PRAGUE — Ronald Lauder, the American chairman of the board, founder and major shareholder of CME broadcasting, has initiated arbitration proceeding against the Czech Republic.
Lauder cited the Bilateral Investment Treaty, which was signed by former Prime Minister Vaclav Havel and protects the rights of foreign investors.
Lauder said the Czech authorities encouraged and approved his investment in Nova TV beginning in 1993, but claimed that the treaty has been violated since 1996.
In early August of that year, license owner Vladimir Zelezny, the Nova general manager dismissed by CME in April this year, replaced CME broadcasts with services from a company he established.
Lauder is seeking through an ad hoc arbitration hearing monetary damages that allegedly resulted from Zelezny’s takeover of the station.
According to a CME spokesman, the company’s total investment in Nova stands at $140 million. CME stock was trading at $1.50 by noon Tuesday. With an initial investment of $75 million by CME, Nova quickly jumped to the top spot in the Czech Republic and was hailed regularly as one of the most successful launches in TV history, turning a profit within two years.
The suit is thought to be the first case in which a foreign resident has sought arbitration against the Czech Republic. The minister of foreign affairs has said the case will harm the country’s business reputation.