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Fox Marble Holdings PLC

Fox Marble launches €195m international arbitration claim against the Republic of Kosovo

Fox Marble Holdings PLC (LON:FOX), the AIM listed company focused on marble quarrying and processing in Kosovo and the Balkans region, has today launched United National Commission on International Trade Law international arbitration proceedings, against the Republic of Kosovo for damages in excess of €195 million, as a result of the failure of the State to protect Fox Marble’s rights over the Malesheva quarry.

The Company is represented by its legal advisers, Stephenson Harwood LLP, as well as its Kosovan lawyers.  As the Company believes the Kosovan Government to be in clear breach of its responsibilities towards the Company which is a foreign investor in Kosovo, the Company is of the opinion that this action is in the best interests of its shareholders and employees and anticipates a fair and satisfactory resolution.  

All the Company’s other operations, including the quarries and processing factory in Kosovo and the Prilep quarry in Northern Macedonia, are unaffected.

As was announced on 26 June 2019, the sellers of Green Power Sh.p.k, the licence holding partner of Fox Marble’s Malesheva quarry, and Scope Sh.p.k reneged on the agreement, announced on 4 April 2019, for Fox Marble to purchase these assets.

Since then Fox Marble has been working to resolve the dispute concerning the purchase of Green Power and Scope with the appropriate Kosovan Government agencies, namely the Kosovo mining regulator, the Independent Commission of Mines and Mineral and the Agjencia e Regjistrimit të Bizneseve, the Kosovo business registration agency. However, in what is a clear breach of Kosovo Law 04/L-220 “On Foreign Investment” (2014), Fox Marble has been prevented from asserting its rights in these matters. This is a law that should provide extensive protection to foreign investors, such as Fox Marble, and promises even handedness in the treatment of foreign investors and local businesses.

The Company has presented detailed evidence to the ICMM that it holds the relevant rights to grant develop, exploit and operate its Malesheva quarry to Fox Marble Kosova Sh.p.k, Fox Marble’s local subsidiary, which has been the case since 2015. However, as disclosed on 18 July 2019, operations at the Malesheva quarry were suspended. Numerous procedural and legal channels open to it in Kosovo to have failed to bring the matter to a satisfactory conclusion.

The Company has also presented the ICMM with detailed evidence of its purchase of Green Power and Scope and shown that their owners had no basis to rescind the share purchase agreements.  Despite the cumulative weight of evidence, Fox Marble was denied the right to appeal any decision relating to the Malesheva quarry in direct contravention of the provisions of the Kosovo foreign investment law, Law 04 /L-220 as well as its own rules and procedures.

In parallel to its efforts with the ICMM, Fox Marble has made repeated attempts to register the transfer of ownership of Green Power and Scope at the ARBK.  This agency has the established authority to accept the valid share purchase agreements as evidence of ownership.  However, the ARBK has rejected Fox’s application to register the change of ownership in direct contravention of the provisions of the Kosovo foreign investment law.

As a direct consequence of the ARBK and ICMM decisions, the Company has brought arbitration proceedings against the Republic of Kosovo pursuant to Article 16 of the Kosovo foreign investment law (as above). The basis of the claim for damages is the investment made to date in the Malesheva quarry, loss of future revenues associated with the site and future investment plans in Kosovo. Significant future investment plans are the subject of the MOU signed in October 2016 by the Government of Kosovo and Stone Alliance LLC which is majority owned by Fox Marble

Chris Gilbert, CEO, commented, “Fox Marble has always sought to work in partnership with Kosovo and its government. We have therefore taken this step with the greatest reluctance, but the current circumstances and decisions made have left us with no choice.  There has been a clear failure by the Kosovo government and its agencies to apply their own laws and regulation in a fair and equitable manner. It is beyond doubt that Fox Marble has a strong case.  I am confident that the claim will be decided in our favour and that the award obtained will protect our investment, our shareholders and show that Kosovo is a place where international businesses can invest.”

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.