HPK seeks USD 12.4 million in damages for Zelezara Smederevo through court in Washington

Dutch company HPK Engineering, hired by the Government of Serbia in 2015 to run the Smederevo steel mill, requested a court in Washington to enable the execution of the decision of the international arbitration in London, whereby the steel mill needs to pay a compensation in the amount of USD 12.4 million due to an invalid termination of the agreement.

On August 1, HPK filed a petition at the Federal Court in Washington, D.C, requiring the decision reached in May by the arbitration tribunal in London to be upheld under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

This May, the London Court of International Arbitration (LCIA) determined that Zelezara Smederevo had unlawfully terminated the contract under which the management of HPK was hired in 2015 to improve the operations of the then state company and attract a purchaser for its privatization.

The contract with HPK Engineering was terminated in June 2016 under the argument that the company didn't meet the obligations defined by it, which have never been published. Zelezara Smederevo was sold to China's Hesteel Group in 2016, but the Dutch company claims that the contract it had signed was terminated without reason “ahead of the very completion of the privatization of the majority stake in Zelezara”.

HPK claims in its petition that Zelezara and the Government of Serbia are refusing to pay the bonus of USD 10 million agreed under the contract in case the privatization takes place within five years of its signing.

The London court determined that HPK has the right to the USD 10 million bonus and an amount for additional expenses, but the Government of Serbia and the steel mill don't want to pay this sum.

HPK accuses the Government of Serbia that, although it used to own Zelezara, it has no grounds on which to invoke its nominally independent corporate status in order to avoid making the payment.

According to Beta's unofficial information, the complaint of HPK Engineering against the Republic of Serbia was not withheld, and the company will not find it easy to realize the arbitral award.

According to those sources, the petition to the American court, if it has been filed, can be seen as HPK Engineering's attempt to pressure the execution of the London court decision.

HPK Engineerig B.V. Holland

Železara Smederevo d.o.o.

Vlada Republike Srbije

HBIS GROUP Iron & Steel d.o.o. Beograd

HPK Engineering

HPK

Zelezara Smederevo

Smederevo steel mill

Government of Serbia

Federal Court in Washington

London Court of International Arbitration

LCIA

Hesteel