Polish Court Backs Vivendi Appeal In PTC Row
WARSAW -(Dow Jones)- The Polish supreme court in Warsaw Thursday ruled in favor of French media firm Vivendi which had lodged an appeal in a dispute about the ownership of a 48% stake in Polska Telefonia Cyfrowa, or PTC.
The court struck down the previous ruling on procedural grounds, while saying it won't rule on the merits of the case as it is sending it back to the Warsaw district court.
Vivendi, Deutsche Telekom and Polish conglomerate Elektrim have been in a dispute over ownership of the 48% stake in PTC for several years and have brought multiple suits against each other in Austria, Poland, and most recently in the U.S.
In this particular case, Vivendi had appealed an earlier ruling by a lower Polish court that had upheld a ruling under Polish law, made by an Austrian arbitration court.
In 2004, an Austrian arbitration court found that the 48% stake in PTC that Vivendi claims to own via a joint venture with Elektrim dubbed "Telco" is in fact owned by Elektrim.
But Thursday's supreme court verdict backed Telco's argument that it hadn't been allowed to participate as a full-fledged party to the dispute in the lower Polish court, creating a "denial of justice." The supreme court also cited the replacement of one of the judges at the lower court, just before the ruling was announced, as a procedural error.
In its summation, the supreme court said it hoped Telco would be allowed to be a full participant in the renewed lower court proceedings.
It said the lower court should consider whether the Vienna arbitration court ruling can apply in any way to Telco, which wasn't a party to the original PTC shareholders agreement. In addition, the supreme court instructed the lower court to make a new assessment of whether Austrian or Polish law should take precedence in certain aspects of the case.
These supreme court guidelines coincide with Vivendi key arguments.
"We are happy that the Polish justice system has recognized the position we have taken for years," Vivendi vice president Robert de Metz said after the verdict.
Thursday's ruling could thwart or at least delay a deal that was meant to transfer the PTC stake from Elektrim to German telecommunications giant Deutsche Telekom.
Deutsche Telekom had already started to consolidate a majority shareholding in PTC on its own balance sheet from November 2006, following a downpayment of EUR600 million it had paid to Elektrim earlier that year.
Deutsche Telekom already owned a direct 49% stake in PTC.
Elektrim's chief counsel Jerzy Modrzejewski said: "Since the supreme court's ruling was purely on procedural grounds, there is no reason to expect the outcome of a further legal process to go against us - it will simply make the whole process more protracted."
A Deutsche Telekom spokesman in Germany said that as the ruling was only made on procedural grounds, it doesn't alter the legal perspective of the case arguing the Vienna court ruling is still valid.
Essentially, Deutsche Telekom continues to believe that it is the rightful owner of the 48% stake, and as such, it will continue to consolidate PTC as a majority holding, the spokesman added.
In late October, Vivendi tried to circumvent the litigation by offering Deutsche Telekom EUR2.5 billion for its direct 49% stake in PTC.
Company Web sites: http://www.vivendi.com;
http://www.telekom.de
-By David McQuaid; Dow Jones Newswires; +4822 622-2766; david.mcquaid@dowjones.com
(Joon Knapen in Berlin contributed to this article.)
(END) Dow Jones Newswires"
Posted to the site on 18th January 2007