Legal Business Blogs

Omani sovereign wealth fund calls in Freshfields to sue Bulgaria

Oman’s largest sovereign wealth fund has hired Freshfields Bruckhaus Deringer to take Bulgaria to arbitration over its role in the collapse in Balkan bank KTB, while the Bulgarian government has instructed Arnold & Porter to defend the claim ahead of preferred law firm White & Case.

Freshfields partners Boris Kasolowsky in Frankfurt and Willibald Plesser in Vienna have been handed the task of recouping losses suffered by the State General Reserve Fund of Oman after KTB closed in June 2014. The arbitration claim, understood to be valued at more than $100m including interest, has been filed at the World Bank’s arbitration court, the International Centre for Settlement of Investor Disputes (ICSID).

The fund held a 30% stake in KTB, which was placed under the supervision of Bulgaria’s central bank last year amid the country’s worst banking crisis in two decades. A bank run began, with customers rushing to withdraw their deposits following allegations that the bank’s main shareholder, Tsvetan Vassilev was embezzling its funds. Vassilev has denied the charges in a case yet to go to trial.

The claim is the sixth time that Bulgaria has been sued at the ICSID, with the Balkan country instructing Arnold & Porter for the first time.

Four Arnold & Porter partners are working on the case, with Washington DC duo Jean Kalicki and Paolo Di Rosa handling the claim stateside, with support from David Reed and Dmitri Evseev in London.

White & Case has acted on four of Bulgaria’s six investor-state cases at the ICSID and is currently counsel on a €600m claim from Austrian energy group EVN over regulatory decisions that reduced its profits in the region.

Kasolowsky and Plesser are representing EVN in that case, which makes the KTB claim Freshfields’ second active case against Bulgaria.