ICSID rejects Romania’s request to halt Eurohold’s EUR 500 million arbitration case

The International Centre for Settlement of Investment Disputes (ICSID) in Washington has dismissed the Romanian government’s motion to terminate the arbitration initiated by Bulgaria’s Eurohold Bulgaria AD and its insurance subsidiary, Euroins Insurance Group (EIG). The dispute stems from the withdrawal of Euroins Romania’s operating license and the company’s subsequent bankruptcy.

Eurohold announced the decision on Tuesday, confirming that ICSID would proceed with the case, which seeks more than EUR 500 million in compensation. The Bulgarian claimants argue that Romanian authorities carried out “multiple unlawful acts” that severely damaged EIG’s operations in Romania and ultimately destroyed Euroins Romania.

Background of the dispute

Eurohold and EIG filed the arbitration request on May 22, 2024, accusing the Romanian Financial Supervisory Authority (ASF) of acting “arbitrarily and discriminatorily” when it revoked Euroins Romania’s license on March 17, 2023. The company was one of Romania’s largest insurers, dominating nearly 30% of the market for mandatory third-party vehicle insurance.

ASF justified its decision by claiming that Euroins faced insolvency, citing a capital deficit of more than EUR 400 million. Regulators alleged that the company could not meet its solvency obligations. Shortly before the decision, Euroins had transferred most of its reserves to EIG Re, a reinsurance entity within the same group, which ASF said had minimal operational capacity compared with the Romanian branch.

The Bucharest Tribunal confirmed ASF’s assessment in June 2023 and officially initiated bankruptcy proceedings against Euroins Romania.

Arbitration to move forward

The Bulgarian group maintains that the Romanian authorities’ actions violated international investment treaties, particularly those guaranteeing fair and equitable treatment for foreign investors. Eurohold argues that ASF’s move was politically influenced and disproportionate, effectively expropriating its assets in Romania without due process.

Romania, in its defense, had petitioned ICSID to terminate the arbitration, arguing that the tribunal lacked jurisdiction and that the case was inadmissible due to the insurer’s bankruptcy status. ICSID rejected that request, clearing the way for the arbitration process to continue.

Eurohold said the ruling marks an important step in its legal effort to recover damages. The company maintains that Romania’s actions caused significant financial harm not only to Euroins Romania but also to its wider insurance and reinsurance operations in Central and Eastern Europe.