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February 26, 2009

Vivendi wins $2.4 billion damages against Elektrim

The tribunal awarded the damages plus accrued interest from Feb 2005

By CBR Staff Writer

French media conglomerate Vivendi has been awarded E1.88 billion ($2.43 billion) damages from the London Court of International Arbitration after its dispute with Polish company Elektrim.

The tribunal awarded the damages plus accrued interest from February 2005 to Vivendi for Elektrim’s intentional breaches of the investment agreement signed by the companies in September 2001 regarding their joint venture Elektrim Telekomunikacja, Telco, and investment in Polish mobile operator Polska Telefonia Cyfrowa, PTC. All of Elektrim’s counterclaims against Vivendi have been dismissed.

Last March the court made a partial award and declared that Elektrim breached the basic premise of the [investment agreement] by systematically acting against the interests of Telco in furtherance of its own interests and by refusing to acknowledge Telco’s right to the economic benefit of the PTC shares.

Last year, a US District Court rejected a $7.5 billion lawsuit brought by Vivendi against Deutsche Telekom alleging theft of its 48% stake in PTC. Deutsche Telekom bought the PTC shares after the Arbitration Tribunal in Vienna awarded it a call option for transferring the shares from Elektrim.

Elektrim had received more than E1.8 billion ($2.32 billion) from Vivendi to transfer the PTC shares to Telco, making Vivendi the largest creditor to Elektrim. However, Telco’s ownership right on the PTC shares is still pending in Polish courts.

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