Siemens 2007 Annual Report Download - page 285

Notes to Consolidated Financial Statements 285
(in millions of €, except where otherwise stated and per share amounts)
Notes to Consolidated Financial Statements
possible anti-trust violations. On October 25, 2007, upon the Company’s appeal, a
Hungarian competition court reduced administrative fi nes imposed on Siemens
AG from €0.3 to €0.1 and from €0.6 to €0.1 regarding VA Tech.
In April 2007, the Polish Competition Authority launched an investigation
against Siemens Sp. z o.o. Poland regarding possible anti-trust violations in the
market for the maintenance of diagnostic medical equipment. The Company is
cooperating in the ongoing investigation with the Polish Competition Authority.
In June 2007, the Turkish Anti-trust Agency confi rmed its earlier decision to
impose a fi ne of approximately €6 on Siemens AS Turkey based on alleged anti-
trust violations in the traffi c lights market. Siemens Turkey has appealed this
decision and this appeal is still pending. It is possible that as a result of this deci-
sion, Siemens could be debarred from participating in public sector tender offers
in Turkey for a one to two year period.
The Company requested arbitration against the Republic of Argentina before
the International Center for Settlement of Investment Disputes (ICSID) of the
World Bank. The Company claimed that Argentina unlawfully terminated the
Company’s contract for the development and operation of a system for the produc-
tion of identity cards, border control, collection of data and voters’ registers and
thereby violated the Bilateral Investment Protection Treaty between Argentina
and Germany (BIT). The Company sought damages for expropriation and violation
of the BIT of approximately U.S.$500 million. Argentina disputed jurisdiction of
the ICSID arbitration tribunal and argued in favor of jurisdiction of the Argentine
administrative courts. The arbitration tribunal rendered a decision on August 4,
2004, fi nding that it had jurisdiction over Siemens’ claims and that Siemens was
entitled to present its claims. A hearing on the merits of the case took place before
the ICSID arbitration tribunal in Washington in October 2005. A unanimous deci-
sion on the merits was rendered on February 6, 2007, awarding Siemens compen-
sation in the amount of U.S.$217.8 million on account of the value of its invest-
ment and consequential damages, plus compound interest thereon at a rate of
2.66% since May 18, 2001. The tribunal also ruled that Argentina is obligated to
indemnify Siemens against any claims of subcontractors in relation to the project
(amounting to approximately U.S.$44 million) and, furthermore, that Argentina
would be obligated to pay Siemens the full amount of the contract performance
bond (U.S.$20 million) in the event this bond was not returned within the time
period set by the tribunal (which period subsequently elapsed without delivery).
On June 4, 2007, Argentina fi led with the ICSID an application for the annulment
and stay of enforcement of the award, alleging serious procedural irregularities.
An ad hoc committee has been appointed to consider Argentina’s application.
Siemens currently expects that the ad hoc committee will not render a decision
before 2009.
Information required under IAS 37 Provisions, Contingent Liabilities and Contin-
gent Assets is not disclosed for certain legal proceedings, if the Company con-
cludes that the disclosure can be expected to prejudice seriously the outcome of
the litigation.