The proprietor of the Corrib gasfield, operating off the western coastline, has launched a contestation for the excess profits tax implemented on the energy industry. This challenge has been promptly ushered into the High Court’s speedy business division, affirmed by Mr Justice Denis McDonald. He noted that Vermilion energy group’s approximately 8 and a half month delay to action this proceedings can be comprehended, given the careful deliberation needed for such a decision.
McDonald commented that this decision was explained by recent happenings in relatable cases occurring in various jurisdictions, including on a European scale. Specifically, recently a related appeal in Belgium regarding the taxation was passed on to the Court of Justice of the European Union (CJEU).
The regulatory enforcement of the tax is being questioned by Vermilion owing to the verification of its invalidity and they are also claiming reimbursement of nearly €98 million they have remitted under the tax, even while reporting losses since 2016, which marks Corrib’s inaugural production year. The tax came into existence as a countermeasure to the steep electricity market rates, an aftermath of Russia’s aggression towards Ukraine.
Three companies under Vermilion Energy: Vermilion Energy Ireland Ltd, Vermilion Exploration and Production Ireland Ltd, and Vermilion Energy Corrib Ireland Ltd, have instigated proceedings against Ireland’s Environment Minister and the Attorney General.
In the previous year, Irish legislation was enacted to operationalise an EU regulation intended for emergency interventions to mitigate high energy costs. Energy corporations were obliged to contribute a minimum “solidarity contribution” of 33 per cent, predicated on the taxable profits for the fiscal years 2022 and/or 2023. It was applicable to profits exceeding a 20 per cent rise in the average taxable profits, with the discretion to include or exclude 2022 being conferred on member states.
Representing Vermilion, Michael Cush SC, voiced the urgency of settling this case via the swift Commercial Court due to recent developments in the Belgian case. On contrary, the defendants’ representative, Catherine Donnelly SC, contested the case’s entry to the commercial list given the delay Vermilion incurred in initiating it, maintaining that the urgency resulted from Vermilion’s own conduct.
After reviewing all the evidence submitted, the magistrate confirmed that the case would typically be recognised by the Commercial Court, with no doubts about its validity. The only concern raised was an eight to 8½ months lag in taking the case to court, which, in his opinion, had been justified.
A hearing took place where it was revealed that the defendants intend to seek a suspension on the Irish proceedings until the outcome is determined in the reference to the CJEU in the Belgian incident.
The judge agreed to postpone any decisions regarding the suspension and the process for advancing the case until next week.