The Uniper-Gazprom Arbitration Ruling [Gas Expert Insights]
The EU-Russia gas relationship came under unprecedented strain in the aftermath of the Russian invasion of Ukraine on 24 February 2022. In March 2022, the Russian president, Vladimir Putin, signed a decree requiring buyers from “unfriendly” countries (including all EU Member States) to pay for Russian gas supplies delivered to them after 1 April 2022 in roubles (instead of euros or dollars) using a special payment mechanism.1 This measure was largely interpreted as an attempt to put pressure on European gas buyers. However, adopting this measure allowed Russia to safeguard future gas payments from being frozen or confiscated by European authorities since, unlike the existing payment mechanism, the new one would not be subject to sanctions. Some European buyers switched to making payments under the new mechanism,2 while others rejected it and saw their supplies cut off.3 Several European buyers, including Finland’s Gasum and Poland’s PGNiG (now Orlen), decided to launch arbitration proceedings against Gazprom Export, a wholly-owned subsidiary of Gazprom. The first such arbitration concluded in November 2022, when a tribunal issued an award in the Gasum arbitration, to the effect that Gazprom was entitled to cut off supplies owing to force majeure. 4 Other cases related to the rouble payment mechanism are pending.
When in mid-June 2022, Russian gas supplies through Nord Stream started to dwindle and stopped altogether by the end of August, more European buyers decided to start proceedings against Gazprom Export, unleashing a second wave of arbitrations, this time in respect of reduced deliveries through Nord Stream. These claimants included Germany’s Uniper and RWE, France’s Engie, Italy’s ENI and Czechia’s CEZ. In the most recent development for second wave arbitrations, a tribunal issued its ruling on 7 June 2024 in the arbitration brought by Uniper over gas volumes it had contracted under its longterm supply contracts (LTSCs) with Gazprom Export but which had not been delivered, either in full or at all since June 2022. Other cases related to reduced delivery through Nord Stream are pending.
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