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Central European Media Enterprises Group
CME WINS INTERNATIONAL ARBITRATION AGAINST
THE CZECH REPUBLIC
Czech Republic Responsible For CME's Loss of Czech TV Investment
Damages Over $500 Million
Hamilton, Bermuda - September 14, 2001- Central European Media Enterprises Ltd.
(CME) (OTCBB:CETVF.OB) today announced that an International Arbitration
Tribunal has ruled in favor of CME's wholly-owned Dutch subsidiary in its
proceedings against the Czech Republic filed under the Bilateral Investment
Treaty between the Netherlands and the Czech Republic (the "BIT") and relating
to the Company's investments in the television service organization CNTS. Signed
in 1991, the BIT seeks to encourage Netherlands investment in the Czech Republic
by providing explicit protections from actions by the signatory states that are
unfair or discriminatory to foreign investors or that deprive investors of their
investments.
"This ruling caps a long and diligent campaign by CME and its Chairman Ronald
Lauder on behalf of our shareholders," stated Fred T. Klinkhammer, CME's
President and Chief Executive Officer. "The ruling by an independent
international tribunal clearly establishes that the Czech Republic committed
multiple breaches of the BIT.
"We will now pursue the award to which we have been found entitled on behalf of
our shareholders. CME will prove that these damages exceed $500 million, plus
interest for the more than two years in which CNTS's operations have been shut
down."
On August 5, 1999, all operations of CNTS in the Czech Republic were halted,
when the licenseholder for TV Nova, CET 21, severed its business relationship
with CNTS. On February 22, 2000, CME instituted arbitration proceedings against
the Czech Republic under the 1991 BIT, claiming that actions by the Czech
Republic had fundamentally undermined and ultimately brought about the loss of
its CNTS investment, and seeking damages for the harm caused by the Czech
Republic's actions. The arbitration was heard before a three-member tribunal of
German, American and Czech arbitrators, pursuant to the Arbitration Rules of the
United Nations Commission on International Trade Law (the "UNCITRAL"), from
April 23 to May 2, 2001 in Stockholm, Sweden, with a final ruling being issued
today. The ruling is final and is not open to appeal.
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Page 2 of 3
Under the ruling the Czech Republic was found to have violated the BIT and here
is what the decision actually says and we quote:
"1. The Respondent has violated the following provisions of the Treaty:
a. The obligation of fair and equitable treatment (Article 3 (1));
b. the obligation not to impair investments by unreasonable or
discriminatory measures (Article 3 (1));
c. the obligation of full security and protection (Article 3 (2));
d. the obligation to treat foreign investments in conformity with
principles of international law (Article 3 (5) and Article 8 (6),
and
e. the obligation not to deprive Claimant of its investment
(Article 5); and
2. The Respondent is obligated to remedy the injury that Claimant
suffered as a result of Respondent's violations of the Treaty by
payment of the fair market value of Claimant's investment as it was
before consummation of the Respondent's breach of Treaty in 1999 in an
amount to be determined at a second phase of this arbitration;
3. (1) The Respondent shall bear its own legal costs.
(2) The Respondent shall pay to Claimant as refund of Claimant's
legal costs and expenditures US $750,000.
(3) The Claimant shall bear one third and the Respondent two thirds
of the Arbitral Tribunal's costs and expenditures. The
Respondent, therefore, shall further pay to the Claimant as
refund of Claimant's payments of the Tribunal's fees and
disbursements US $257,749.81.
4. This Partial Award is final and binding in respect to the issues
decided herein. The legal seat of the proceedings is Stockholm,
Sweden.
The Tribunal will continue the arbitration proceedings in order to
decide on the quantum of the Claimant's claim upon request of one of
the Parties."
"Once a monetary award has been finalized, we expect the Czech Republic to pay
it promptly," Mr. Klinkhammer added. "It is legally obligated to do so, has
signed a treaty promising to do so, and must do so to have any credibility in
the international marketplace and any standing in the international community.
Under the ruling CME was awarded `costs to date' of $1,007,749.81, payable
immediately by the Czech Republic."
"Despite these courtroom distractions, our management team has remained focused
on strengthening our station group," Mr. Klinkhammer continued. "In the first
six months of 2001, all of our stations posted positive EBITDA and broadcast
cash flow with combined increases of 91% and 77%, respectively. Under the
guidance of Robert Burke, our recently appointed COO, and the rest of our
management team we will continue to build upon the success of our market leading
stations."
Under UNCITRAL rules, the full text of the award cannot be made public without
the parties' consent. "As CME said before this award was issued, CME and Ronald
Lauder consent to the public release of the award and the London award in the
interest of transparency," said Mr. Klinkhammer. "We again call upon the Czech
Republic to support transparency by agreeing to the public release of both
awards."
CME will be hosting a teleconference for its shareholders and bondholders to
discuss the ruling. The timing of this conference call has not yet been
determined, and the company will announce details early next week.
Central European Media Enterprises Ltd. (CME) is a TV broadcasting company with
leading stations located in Romania, Slovenia, Slovakia and Ukraine. CME is
traded on the Over the Counter Bulletin Board under the ticker symbol
"CETVF.OB".
For additional information contact:
United States: United Kingdom: Czech Republic:
Michael Smargiassi/Glen Dickson Gerry Buckland Michal Donath
Brainerd Communicators, Inc. 011-44-776-831-0861 011-420-602-222-128
212-986-6667
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