International investment disputes typically end in one of two ways, either a tribunal issues an award after years of litigation, or the case drags on so long that one party gives up.
But the case of Dutch-owned Cunico Resources N.V. against the Republic of North Macedonia unfolded very differently, and far more positively.
Cunico filed its claim in late 2017 after the government blocked the planned sale of its ferronickel plant and launched criminal investigations into several company executives.
What followed was not the protracted legal battle that most observers expected but a comprehensive settlement reached within two years. The settlement closed the arbitration, dismissed all criminal proceedings against the former CEO, Yusuf Mirakhmedov, and left both parties claiming they had achieved their objectives.
How the dispute started
The dispute began in 2017, when Cunico Resources N.V. moved to sell Feni Industries AD, a ferronickel plant in Kavadarci, Macedonia. Cunico had acquired Feni through its wholly owned subsidiary, and the operation was a major asset in the regional metals industry.
According to Cunico, the Macedonian government stepped in to block the sale. State authorities launched investigations and initiated bankruptcy proceedings against Feni Industries AD, actions the company viewed as unjustified and part of an orchestrated effort to take control of the facility.
The situation escalated when North Macedonia opened criminal investigations into executives who had managed both at entity level (Feni Industries AD) and at Group level (Cunico Resources N.V.). Cunico saw this as part of a broader campaign to pressure the company during the contested sale process.
In December 2017, Cunico Resources N.V. filed for arbitration under the 1998 Netherlands-Macedonia Bilateral Investment Treaty.
The final settlement
Eventually, both parties’ statements were issued on December 25, 2019.
North Macedonia’s statement, signed by White & Case partner Damien Nye, declared that “any and all controversies between itself, its State organs and officers, and Cunico Resources N.V., its associates, and affiliates are fully and finally settled.” The government acknowledged that Cunico Resources N.V. had retracted all allegations of breaches under the BIT.
Cunico’s statement mirrored this language almost to the tee. Indeed, the company confirmed that “any and all controversies between itself, its associates, and affiliates, and North Macedonia, its State organs, and officers, are fully and finally settled.” Both parties used the word “fully” with emphasis, pointing to a comprehensive resolution.
The settlement resolved both the commercial dispute and the criminal investigations that had targeted company executives. Furthermore, the Public Prosecutor’s office of the Republic of North Macedonia dismissed all charges against former Feni Industries AD management on January 20, 2020.
A recent court report confirmed that Yusuf Mirakhmedov had no ongoing investigations in North Macedonia, which removed what had been a significant point of tension throughout the arbitration.
The bigger picture for investors
North Macedonia’s willingness to settle sent a positive message to potential investors.
The country’s mining sector has struggled with regulatory uncertainty, and the way governments handle conflicts often determines whether investors stay or leave.
North Macedonia chose to settle instead of fighting through to a tribunal award. The decision helped the country avoid a ruling that could have made other foreign investors nervous about putting money into Macedonian projects.
For Cunico Resources N.V., the agreement cleared away a legal problem that would have followed the company into any future business relationships, even though it no longer operates mines.
When Macedonian authorities dismissed all charges against former Feni Industries AD executives, they gave up significant leverage. That concession almost certainly helped both sides reach the broader agreement that closed the entire dispute.
A case study in how both sides can walk away with a win
The tribunal issued its discontinuance order in January 2020, and ICSID now lists the case as settled. For investors trying to measure how emerging European markets handle disputes, this case is a useful data point.
North Macedonia’s decision to settle and drop all criminal proceedings sends a signal about how the government thinks about foreign investment.
Cunico Resources N.V. walked away with its reputation intact and no lingering legal problems. The case is a perfect example that investment disputes can end without dragging on for years. Both parties figured out how to close the matter and move on.
The settlement delivered concrete wins that no tribunal award could have provided to both sides simultaneously. In investment arbitration, where most cases drag on until one party collapses or a tribunal finally rules, that kind of mutual benefit is the exception, and it shouldn’t be.
Featured image via Shutterstock.
