The refinery deviated from Rosneft – Newspaper Kommersant No. 43 (7488) dated 03/15/2023

The German court dismissed the claim of Rosneft, which tried to challenge the introduction of external management in respect of its refineries in Germany. The German authorities now intend to extend the term of external administration for another six months. According to lawyers, Rosneft still has a theoretical opportunity to challenge Germany’s actions in the ECtHR.

The Federal Administrative Court in Leipzig upheld the legality of transferring Rosneft’s stake in three oil refineries to the state in trust. Thus, the claim of Rosneft, filed in October 2022, was rejected.

“This is good news for security of supply and the future of the Schwedt refinery. Security of supply is a top priority and therefore a guiding principle,” said German Economy Minister Robert Habeck.

Control of PCK Raffinerie in Schwedt (54.17%), MiRo in Karlsruhe (24%) and Bayernoil in Vogburg (28.57%) Berlin received in September 2022 on the basis of the law on energy security, citing the need to ensure uninterrupted supplies of oil to refineries against the backdrop of the conflict in Ukraine and the ban on imports of raw materials from Russia. Historically, enterprises were provided with Russian oil through the Druzhba pipeline in the amount of about 19 million tons per year, but the German government announced its intention to refuse supplies from the Russian Federation. This was an initiative decision of the German authorities, since the all-European sanctions did not prohibit buying Russian oil through pipelines. Now the refinery in Schwedt is mainly supplied by sea through the port of Gdansk, Poland.

Since October, Rosneft has been trying in court to challenge the legality of the actions of the German authorities, referring to the fact that the external management of its shares in the plants actually imposed an oil embargo that was unfounded from a legal point of view.

Rosneft did not comment on whether the company would challenge the court’s decision.

The external management of Rosneft’s assets introduced by the authorities expired on March 15. Immediately after the decision of the court, the Ministry of Economy of Germany announced its intention to extend it for another six months. The German government admits the possibility of selling the shares of the Russian oil company in the refinery – according to Kommersant, the Polish concern Orlen acted as a contender.

Yury Fedyukin, managing partner of the law firm Enterprise Legal Solutions, believes that in the current situation, the German court could take the side of the authorities based on the norms of the law on energy security. But Rosneft could demand that the very provisions of the law, on the basis of which external management was introduced in respect of its property, be declared unconstitutional. The determination of the conformity of the norms of the Constitution in Germany, as in Russia, is handled by the Constitutional Court, he reminds.

In turn, the senior partner of KA Pen & Paper, Anton Imennov, explains that the Federal Administrative Court of Germany is, as a general rule, the last instance considering the case, that is, Rosneft’s remedies in Germany have been exhausted. However, in his opinion, the company may have grounds for filing a complaint with the European Court of Human Rights in connection with a possible violation of Article 1 of Protocol 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, which guarantees the protection of property. The respondent in this case will be Germany as a state party to the convention.

Rosneft is under EU sanctions, but Anton Imennov points out that sanctioned persons may well win the case, as the practice of proceedings in the ECtHR shows. For example, in Al-Dulimi and Montana Management Inc. v. Switzerland The actions of the Swiss authorities to confiscate the property of a sanctioned person were found to violate the convention due to the fact that due process guarantees were not observed during the consideration of the confiscation issue, the lawyer says.

Olga Mordyushenko