US-based Invenergy has filed four lawsuits against Poland-based Tauron Polska Energia, claiming damages of around $325m.
Claimed to be one of the largest commercial legal actions in the Polish courts in the recent past, the lawsuits allege Tauron of committing unlawful and unethical acts by terminating long-term agreements with windfarms on the purchase of electricity and 'Green Certificates'.
Invenergy has also alleged the involvement of former officials of the Polish State Treasury in these unethical acts.
The firm's investments in the country total PLN2.2bn ($595m) in 11 wind projects.
Invenergy's chief executive officer (CEO) and founder Michael Polsky said: "We made a long-term investment in Poland with confidence that a legal framework existed to protect our investments from this type of behaviour.
"This case will test the assumptions of our original investment decision and signal to the market whether Poland is a country where investors can rely on the sanctity of contracts."
After talks with Tauron in 2010, Invenergy's affiliates signed long-term contracts with a wholly owned unit of Tauron, Polska Energia Pierwsza Kompania Handlowa (PE-PKH).
Tauron had made PE-PKH as the contractual counterparty and even assured Invenergy that PE-PKH was a bona fide unit.
"We made a long-term investment in Poland with confidence that a legal framework existed to protect our investments from this type of behaviour."
PE-PKH signed 15-year agreements for the purchase of both energy and Green Certificates from Invenergy's windfarms.
After the signing of these deals, Tauron commenced a series of actions to release itself and its unit of their obligations, alleged Invenergy.
Among these actions included divestment of all significant assets of PE-PKH and the resignation, dismissal, or transfer of key PE-PKH employees.
In 2014, Tauron, as the sole shareholder of PE-PKH, passed a resolution, triggering the liquidation of PE-PKH and thereby leading to annulment of its unit's contractual obligations.
Invenergy challenged this manoeuvre in court. The country's law prevents liquidation unless contractual obligations have been settled.
Although Tauron has not formally completed the liquidation, nothing has been to reverse the damage caused, alleges the company.
Invenergy also levelled allegations of the involvement of former representatives of the State Treasury and Tauron in planning the termination of the commercial agreements between PE-PKH and the Invenergy's affiliate companies.
Invenergy chief legal officer Michael Blazer said: "Over several years, we made every attempt to work with Tauron and others in positions of authority to resolve this, and we asserted our rights in court cases against PE-PKH. We were met with nothing but delays, obstructions and, ultimately, silence. Today's legal actions are an unavoidable result of Tauron's refusal to honor contractual obligations and the rule of law."
Image: Dobieslaw windfarm, one of four projects involved in the lawsuits. Photo: courtesy of Invenergy.