Dutch Shipbuilder Damen Sues Romania Over Mangalia Shipyard Management Rights

Dutch shipbuilding giant Damen is locked in a legal battle with the Romanian government at the International Court of Arbitration in Vienna. The dispute centers on managing and owning the Damen Shipyards Mangalia, a key player in Romania’s shipbuilding industry.

The conflict stems from a 2018 agreement where Romania, following the withdrawal of previous owner Daewoo, acquired a majority stake (51%) in the shipyard, then known as 2 Mai Shipyard. However, the deal granted Damen operational control despite Romania’s ownership.

According to Damen, a recent Romanian law on corporate governance for state-owned enterprises disrupts operational autonomy, making it difficult to run the shipyard effectively. In response, Damen issued a termination notice for the 2018 agreement and is now seeking €500 million in compensation if the court rules in their favour.

In August last year, Damen announced it wanted to abandon operations at Mangalia Shipyard. This followed their previous announcement that the Dutch company could have sued Romania over the corvettes tender cancellation. The situation has caused anxiety among the Mangalia shipyard’s employees, who fear potential job losses if the partnership dissolves.

The legal framework currently applied violates the conditions offered, agreed and guaranteed in favour of Damen by the Romanian state and its structures in 2018, completely invalidating the principles that were the basis of Damen’s decision to invest in the Mangalia construction site. In addition, this fact comes after more than three years of other blockages in the decision-making process, and there is no other type of help, involvement, or financing from the Romanian partner. For example, we informed the Romanian authorities and the relevant entities about the new law’s impact on this partnership, even before its adoption, and requested immediate actions to prevent it. Damen insisted on genuine dialogue and a quick solution before the law came into force to minimize any disruption to shipyard activity and resolve the problematic situation. This did not happen.

Damen International announcement on its intention to withdraw from Mangalia Shipyard in August 2023

Meanwhile, Damen’s operations at their separate shipyard in Galati remain unaffected. The company has no plans to leave Galati and has announced continued investments there.

Romania has constantly been trying to please Damen, but this has had little effect on the Dutch company’s intention to return the favours. In October 2022, Romania announced purchasing two ships from Damen in the context of the Netherlands opposing Romania’s entrance to the Schengen area.

The outcome of the Vienna arbitration court case will determine the future of Damen Shipyards Mangalia. If the court rules in Romania’s favour, Damen may exit the partnership, potentially impacting the Mangalia shipyard’s workforce and operations. Conversely, a verdict for Damen could see them regain control under the original agreement or negotiate a new one.