The Nord Stream 2 pipeline company has taken an unusual legal step in its dispute with the European Commission by asking the Court of Justice of the EU (CJEU) to annul the amendments to the Gas Directive which the Gazprom-led project considers discriminatory.
Western European investors Engie, OMV, Shell, Uniper and Wintershall are part of the Nord Stream 2, which is led by Russian gas monopoly Gazprom.
On Friday (26 July), Nord Stream 2 published a press release saying it had brought legal action for annulment before the General Court. Nord Stream 2 requests that Directive (EU) 2019/692 amending the EU Gas Directive be annulled because of an infringement of the EU law principles of equal treatment and proportionality.
Nord Stream 2 believes this would lead to the cancellation of Directive (EU) 2019/692. The pipeline company claims the amendment was clearly designed and adopted for the purpose of disadvantaging and discouraging the project.
“The amended Gas Directive breaches fundamental EU legal principles, such as non-discrimination. It is obviously a “lex Nord Stream 2”. That is why Nord Stream 2 has brought an action for annulment.”, Sebastian Saas, the Nord Stream 2 chief lobbyist told EURACTIV.
The step is unexpected because until now Nord Stream 2 was seriously exploring the possibility of resorting to legal arbitration rather than seek a legal annulment. But apparently, Nord Stream 2 reserves itself this option as well.
Arbitration under the Energy Charter Treaty is expected to take longer than an action for annulment. Based on historical experience, actions for annulment have an average duration of 20 months.
“We as a prudent investor are committed to protecting our investments. But the amendment to the Gas Directive is not only harmful to Nord Stream 2. Such obvious discrimination against an individual commercial investment also undermines the ability of the EU’s internal market to attract investments for making the energy transition a reality”, Matthias Warnig, CEO of Nord Stream 2, was quoted as saying.
The controversial €11 billion new gas link between Russia and Germany is to run under the Baltic Sea and is set to double Russian gas shipments to the EU’s largest economy.
Legal experts have recently argued that the amendment to the Gas Directive 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 well before this date.
However, the pipeline has not been completed yet even though significant capital was committed and the project is near completion.
The CJEU will assess whether the contested act conforms to EU law. It may decide to annul the act for example because of infringement of the EU treaties or of any rule of law relating to their application; or misuse of powers.
If the Court rules in favour of the plaintiff, it may annul the contested act in its entirety or certain provisions only. Nord Stream 2 has requested the CJEU to annul the amendment to the Gas Directive in its entirety.
[Edited by Zoran Radosavljevic]