Damen Demands Termination of Contract with Romania regarding Mangalia Shipyard

The Dutch Damen Shipyards group, which in mid-2018 became a shareholder of the Damen Mangalia shipyard, requests the termination of the legal operating contract of the association between Damen Holding BV and the Romanian state regarding the Mangalia Shipyard.

The company’s officials say that at the moment, the legal framework under which the association between the Romanian state and Damen operated the Mangalia Shipyard was cancelled.

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, 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 Internatioal press release

Damen Holding B.V. (Damen) is a controversial presence in Romania, as they invested in shipyards in Galaţi and Mangalia and operate the largest naval design company in Romania. Their investment is seen as the Netherlands’ desire to take the Romanian shipyards and seaports under their control to hinder Romania from competing with Rotterdam and other Dutch ports. This is not only a political campaign subject used by various politicians over time but also a widespread belief.

More than that, the Netherlands’ opposition to Romania entering Schengen has primarily been viewed as a strategy to pressure the Romanian Government into giving up control over the national harbours.

In 2018, Damen decided to invest in Mangalia and agreed to transfer to the Romanian side 2% of the shares of the company that operates the Mangalia Shipyard (allowing the Romanian state to become a majority shareholder in this company, with 51%), in exchange for receiving and keeping operational control and managerial of the shipyard.

Based on this partnership with the Romanian state, Damen provided financing, know-how, specialized resources, clients, and contracts to transform the Mangalia site into a competitive one on the European market. This was possible due to the approval of the Government Emergency Ordinance (GEO) 73/2018, which amended GEO 109/2011 for the corporate governance of state companies.

“Following an already difficult collaboration and now facing these unilateral changes, Damen thus faces not only a breach of contract but also a breach of the relationship of trust on the part of the Romanian state. In this regard, after a previous notice of breach of contract through which Damen expressed for the last time its willingness to find a possibility for the continuation of the association, to which the Romanian side offered no solution, Damen had no other option than to issue the notice of termination of the Association Agreement concluded in 2018 with the Romanian partner”, the official press release mentions.