Russia is being pursued by Wintershall Dea for potential financial reparations.
Sparking a Legal Battle: Wintershall Dea vs Russia
The German energy giant, Wintershall Dea, is entangled in a contentious legal battle with Russia, demanding billions in compensation for alleged contract breaches. The ongoing dispute has taken a fresh twist, with Russia's Prosecutor General filing a lawsuit against Wintershall Dea and associated parties in the Moscow Commercial Court.
If the arbitration persists, Wintershall Dea, along with its Frankfurt law firm Aurelius Cotta, the three arbitrators in The Hague, could face a staggering 7.5 billion euro fine. This dramatic development was first reported by the "FAZ".
Russia's countermove utilizes their domestic law (Article 248 APC), a law enacted due to the sanctions imposed post-Crimea annexation. This law allows for Russian courts to impede international proceedings if western sanctions are claimed to encroach upon Russian actors’ rights. In this specific case, Russia asserts that the arbitration court in The Hague is biased and influenced by western interests, with the arbitrators serving as "agents of influence" and "hostages of western sanctions".
Yet, the success of the Moscow lawsuit and its potential implications remain to be seen.
Wintershall Takes on Russia for a Hefty Sum
The Russian Prosecutor General's lawsuit puts pressure upon Wintershall Dea, its legal representatives, and the arbitrators. However, even if a Moscow court upholds the billion-dollar claim, it would have no force within the European Union due to the EU's late 2024 decision, which stipulates that EU courts may no longer enforce judgments claiming jurisdiction based on Article 248 APC, the very article upon which the Moscow lawsuit relies.
The legal dispute revolves around Russia's alleged expropriation of Wintershall's significant oil and gas project stakes, such as the Yuzhno-Russkoye gas field and the Achimov deposits, without fair compensation. This is an outcome of the decrees issued by Russian President Vladimir Putin in December 2023, which transferred Wintershall's project stakes (joint ventures) to Russian companies.
Wintershall is relying on the 1989 German-Russian investment protection treaty and the Energy Charter Treaty, agreements designed to safeguard investors from such interventions. The company aims to hold Russia accountable for the expropriation and the associated damages, with media reports indicating a claimed 7.5 billion euros that Wintershall is seeking from Russia.
Wintershall Dea's Historical Relationship with Russia
For decades, Wintershall Dea, a subsidiary of chemical colossus BASF, was a major German player in the Russian oil and gas business. The company had stakes in the Nord Stream 1 and 2 pipelines and was linked to Russian state-owned Gazprom via three joint ventures, including operators of Yuzhno-Russkoye and Achimov deposits.
Wintershall Dea's full withdrawal from Russia only occurred towards the end of January 2023, following new Russian regulations that prohibited profits within the country. More recently, BASF sold its Wintershall Dea subsidiary to oil company Harbour Energy, securing the Federal Ministry of Economics' approval following an investment review. However, Wintershall Dea's Russia-related businesses were not part of the sale, with the federal government providing investment guarantees worth 1.8 billion euros to a new company. The federal government's intention seems to be to reserve these guarantees for the failed Russia business, should the government decide to approve them.
- Despite the Russian Prosecutor General's lawsuit, a Moscow court's decision on the billion-dollar claim would hold no enforcement power within the European Union post-2024, due to a EU decision that bars EU courts from enforcing judgments relying on Article 248 APC.
- Wintershall Dea is embroiled in a legal dispute with Russia, accusing it of expropriating its significant oil and gas project stakes without fair compensation, following decrees issued by President Vladimir Putin in December 2023.
- Wintershall is relying on international treaties, such as the 1989 German-Russian investment protection treaty and the Energy Charter Treaty, to sue Russia for alleged expropriation and associated damages, with a claimed sum of 7.5 billion euros.
- The ongoing dispute, sparked by Winterhall Dea's claim of breached contracts, has taken an unexpected turn, involving the Moscow Commercial Court and raising questions about the impartiality of international proceedings in the face of alleged western biases and influence.
