2 Nov 2023 17:05

Russian court imposes $1.5-bln fine against Poland's Europol GAZ if company continues arbitration proceedings against Gazprom in Stockholm

MOSCOW. Nov 2 (Interfax) - A Russian court, having prohibited Polish company Europol GAZ from continuing its legal process against Gazprom Export in arbitration in Stockholm, imposed a sanction for violating the ban of $1.5 billion. The Polish company is demanding the same amount from the Gazprom subsidiary in a contested arbitration.

On October 26, the Arbitration Court of St. Petersburg and the Leningrad Region upheld Gazprom Export LLC's claim against Europol GAZ. The full text of the decision was published on October 31.

In May of this year, Europol GAZ filed a claim with the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) regarding the 2010 agreement between Gazprom Export, the Russian Federation, PGNiG and Europol GAZ, demanding to recover $285 million for gas transportation through Poland in 2006-2009 and 5.357 billion zlotys ($1.263 billion) in losses.

In its response, Gazprom Export pointed out the invalidity of the arbitration clause, the lack of competence of the SCC arbitration tribunal to consider the dispute, and the impossibility of ensuring an impartial, objective, comprehensive and fair hearing. In September, the arbitration court rejected this request.

In a Russian court, Gazprom Export demanded "a ban on initiating or continuing proceedings in a foreign court on disputes involving entities against whom restrictive measures have been introduced."

"The court came to the conclusion that there are currently no prospects for an impartial, objective, comprehensive and fair trial to be administered by the Stockholm Chamber of Commerce in relation to Gazprom Export LLC. Arranging representation of the Company's interests in the Chamber of Commerce and Industry is extremely difficult and unpromising based on objective technical and economic, as well as political reasons. The above circumstances together indicate the existence of the exclusive competence of the Arbitration Court of the city of St. Petersburg and the Leningrad Region to consider the dispute between the Company and Europol GAZ," the court decision says.

Europol GAZ owns the Polish section of the Yamal-Europe gas pipeline. This main line with a length of over 2,000 from Torzhok to Frankfurt-on-Oder, reached its design capacity of 33 bcm per year in 2006. The Polish section has 683 km in linear sections and five compressor stations.

In 2022, the Polish Ministry of Internal Affairs imposed sanctions against PJSC Gazprom, freezing its exercise of rights to shares and the payment of dividends from Europol GAZ.

Russia has taken retaliatory blocking measures against Europol GAZ - for Gazprom this means a ban on the use of the company's gas pipeline to transport Russian gas through Poland.

In September 2022, the Polish Ministry of Internal Affairs imposed sanctions against Gazprom Export LLC, which involved freezing the company's financial and economic resources and a ban on providing it directly or indirectly with any financial or economic resources. For the company, this means the impossibility of receiving any payments to it, as well as the impossibility of delivering gas to Polish recipients.

In 2023, the Polish authorities transferred Gazprom's share in Europol GAZ to the balance sheet of the company itself. Thus, full control over the company was established by Polish oil concern Orlen, with whom gas company PGNiG had previously merged.