French media conglomerate Vivendi received a long-awaited boost in its effort to win back its stake in Polish wireless carrier Polska Telefonia Cyfrowa (PTC), as a tribunal associated with the London Court of International Arbitration ordered Elektrim—a Polish utility firm that once partnered with Vivendi in PTC—to pay the French firm US $2.491 billion in damages and interest. Contested in numerous courts throughout Europe, the dispute over Vivendi’s PTC stake goes back to 1999, when Vivendi paid US $3.1 billion to enter a joint venture with Elektrim that, in turn, would hold 51% of PTC’s shares. After Deutsche Telekom (DT)—a minority PTC shareholder—challenged the legality of that agreement, Elektrim sided with DT and sold its stake to the German carrier, which later forced Vivendi out of the venture. After a succession of courts in Austria, Poland and France upheld the arrangement, Vivendi pressed its case in the U.S., citing violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. That effort failed last year, however, as the U.S. District Court in Seattle turned down Vivendi’s complaint on jurisdictional grounds. Awarding damages to Vivendi for “intentional breaches by Elektrim of the investment agreement entered into . . . regarding their joint venture,” the London tribunal concluded that “Elektrim breached the basic premise of the [investment agreement] by systematically acting against the interests of [the joint venture] in furtherance of its own interests.” Notwithstanding the tribunal’s decision, the question concerning PTC’s ownership remains unresolved as appeals of earlier rulings affirming DT’s stake in PTC remain pending in the Polish court system.
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London court awards Vivendi $2.41 billion in dispute over Polish wireless stake
- Paul, Weiss, Rifkind, Wharton & Garrison LLP
- Patrick S. Campbell
- France, Poland, United Kingdom
- February 27 2009
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