The High Court of Cassation and Justice has definitively rejected the Ministry of Transport’s claims regarding the payment of the EUR 10 million letter of credit submitted by the private operator SC Grup Feroviar Român SA (GFR) for participation in the privatization process of the National Railway Freight Company – CFR Marfă SA, in 2013.
“We are pleased to see a final resolution in this case, which confirms that Grup Feroviar Român acted in good faith and in line with legal provisions throughout the entire privatization process,” says Gruia Stoica, President of GRAMPET Group – Grup Feroviar Român. “It is unfortunate that the Ministry of Transport chose to take this fight for almost 7 years, ignoring the evidence that the execution of the letter of credit could only be done within the legal provisions and in strict compliance with the formal and substantive requirements under which it had been issued, a fact that has been confirmed by all the 3 courts resolving this dispute”.
In order to participate in the privatization, in June 2013 Grup Feroviar Român submitted a letter of credit issued by Raiffeisen Bank International AG, accompanied by the confirmation of authenticity issued by the Import Export Bank of Romania – Eximbank.
In September 2013, the Romanian State, through the Ministry of Transport, and Grup Feroviar Român, as buyer, signed the contract for the acquisition of 51% of CFR Marfă shares. Eventually, the privatization process failed because the creditor banks of CFR Marfă did not give their consent for the change of the shareholders’ structure. Consequently, the contract was terminated, and the buyer – not being guilty for the privatization’s failure – was relieved of any incumbent obligation, including the payment of the EUR 10 million credit.
In addition, there were no reasons for the financial sanction of Grup Feroviar Român, which had fully fulfilled its obligations and made every effort to successfully complete the privatization process.
In 2017, the Ministry filed a lawsuit against the financial institutions Eximbank and Raiffeisen International Bank, with Grup Feroviar Român joining as intervener (capacity through which it can participate in the process, formulating its own claims and thus preventing a possible subsequent lawsuit on the same case).