ICSID rejects Romania's call to terminate Eurohold's EUR 500 mln arbitration request

The International Center for Settlement of Investment Disputes in Washington (ICSID) rejected the Romanian government's request to terminate the arbitration case filed by the Bulgarian group Eurohold (Eurohold Bulgaria AD) and its insurance arm Euroins Insurance Group (EIG) due to the withdrawal of the license and the declaration of bankruptcy of Romanian subsidiary Euroins Romania by the Romanian authorities, Eurohold announced.

The Bulgarian entities on May 22 2024, have officially filed a Request for Arbitration against Romania at the ICSID. They cited "multiple unlawful acts of the Romanian authorities, which have damaged EIG's business in Romania and completely destroyed it in the case of Euroins Romania". The claim is in excess of EUR 500 million.

Before its bankruptcy in June 2023, Euroins Romania was the leader of the country's third-party car insurance market, with a share of nearly 30%.

The two Bulgarian entities claim that on March 17, 2023, ASF, the Romanian financial authority, unjustifiably withdrew the license of Euroins Romania in an "arbitrary and discriminatory" decision.

The ASF announced in March 2023 that it had found "elements of insolvency" at Euroins and decided to withdraw the insurer's license and file a bankruptcy request. The Bucharest Tribunal confirmed the state of insolvency in June 2023 and approved the bankruptcy procedure requested by the ASF in the case of Euroins Romania.

ASF found that the company had a solvency capital deficit of over EUR 400 million, that is, it could not guarantee the payment of obligations. Shortly before, allegedly anticipating the decision of the ASF, Euroins transferred almost all the reserves to EIG Re, a reinsurer from the group with almost negligible activity compared to Euroins Romania.

(Photo source: press release)