Integrated report 2021

33.4 Czechia’s complaint against Poland regarding prolongation of mining concession for KWB Turów

On September 30, 2020 the Czech Republic sent a letter to the European Commission pursuant to art. 259 of the Treaty on the Functioning of the EU, initiating a procedure against Poland for alleged violations of EU law in connection with the extension of the term of KWB concession for lignite mining for 6 years for KWB Turów.

On December 17, 2020, the European Commission issued a reasoned opinion, in which it shared some of the objections of the Czech side, while pointing out that the extension of the operation of KWB Turów did not violate the provisions of the Water Framework Directive. The European Commission also stressed that some of the remaining allegations from the Czech side turned out to be wrong.

On February 26, 2021 the Czech government lodged a complaint against Poland with the Court of Justice of the EU. A summary of the complaint and key arguments were published in the EU Official Journal on April 19, 2021. The parties in this proceeding are member states, which precludes the participation of natural and legal persons even if the case directly concerns their activities.

On May 21, 2021, the Vice-President of the Court of Justice issued an order for an interim measure as follows: „The Republic of Poland will cease immediately and until a ruling in case C-121/21 lignite mining at the Turów mine (Poland).” An interim measure does not decide the merits of the case.

On June 9, 2021, the European Commission joined the main proceedings as an intervener supporting some of the claims of the Czech side. In the interim measure procedure, the Czech Republic additionally demanded a fine for each day of non-compliance with the decision to immediately cease lignite mining. At the same time, the Republic of Poland applied for annulment of the decision on interim measures due to a change in circumstances within the meaning of art. 163 of the Rules of the Court of Justice. In accordance with the decision of September 20, 2021, the Vice-President of the Court of Justice dismissed the request to revoke the interim measure and ordered Poland to pay the European Commission a fine in the amount of EUR 500 000 per day, starting from the date of delivery to Poland of the decision until that Member State complies with the decision of May 21, 2021. According to the Company, it is not possible to transfer the above-mentioned penalties onto PGE Group companies.

A hearing at the EU Court of Justice was held on November 9, 2021. On February 3 2022, the Advocate General issued an opinion on the complaint and found part of the Czech party’s allegations to legitimate. On February 3, 2022, the Prime Ministers of the Polish and Czech governments initialled a bilateral agreement setting out the conditions for the withdrawal of the Czech complaint from the Court of Justice of the European Union. On February 4, 2022, the Czech Republic informed the Court that, pursuant to art. 147(1) of the Rules of Procedure, it waves all of its claims in consequence of an agreement reached with the Republic of Poland on the settlement of the dispute. In view of the above, on February 4, 2022 the President of the Court of Justice issued an order removing the case from the register.

On February 7, 2022, an Agreement was concluded between PGE GiEK S.A., PGE S.A. and the State Treasury defining principles of cooperation in connection with the execution of the Agreement concluded on February 3, 2022 between the Government of the Czech Republic and the Government of the Republic of Poland on cooperation in respect of effects on the territory of the Czech Republic of mining operations at KWB Turów.

Pursuant the above-mentioned Agreement, PGE GiEK S.A. has undertaken to construct an earth embankment, monitor noise, monitor air quality, drill 4 boreholes to monitor water aquifer levels, complete the construction of an anti-filtration screen, carry out land displacement measurements and replace lighting at KWB Turów.

Furthermore, PGE GiEK S.A. has committed to contribute EUR 10 million to the Liberec Region of the Czech Republic through the PGE Foundation. The donation was made in February 2022.

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