Estonian fintech company is suing the Republic of Kosovo

Published on: 26 Feb 2020

As the Central Bank of Kosovo has not provided an explanation or solution regarding unexpected and unlawful revocation of the licence from IuteCredit Kosovo, the parent company has submitted a request for arbitration to the International Court of Arbitration of the International Chamber of Commerce.

The CEO of IuteCredit Europe, Tarmo Sild explained that the Law on Foreign Investment clearly specifies that it allows a foreign investor who has been treated unjustly, instead of using local remedies, to pursue arbitration.

“We have experienced and concluded by now, that in Kosovo one cannot rely on a local judicial process or transparent public administration, that is based on the rule of law. That is why we have chosen the path that is most efficient to remedy the the situation, where the Central Bank of Kosovo has unexpectedly and unlawfully revoked the business licence from our subsidiary in Kosovo, and to continue in international arbitration,” Sild stated.

“Of course we would have preferred that the Central Bank of Kosovo had not executed this unlawful decision in the first place. But today, our main cause for continuing in international arbitration is due to the damage done to our reputation and to our assets,” Sild explained.

Sild described that revocation of the licence of the business at the time when the loan portfolio of local subsidiary was approximately EUR 12 million spread over more than 25 000 loans was a violation of Kosovo’s obligations under its Foreign Investment Law while there was also no valid reason for this action.

According to IuteCredit Europe, by revoking the business licence, Kosovo breached several obligations under the Foreign Investment Law, such as the obligation to accord IuteCredit with fair and equitable treatment under Article 3(1); the obligation to provide full protection and security to IuteCredit under Article 3(2); the obligations not to interfere with or impair IuteCredit’s investment under Article 3(4); the obligation to comply with the Repubilc of Kosovo’s obligations created by law or other legal acts (umbrella clause) under Article 5(1); and the obligation not to expropriate IuteCredit’s investment without immediate, adequate and effective compensation under Article 7.

“Today, IuteCredit has been put in an extremely unfair position in Kosovo and therefore has suffered losses that need to be compensated. The specific amount will be determined in this arbitration,” Sild stated.

IuteCredit is an Estonian-origin international microcredit and fintech company focusing mostly on installment loans, including car loans. The average loan period is 18 months. Today, IuteCredit has become a leading microcredit company in Europe with a balance sheet of 100 million euros and more than 200,000 active customers. The company raises its funding through publicly traded bonds that are listed on the Frankfurt Stock Exchange.

Company operates in Moldova, Albania, North Macedonia, Bulgaria, and Bosnia & Herzegovina. The portfolio of business partners of IuteCredit includes state postal services, international teleoperators Orange, VodaFone, Deutsche Telekom, large electronics stores, etc.