Frontier supports resolution of a decades-long energy dispute

In a breakthrough development, electricity supply has been reinstated between RiTE Ugljevik, a power station situated in Bosnia and Herzegovina, and EGS, a predecessor of Slovenian utility HSE. This milestone signifies the resolution of a protracted dispute that has lasted over three decades.

The resumption of electricity supply from RiTE Ugljevik to EGS follows arbitration proceedings held before an ad-hoc UNCITRAL tribunal in Belgrade. The tribunal's decision to award damages to EGS has clarified the basis for the parties’ commercial relationship  and paved the way for the restoration of electricity supplies.

EGS retained Frontier’s Directors Christoph Riechmann and Wynne Jones to provide expert testimony on quantum on behalf of EGS, following an earlier partial award on merits. The Tribunal directed that an approach to quantum proposed by Frontier should be applied.  This resulted in a total award of €125m.

Key components of Frontier's quantum assessment encompassed:

  • Valuation of undelivered electricity, leveraging expertise in electricity wholesale markets and trading.
  • Assessment of contractual costs associated with the electricity supply, drawing upon Frontier's experience in contract evaluation, financial modelling, and cost assessment. Given the prolonged history of the dispute, contractual provisions required reinterpretation in light of economic developments in the region.
  • Rebuttal of arguments suggesting that EGS could have mitigated damages, employing evidence based on economic theory and practice.
  • Calculation of interest payable under the relevant legal framework.

The tribunal's adoption of Frontier's quantum approach is a testament to Frontier's ability to communicate complex economic matters in legal proceedings effectively.

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