SLOVAKIA has won the arbitration proceedings initiated by Dutch company Achmea, the owner of the health insurer Union, against the Slovak government, which plans to merge the three existing health insurers and introduce a unitary system of public health insurance. Achmea is required to pay Slovakia €1.340 million, but the disputing parties differ in their interpretation of the verdict.

While the Robert Fico government celebrates the victory and sees the verdict as a green light for its project, Achmea claims that it achieved its goal, too, in terms of averting expropriation.

Lawyers opine that the verdict does not prove that the intention and steps of the Health Ministry toward creating a unitary public health system are correct and in line with European legislation.
“The arbitral tribunal announced that the design and implementation of its public health policy is for the state alone to assess,” the Slovak Finance Ministry wrote on May 22 in its press release when commenting on the verdict. “Moreover, it stated that it is not empowered to intervene in the democratic process of a sovereign state and concluded that it has no jurisdiction over the dispute.”
The arbitral tribunal dismissed all of Achmea’s claims and ordered it to pay to the Slovak Republic the legal costs of €1.011 million as well as the costs of the tribunal at over €340,000, according to the Finance Ministry.

Bert Rensen, press officer of Achmea, reiterated for the TASR newswire in response to the verdict that by commencing the arbitration, Achmea sought to avert the impending expropriation and that they can now say they have achieved this goal.

Achmea announced on February 6, 2013 that it opened an arbitration proceeding with the Slovak Republic over the Slovak government’s plan to expropriate the private health insurers, according to its press release. It started the arbitration in response to Slovakia’s decision to seek to expropriate Achmea’s investment in Union.

“Achmea wishes to retain its investment in Union and maintains that the expropriation contemplated is not in the public interest, that it is not taken under due process of law and that it is discriminatory,” Achmea wrote in the press release on February 6, 2013. “Moreover, the manner in which the Slovak Republic intends to proceed in the expropriation process clearly contravenes the Bilateral Investment Treaty. By commencing this arbitration, Achmea seeks to avert the impending expropriation.”

The project of the launch of the unitary system has been frozen for now due to a lack of money. But Prime Minister Robert Fico said on May 21 that the project is not dead, TASR wrote.

Under its plan, the government wants to create one single, public health insurance company. There were three proposals to achieve this: acquiring the shares of the private health insurance companies, taking over the management of the private insurers’ client portfolios or expropriating the private health insurance companies for an appropriate sum, with the first option listed as the best alternative. If the government had reached an agreement with the private insurers about the sale of their shares, the single health insurer might have been launched as of January 1, 2014. In the event of expropriation, the single insurer would not emerge until July 2014. However, the Health Ministry has not yet submitted the draft of the transformation law based on which the process for the unitary system would be launched, even though the ministry claims that it is ready and that it will do so only when there is money for the project.

Originally, the government wanted to finance the project from proceedings from the sale of the 49-percent stake in Slovak Telekom. While the government hopes to get about €1 billion from the sale, Finance Minister Peter Kažimír wants to see this money used to reduce the state debt. The government plans to start the sale process in autumn.

The Health Ministry views the decision of the arbitration tribunal as positive news.

“Also, this decision is proof that the intention and steps of the Health Ministry related to the creation of the unitary system of the public health insurance are correct and fully in line with ours, but also European legislation,” said Health Minister Zuzana Zvolenská, as cited in the ministry’s press release.

Lawyers, however, do not agree with this interpretation. The Health Policy Institute think tank, which sees this interpretation as misleading, cites in its response lawyer Jana Martinková as saying that the arbitration court was only able to assess the accord with the Bilateral Investment Treaty and that probably even this did not happen because so far any interference into the investments of Achmea by the state has not happened. The transformation law does not formally exist yet. Neither the expropriation nor the subsequent compensation has taken place.

According to Martinková, Achmea’s initiative was premature, and Andrej Leontiev, a partner of the TaylorWessing e/n/w/c law firm, agrees.

“I do not want to speculate, but if conditions changed and, for example, the expropriation took place, they [Achmea] can try to sue the state again,” said Leontiev, as cited by the Sme daily.

Another arbitration proceeding between Achmea and Slovakia, concerning the ban on repaying the health insurer’s profits to shareholders, dates back to the first tenure of Prime Minister Robert Fico’s government and the verdict in this case is still pending, Sme wrote. Achmea won €25 million in the original verdict, which Slovakia appealed, however.