Energo Zelena submitted Request for Arbitration against Republic of Serbia and suspends operations of its rendering plant in Indjija

(Office building in Indjija)

Belgium companies Energo-Zelena and Zelena submitted the Request for Arbitration against Republic of Serbia to International Center for Settlement of Investment Disputes in Washington DC (ICSID). They have been forced to take these measures due to systematic omission of Republic of Serbia to enforce its own legislation on treatment of animal by-products thus jeopardizing viability of Energo-Zelena’s operations in Serbia. The Board of Directors also decided to suspend the operations of its Indjija based plant that is the only rendering facility for treatment of hazardous ABP in Serbia fully compliant with the Serbian legislation.

Companies Energo-Zelena d.o.o. and Zelena N.V. decided to start international investment arbitration against Republic of Serbia before International Center for Settlement of Investment Disputes in Washington DC (ICSID) due to substantial and recurrent damage and losses caused to its rendering business by repeated wrongful acts and omissions by the competent authorities of Serbia.

The business case of Energo-Zelena, the only rendering plant for treatment of hazardous ABP in Serbia that fully complies with legislation, is based on two corner-stones: the first is implementation of Serbian law and regulations (Veterinary Act and Regulation on ABP treatment) applicable to the treatment of ABP and the second is equal treatment of all rendering plants on the market. Instead, Energo-Zelena has been continuously exposed to blatant discrimination and unfair competition on the market.

As it was announced, by its systematic omissions to enforce its own legislation on treatment of animal by-products Serbia has not only caused significant damage to Energo-Zelena, but also endangered the environment and public health of Serbian citizens and citizens of other countries and Serbia breached its international obligations, in this case obligations under the bilateral investment treaty with Belgium (Agreement between Belgium-Luxemburg Economic Union and Serbia and Montenegro on the Reciprocal Promotion and Investment Protection that entered into force in 2007).

Energo-Zelena tried to resolve this dispute amicably. On 28 March 2014, it sent the Notice of Submission of Investment Dispute to Amicable Settlement Negotiations to the highest authorities in Serbia. However, despite the investor's continued devotion to cooperation and finding an amicable solution, it faced a series of empty promises, continued flagrant breaches of the law and an obvious lack of good intentions from Serbia's side. As a result, the investor submitted the Request for Arbitration to ICSID on October 24, 2014 which was registered and published on ICSID's website on November 7, 2014 (https://icsid.worldbank.org/ICSID/FrontServlet?requestType=GenCaseDtlsRH&actionVal=ListPending).

To mitigate further losses, the Board of Directors decided to suspend all Energo-Zelena’s activities related to ABP collection and treatment as of November 29, 2014 and to ultimately close the plant in Indjija by the end of December this year. Until end of December, all 43 employees of Energo-Zelena will remain employed. In early November, Energo-Zelena informed the Veterinary Directorate and the Head of the Veterinary Inspection about its plans and the timing, providing in this way additional two months’ time for amicable settlement of present dispute without irreversible consequences.

- “Company Energo-Zelena and its Belgium shareholder Zelena N.V. are committed to the Serbian market. We initially invested EUR 21.5 million in a state-of-art rendering plant for treatment of hazardous ABP with intention to establish long-term business and create viable business partnerships and relations in Serbia. The best example of our commitment was unselfish support of our Company and our employees during the floods when we supported the Government of Serbia and Bosnia and Herzegovina in fighting the consequences of devastating floods. However, our company, which operates the only rendering plant for treatment of hazardous ABP that is fully compliant with Serbian legislation, has been continuously exposed to unfair competition and blatant discrimination. When we entered Serbian market we expected the Serbian state to implement its own legislation. This is not happening in practice, the opposite is true: as foreign direct investors we have been continuously discriminated. As a result our investment is severely jeopardized and the company is operating with substantial loss. We are deeply disappointed with the investment climate in Serbia and the unwillingness of the Serbian Government to respect its own law and to establish a constructive dialogue in order to find a solution for the problem. We started international arbitration before International Centre for Settlement of Investment Disputes in Washington DC as it is the only way to protect our investment”, says Tom Hanson, Director of Energo-Zelena.