CEZ to challenge regulation over Diag Human in Luxembourg court

Prague, Oct 13 (CTK) - The Czech semi-state energy group CEZ will challenge the ruling in the Diag Human case in a Luxembourg court and CEZ representatives are convinced they will succeed, Prime Minister Andrej Babis (ANO) told CTK today.

Babis said this will not affect the company’s operation and its customers in the Czech Republic.

Analysts also said that the freezing of CEZ's stakes in Luxembourg-based companies would not significantly affect the energy company's operations and the price of its shares.

On Monday, CEZ posted on its website that a Luxembourg court had frozen its stakes in two local companies through which CEZ owns the gas distributor GasNet, due to the Diag Human case. In the Diag Human case, Czech-Swiss businessman Josef Stava is seeking approximately 17 billion crowns in compensation from the Czech state.

"According to my information, CEZ will challenge this ruling in a Luxembourg court and is confident it will succeed. In any case, this will not affect the activities of CEZ or customers in the Czech Republic in any way. This whole affair dates back to 1992, when the Civic Democrat (ODS) politicians signed arbitration clauses in this matter, thereby causing significant harm to the state. However, the state has never, not even for a moment, acknowledged the legitimacy of Diag Human’s claim, and we will, of course, continue to defend ourselves," said Babis.

He stated that under his leadership, the government had always done its utmost to succeed in this dispute.

Babi said that in case of former finance ministers Zbynek Stanjura (ODS) and Miroslav Kalousek (formerly TOP 09), who have been linked to businessman Stava, it is hard to say what they agreed upon.

CEZ stated that it had received notice from a Luxembourg bailiff regarding the issuance of two decisions concerning Czech Gas Networks S.a r.l. (CGN), in which CEZ holds a roughly 55 percent stake, and Czech Gas Networks Investments S.a r.l. (CGNI), which is wholly owned by CGN. CGNI owns the Czech company Czech Grid Holding, which in turn owns GasNet and GasNet Sluzby. The Czech government is the majority owner of CEZ, with a stake of about 70 percent.

According to CEZ, the rulings follow legal actions taken by Diag Human in Luxembourg, in connection with compensation the company is seeking from the Czech government.

The Diag Human case broke out in 1991, when the Czech Health Ministry announced a tender for blood plasma processing. It reached a preliminary agreement with Novo Nordisk and Conneco, which later became Diag Human. In 1992, then health minister informed Novo Nordisk that it had not won the tender, and a letter from the ministry to Novo Nordisk expressed doubts about Conneco's reliability. Stava has been in litigation with the Czech Republic ever since.

A London court ruling last year upheld Stava’s claim. The website HlidaciPes.org then reported that Diag Human had initiated legal action to seek damages and was targeting two companies in which CEZ holds a stake. At that time, CEZ told CTK that this had not affected GasNet’s operations.

($1 = 21.809 crowns)

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