NET4GAS rejects St Petersburg ruling: Russian ban on EU arbitration cannot be recognised

The ban on Czech gas pipeline operator NET4GAS continuing arbitration proceedings against Russian company Gazprom before an arbitration court in the Czech Republic, issued on Monday by an arbitration court in Russia's St Petersburg, cannot be recognised in the European Union. NET4GAS told CTK today that it has also taken further measures to protect its interests in both Russia and the Czech Republic. The dispute with the Russian company should therefore continue.

Disputes between the Czech gas pipeline operator and the Russian gas group have been ongoing for several years. Two years ago, NET4GAS announced that it had prevailed in its dispute with Gazprom before a Czech arbitration court. The Czech company turned to the court because the Russian company owed it payments for leasing gas pipelines. The arbitration court ruled that Gazprom must pay the debt, including late-payment interest and legal costs.

On Monday, however, the Russian arbitration court upheld a complaint by Russian gas companies Gazprom and Gazprom Export and barred NET4GAS from continuing arbitration proceedings against the Russian side before the Arbitration Court attached to the Czech Chamber of Commerce and the Czech Agrarian Chamber. Otherwise, according to the Russian court, the Russian companies may seek fines worth billions from NET4GAS. Russian courts have recently been taking a similar approach towards foreign companies, arguing that anti-Russian sanctions imposed over Russia's invasion of Ukraine make it impossible for Russian companies to receive a fair trial abroad.

According to the Czech company, however, the current rulings of Russian courts cannot be recognised or enforced in any EU Member State. It cites an EU Council regulation. "The EU Council adopted this protective measure as part of the 15th sanctions package in response to Russian court decisions issued under the so-called Lugovoy Law against European companies seeking to enforce their rights against Russian business partners through arbitration proceedings," NET4GAS said.

The Czech company also indicated that it had taken further measures in the case to protect its interests in both Russia and the Czech Republic. It did not specify them further. "In connection with the above-mentioned proceedings before the Russian court, a Czech court issued an interim measure ordering that all necessary steps be taken to halt them," NET4GAS announced.

NET4GAS operates 4000 kilometres of gas pipelines, five compressor stations and one hundred transfer stations, including three at border crossings. Since 2023, the company has been owned by state-owned company ČEPS. NET4GAS holds an exclusive licence for natural gas transmission in the Czech Republic. It manages the gas system in emergencies and declares regulatory levels, thereby deciding on gas supplies to customers. Any problems with NET4GAS pipelines would fundamentally threaten gas supplies to the country.