventus (German).
johnny reb 17 | 3,530
17 Oct 2017  #17
They're dealing with cwaniaczki afterall...

I can't read Polish but "cwaniaczki" must mean liars and cheats.

with little experience and knowledge of operating in the Polish market

Are you saying that is what the Polish market is comprised of is liars and cheats with the Polish government not holding them accountable or is the Polish government liars and cheats also ?
SigSauer 4 | 413
17 Oct 2017  #18
@Atch

It's not a feature of only PiS policy. In fact, it is a pervasive problem across Eastern Europe. Based both on evidence in reports, and anecdotally from expat investors I know personally. Property rights in many post-Soviet states is a problem with antiquated laws on the books, corrupt judges who take bribes, and allow legalized theft to take place. I don't have much sympathy for people who engage in this, particularly when they are trying to court foreign investors as is the case in Ukraine. The woes of one French winemaker in Odessa oblast are enough to scare away most foreigners.
Dirk diggler 9 | 4,386
17 Oct 2017  #19
cwaniaczki

It could be but more means 'smarta$$es' as 'cwany' means like wise, smart, etc.

Are you saying that is what the Polish market is comprised of is liars and cheats with the Polish government not holding them accountable or is the Polish government liars and cheats also ?

Its a sort of strange system between business persons and courts to allow for local Poles to screw over foreigners IF it is in the interests of Poland, the court doesn't care, etc. That is why so many foreigners who come to establish businesses, buy real estate, etc. get screwed over. Most of the time it's not due to like mismanagement on their own part, just more so that they got screwed over by some Polish real estate agent, title company, lawyer, etc and the courts don't care much to enforce it. Now if it's a multi million/billion dollar contract, an enormous factory or office, etc. then the PL government will bend over backwards to give them tax breaks and other incentives in return for the tax money and employment such an operation would provide - for example the JP Chase office in Warsaw which will employ 3k, the Mercedes factory outside of Wroclaw, the LG factory which will open in 2 years. The LG factory is actually to develop electric batteries for cars and other components so definitely green energy. It's just in this particular case with the above investors it appears that they've had problems for a long time and lawsuits on both ends for years and years. In that case perhaps it wasn't worth it for the courts to side with the plaintiff and would side with the Polish defendant regardless if they were in the wrong. It just depends - each case is different. Normally though in most like small-mid sized business transactions if you get screwed over by a Polish dude or party, your chances of recuperating and enforcing a contract are pretty slim to none. You'll either get drowned in the bureaucracy, be forced to pay a bribe so the prosecutor/judge does the job they're suppose to do, etc. This is a bit of a generalization of course but I've seen (and even experienced) this kind of stuff myself. The courts and legal system could definitely use reform.

This will scare a lot of smaller/mid investors and such, but large multinational corporations with years of experience and teams of individuals who can navigate through the individual nuances of each country and market can certainly do it in Poland and that's why the big name companies are flooding in. But the smaller/mid companies from abroad, which small biz is the economic engine of nearly all developed economies, are weary about Poland - of course depending on their operation, what business and industry they'r ein, etc.

But ya if youre a foreigner and want to open a restaurant, develop properties, etc chances are youll be left high and dry.
Ziemowit 12 | 3,509
17 Oct 2017  #20
I can't read Polish but "cwaniaczki" must mean liars and cheats.

Johnny, I am truly amazed that not knowing Polish you can work out the meaning of a Polish word so easily and so precisely. Brawo Ty!
jgrabner 1 | 71
17 Oct 2017  #21
The case I referred to is a separate action against the present government and is for the amount of 700 million dollars.

yes, the FT is reporting the same figure today: ft.com/content/a26dda50-af3b-11e7-aab9-abaa44b1e130

but also in this piece, it says: "Michael Polsky, the founder and chief executive of Invenergy, said the dispute had now been raging "for three-plus years".", meaning that they "have exhausted [their] commercial and legal remedies in the country" and are now sueing the current goverment for actions that were undertaken during the previous government. Since the termination of the SPVs had something to do with falling energy prices, 2014 sounds like a reasonable timeframe because mid of 2014 we had the big oil price drop and with it came also a downturn in wholesale electricity prices.

corrupt judges who take bribes

for this reason, the BITs usually open the door for independent courts, also in the PL-USA BIT:

An investor may take a dispute with a Party directly to binding third-party arbitration without first resorting to domestic courts.

investmentpolicyhub.unctad.org/Download/TreatyFile/5339

In general, nothing can be inferred just from the plaintiff complaining. It is currently just that: a "media offensive". It is up to the courts to decide whether the case has any merits.
peterweg 36 | 2,316
18 Oct 2017  #22
no heavily subsidising green energy doesn't make Poland richer

On shore wind power is the cheapest available. Nothing can compete against it, not even coal.

Now, a contract signed years ago for a long term would be at a much higher price than it could be built today. The installer will have invested at the higher cost with a long term plan to get a return on investment.
gumishu 11 | 5,012
18 Oct 2017  #23
On shore wind power is the cheapest available. Nothing can compete against it, not even coal.

if it's cheapest why do we need any subsidies wind farms
johnny reb 17 | 3,530
18 Oct 2017  #24
The cheapest energy concerning a viable resource would be hydro electricity.
By using a water wheel or turbines it is one of the most efficient ways, cheapest at that.
When the wind doesn't blow, the lights don't glow.
DominicB - | 2,678
18 Oct 2017  #25
The cheapest energy concerning a viable resource would be hydro electricity.

Not in Poland. The country is far too flat.
johnny reb 17 | 3,530
19 Oct 2017  #26
Poland has 21 mountains over 2,000 m (6,600 ft) in elevation and three major rivers.
It doesn't take much of a flow to turn todays turbines.
DominicB - | 2,678
19 Oct 2017  #27
@johnny reb

Unfortunately, there are very few streams in those mountains that can be harnessed for hydroelectric power, all of them small. Poland is on the rain-shadow side of those mountains, so precipitation is relatively low. Most of those few streams have already been dammed, producing only about 4% of the power of the country, or, rather, much less, as many of them are pumped storage reservoirs. Those reservoirs do not actually produce any energy at all. Any recent gains in generation capacity are due to the increase in pumped storage facilities.

Turning the turbines is not the problem. Turning them fast enough to produce enough energy to pay off is, and for that, you need a substantial drop in height. Low potential energy means low output, which means higher cost per unit generated. Very few of the rivers on the plain meet that requirement.

In the EU, Poland ranks 24th out of 25 in terms of hydroelectric generation potential. Holland actually has negative hydroelectric potential, because water has to be pumped up into the sea.

When the wind doesn't blow, the lights don't glow.

Yes, it does. That's exactly what those pumped storage facilities are for.

Building dams costs a lot, and is very destructive to the environment. Most of those built in Poland were built for flood control, with hydroelectric generation as a secondary purpose.
NoToForeigners 6 | 984
19 Oct 2017  #28
Johnny, I am truly amazed that not knowing Polish you can work out the meaning of a Polish word so easily and so precisely. Brawo Ty!

It was SOOOOO HARD to predict the meaning from context!
johnny reb 17 | 3,530
19 Oct 2017  #29
Unfortunately, there are very few streams in those mountains that can be harnessed for hydroelectric power,

Thank you Dominic for the enlightenment in an educational non boasting manner.
I am so use to being told on this forum that, "you don't live here, you never have been here nor will you ever come here so quit asking stupid questions to us brilliant ex-pats who live here."

I admit that I am no expert on turbines for electricity but do know that they are the cheapest source of electricity which was my original point.

I also admit that I do not know if the three main rivers in Poland have enough current to operate an efficient turbine/turbines.
I do know generators run more efficiently at higher RPM, so this is why turbines will spin up higher, but they can also run gearboxes to get the achieved rpm if the type of powerplant runs a colder steam.

Thank you again for teaching me a little bit more about Poland as that is what this forum is suppose to be all about. ;-)
DominicB - | 2,678
19 Oct 2017  #30
am so use to being told on this forum that,

I've been told that, too, and I lived in Poland for 12 years!

As for the rpm's, etc. It's a matter of simple physics. The energy available to you is the energy that is released when the water falls a distance. The greater the distance, the greater the energy. Try dropping a bowling ball on your toe from a height of 1 inch. It wouldn't hurt at all. Now from three feet, you could break your foot. From 100 feet, you foot would be hamburger.

The problem with Poland is that the country is mostly rather flat, so little energy is released when the water falls through the turbines. This means that each turbine will produce a lot less energy than the same turbine would in, say, Hoover Dam, where the water falls a much greater distance.


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