Bulgaria Wins the Biggest Arbitration Case Ever Brought Against the Country

Bulgaria has won the largest arbitration case ever brought against the country, the Ministry of Finance announced on January 30.

The case was filed in 2016 by the Czech energy company ČEZ before an arbitration tribunal in Washington.

In its ruling the tribunal dismissed all claims brought by ČEZ, finding that the actions of Bulgarian institutions did not breach international standards for the treatment of foreign investments under the Energy Charter Treaty.

The total value of ČEZ’s claims amounted to €967m, plus interest of 1.9% per year.

The ruling marks Bulgaria’s third consecutive victory in a series of arbitration cases brought by three foreign electricity distribution companies, with combined claims of around €2bn. A loss in any of these cases, the ministry said, would have led to a significant increase in electricity prices in Bulgaria.

Full Statement by the Ministry of Finance:

The Republic of Bulgaria has won an international arbitration case (ICSID Case No. ARB/16/24) before the International Centre for Settlement of Investment Disputes (ICSID) in Washington, United States. The proceedings were initiated on 26 July 2016 by ČEZ a.s. of the Czech Republic.

On 29 January 2026, the arbitral tribunal issued its decision, dismissing all claims brought by ČEZ and ruling that the actions of the Republic of Bulgaria, through the Energy and Water Regulatory Commission (EWRC), the Ministry of Economy, the Ministry of Energy, as well as the Sofia City Administrative Court, the Varna Administrative Court and the Supreme Administrative Court, did not constitute breaches of the standards for the treatment of foreign investments under the Energy Charter Treaty.

The total value of ČEZ’s claims amounted to €967m, plus interest at an annual rate of 1.9%, compounded annually from the date of the award until final payment.

ČEZ claimed it qualified as a foreign investor under the Energy Charter Treaty on the basis of three separate investments in Bulgaria:
– the electricity distribution company ČEZ Distribution Bulgaria AD and the electricity supply company ČEZ Electro Bulgaria AD;
– the Varna thermal power plant;
– the Bara biomass power plant.

During the proceedings, the claimant complained about actions taken by the Bulgarian state, and in particular by the Ministry of Economy, the Ministry of Energy, the Energy and Water Regulatory Commission, and the Bulgarian courts, in relation to all three investments.

Regarding its investment in the Varna thermal power plant, ČEZ a.s. alleged that its legitimate expectations had been breached, arguing that Bulgaria had failed to liberalise its energy market and to set electricity prices in line with the commitments made at the time of the plant’s privatisation, based on the 2005 Guidelines for the Regulation of Bulgarian Electricity Generators.

Alternatively, the company claimed that the Energy and Water Regulatory Commission (EWRC) had acted arbitrarily and without proper justification in setting prices in each pricing decision between 2006 and 2014, and also complained about actions taken by the Ministry of Energy in determining the cold reserve. Complaints were also raised over decisions by the Varna Administrative Court and the Supreme Administrative Court in appeals against the regulator’s pricing rulings.

The compensation sought by ČEZ a.s. in relation to this investment amounted to €220m, plus interest at an annual rate of 1.9%, compounded annually from the date of the award until full payment.

As regards its investment in the Bara biomass power plant, ČEZ a.s. claimed that Bulgaria had unjustifiably changed the support regime for electricity generation from renewable energy sources, resulting in the total loss of its investment.

The compensation sought in relation to this investment amounted to €14m, plus interest at an annual rate of 1.9%, compounded annually from the date of the award until full payment.

This is the third consecutive success for Bulgaria in the series of cases brought against it by the electricity distribution and supply companies EVN AG, Energo-Pro a.s., and ČEZ a.s. The total amount of claims filed by the three companies amounted to approximately €2 billion.

The significance of Bulgaria’s success in these cases goes beyond the size of the claims themselves, as the loss of any one of these cases would have led to a change in the in the way electricity prices are set and to their substantial increase.