Chopping was recognized as force majeure – Newspaper Kommersant No. 214 (7415) dated 11/18/2022

The Stockholm arbitration ordered the Finnish Gasum to pay Gazprom Export more than €300 million in debt for gas supplies, and also recognized the decree of the President of the Russian Federation on the transition to paying for Russian gas in rubles for “unfriendly” countries as force majeure, Gazprom Export said. Thus, the arbitration does not require Gasum to switch to payment in rubles, however, it obliges to pay not only for past deliveries, but also for unselected gas. Gasum told Kommersant that they were ready to make this payment in euros. Such a decision, which is more in the interests of Gazprom, may alert other European companies that planned to file similar claims.

The arbitration tribunal ordered the Finnish Gasum to pay Gazprom Export more than €300 million for gas supplies and in connection with the failure to fulfill the obligation to take or pay, as well as interest for late payment, said Gazprom Export November 17th.

According to the company, the tribunal also considered the decree of Russian President Vladimir Putin on the transition to payment for gas in rubles as a force majeure circumstance under the contract. “Thus, the tribunal confirmed the legitimacy of suspending natural gas supplies if the buyer fails to pay in rubles in accordance with the decree of the President of the Russian Federation,” Gazprom Export said in a statement.

Russian President Vladimir Putin in March signed a decree obliging buyers from “unfriendly” countries to pay for Russian gas in rubles through a new currency conversion mechanism, otherwise supplies must be stopped.

The largest European buyers agreed to the new scheme by opening corresponding accounts with Gazprombank in order to be able to convert gas payments into rubles. Gasum was one of the first to announce that it does not accept the new payment terms.

Gazprom stopped gas supplies to Gasum on May 21, after which the Finnish company applied to arbitration. In addition to Gasum, for a similar reason, Bulgarian Bulgargaz and Polish PGNiG lost access to Russian gas on April 27, May 31 – Dutch trader GasTerra, and on June 1 – Danish Orsted and British Shell, which supplied Russian gas to Germany. Most of these companies have said they are considering suing Gazprom.

Herself gasum November 16 differently interpreted the decision of the arbitration. She said that, according to the decision, Gasum is not obliged to pay Gazprom in rubles. The Finnish company clarified that Russian gas supplies under the current contract “yet” will not be resumed.

Gasum told Kommersant on November 17 that they would not comment on Gazprom Export’s statement.

“Naturally, we will pay the unpaid amounts according to the contract in euros. The arbitration court ordered Gasum and Gazprom Export LLC to continue bilateral negotiations on the contract to resolve the current situation,” the company said.

Russia and Finland have the longest historical contracts for the supply of natural gas, spanning five decades. The last time the contract with Gasum was extended until December 31, 2031. In 2021, Gazprom supplied 1.49 billion cubic meters of gas to Finland. After the cessation of supplies from Russia, Finland imports gas through the Balticconnector gas pipeline connecting it with Estonia along the bottom of the Gulf of Finland. Helsinki also intends to launch a 5 bcm/y floating LNG terminal in Inkoo port in December, with commercial LNG supplies likely to start in January.

In this case, it was necessary to resort to force majeure not in order to confirm the legitimacy of Gazprom’s actions, but in order to relieve the Finnish company of responsibility for stopping payment, Mikhail Zhuzhzhalov, senior lawyer at Tomashevskaya & Partners, believes. He emphasizes that Gasum still has the obligation to pay for the supplied gas, but the company will be able to do it in euros.

According to the lawyer of the A1 Bar Association Georgiy Shashero, “in fact, the arbitration has fixed the status quo: Gasum will have to pay for the old supplies (but in euros), but in the future the parties must negotiate and properly resolve all disputes about future supplies and their payment.”

The lawyer admits that the arbitration decision may alert other European companies that planned to file similar claims.

At the same time, he notes that arbitration courts, especially ad hoc courts (that is, those formed for each individual dispute), usually cannot, due to the confidentiality of arbitral awards on commercial disputes, be guided by any precedents when resolving a particular dispute. “With a high probability, the decision made will not affect future decisions on similar disputes,” Georgy Shashero believes.

Tatyana Dyatel