ZAGREB, December 19, 2018 - The Hungarian oil and gas company MOL has unexpectedly and without any explanation withdrawn its lawsuit against Croatia filed with a Washington district court, the Večernji List daily of Wednesday reports.

The Hungarian company in 2017 asked the US court to recognise and accept a ruling by the United Nations Commission on International Trade Law (UNCITRAL) in Geneva which two years ago ruled in favour of MOL and against Croatia.

The lawsuit in that case was launched in 2014 by the Zoran Milanović government, and Croatia requested UNCITRAL to annul changes to a 2009 agreement on management rights in the INA oil company, jointly owned by MOL and Croatia, as well as a master gas business agreement, signed during the term of the Ivo Sanader government.

Sanader is currently on trial on the charges that he received a bribe from MOL company CEO Zsolt Hernadi, who is beyond the reach of Croatian authorities, in exchange for ceding management rights in INA to the Hungarian company. Also indicted in this case is Hernadi.

According to documents from the Washington court, MOL asked that the United States confirm, recognise and apply UNCITRAL's final ruling of 23 December 2016, referring to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, of which Croatia is a signatory.

This would mean that the US judiciary should treat the Geneva tribunal's ruling as if it had been made by a US court and its enforcement was subject to US laws.

In the first version of its lawsuit, MOL also asked that Croatia should pay 14.5 million euro in costs it was ordered to pay by the court, which Croatia did, after which MOL confirmed that Croatia had settled the debt but not the interest and proceeded with the case.

The US court on 13 November 2017 informed the Croatian Economy Ministry that a lawsuit had been filed against it.

The penultimate document on this case from the US court was released on April 18, 2018, when Croatia was given an extension of the deadline until 28 September to prepare for the case, but five days before the deadline expired, on September 24, information arrived from the court that the plaintiff had voluntarily withdrawn the complaint, Večernji List says, stressing that MOL officials did not want to comment on the withdrawal of the lawsuit.

Many see the withdrawal of the lawsuit as a tactical move whereby MOL wants to additionally strengthen its position in ongoing arbitration proceedings it launched in Washington in 2013.

Croatia's launching arbitration proceedings before UNCITRAL in 2014 was a response to MOL's arbitration lawsuit.

Večernji List notes that it is an interesting coincidence that on September 12 European Parliament members from the Croatian Democratic Union (HDZ) supported Hungarian Prime Minister Viktor Orban in the European Parliament, after which Hungary lifted its blockade of Croatia's bid to join the Organisation for Economic Cooperation and Development (OECD), while on September 24, MOL withdrew its lawsuit against Croatia before the US court.

Following the decision by UNCITRAL to dismiss Croatia's motion to nullify the 2009 agreement on management rights in INA and the master gas business agreement, incumbent Prime Minister Andrej Plenković said that the government had decided to claim back full ownership of INA by buying MOL's stake in it.

More news on the INA-MOL case can be found in our Business section.

ZAGREB, December 5, 2018 - Prime Minister Andrej Plenković said on Tuesday that, if Croatia and Hungary failed to reach agreement on the price at which MOL's stake in the INA oil company would be bought back by Croatia, that problem would become insurmountable because no one was in a position to set aside more funds than they could or should.

Responding to a reporter's question at a news conference after a summit of the Central European Initiative (CEI) in Zagreb, Plenković said that Hungary and Croatia had different views on the issue of the INA oil company. "The price of restoring Croatian ownership of INA is not something that can be negotiated overnight nor is it that simple. Quite the contrary, we are aware of its complexity and ultimately, if we do not agree on a price, in my opinion, that may become an insurmountable problem because nobody can set aside more funds than they can or should," said Plenković.

The Croatian government has estimates, he said. "We have rough estimates. What varies are broader details that can be important for energy companies, their future prospects and relevant global trends. However, we haven't done anything wrong in this case, quite the contrary, I believe that our decisions have been good and that that fact has even helped deal constructively with certain processes and problems. That was the content, spirit and tone of our meeting yesterday," said Plenković.

He reiterated that after his meeting with Hungarian Prime Minister Viktor Orban in Zagreb on Monday it was concluded that relations between Croatia and Hungary were very good and free of outstanding issues in terms of their good neighbourly relations, as well as that there were no problems in the two countries' relations regarding INA and MOL.

Prime Minister Orban said yesterday that Hungary saw the INA-MOL situation as an issue concerning the two companies.

In late 2016, Plenković said that the Croatian government had decided to restore its ownership of the INA oil company by buying back MOL's stake in INA, after Croatia lost a case filed against MOL before the United Nations Commission on International Trade Law in Geneva.

In mid-January last year, the government formed a council for negotiations with MOL regarding the possible purchase of shares held by that Hungarian company in INA, and in April this year it selected a consortium consisting of Morgan Stanley, Intesa Sanpaolo Group and Privredna Banka Zagreb as its investment consultant for the possible purchase of the stake and its possible subsequent sale to INA's new strategic partner. However, a contract with the consultants has not been signed yet.

For more on the INA-MOL problems, click here.

The Summit of the Central European Initiative (SEI), which brought together the heads of state of six countries in Zagreb, saw the Hungarian Prime Minister, Viktor Orban, arrive in Croatia. Despite talks between the two leaders, the INA-MOL situation remains without real direction.

As Jadranka Dozan/Poslovni Dnevnik writes on the 3rd of December, 2018, this opportunity, as was well understood by the involved parties, was also used for bilateral talks between the Hungarian PM and Croatian Prime Minister Andrej Plenković. After the meeting, there were more or less protocol words and a few statements decorated with positive intonations released. The talk, according to Plenković, showed the desire of both countries to continue to develop economic cooperation as well as the good will to overcome existing problems primarily regarding INA and MOL, so as to solve and not further endanger the development of relations in all other areas.

Orban isn't quite as diplomatic as the ever-polished Plenković in his view, and in his opinion it isn't normal that two neighbouring states which look to each other as allies have allowed six or seven years to pass since the last official visits between their respective prime ministers.

"During the last few months, we've conducted numerous negotiations, and today I came to bring our relations back," Orban said, recalling that cooperation with Croatia began back in the 1990s with an advocate in the Hungarian parliament, and underlining the fact that he was a friend of President Franjo Tudjman. This will result in a new dialogue between the two neighbouring governments, it's too early to talk in any real detail, but talks on the energy sector are expected, as well as those over the ongoing INA-MOL situation and the question of Hungary's interest in the LNG terminal project on the island of Krk. Despite the aforementioned, the talks between the two prime ministers certainly weren't focused purely on neighbourly relations in terms of business and energy strategies.

Justice had its part to play in the talks. On the one hand, there is the arbitration dispute at the International Settlement of Dispute Settlements in Washington, and other disputes over the request of the Croatian judiciary for the extradition of Zsolt Hernadí of Hungary's MOL.

From the aspect of energy strategy and business, especially in light of the declarative plan of the Croatian Government on the purchase of MOL's stake in INA, the appearance of Minister Tomislav Ćorić on Sunday was very indicative.

The day before talks with the Hungarian side over the INA-MOL situation were due, Minister Ćorić confirmed that the Croatian Government had not yet signed a contract with the investment advisory consortium for the INA project, which was chosen back in April, after a multi-month process which was characterised by several so-called "extensions".

According to the minister, a contract with a consortium in which Morgan Stanley, Intesa Group and PBZ are involved has not yet been signed owing to the fact that when conversation with them following the initial selection, "points around which there was no complete understanding" arose. Despite this, Minister Ćorić claims that "they're currently being resolved". This raised numerous questions from the side of experts and left them wondering what the situation would be like if international consultants hadn't stepped in.

Meanwhile, there were more meetings between representatives of the Croatian Government and Hungarians, and one can quite easily conclude that these talks were without any real specific focus. Most of the bigger problems appear to lie with the sheer lack of clear views on what strategic goals need to be achieved and in which development segments the Croatian Government intends to place the most emphasis.

As with most things in Croatia, the path to solving the INA-MOL situation is littered with obstacles and appears to be very far from a solution, regardless of the apparent good will on both the Croatian and the Hungarian side.

Make sure to keep up with our business, politics and news pages for more.

Click here for the original article by Jadranka Dozan for Poslovni Dnevnik

ZAGREB, December 3, 2018 - Croatian Prime Minister Plenković and Hungarian Prime Minister Orban said in Zagreb on Monday the only issue burdening relations between the two countries was the management of the Croatian INA oil company, in which Hungary's MOL is a part owner, adding that if MOL were to sell its stake to Croatia, the key point was to agree on the price.

The two prime ministers met ahead of a two-day summit of the Central European Initiative (CEI) in Zagreb and discussed many issues, underscoring that this was Orban's first visit to Zagreb in seven years and an opportunity to strengthen bilateral relations burdened by disagreements over the management of Croatia's largest oil company.

"There is good will on behalf of both the Hungarian and the Croatian government to resolve those problems. What we would like is this problem not to burden relations in other areas," Plenković said.

Asked if Croatia was still willing to buy back MOL's stake in INA, Plenković recalled that on the Croatian side was the government and on the Hungarian side a private company. "The Croatian government's stance has not changed and in the end the key thing is to agree on the price."

Orban underscored that disagreements over an economic issue, which he compared to "a thorn under the nail", could not be more important than centuries of common history between two neighbouring nations. "I really don't know of any economic problem that could be more important or difficult than 800 years of common history."

Orban said "it's not a normal situation between two allied and neighbouring states when a Croatian prime minister hasn't been to Hungary in six years." "Until today's visit, I hadn't been to Croatia for seven years. I came here to change this unnatural situation so that we can bring our relations back to normal. The current situation makes me unhappy," he added.

Orban said it was confirmed at the talks with Plenković that the two countries were "on the same side." "We want a strong Europe. We want to strengthen the cooperation between European nations."

He said Croatian-Hungarian cooperation was "good". "Economic figures are good, we have constant trade growth, more and more Hungarians come to Croatia, there's a rise in the number of Hungarian investments in Croatia."

"Hungarians in Croatia speak of the incumbent Croatian government with great respect and Croats in Hungary can't remember a time when they enjoyed such great support from the Hungarian government," Orban added.

"Things look good," he said, but noted that "there's a certain bitter taste in our mouths." "The horizon of our relations is not entirely without clouds. You probably know how a healthy body reacts when a thorn gets stuck under the nail. It's no big deal but it still affects a person's mood."

"That's the situation we are faced with now," Orban said, alluding to the outstanding INA-MOL issue. "We must pull this thorn from under the nail and everything will be all right."

Asked by the press how he looked upon this issue, he said: "Hungary looks upon it as an issue between companies." "Decisions should be made at company level. If Croats and Hungarians can't cooperate in a company, then they shouldn't do it, they should go their separate ways," he said, adding that "in this particular case this means that Croatia should buy out MOL's stake in INA. That's the advice we can give."

Asked by the press how to resolve the issue of Hungary's refusal to extradite MOL CEO Zsolt Hernadi, for whom Croatia issued an arrest warrant on the charge that he had bribed former Croatian PM Ivo Sanader in exchange for securing management rights in INA, Plenković and Orban said it was a judicial matter.

"This government knows what the separation of powers is. This government neither intends to nor can in any way interfere in the work of courts and prosecutors," said Plenković.

Orban too said he considered this "a legal matter" and that in Hungary "politics doesn't interfere in legal matters. The judiciary should take its course. I won't make any secret deals regarding any legal matters."

Plenković said they also talked about transport cooperation, cooperation in the development of an LNG terminal on Krk island, and European matters, notably Croatia's wish to enter the Schengen Area.

"We want to make headway there and I'm sure we'll have Hungary's support in that," he said and Orban agreed. "We'll be glad if Croatia becomes a member of the Schengen Area as soon as possible. That will bolster Europe's importance too," said Orban.

As for Hungary's possible participation in the LNG project, he said it was primarily a question of gas prices. "At the moment, Hungary procures the cheapest gas from Russia. Second is gas from Romania, for which an interconnection is being built, third is the procurement of gas from Slovakia, while Croatia is only fourth," he said, adding, "If we can agree a business model, we'll be able to cooperate."

For more on relations between Croatia and Hungary, click here.

ZAGREB, November 22, 2018 - Economy Minister Darko Horvat has said that in the coming months a final decision on Croatia's buyout of Hungarian energy group MOL's stake in Croatia's INA can be expected, underscoring that it is more important that the entire process is well done than the fact how much time all that will take. He also commented on claims that Hungarian Prime Minister Orban was angry with Croatia.

When asked by the press on Thursday about the outcome of the process, Horvat declined to speculate. "We are in a very delicate stage of the selection of relevant consultants that can help us in due diligence and in making a final decision on INA's current value and its value on the market," he said adding that this part of the process was within the remit of the ministers of finance and energy.

Earlier on Thursday, Energy Minister Tomislav Ćorić also commented on scenarios for Croatia's buyout of MOL's stake in INA, and said that he expected a decision in the months ahead. After a reporter remarked that the government was taking too long to decide, Ćorić said such a job should be done properly. "It's much better to work longer and for the analysis to be good than to do it in a short time and have a lacking analysis," he said.

In January 2017, the government set up a council for negotiations with MOL on a possible buyout of its stake in INA. This past April, the government chose a consortium comprising Morgan Stanley, Intesa Sanpaolo Group and Privredna Banka Zagreb as its investment consultants in the possible buyout and subsequent sale to a new strategic partner for INA. However, a contract with these consultants has not yet been signed.

Also on Thursday, Horvat and Ćorić commented on Hungarian Prime Minister Viktor Orban's alleged anger at Croatia over the reactivation of an arrest warrant for MOL CEO Zsolt Hernadi.

Ćorić told reporters "What anger? Only good vibrations, please" and announced that Orban was expected in Croatia on December 3.

Croatian media have carried Hungarian Index.hu portal's claim that Orban was "very angry that Croatia betrayed Hungary and didn't act gentlemanly in the lifting of the blockade on Croatia's OECD membership bid in exchange for giving up the Hernadi arrest warrant."

Horvat said he did not see any reason for anger. Furthermore, he did not perceive such feelings in any form of communication with Orban.

The Croatian minister expressed hope that Slovenia would follow Hungary's suit and remove its objections to Croatia's OECD membership bid.

For more on the INA-MOL issues, click here.

ZAGREB, November 17, 2018 – The Interpol Executive Committee met in Dubai on Saturday and ruled in favour of Croatia, allowing the renewal of the international arrest warrant for the CEO of the Hungarian energy company MOL, Zsolt Hernadi, the Croatian Interior Ministry said in a press release.

The Ministry recalled that in November 2016, Croatia's request to INTERPOL to extend a Red Notice for MOL's CEO Hernadi was outvoted at an Interpol general assembly. As EU member states, Croatia and Hungary were urged to resolve their dispute before a relevant EU body after which they can submit another request to the Committee to consider issuing the arrest warrant for Hernadi.

After a European Court in Luxembourg announced in July this year that Hungary should not have ignored the European arrest warrant issued for Hernadi, Croatian police have once again requested Interpol to extend a Red Notice for the MOL's CEO,

The European arrest warrant for Hernadi, which some states have ignored, was first issued after Croatia's USKOK anti-corruption office accused him of giving former Croatian Prime Minister Ivo Sanader 10 million euro in bribes so that MOL could have management rights in Croatian oil company INA.

In December 2015, Sanader's corruption trial was combined with Hernadi's case, but the latter's defence asked that the case file be translated into Hungarian. They also claimed that Hernadi had been acquitted of bribing Sanader in a private suit in Hungary.

At the end of 2017, Croatia's Supreme Court quashed a decision of 30 May 2017 whereby Zagreb's County Court suspended the Sanader-Hernadi trial while ruling on appeals filed by USKOK and Hernadi's defence. Last week, the County Court adjourned a preliminary hearing in the proceedings.

For more on the INA-MOL case, which has been burdening the relations between Croatia and Hungary, click here.

ZAGREB, September 7, 2018 - A group of workers at the Sisak oil refinery said on Friday they had documents showing that the management of the INA oil company were preparing two versions of a plan to terminate production at the plant, with January 1 or May 1, 2019 as the dates for the closure of the refinery.

ZAGREB, August 11, 2018 - After a European Court in Luxembourg announced that Hungary should not have ignored the European arrest warrant issued for Zsolt Hernadi, CEO of the Hungarian energy company MOL, the Croatian police have once again requested Interpol to extend a Red Notice for the MOL's CEO, according to what the N1 broadcaster reported on Friday.

ZAGREB, August 9, 2018 -The MOST party leader Božo Petrov expressed fear on Thursday that the government-sponsored draft law on the privatisation of the oil and gas group INA, which has been put to public consideration, would actually revoke Article 10 of the existing legislation, which would clear the way for MOL to completely take over the biggest Croatian company.

ZAGREB, July 26, 2018 - Environment Protection and Energy Minister Tomislav Ćorić said on Thursday the process of a possible buyout of Hungarian energy group MOL's stake in Croatian peer INA was taking its course and that he expected an expert analysis by the government's consultants, Morgan Stanley and partners, to be ready by year's end.