The Polish General Directorate for National Roads and Motorways (GDDKiA) is seeking compensation of 200 million euros from the China Overseas Engineering Group (COVEC), the 21st Century Business Herald reported Monday.

COVEC, a subsidiary of China Railway Group, won the contract to build a 49 kilometer stretch of highway in Poland in 2009. It was the first time a Chinese company had won such a large European contract.

COVEC cancelled its highway contract with Poland midway through construction in 2011, claiming the road construction authority was late making payments.

GDDKiA decided to file a lawsuit against the company seeking compensation after several rounds of failed negoations in June and July, Jakub Troszynski, an official with the legal division of GDDKiA, said.

GDDKiA said it will also file suit against Bank of China and the Export-Import Bank of China, claiming the two banks had refused to pay for a deposit of 130 million zlotys for the A2 highway project.

COVEC is also going to sue GDDKiA for being late making payments, an unnamed person close to the issue told the 21st Century Business Herald.

China's business press carried the story above on Tuesday.