Information concerning significant proceedings in front of court, body appropriate for arbitration proceedings or in front of administration bodies in which the companies of the ORLEN Group act as the defendant:
On 23 May 2012, Unipetrol RPA s.r.o. received from the District Court in Ostrava a claim brought by I.P.-95 s.r.o. for compensation related to the filing by Unipetrol RPA s.r.o. a motion for bankruptcy of I.P.-95 s.r.o. in November 2009. The total amount of the claim is approximately PLN 300 million, translated using the exchange rate as at 31 December 2019 (representing CZK 1,789 million). Unipetrol RPA s.r.o. is one of eight defendants which were jointly and severally claimed. At the request of the I.P.-95 s.r.o proceeding was pending concerning the accession to the claim as plaintiff NESTARMO TRADING LIMITED. The court refused the Company permission to enter to the case. In February 2018, the court dismissed in entirety claim ruling in favour of Unipetrol RPA s.r.o. On 3 April 2018, I.P.-95 s.r.o. appealed against the decision of the court of first instance. On 22 May 2018, the District Court in Ostrava obliged I.P. – 95 s.r.o. to pay the appeal fee. On 11 December 2018, the court of second instance dismissed the appeal of I.P.-95 s.r.o. from the judgment of the District Court in Ostrava. The judgment is binding. On 20 March 2019 I.P. – 95 s.r.o. filed a cassation appeal against the judgment of the court of second instance. According to Unipetrol RPA s.r.o. the claim is without merit.
On 5 September 2014, OBR S.A. (currently: Warter Fuels S.A.) filled an action against PKN ORLEN with the District Court in Łódź for a claim for payment in respect of an alleged breach by PKN ORLEN of patent rights. The amount of the claim in the lawsuit was estimated by Warter Fuels S.A. in the amount of approximately PLN 84 million. The claim covers the adjudged sum of money from PKN ORLEN for Warter Fuels S.A. in the amount corresponding to the value of the license fee for the use of the solution under the above patent and adjudge the obligation to repay the benefits derived from the use of this solution. On 16 October 2014 PKN ORLEN responded to the lawsuit. By the procedural document from 11 December 2014 the value of the dispute was referred to by the plaintiff in the amount of approximately PLN 247 million. So far, several hearings have been held (last on 28 September 2018), during which witnesses submitted by the parties were heard by the court . On 19 December 2018, a hearing took place, during which the Court heard the parties’ position in the scope of the grounds for any repeal of the freezing order. By a decision of 2 January 2019 the Regional Court set aside the order granting security for claims. Warter Fuels S.A. submitted a complaint against this decision on 5 February 2019. PKN ORLEN submitted a response to the complaint. The matter of complaint consideration is at the stage of secondary proceedings, i.e. before the Court of Appeal in Łódź. The freezing order has been legally repealed.
The PKN ORLEN attorney submitted a request to suspend the proceedings due to parallel proceedings for determining the right to the disputed patent, the outcome of which will have significance for the resolution in the case of breach. The request has not been considered yet. The court is currently looking for an expert or institute to issue an opinion. In the opinion of PKN ORLEN the above claims are without merit.
On 21 September 2017, AB ORLEN Lietuva received from the court a claim brought by the Belarusian company Polocktransneft Druzhba (operator of the Belarus section of the Druzhba pipeline) for payment of compensation for crude oil (so-called ‘technological oil’) which from 1992 was located in Lithuanian section of the Druzhba pipeline and used by ORLEN Lietuva after operation of this section was stopped in 2006. Polocktransneft Druzhba believes that this oil was its property. The value of the claim is approximately PLN 319 million, translated using the exchange rate as at 31 December 2019 (representing USD 84 million). The claim also includes a request for procedural interest and litigation cost. ORLEN Lietuva responded to the claim. On 15 March 2018 a hearing took place. On 29 March 2018, the court dismissed the plaintiff’s claim. Polocktransneft Druzhba appealed against the judgment dismissing the claim. ORLEN Lietuva responded to the appeal. The hearing took place on 6 May 2019. The witness, the former chief representative of the Druzhba Polocktransneft in Lithuania, was heard. On 4 September 2019, another hearing was held, at which the Court decided several procedural issues, including admitted evidence from expert opinions appointed by the parties, refused to attach to the case documents from other criminal cases requested by Polocktransneft Druzhba. The court appealed the plaintiff and the defendant to submit documents and information to the case file by 22 October 2019. On 6 November 2019, on 22 January 2020 and on 7 February 2020 subsequent hearings were held at which documentary evidence was submitted and witness was questioned. On 9 March 2020 the Court of Appeal dismissed the plaintiff’s appeal. Polocktransneft Druzbha has the right to lodge a cassation appeal within 3 months from the date of delivery of the judgment of the Court of Appeal. In the opinion of ORLEN Lietuva, the above claim is without merit. According to ORLEN Lietuva, the above claim is without merit.
In May 2019, UAB Baltpool (an entity administering the funds and responsible for collecting fees for so-called Public Service Obligation in Lithuania) filed a claim against ORLEN Lietuva for payment of system fees (so–called PSO fees) related to electricity consumption for the period from February 2013 to March 2019 (excluding May 2017). The claim relates to unpaid by ORLEN Lietuva system fees on the amount of electricity generated and consumed by ORLEN Lietuva for own needs. ORLEN Lietuva believes, that such system fees (self-producer fees) are not due. The value of the dispute together with interest was included in the books of ORLEN Lietuva and amounted to PLN 64.8 million, translated using the exchange rate as at 31 December 2019 (representing EUR 15.2 million).
The case is connected with 7 administrative cases brought by ORLEN Lietuva (since 2013), in which ORLEN Lietuva challenges the legality of charging PSO on electricity generated and consumed for own needs. All these administrative cases are suspended in connection with proceedings pending before the Court of Justice of the EU. The outcome of the case brought by UAB Baltpool depends on a large extent on the outcome of these administrative proceedings and proceedings before the Court of Justice of the EU. The Court of Justice of the EU decided, that the Lithuanian PSO program constitutes the nature of state aid. In the opinion of the ORLEN Lietuva the claims are without merit.
On 19 April 2019 ORLEN Projekt filed a claim against POLWAX with the District Court in Rzeszów for payment of the amount of PLN 6.7 million together with due statutory interest for delay in commercial transactions in respect of remuneration for performed and received by POLWAX construction works in connection with the Agreement concluded on 7 April 2017 for „Construction and start-up of the paraffin wax solvent deoiling installation together with auxiliary installations for POLWAX .S.A.”. On 23 May 2019 the Court issued a warrant for payment to ORLEN Projekt in a writ of payment proceedings covering the entire amount claimed, thanks to which ORLEN Projekt obtained subsequently a bailiff’s security for this amount on the POLWAX bank account. The motion submitted by POLWAX for overturning the warrant of payment was dismissed by the decision of the Court of First Instance. Currently, the lawsiut is in the process of considering POLWAX’s complaint against the indicated decision of the Court of First Instance by the Court of Appeal. The planned deadline for considering the POLWAX’s complaint is mid-March 2020. After consideration, the lawsuit’s files will be transferred back to the District Court in order to carry on evidence proceeding.
On 31 May 2019 ORLEN Projekt filed another claim against POLWAX with the District Court in Rzeszów for payment of further PLN 6.5 million together with due statutory interest for delay in commercial transactions in respect of further part of remuneration for performed and received by POLWAX construction works.This claim was then extended twice – the extension of the claim as of 20 September 2019 by the amount of PLN 13.9 million for groundless reimbursement of a performance guarantee and covering the costs of its execution, and the extension of the claim as of 6 November 2019 by the amount of PLN 25 million for other claims related to withdrawal from the Agreement by ORLEN Projekt due to POLWAX’s fault, up to the total amount of PLN 45 million. The case is pending.
On 25 February 2020 ORLEN Projekt received from POLWAX a request for payment of PLN 132 million, consisting of the following: PLN 84 million for damages incurred by POLWAX as a real loss and PLN 48 million for lost benefits resulting from improper performance and failure to perform the Agreement by ORLEN Projekt. According to the information held by ORLEN Projekt, on 2 March 2020, the District Court in Rzeszów received a lawsuit of POLWAX against ORLEN Projekt for payment of PLN 132 million together with interest due for delay. The case is currently at the stage of examining the formal requirements of the lawsuit filed by POLWAX and the Court has not issued any judgements within it so far, in particular it has not yet ordered the delivery of a copy of the lawsuit to ORLEN Projekt. In the opinion of ORLEN Projekt, POLWAX claims covered by the request for payment and a lawsuit are without merit and immediately after the delivery of a copy of a lawsuit, ORLEN Projekt will take measures provided for by law to show their groundlessness. According to the information held by ORLEN Projekt, before filing the lawsuit, POLWAX filed a request to the District Court in Rzeszów for securing the claims it intended to pursue from ORLEN Projekt, however, the Court entirely dismissed the request by the order as of 6 February 2020.
On 10 March 2020 POLWAX published current report no. 7/2020 informing about filing a lawsuit with the court for payment of PLN 10 million due to: (i) removal and utilization of waste of contaminated soil from the Investment area, and (ii) non-contractual land storage outside the investment area on plot no. 3762/70. In the opinion of ORLEN Projekt, the above claims of POLWAX are without merit and immediately after delivery of a copy of the lawsuit, ORLEN Projekt will take measures provided for by law to show their groundlessness.
Except of described above proceedings, the Group has not identified any other significant contingent liabilities.