King’s City investors also decided to initiate legal proceedings

Developers of the King’s City project – being weary of continual delays – finally decided to appeal to the ICSID, the International Centre for Settlement of Investment Disputes, a member of the World Bank Group in Washington D.C. Given that businessmen involved in the King’s City project planned an investment worth of € 1 billion in the country, they may demand an adequate compensation in excess of $ 100 million from the Hungarian government, which is – at the same time – countersuing them before Hungarian courts, and claims over HUF 2 billion for breach of contract. “We have submitted an official claim for the settlement of the investment dispute that arose in connection with the blocking of the King’s City project” – stated the Cyprus based Vigotop Ltd., rights owner of the project in a statement that was published by the Hungarian daily Népszabadság. “King’s City is supposed to be a multi–faceted wellness and holiday resort, one of the most important tourist destinations in Europe... Agents of the company have already made several futile attempts to meet representatives of the government in order to discuss the future of the development since the new government of Hungary was sworn into power in 2010. After these attempts failed, Vigotop Ltd. contacted the Hungarian State in January 2011, and – in line with the international agreement on the settlement of investment disputes – asked its representatives to negotiate the issue in order to arrive at a satisfying solution and to avoid any legal proceedings” – declares the statement. Latest developments of the procedure can now be monitored on ICSID’s website as well, and the London based legal representative of Vigotop Ltd. also confirmed that their claim had been officially submitted.Experts said that compensatory damages for the blocking of such a high–profile investment project may even be in magnitude of hundreds of millions of dollars. Neither Vigotop Ltd., nor the company’s legal counsel wanted to comment on the opinions concerning sums of money. Independent lawyers pointed out, however, that arbiters usually try to convince the parties to first negotiate the disputed issue(s) and enter into an agreement if possible, and only when these negotiations fail, are they willing to hold a trial and decide on any monetary compensation – provided that the claim turns out to be righteous and in compliance with the law. However, the disputed parties barely have any common interest: the government did not even try to negotiate anything with the investors; what’s more, it does not recognize the jurisdiction of ICSID. The Ministry for National Economy [in Hungarian: Nemzetgazdasági Minisztérium; common abbreviation: NGM] stated in its response letter that the concession agreement for the establishment of a casino – which was deemed to be null and void by the Hungarian government at the beginning of 2011 for breach of contract – was not concluded directly with Vigotop Ltd. but with King’s City Kft., which is a limited liability company incorporated in Hungary. That is why it is solely under the jurisdiction of the courts of Hungary. The letter of the Ministry did not contemplate, however, that King’s City Kft. is wholly owned and operated by Vigotop Ltd. More interesting is the fact that the concession was – based on contemporary news and press releases – not issued in a competition and won by the company mentioned in the Ministry’s response (King’s City Kft.), but it was actually applied for and won by KC Bidding Kft., which is also a limited liability company incorporated in Hungary, and is also wholly owned and operated by Vigotop Ltd.Source: nol.hu

Last Updated on Friday, 30 August 2013 09:11