Damen reportedly sues Romania over Mangalia shipyard agreement

Dutch company Damen "sued Romania" at an international arbitrage court (Vienna International Arbitral Centre according to Europa Libera Romania), asking for the termination of the agreement reached in 2018 over local company Damen Shipyards Mangalia – which operates a shipyard on the Black Sea coast, Profit.ro announced.

However, the essence of the legal action taken by the Dutch company remains unclear.

The defendant (in the litigation at the Vienna International Arbitral Centre) is the Romanian state company Santierul Naval 2 Mai, controlled by the Ministry of Economy, which owns 51% of Damen Shipyards Mangalia, according to Profit.ro, which also speaks of some compensation asked by the Dutch company without however indicating whether the compensation should be paid by Santierul Naval 2 Mai or the Romanian state.

"Damen Group does not have any information to communicate at this moment," the Dutch company told all Romanian media outlets that contacted it for details on April 24.

Romania's prime minister Marcel Ciolacu, speaking for Profit.ro, and finance minister Marcel Bolos, answering Europa Libera, confirmed that something is happening about the shipyard, but none provided specific details.

PM Ciolacu vaguely confirmed that something is happening at Mangalia shipyards. His comments point to potential ongoing negotiations about military contracts that Damen and the shipyard might be given to address the conflict. Damen competed for a EUR 1.1 billion military corvette contract given by Romania to the French Naval Group (and eventually scrapped).

"I still believe that Damen should begin negotiations to find the best solutions. I wish that part of the procurement for the Romanian Army would be sourced from local factories. The Damen-controlled shipyard is one option. I am convinced we will hold such discussions in the next period," said PM Ciolacu after the government meeting.

The termination of the 2018 agreement between Damen and Romania, reportedly required by the Dutch company, generates legal complications. The Romanian authorities, which passed the legislation conflicting with the agreement last year, also failed to address the legal deadlock.

Damen's intentions, other than pulling out of the business and leaving the shipyard to sink (as implied by the trade unions at the company), are unclear in the given legal context. The EUR 500 million compensation asked by Damen, according to unconfirmed sources, looks unrealistic given the magnitude of the business. Paradoxically, Damen's intention to give up the shipyard's management may not be straightforward since the termination of the 2018 agreement would leave it with the majority stake.