Croatia has lost its arbitration case against the Hungarian oil company Mol over the Croatian oil company Ina in which Mol is the largest single shareholder, Vecernji List, a newspaper close to the ruling HDZ party, said on Wednesday, citing "unofficial sources." The paper added that the ruling also awarded damages "in the region from $250m to $300m" to Mol.

The Croatian government lost the case for not honoring the provisions of a 2009 agreement which stipulated that the government would divest the loss-making gas business from the oil and gas company Ina after Hungary’s Mol buys shares in the state-owned company.

The agreement required the government should take over the underground gas storage facility at Okoli, and to take over the entire gas trading part of Ina’s businesses. The latter never happened, so Ina launched an arbitration case in 2013 before the International Court for Settlement of Investment Disputes (ICSID) in Washington, DC.

Meanwhile, the sale of shares to Mol and management rights of Ina became mired in an endless series of legal disputes and criminal proceedings in Croatia involving former prime minister Ivo Sanade.

In the latest episode of the saga, Croatia’s Supreme Court confirmed an earlier guilty verdict for Ivo Sanader for receiving bribes from Mol’s executive Zsolt Hernadi in order to allow Mol to control the company in December 2021. Sanader was sentenced to six years in prison, and Hernadi – who was tried in absentia – to two.

Croatia’s objections regarding corruption in the purchase of Ina by Mol were dismissed by the court.

This was the second arbitration case Croatian government has lost to Mol. The first one was ruled in 2016 by the UN Commission for International Trade Law (UNCITRAL) then based in Geneva. Current Prime Minister, Andrej Plenkovic announced the government would buy back the shares sold to Mol in the wake of the ruling.

Although the government hired consultants to advise on the buyback and negotiate the sale, the value of the company – or the economic justification for its sale back to Croatia – were never explained to the general public.

Mol is the single largest shareholder in Ina, holding a 49.1 percent stake. The Croatian government holds 44.8 percent, and other shareholders 6.1 percent.

Still, the damages awarded to Mol, if confirmed by the court, will be several times lower than the $1 billion Mol had demanded in the arbitration.