Construction, Energy, EU – CIS, Gas, Russia

International Internet Magazine. Baltic States news & analytics Thursday, 28.03.2024, 16:40

Nord Stream 2 seeks arbitration in dispute with EU Commission

BC, Riga, 26.09.2019.Print version
The Russian-owned Nord Stream 2 pipeline consortium filed a notice on Thursday (26 September), asking a tribunal of private arbiters to determine whether the European Union is in breach of its obligations under the Energy Charter Treaty (ECT).

The move marks an escalation in the dispute opposing Nord Stream 2 and the European Commission, which carries risks for both sides. Settlements under the Energy Charter Treaty are sometimes in the billions of dollars.


By amending its Gas Directive, Nord Stream 2 believes the EU has breached its obligations under Articles 10 and 13 of the Energy Charter Treaty, a legally-binding treaty originally signed in 1991 after the collapse of the Soviet Union.


In particular, the consortium argues that the amended directive discriminates against Nord Stream 2, in breach of the EU’s Article 10(1) obligation not to take such discriminatory action, and in breach of the EU’s general obligation to guarantee fair and equitable treatment for investors.


The European Commission has come under pressure from Poland and the Baltic states to legislate on Nord Stream and tabled an amendment to the EU Gas Directive in November 2017.

While the amendments – relating to third-party access, tariff regulation, ownership unbundling and transparency – aren’t officially directed against any particular project, they were obviously designed to stop Nord Stream 2.


Legal experts have recently argued that the amendment is drafted in such a way that all existing pipelines can enjoy a derogation from EU gas market rules under the updated Gas Directive, except Nord Stream 2.


The derogation is indeed available for pipelines that are “completed before the date of entry into force of this Directive,” which is 23 May 2019.


According to them, the discriminatory treatment of Nord Stream 2 stems from the fact that it is the only import pipeline which cannot benefit from the derogation, because the final investment decision was made before this date, even though significant capital was committed.


Nord Stream 2 also announced it will go ahead with a legal procedure to annul the amended gas directive, for breaches of EU law before the Court of Justice of the European Union, which was submitted in July.






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