St Petersburg court bars Czech NET4GAS from continuing its dispute with Gazprom

The Arbitration Court in St Petersburg, Russia, has upheld a complaint by Russian gas companies Gazprom and Gazprom Export and barred Czech gas pipeline operator NET4GAS from continuing arbitration proceedings against the Russian side before the Arbitration Court attached to the Czech Chamber of Commerce and the Agricultural Chamber of the Czech Republic. Russian state news agency TASS and the Vedomosti website reported the ruling today. The Czech News Agency (ČTK) is seeking comment from NET4GAS.

Russian courts have recently taken a similar approach towards foreign companies, arguing that anti-Russian sanctions imposed over Russia’s invasion of Ukraine prevent a fair trial abroad in cases involving Russian companies. Russian courts typically couple such bans with a fine equal to the amount at issue in the dispute. This approach, however, is considered unenforceable abroad.

In the case involving Gazprom, Gazprom Export and NET4GAS, the St Petersburg court said that if the Czech company did not comply with its ruling, Gazprom and Gazprom Export could jointly seek to recover 57,919.678,18 euros (approximately CZK 1.4 billion) from NET4GAS, while Gazprom could also seek 60,789.479,36 euros (more than CZK 1.4 billion). TASS did not provide further details about the ruling.

Disputes between the Czech gas pipeline operator and the Russian gas giant have been ongoing for several years.

The year before last, the Czech company announced that it had won its dispute with Gazprom before a Czech arbitral tribunal. The Czech company had taken the case to the tribunal because the Russian company owed it payments for leasing gas pipelines. The tribunal ruled that Gazprom had to pay the debt, along with interest for late payment and the costs of the proceedings.

Gazprom had already turned to the Arbitration Court in St Petersburg before that ruling. In 2024, the court barred the Czech company from continuing arbitration proceedings over its dispute with the Russian company before a court in Czechia. It also ruled that if its decision were breached, NET4GAS would have to pay the Russian company 112.96 million euros (nearly CZK 3 billion).

NET4GAS operates 4,000 kilometres of gas pipelines, five compressor stations and around 100 handover stations, including three at the borders. The company has been owned by state-owned ČEPS since 2023. NET4GAS holds the exclusive licence to transmit natural gas in Czechia. In an emergency, it manages the gas system and declares regulatory levels, thereby deciding on gas supplies to customers. Any problems with NET4GAS pipelines would pose a serious threat to gas supplies to the country.