The Bulgarian law firm Djingov, Gouginski, Kyutchukov and Velichkov together with the multinational law firm Pinsent Masons are advising one of the largest Bulgarian publicly traded companies, Eurohold, and its insurance business Euroins Insurance Group (EIG) on their EUR500 million investment dispute with the Government of Romania.

EIG is seeking to annul the scrapping of its licence by the Romanian financial regulator ASF in March 2024 following alleged violation of regulations and amid regulator steps to launch bankruptcy proceedings.

If the dispute fails to settle amicably, the case will see Eurohold and EIG challenge this move arguing that the revocation of the license was arbitrary, discriminatory, and constituted an unlawful expropriation in breach of international law.

The dispute signals a step change in European investment treaty law as the insurer prepares to challenge the European Union’s clamp down on investment agreements made between member states.

The dispute engages a leading insurance group with solid market presence in Central and Southeastern Europe, in which investment holds one of the largest public holding companies in Bulgaria – Eurohold Bulgaria and the European Bank for Reconstruction and Development (EBRD).

It concerns a multiplicity of breaches on behalf of a Romanian regulator in respect of the Solvency II regime, the EU’s ‘Gold Standard’ Insurance and Reinsurance Regulation that should ensure a sound regulatory framework and consistent supervisory practices in the sector across the EU.

Such arbitration would set a precedent for other EU businesses operating across the EU and could ultimately prompt a wave of disputes as they grapple with the impact of the EU’s clamp down on investment agreements between EU states. Should this dispute progress to arbitration, it will raise novel and cutting-edge issues of public international law such as the ability of investors to bring claims under a sunset clause of a terminated bilateral investment agreement between two EU countrie.

A team at Pinsent Masons and Bulgarian law firm DGKV is being led by Pinsent Masons co-head of International Arbitration, Sylvia Tonova and head of Dispute Resolution and Arbitration Angel Ganev at DGKV.