AS Tallinna Vesi submitted a complaint to the European Commission in 2010. Following an investigation, the European Commission has decided that complaints, in relation to a new legal framework (the anti-monopoly bill) introduced by the Republic of Estonia with retroactive effect for tariff setting in the water sector, could not be upheld. However, in so finding, the European Commission did not conduct any detailed analysis or make any comment on the appropriateness of that regulatory methodology.
The European Commission recognised that the Services Agreement between the Company and the City of Tallinn contained economic conditions that were contractually agreed at the time of the privatisation and thus recognised that the modification of the privatisation regime could trigger the liability of the relevant Estonian authorities and a possible claim for compensation.
That recognition was in stark contrast with the suggestion put forward by the Estonian authorities to the local courts, where it was claimed the privatisation contract was always illegal and was therefore void ab initio.
The European Commission clarified that the result of its examination would have no impact on AS Tallinna Vesi’s court case in Estonia. It stated in terms that “the result of the examination of this complaint by the Commission Services is without prejudice to litigation pending before the national courts”. Moreover, it suggested that it is for the local courts to ascertain whether this change in the law had unlawfully damaged the Company and if so, what compensation would be payable to AS Tallinna Vesi.
AS Tallinna Vesi will continue to pursue its case through the local courts. It has also recently sent a letter before action to the Government of Estonia pursuant to the Agreement on the encouragements and reciprocal protection of investments between the Kingdom of the Netherlands and the Republic of Estonia. With regard to the European Commission’s decision, the Company is taking further legal advice before deciding whether to refer the case to the EU Ombudsman and/or the European Court of Justice.
Mariliis Mia Topp AS Tallinna Vesi Head of Communications Tel: (+372) 62 62 275 mariliismia.topp@tvesi.ee
