Vivendi seeks arbitrage, claiming Elektrim breached their deal

French media conglomerate Vivendi Universal has entered arbitrage proceedings against telecom and energy group Elektrim, for failing to respect the terms of their 1999 agreement on investments. Elektrim has denied the allegations, demanded that Vivendi withdraw the request for arbitration and threatened a counter-suit. The agreement was signed in December 1999, when cash-strapped Elektrim was fighting with Deutsche Telekom (DT) over control of Polska Telefonia Cyfrowa (PTC), operator of the Era GSM mobile phone network. Vivendi acquired a 49% stake in Elektrim Telekomunikacja, which holds a majority stake in PTC, in return for agreeing to invest $1.2 billion in joint projects the two groups would pursue. With time, however, Vivendi's relations with Elektrim deteriorated, while the latter mended fences with DT and signed a letter of intent to sell it a 51% stake in its fixed-line telecom ventures for $180 million. According to rumors this was just a prelude to broader cooperation between the two, which would include Elektrim surrendering control over PTC to DT. (Gazeta Wyborcza, Feb. 24-25, p.27) T.J.