TASS: Russian court bars Czech company NET4GAS from pursuing arbitration against Gazprom abroad

The Arbitration Court of the Northwestern District of Russia has upheld an earlier court ruling barring Czech gas pipeline operator NET4GAS from continuing proceedings against Russian company Gazprom Export abroad, Russian state news agency TASS reported today. The Czech company referred to its previous statements on the case in response. It said it would not comply with the ban because the Russian court rulings violate international law.

NET4GAS said early last year that it had not received the latest monthly payments due to it under its contracts from its Russian partner. It did not name the Russian company at the time. The Czech gas pipeline operator also said that talks with the Russian company had failed and that it had therefore decided to begin arbitration, TASS noted.

In March, the Arbitration Court of St Petersburg and the Leningrad Region upheld Gazprom’s complaint against NET4GAS and barred the Czech company from continuing arbitration proceedings over its dispute with the Russian company before a court in the Czech Republic. The court also ruled at the time that NET4GAS would have to pay the Russian company 112.96 million euros (approximately CZK 2.9 billion) if it breached the ruling.

The Czech company filed an appeal against the ruling in April, TASS reported. The Arbitration Court of the Northwestern District has now ruled that the earlier court decision „remains unchanged“.

NET4GAS spokesperson Vojtěch Meravý told the Czech News Agency (ČTK) today that the company could not comment beyond what it had previously published about the case. In March, the company said it would not comply with the Russian court’s ban. The Czech company says the provision of Russian law on which the Russian court based its earlier ruling is clearly at odds with international law and generally accepted principles of a fair trial. The company also said in the spring that it believes the Russian court’s ruling should not be recognised or enforced in any relevant jurisdiction outside Russia.

Gazprom has filed lawsuits in Russian courts against a number of other European companies and, in all cases decided so far, has secured a ban on continuing arbitration abroad. They include Czech company ČEZ, Západoslovenská energetika (ZSE), Austrian company OMV, German companies Uniper Global Commodities and Metha-Methanhandel, Ukraine’s Naftogaz, Dutch company Gasunie Transport Service, the operator of the BBL gas pipeline between Britain and the Netherlands, and Polish-Russian company Europol GAZ, which owns the Polish section of the Yamal-Europe pipeline, TASS added.

According to the Russian news agency, Gazprom Export has also filed similar complaints against other companies, including Czech company innogy, with the court’s ruling still pending.