Danish Carlsberg was taken over by Russia – could get billions from Putin

The Russian state has taken over Carlsberg’s breweries in Russia.

Then a 30-year-old document could give the Danish beer giant billions – from Putin’s frozen money, experts say.

– They must act now, before the Russian state’s money runs out, says lawyer Eduardo Vistisen.

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A ten-page document from 1993 could give the beer giant Carlsberg billions – from Putin’s frozen assets.

Last week, the Russian state took over control of Carlsberg’s operations in Russia, Baltika breweries. The takeover took place without the Danish brewery’s knowledge or approval. The new director of Baltika breweries was 70-year-old Taimuraz Bolloev, who was director of the brewery before Carlsberg bought it – and who is a close ally of Russian President Vladimir Putin.

Now the brewery giant can be compensated in the billions from Putin’s own coffers, say several experts such as Danes TV2 talked to.

Worth 31 billion

The West has frozen huge sums belonging to Russia – which can be used to compensate companies that suffered huge financial losses after Russia’s invasion of Ukraine. Baltika breweries has an estimated value of around SEK 31 billion.

– If I were Carlsberg’s advisor, I would say: Do it, and do it now. Carlsberg has a really good cover that nobody seems to have noticed. I don’t even know if they know it themselves, says lawyer Eduardo Vistesen to TV2.

The old agreement is a so-called bilateral investment agreement (BIT), which was signed by then Prime Minister Poul Nyrup Rasmussen on 4 November 1993.

“To be replaced immediately”

According to the agreement, Denmark must, among other things, ensure that Russian companies and investments in Denmark receive “favorable conditions” and “reasonable and fair treatment”. Russia do the same for Danish companies.

The agreement also states that a state takeover – a so-called expropriation – may only take place in very specific cases. If a Danish company in Russia were to be taken over, an “immediate, adequate and effective compensation” must be paid, the agreement states, according to TV2.

According to Vistisen, Russia’s takeover of the beer giant is a breach of contract.

– On paper, it may well be that it is just a new management, but I judge that Russia would have problems in an arbitration arbitration. An arbitration is a dispute between two parties about something that does not fall within the normal legal system., says Eduardo Vistisen.

The agreement also states that disputes would be resolved as an arbitration procedure, that is, a dispute decided by an arbitrator or arbitration board instead of a court. The arbitration shall follow the UN Commission for International Trade Law, or the Arbitration Institute in Stockholm.

Has seized 3,500 billion

This allows international courts to investigate whether Russia is in breach of the 1993 agreement – ​​and whether Carlsberg can receive compensation. According to the BIT, the compensation must in that case “correspond to the value of the expropriated investment, immediately before the expropriation”.

Over 300 billion euros – equivalent to up to 3,500 billion kroner – have been frozen in Western banks, from the Russian central bank alone. Carlsberg should be able to receive full compensation from that sum, if they act quickly.

– Carlsberg should have good chances to win a goal, but they have to act now, because the Russian state’s money abroad may run out, says Vistisen.

Poul Hvilsted at the law firm Horten also points out that Carlsberg must hurry before Putin acts more aggressively against the Western companies that are still in the country.

– The system is such that those who come first and demand their money get priority over those who come the week after and want theirs, he says to TV2.

Since Russia’s invasion of Ukraine began, Carlsberg had tried to sell Baltika breweries.