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Announcement about denial of benefits to Adams & Co. Inc. by the Slovak Republic

23. 10. 2014

23 October 2014, Bratislava. Yesterday (22 October 2014), the Slovak Republic exercised its right under the Treaty between the United States of America and the Czech and Slovak Federal Republic Concerning the Reciprocal Encouragement and Protection of Investments, signed on 22 October 1991 (the “Treaty”) to deny the benefits of the Treaty to Adams & Co. Inc. (‘Adams’), a company incorporated in the United States.

On 14 April 2014, Adams filed a Notice of Dispute under the Treaty with the Slovak Republic, alleging that the Slovak Republic violated the Treaty in connection with legal proceedings lasting for more than 15 years, which is considered by Adams to be a denial of justice. The Slovak Republic denies any violation of the Treaty.

The purpose of the Treaty is to promote greater economic cooperation between the United States and the Slovak Republic with respect to investment by nationals and companies of one country in the territory of the other country. In the Treaty, the United States and the Slovak Republic recognized that, in furtherance of that objective, investors bringing claims under the Treaty must have a sufficient connection to one of the countries. Therefore, under Article I(2) of the Treaty, either country is entitled to deny the benefits of the Treaty to investors who are not engaged in substantial business activities in the other country or are controlled by a national of a third country.

Based on available information, the Slovak Republic understands that Adams is not engaged in substantial business activities in the United States and is controlled by a national of a third country. Accordingly, the Slovak Republic yesterday sent a formal letter to Adams exercising its right to deny the benefits of the Treaty to Adams.