How Uniper used a ‘cunning’ legal tactic to win billions from Gazprom

Bloomberg reports that the German energy company Uniper managed to obtain compensation through a “cunning” legal tactic after Gazprom halted its gas supplies.

In mid-July 2022, Gazprom declared force majeure on a series of shipments to Europe.

According to the Russian company’s statement, the reduced flow through the Nord Stream 1 pipeline, which transported large quantities of Russian gas to Germany, was due to issues with Siemens turbines at the Portovaya compressor station. Gas deliveries via Nord Stream 1 were completely stopped on August 31.

At the end of September of that year, three of the four lines of the Nord Stream 1 and Nord Stream 2 pipelines were destroyed by explosions. Nord Stream 2 had never become operational.

Uniper’s dual legal maneuver

Like many other European energy companies such as Italy’s Eni, France’s Engie, and Austria’s OMV, Uniper filed an arbitration claim for €11.6 billion against Gazprom. While such proceedings typically take years, Uniper managed to expedite the process, and most other companies are still awaiting payment.

In addition to arbitration, Uniper applied for an emergency ruling from the Weiden regional court in Bavaria in the summer of 2022. The company sought a €5 billion advance from Gazprom, but the court rejected the request.

Following this, Uniper appealed to the Nuremberg court. This court ruled in the company’s favor, allowing it to collect €3.65 billion. Uniper later won two more cases for €3.79 billion and €576 million, bringing the total to approximately €8 billion.

The arbitration process, however, only concluded in June 2024, resulting in a decision to award the German company an additional €13.5 billion in compensation.

“A tactic not suitable for everyone”

Tino Schneider, a litigation lawyer from the Frankfurt-based law firm A&O Shearman, stated that not all European companies can follow Uniper’s example and that this tactic is only applicable under specific circumstances.

“It is necessary to prove the existence of an emergency. Uniper’s very existence was at stake. Not every creditor meets these conditions,” he said.

Uniper began receiving payments in 2023 but did not provide details on the amounts or which claims were satisfied. The German company has committed to transferring any compensation received from the lawsuit against Gazprom to the government.

Meanwhile, in March 2024, the Arbitration Court of St. Petersburg and Leningrad Oblast ordered Uniper’s subsidiary, Uniper Global Commodities, and METHA-Methanhandel to pay Gazprom Export €14.312 billion.

The decision was reportedly related to the companies violating a court injunction that required them to halt proceedings in international arbitration.