THE EUROPEAN Court of Arbitration in Strasbourg will no longer deal with a case involving Slovak legislation which was recently ruled unconstitutional by the country’s Constitutional Court. HICEE, a Dutch company that is a 100-percent shareholder in the Slovak health insurer Dôvera was seeking compensation of more than €500 million in a lawsuit filed with the European court challenging legislation passed by the last government that banned private health insurers from using profits to pay dividends to their shareholders.
The legislation, which became one of the most criticised laws advanced by the government of Robert Fico, also attracted the attention of the European Commission. The present cabinet of Prime Minister Iveta Radičová has already agreed a draft amendment to deal with the issue but the legislation has not yet been considered by parliament.
HICEE is owned by Penta International Investment Group and its spokesperson said the arbitration court’s decision was of a technical-procedural nature and did not address the essence of the issue, which Penta said is whether the 2007 revision to Slovakia’s health insurance legislation was legal or whether it violated international agreements on the protection of investments.
“Certainly, we do not consider the decision of the arbitration tribunal to be favorable,” Martin Danko, spokesman for Penta Investments, told The Slovak Spectator. “On the other hand, our main goal is not to be involved in arbitrations but to operate in a stable and predictable legislative environment.”
According to a report in the Sme daily, the court is continuing to review the same issue in a dispute between the Dutch Eureko company, the majority shareholder in Slovakia’s Union health insurer, which also filed an arbitration claim seeking around €160 million.
An arbitration case involving a third private health insurer, Apollo, which merged with Dôvera in 2010, is still being assessed by the court to determine whether it has jurisdiction over it, the SITA newswire reported.
Danko told The Slovak Spectator that HICEE representatives will study the written decision, which they should receive in a couple of weeks, before deciding on next steps, adding that once they understand the court’s exact reasoning, the lawyers may propose further proceedings.
Danko stated that Penta is positive about the recent decision of Slovakia’s Constitutional Court that ruled the legislation unconstitutional.
The Constitutional Court found that the legislation, which became effective in 2008, restricted the property rights of health insurers’ shareholders and that the government had interfered in the insurers’ right to do business by depriving them of their right to make autonomous decisions over how to use their profits. It ruled that this restriction was unconstitutional.
In defending the legislation in 2007, Fico, then prime minister, told public broadcaster Slovak Radio that the previous centre-right government’s aim had been “to allow someone, mainly foreign firms, to access public resources and gradually carve off huge profits from these resources. People are now required to pay money for insurance premiums to the insurers and it is absolutely unacceptable to us to allow someone to keep part of this money.”
The private health insurers operating in Slovakia retorted that the legislation was hostile to the investments made by their major shareholders. HICEE filed the lawsuit against Slovakia in January 2009, claiming some €500 million in compensation. Fico called the action blackmail.
Slovakia’s Association of Health Insurers (ZZP) had stated several times that the legislation would conflict with international agreements on the protection of investments, as well with EU law and Slovakia’s constitution. ZZP’s Eduard Kováč told The Slovak Spectator when the legislation was in the pipeline that it interfered with the ownership rights of shareholders and that the state is permitted to interfere with ownership rights only if certain conditions are met: if intervention is unavoidable; if it is demonstrably in the public interest; and if there is adequate compensation.
In 2008, 49 members of the Slovak parliament asked the Constitutional Court to review the law, arguing that the amendment contradicted the constitution as well as international laws. Later, Fico, who now serves as a deputy speaker of parliament, refused to represent the Slovak parliament in front of the Constitutional Court in the hearing regarding the health insurance legislation.
Citing dissatisfaction with market conditions in Slovakia, private health insurer Európska Zdravotná Poisťovňa left the market in 2008. Dôvera and Apollo merged in 2010, leaving only one other private insurer, Union. The two state-run health insurers, Všeobecná Zdravotná Poisťovňa (VšZP) and Spoločná Zdravotná Poisťovňa (SZP), also merged in 2010.
Danko told Sme that one possible reason why the arbitration court decided that the case does not come under its jurisdiction is that HICEE is not the direct owner of Dôvera: Dôvera Holding is an intermediary company between HICEE and the Dôvera health insurance company.
Former health minister Richard Raši, a nominee of Fico's Smer party, welcomed the court’s decision and told Sme that he hopes that this will also be the outcome in the other shareholders’ case, adding that “resources of public health insurance are in question. If you pay obligatorily as a health tax, it is absurd that someone is drawing that money in the form of profit.”
16. May 2011 at 0:00 | Beata Balogová