As at 31 December 2014 the ORLEN Group entities were parties in the following significant proceedings in front of court, body appropriate for arbitration proceedings or in front of public administration bodies:
41.1. Proceedings in which the ORLEN Group entities act as a defendant
41.1.1. Proceedings with the total value exceeding 10% of the Issuer’s equity
188.8.131.52. Risk connected with the disposal of assets and liabilities related to purchase of Unipetrol shares
The claim regarding the payment of a compensation for losses related among others to alleged unfair competition of PKN ORLEN included in Agrofert Holding a.s. (Agrofert) claim and alleged illegal violation of reputation of Agrofert in relation to purchase by PKN ORLEN of UNIPETROL a.s. shares. On 21 October 2010 the Court of Arbitration in Prague overruled the entire claim of Agrofert against PKN ORLEN regarding the payment of PLN 2,992 million translated using exchange rate as at 31 December 2014 (representing CZK 19,464 million) with interest and obliged Agrofert to cover the cost of proceedings born by PKN ORLEN. On 3 October 2011 PKN ORLEN received from the common court in Prague (Czech Republic) claim which overruled the sentence of the Arbitration Court attached to the Economic Chamber of the Czech Republic and Agricultural Chamber of the Czech Republic in Prague issued on 21 October 2010. The complaint was dismissed by the court in Prague with the ruling of 24 January 2014. On 7 April 2014 Agrofert appealed from the above sentence. In the opinion of PKN ORLEN the decision included in the judgment of the Arbitration Court dated 21 October 2010 and in the judgment of the common court in Prague dated 24 January 2014 are correct and will take all necessary means to retain the judgment in force. On 24 March 2015, the hearing of the court of appeals was held in which the date of the next hearing was set on 7 April 2015.
41.1.2. Other significant proceedings with the total value not exceeding 10% of the Issuer’s equity
184.108.40.206. Tax proceedings in ORLEN Południe S.A. (previously Rafineria Trzebinia S.A.)
On 14 May 2014 and 20 May 2014 the company received the decisions of the Head of the Customs Office in Cracow determining excise tax liabilities for the period: May, June, July and August 2004. The excise tax liability according to those decisions is PLN 132 million. The company filled an annulment against the decision to Head of the Customs Office in Cracow. The annulment was overruled. On 5 June 2014 Rafineria Trzebinia paid entire liability with interests. At the same time provisions recognized for this purpose in prior years were used. Rafineria Trzebnia S.A. appealed to the Voivodship Administrative Court (VAC) in Cracow against decisions on tax liability for the period May – August 2004. On 12 February 2015 court hearing was held before VAC in Cracow. On 26 February 2015 the Court announced judgment dismissing company’s claim. After receiving written reasons for the judgment the company will consider further steps in this case.
220.127.116.11. Power transfer fee in settlements with ENERGA – OPERATOR S.A. (legal successor of Zakład Energetyczny Płock S.A.)
PKN ORLEN participates in court proceeding concerning the settlement of disputed system fee with ENERGA – OPERATOR S.A. for the period from 5 July 2001 to 30 June 2002. ENERGA – OPERATOR S.A. claims from PKN ORLEN payment of PLN 46 million increased by the statutory interest. During the retrial, an opinion was prepared by an expert witness for the variant damages calculation. The District Court in Warsaw (as a first instance authority) by its judgment from 27 October 2014 ordered PKN ORLEN to pay to ENERGA - OPERATOR S.A. the amount of PLN 46 million, together with statutory interest from 30 June 2004 to the date of payment. The judgment is not binding. PKN ORLEN filed an appeal against the judgment.
18.104.22.168. I.P.-95 s.r.o. compensation claim against UNIPETROL RPA s.r.o.
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. motion for bankruptcy of I.P.-95 s.r.o. in November 2009. Total amount of the claim is approximately PLN 275 million, translated using the exchange rate as at 31 December 2014 (representing CZK 1,789 million). UNIPETROL RPA s.r.o. is one of the 8 defendants against which the claim was brought. According to the UNIPETROL RPA s.r.o the claim is unjustified and groundless. Based on the Supreme Court decision on the jurisdiction of the court proceedings will be continued before the District Court in Ostrava.
22.214.171.124. Claim of OBR S.A. for compensation
On 5 September 2014, the company OBR S.A. filed an action against PKN ORLEN to the District Court in Lodz with the claim for payment in respect of the alleged breach by PKN ORLEN of patent rights: ‘The technique of the separation of hydrodesulfurization products of heavy residue after extractive distillation of crude oil’. The amount of the claim in the lawsuit has been estimated by the OBR S.A. of approximately PLN 83 million. The claim covers the adjudge sum of money from PKN ORLEN for the OBR S.A. in the amount corresponding to the market 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 for the lawsuit. The value of the dispute was referred to by the plaintiff in the procedural document from 11 December 2014 in the amount of PLN 247 million. In the opinion of PKN ORLEN the claim of patent infringement is griundless.
41.2. Court proceedings in which entities of the ORLEN Group act as plaintiff
41.2.1. Compensations due to damages suffered by Rafineria Trzebinia S.A. (currently ORLEN Południe S.A.)
ORLEN Południe S.A. (previously Rafineria Trzebinia S.A.) acts as an auxiliary prosecutor in the proceedings started in 2010 concerning abuses associated with the realization of investment - installation for the esterification of biodiesel oils, on which Rafineria Trzebinia S.A. (currently: ORLEN Południe S.A.) claims to incur a loss of approximately PLN 79 million. The company issued a motion requesting to oblige the defendants to compensate the incurred damages. The proceeding is pending in the District Court in Chrzanów. By the order from 26 August 2014, certain acts from the accusation were partially remitted. The criminal proceedings concerning the accused who acted against the company’s interest are ongoing. Several hearings were held, so far during which accused filed an explanations.
41.2.2. Proceeding of ORLEN Lietuva for compensation in respect of accident at Terminal in Butingė
AB ORLEN Lietuva is a plaintiff in the court proceeding against RESORT MARITIME S.A., The London Steamship Owners’ Mutual Insurance Association Limited, Sigma Tankers Inc., Cardiff Maritime Inc., Heidenreich Marine, Heidenreich Maritime Inc. and Heidmar Inc. regarding compensation payment for damage caused by the hit of tanker ship into terminal buoy in Butinge Terminal on 29 December 2005. The total compensation claim amounts to approximately PLN 74 million translating using the exchange rate as at 31 December 2014 (representing approximately LTL 60 million). The parties agreed to relocate the case to the jurisdiction of English courts.
41.2.3. Tax proceedings in UNIPETROL RPA
UNIPETROL RPA s.r.o., acting as a legal successor of CHEMOPETROL a.s. claims the return of tax expense paid in 2006 for the year 2005 by CHEMOPETROL a.s.. The claim concerns unused investment relief attributable to CHEMOPETROL a.s.. The value of claim amounts to approximately PLN 50 million translated using the exchange rate as at 31 December 2014 (representing approximately CZK 325 million). On 11 December 2013, the Court in Usti by the Elbe River (Czech Republic) issued a sentence in which it dismissed the decisions of the tax authorities regarding tax liability due to tax expense of UNIPETROL RPA s.r.o. of approximately CZK 325 million. UNIPETROL RPA s.r.o. submitted an annulment claim against the sentence of the Court in Usti by the Elbe River seeking to dismiss of the tax authorities decision and to state that they are invalid, as such statement would improve the company's position against the tax authorities in this particular case. On 19 March 2014 the Czech Supreme Administrative Court overruled an annulment claim of UNIPETROL RPA, s.r.o and dismissed the Court in Usti by the Elbe River judgment and decided to revoke them to reexamination. At a hearing on 25 February 2015 the Court in Usti by the Elbe River rejected of an annulment claim of UNIPETROL RPA s.r.o regarding dismisal of the tax authorities decision. UNIPETROL RPA s.r.o. will consider bringing a cassation appeal against this decision after receiving written reasons.
41.2.4. Arbitration proceedings against Basell Europe Holdings B.V.
On 20 December 2012 PKN ORLEN sent an arbitration call to Basell Europe Holdings B.V. regarding ad hoc proceeding in front of the Court of Arbitration in London relating to Joint Venture Agreement signed in 2002 between PKN ORLEN and Basell Europe Holdings B.V. The claims follow from the use by Basell Sales & Marketing Company so-called Cash Discounts which effectively led to a lower product price payable to Basell Orlen Polyolefins Sp. z o.o. On 27 February 2014 PKN ORLEN submitted its statement on this case, according to which claimed amounts were updated in the way that PKN ORLEN requests payments from Basell Europe Holdings B.V. to Basell Orlen Polyolefins Sp. z o.o. the amount of PLN 128 million translated using exchange rate as of 31 December 2014 (representing approximately EUR 30 million) plus interest, or alternatively, from Basell Europe Holdings B.V. to PKN ORLEN the amount of approximately PLN 57 million, provided that the amounts may be adjusted during arbitration proceedings. On 10 April 2014 PKN ORLEN submitted an application for suspension of the arbitration proceedings until 1 November 2014. Basell Europe Holdings B.V. accepted this request. On 23 April 2014 the parties received the Tribunal’s decision regarding the suspension of the proceeding until 1 November 2014. On 1 November 2014, the arbitration proceedings were resumed. On 24 March 2015, the seating of the Tribunal which was planned on 24-27 March 2015 began.
41.2.5. The dispute between ORLEN Lietuva and Lietuvos Geležinkeliai
On 31 December 2014, ORLEN Lietuva filed in a court of arbitration in Vilnius a motion for arbitration against the company Lietuvos Gelezinkeliai (LG). In this proceeding ORLEN Lietuva will strive for a compensation in the amount of approximately PLN 68 million converted with exchange rate from 31 December 2014 (equivalent of EUR 15.9 million) due to breach of contract of rail transport by LG by the use of excessive rates. The proceeding is in progress.
Simultaneously two court proceedings are held in which Lietuvos Gelezinkeliai demands from ORLEN Lietuva a payment of approximetly PLN 36 million converted with exchange rate from 31 December 2014 (representing of approximately LTL 29 million) from fees for rail transport.