POLAND. The Hague-based Permanent Court of Arbitration has ruled that the Polish state must pay over €20 million to Flemingo International division Baltona Duty Free. The compensation was awarded to Baltona over a contract dispute at Warsaw Chopin Airport.
As we reported in 2012, state-owned Polish Airports State Enterprise (PPL), which runs Warsaw Chopin, decided to unilaterally cancel its retail lease agreement with Baltona’s subsidiary BH Travel Retail Poland before beginning an overhaul of one of its terminals. The construction work was to be carried out ahead of the UEFA European football championship that was jointly hosted by Poland and Ukraine.
BH Travel Retail Poland decided to seek financial compensation for the move, as its lease deal guaranteed a notice period that it claimed was not respected by PPL. The state-run company refused to compensate Baltona’s offshoot, and instead, demanded that the company cease its retail operations at the airport. PPL claimed that Baltona was in breach of the technical conditions of its agreement.
In 2014, Baltona filed a complaint to the Permanent Court of Arbitration, which recently ruled that the state is to pay the company €20 million, along with interest and a portion of the costs of the arbitration proceedings.
In a statement issued to Polish media, Flemingo International CEO Atul Ahuja was quoted as saying that he was not fully satisfied with the amount of the compensation in the ruling, but he was glad that the court ruled in favour of his company.
“I hope that this dispute will be over as soon as possible. Currently, we are waiting for relevant Polish institutions to implement this ruling, and we hope that the Polish authorities will respect the Bilateral Investment Treaty (BIT) that was signed by Poland and India,” Ahuja said.
The BIT includes an investor-state dispute settlement (ISDS) provision which enables companies to sue state authorities over alleged discriminatory practices.
To date, the Polish Ministry of Infrastructure and Construction, the institution that oversees Poland’s airports, has not issued any statement on the court’s decision. The Polish authorities may seek to appeal against the ruling.
A spokesman for PPL told The Moodie Davitt Report that it was not a party to the case, and so could not comment, noting that it was a matter for the Ministry of Infrastructure.
Baltona currently operates 25 retail outlets at seven Polish airports: Warsaw-Modlin, Rzeszów, Poznań, Kraków, Katowice, Gdańsk and Bydgoszcz.
Flemingo International took control of Baltona in 2010.
