State Risks Paying Millions in Arbitrage

TransAtlantic Petroleum

Oil company TransAtlantic Petroleum has sued the Albanian state at the International Court of Arbitrage in Switzerland. The company accuses the Albanian state for a unilateral breach of contract and seeks $70 million in damages.

In October 2016, Albpetrol canceled the company’s right to exploit two oil wells in the Çakran–Mollaj and Gorisht–Çokul respectively, claiming that the oil company hadn’t made the investments foreseen in the contract, while creating a backlog of €13 million in payments to Albpetrol.

In early 2016, the employees of TransAtlantic Petroleum protested against the non-payment of their wages. They declared that several of them had been threatened with losing their jobs because of the frequent protests.

The employees also sent a letter to Prime Minister Rama and Minister of Energy Damian Gjiknuri seeking a solution for the situation.

In 2014, TransAtlantik Petroleum, which had bought the second largest Albanian oil company, Stream Oil, is a foreign company with an Albanian CEO registered in Delaware, USA, which is known as a tax haven.

Bankers Petroleum

At the same time, the Albanian government continues to battle in court with the largest oil company in the country, Bankers Petroleum.

In late 2016, the government decided to appeal the decision of international auditors in favor of Bankers Petroleum at the International Court of Arbitrage. According to the auditors, Bankers Petroleum does not need to pay any taxes to the Albanian government, which was ordered to return around €37 million in unjust tax payments to the company.

Bankers had accused the Albanian state in 2015 of imposing unjust taxes on the company, while the government claimed that Bankers had claimed $300 million in fictional expenses, after the deduction of which the company owed the government $57 million. As a result, the government blocked the bank accounts of the company, paralyzing its activities in Albania. Although Bankers appealed the decision of the government, the Appeals Court decided that the state had the right to block the bank accounts.

After losing their appeal in Albania, Bankers turned to the International Court of Arbitration, where the case is still pending.