155 - Nord Stream 2 AG and INVESTMENT TREATY ARBITRATION European Union

SUMMARY:

This blog post outlines the legal struggles encountered by Nord Stream 2 AG, the operator of the Nord Stream 2 pipeline. It covers investor-state dispute settlement (ISDS) claims under the Energy Charter Treaty, challenges regarding EU pipeline regulations, and the resulting bankruptcy proceedings exacerbated by multiple court-ordered moratoriums. 

KEY TAKEAWAYS:

Legal Challenges: Nord Stream 2 AG confronted significant legal hurdles after the German government suspended the pipeline's certification, which raised concerns about potential ISDS claims under the Energy Charter Treaty. 

EU Court Involvement: The EU's highest court partially accepted Nord Stream 2 AG's challenge against EU pipeline regulations, highlighting ongoing tensions within regulatory frameworks. 

Impact of Geopolitics: Even with some legal victories, the future of the pipeline was severely threatened by the outbreak of war in Ukraine, coupled with Germany's withdrawal of support. 

Rescue Attempts: To stave off insolvency, Nord Stream 2 AG was granted several court-approved moratoriums. 

European Commission's Role: The European Commission represented the European Union in the investor-state arbitration initiated by Nord Stream 2 AG, reflecting the intricate relationship between member states and EU regulations. 

Complexity of Investment Treaties: The blog highlights the intricate nature of investment treaty arbitration involving the European Union, showcasing the balance of interests at play. 

DATA:

SOURCE:

File: 2023_Investment_Treaty_Arbitration_-_European_Union.pdf

24 Feb 2022 - The German government has been worried about being sued by the fossil fuel companies behind the Russian gas pipeline under the Energy Charter Treaty

After Russian tanks rolled into Ukraine on Tuesday, German chancellor Olaf Scholz finally decided to halt the certification of the Nord Stream 2 gas pipeline linking Germany and Russia.

But why has the German government delayed this decision for so long? And why did Scholz merely halt the certification rather than cancelling it?

The words of German environment minister Svenja Schulze from last February give a clue. “We also run the risk of ending up in international arbitration courts with compensation claims if we stop the project,” she said.

Her warning added to a growing list of ministers admitting that they feared investor-state-dispute settlement (ISDS) claims under the Energy Charter Treaty (ECT), of which Germany is one of 53 members.

12 July 2022 - The Court declares the action brought by Nord Stream 2 AG

...against the directive extending certain rules of the internal market in natural gas to pipelines from third countries to be partially admissible. 

 12 July 2022 - Gazprom’s Shunned Nord Stream 2 Wins Spat Over EU Pipeline Rules

EU top court says gas project’s challenge is admissible

Lower EU court will have to rule on substance of dispute

Russia’s shunned Nord Stream 2 gas pipeline won a legal boost in its pre-war challenge against European Union rules that subjected all new and existing pipelines involving foreign suppliers to the EU’s energy market-opening requirements, after the bloc’s top court said its appeal can be heard.

While the ruling is a win for Nord Stream 2, its impact may have been overtaken by events in Ukraine, which led Germany to withdraw its backing for the project.

12 July 2022 - EU top court backs operator of shelved Nord Stream 2 pipeline

The operator of Nord Stream 2, a pipeline designed to double Russia's gas exports to Germany, won an appeal in the EU's top court on Tuesday after challenging European Union rules that require separate companies to build, operate and own pipelines.

12 July 2022 - Gazprom’s Shunned Nord Stream 2 Wins Spat Over EU Pipeline Rules
EU top court says gas project’s challenge is admissible
Lower EU court will have to rule on substance of dispute

Russia’s shunned Nord Stream 2 gas pipeline won a legal boost in its pre-war challenge against European Union rules that subjected all new and existing pipelines involving foreign suppliers to the EU’s energy market-opening requirements, after the bloc’s top court said its appeal can be heard.

While the ruling is a win for Nord Stream 2, its impact may have been overtaken by events in Ukraine, which led Germany to withdraw its backing for the project.

12 July 2022 - Judgment of the Court in Case C-348/20 P | Nord Stream 2 v Parliament and Council

12 July 2022 - The Court declares the action brought by Nord Stream 2 AG against the directive

... extending certain rules of the internal market in natural gas to pipelines from third countries to be partially admissible 

13 July 2022 - EU and US welcome Canada's decision to return Russian turbine to Germany

13 July 2022 - EU court points to future resurrection of Russian gas pipe

8 Sept 2022 - Swiss court gives Nord Stream 2 more time to avoid insolvency.

In May, the court granted a provisional moratorium against bankruptcy proceedings for the first time, which was valid until September 10. This period has now been extended by another four months.

The Swiss company behind the Russian gas pipeline Nord Stream 2 has received a four-month extension to try to repay its debts.

8 Sept 2022 - Gazprom unit granted Nord Stream 2 debt restructuring moratorium extension

Nord Stream 2 AG will not go bankrupt at least until 10th of January 2023 thanks to another decision from Zug court. 

 10 Sept 2022 - Nord Stream 2 gas link operator wins further stay of bankruptcy: court

On May 11, Switzerland-based Nord Stream 2 AG was awarded a provisional stay of bankruptcy until Sept. 10 2022, according to a notice in the Swiss Official Gazette of Commerce.

In a new notice dated Sept. 8, a court in Zug awarded a four-month extension of the stay of bankruptcy from Sept. 10 until Jan. 10, 2023.

There have been calls from within Germany in recent weeks to allow Nord Stream 2 to begin operations after flows through the first Nord Stream system were curtailed and then halted altogether, with gas prices having surged to new records as a result.

 28 Dec 2022 - Nord Stream 2 pipeline firm gets 6-month stay of bankruptcy

A Swiss court has granted a six-month “stay of bankruptcy” to the operating company for the never-opened Nord Stream 2 pipeline, which was built to bring Russian gas to Germany but put on ice shortly before Russia invaded Ukraine in February.

Nord Stream 2 AG, a subsidiary of Russia’s Gazprom, is based in Zug. Nord Stream 2′s court-appointed administrator, Transliq AG, sought the extension. 

INVESTMENT TREATY ARBITRATION European Union

...However, CETA, EUSIPA and EUVIPA do not specify which institution of the European Union must be served with the ‘notice to submit a claim’, and, potentially, with the notice of arbitration. 

CETA merely provides (article 8.23.8) that the European Union and Canada will notify each other of the place of delivery of notices and other documents by the investors and that this information will be made publicly available. EUSIPA and EUVIPA do not contain such a provision. 

As a default, it is the European Commission that represents the European Union in international judicial proceedings. 

So far, only one investor-state arbitration has been initiated against the European Union (pursuant to the UNICTRAL Arbitration Rules 1976 and the Energy Charter Treaty (ECT) ). Based on publicly available information, the claimant (Nord Stream 2 AG) served the notice for arbitration on the EU Commission represented by its president and other senior officials (such as the Director-General for the EU Commission’s Legal Service and the Director-General for Trade). 

Law stated - 19 October 2022

RELATED POSTS:

160 - January 2022 - Nord Stream 2 AG has founded a German subsidiary Gas for Europe Gmb

132 - Despite explosions: The NordStream companies in Zug live on

174 - October 2022 - Putin: Gas spot price change caused 2% loss of European GDP

157 - Gazprom Export case - Uniper terminates Russian gas supply contracts

***

- INDEX -

***

Uncovering the truth took over two years of self-funded, tireless investigation.

I decided to open it for free, no paywall, despite huge investment.
Because the truth matters.
Please consider supporting my work with a donation.

Every bit helps keep this mission alive!

mortymer001

(retweet and follow)

154 - UNCLOS - The United Nations Convention on the Law of the Sea AND Nordstream

UNCLOS

The United Nations Convention on the Law of the Sea was adopted in 1982. It lays down a comprehensive regime of law and order in the world's oceans and seas establishing rules governing all uses of the oceans and their resources.

Article 58 

Rights and duties of other States in the exclusive economic zone 

1. In the exclusive economic zone, all States, whether coastal or land-locked, enjoy, subject to the relevant provisions of this Convention, the freedoms referred to in article 87 of navigation and overflight and of the laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to these freedoms, such as those associated with the operation of ships, aircraft and submarine cables and pipelines, and compatible with the other provisions of this Convention.

2. Articles 88 to 115 and other pertinent rules of international law apply to the exclusive economic zone in so far as they are not incompatible with this Part.

3. In exercising their rights and performing their duties under this Convention in the exclusive economic zone, States shall have due regard to the rights and duties of the coastal State and shall comply with the laws and regulations adopted by the coastal State in accordance with the provisions of this Convention and other rules of international law in so far as they are not incompatible with this Part. 

Article 59 

Basis for the resolution of conflicts regarding the attribution of rights and jurisdiction in the exclusive economic zone In cases where this Convention does not attribute rights or jurisdiction to the coastal State or to other States within the exclusive economic zone, and a conflict arises between the interests of the coastal State and any other State or States, the conflict should be resolved on the basis of equity and in the light of all the relevant circumstances, taking into account the respective importance of the interests involved to the parties as well as to the international community as a whole.

Jurisdiction related:

RELATED POSTS

The EEZ of Sweden and Denmark were not applied

 -> the jurisdiction falls under the owner of the pipeline who investigates:

136 - Nordstream and Lack of Jurisdiction by Sweden and Denmark

This Rishi Sunak´s important paper

-> which discusses low legal protection of maritime infrastructure:

051 - Rishi Sunak´s 2017 report about (legal) vulnerability of subsea internet cables

 

***

- INDEX -

***

Uncovering the truth took over two years of self-funded, tireless investigation.

I decided to open it for free, no paywall, despite huge investment.
Because the truth matters.
Please consider supporting my work with a donation.

Every bit helps keep this mission alive!

mortymer001

(retweet and follow)

153 - The Nord Stream AG operator justified his claim against insurers

An article in RU newspapers

SUMMARY:

Nord Stream AG is initiating an insurance claim for damages to the Nord Stream pipelines, asserting that the damage to each pipeline branch represents a distinct insured event. In contrast, insurers argue that the damage results from military action, which is generally excluded from coverage. The upcoming legal battle will depend on the specific wording of the insurance policy and the burden of proof required.

KEY TAKEAWAYS:

Claim Filed: Nord Stream AG has filed a claim against insurers Lloyd's of London and Arch Insurance, seeking damages exceeding €1.2 billion. 

Event Classification: Central to the claim is whether the pipeline damage is regarded as a single event or two separate incidents. 

Insurers' Position: Insurers contend that the damage was caused by military action, a typical exclusion under insurance policies. 

Policy Coverage: Nord Stream's insurance policy might include provisions that cover damages due to government actions. 

Court's Interpretation: The court's ruling will likely hinge on the interpretation of specific terms within the insurance contract. 

Financial Implications: Should insurers fail to demonstrate that military action caused the damage, they could face substantial payouts. 

Legal Considerations: There are potential legal options for pursuing claims against the state responsible for the damage; however, this process can be intricate and time-consuming.

DATA:

14 May 2024 - The Nord Stream 2 AG operator justified his claim against insurers

"He considers damage to each of the two gas pipeline branches a separate insured event...

...The statement, signed by Nord Stream Managing Director Alexey Zaitsev, is dated May 2, was received in court on May 7, and is the company’s response to insurers Lloyd’s of London and Arch Insurance. They are defendants on behalf of several insurance companies (at least 13) that insured the exploded gas pipeline...
...The Financial Times, citing court documents, reported that Nord Stream had previously estimated the costs of restoration and repair work at 1.2–1.35 billion euros...

...Insurers considered that the gas pipeline was damaged was a result of military operations, and such risks are not covered by the insurance policy, Kommersant wrote in April...

[MRT: Note the "definition" of the event - here.

             IF the case is defined as Armed attack then governments are liable.

            More about the insurance claim - here.]

The operator also indicates in its statement that the insurance policies provided for the risks of damage to the gas pipeline, including in the event of military action. The policy “covers all risks of physical loss or physical damage to the object of insurance during the period of insurance - always subject to all the terms, conditions and exclusions of this insurance,” the plaintiff’s response states. The insurance policy also covers damage caused by the actions of any government body or agency, the document says.

[MRT: definition COULD BE "Armed Attack" or "Terrorist attack by state"

The Russian Prosecutor General's Office initiated a case regarding an Act of international terrorism. 

"...If Nord Stream’s agreement with insurers excluded military actions from the list of insured events, the court may well recognize the incident as not subject to payment of compensation, says Forward Legal lawyer Oles Gruzdev.

The court's decision will depend on the specific wording of the contract, the meaning of which the court will interpret in relation to the circumstances of the dispute, the interlocutor points out.

Since there is no final investigation into the causes of the explosions on the gas pipeline, Nord Stream can appeal to this fact, even if the court finds that the insurance policy does not cover damage to the gas pipeline as a result of hostilities, says Business Council lawyer Nihad Kasumov.

For the same reason, the defense’s argument “looks very strained,” notes Anton Namenov, senior partner at Pen & Paper. The process for insurers to prove property damage due to military action is extremely difficult, he explains..." 

[MRT: This basically says that it is up the insurers to prove that the attack was caused by a state actor. 

Note that claims Against the Perpetrating State state that the state responsible for the destruction of the pipeline could be held liable for damages. This could involve diplomatic negotiations, international arbitration, or lawsuits in international courts. However, recovering damages from a state through legal channels can be challenging and may take years.

Subrogation Rights: If the insurance company pays out the claim, it may acquire subrogation rights, allowing it to step into the shoes of the insured and pursue a claim against the state responsible for the attack to recover the amount paid. 

International Law and Treaties: The incident could be subject to international law and treaties. For instance, the United Nations Convention on the Law of the Sea (UNCLOS) and other relevant international agreements might have provisions regarding the protection of subsea pipelines and the responsibilities of states. (The latest version - UNCLOS.pdf)

Potential Classifications of the event:

Sabotage: 

Sabotage generally refers to deliberate actions aimed at damaging, destroying, or obstructing an asset or operation, typically for political or military purposes. This act can be considered sabotage because State-which-did-it is intentionally destroying pipeline (even partly) owned by other state or states to harm Russian, and/or EU economy, and to assist Ukraine.

Grand Sabotage: 

This term is less common but could be used to describe large-scale sabotage with significant impact. Given the substantial economic and strategic implications of destroying a subsea pipeline, the act might be classified as grand sabotage. Germany has announced that they are using this definition in winter 2022.

Act of War: 

Since State State-which-did-it is not officially at war with Russia, but its actions are in support of a state that is, this classification is more complex. However, if State-which-did-it’s actions are seen as directly aiding an enemy in a conflict, it could be interpreted as an act of war, especially by Russia.

Act of International Terrorism: 

For an act to be considered international terrorism, it typically needs to involve violence or threats intended to create fear or coercion for political purposes it typically needs to involve violence or threats intended to create fear or coercion for political purposes. While the destruction of the pipeline is politically motivated, it may not fit the typical definitions of terrorism, which often involve civilian targets and a broader aim to instill terror.

Armed Attack:

Under international law, an armed attack refers to the use of force by one state against another, causing significant harm. The destruction of critical infrastructure like a subsea pipeline could be considered an armed attack, particularly if it results in substantial economic and environmental damage.

Act of Aggression: 

According to the UN General Assembly Resolution 3314 (XXIX) UN General Assembly Resolution 3314 (XXIX), aggression is the use of armed force by a state against the sovereignty, territorial integrity, or political independence of another state. The deliberate destruction of the pipeline by State-which-did-it could be seen as an act of aggression if it undermines the sovereignty and economic stability of Russia.

Summary:

The issue is going to be what happens if you can’t prove it is a state sponsor (responsible for the blasts), you end up with a massive claim for damage.

Nord Stream’s insurance companies will need to prove their policy doesn’t cover the damage from the blast.

Claims Against the Perpetrating State: 

The state responsible for the destruction of the pipeline could be held liable for damages. This could involve diplomatic negotiations, international arbitration, or lawsuits in international courts. However, recovering damages from a state through legal channels can be challenging and may take years. 

Burden of proof:

Insurance claims

Policyholder/Insured: 

• Initial Claim: The insured party (the owner of the pipeline) generally has the burden of proof to demonstrate that the damage or loss falls within the terms of the insurance policy. This includes proving that the event occurred and that the damages claimed are legitimate.

• Exclusions: Once the insured party has demonstrated that a loss has occurred, the insurance company might bear the burden of proof to show that the loss is due to an excluded event (such as acts of war, terrorism, or sabotage, if such exclusions are present in the policy). 

    Insurer: 

• Disputes: If the insurance company denies the claim based on an exclusion (such as an act of war), it generally must prove that the exclusion applies. This might involve showing evidence that the event was indeed an act of war, sabotage, or terrorism

 International Disputes]

State Claiming Aggression:

• In international law, the state alleging that an act of aggression, armed attack, or other hostile act has occurred typically has the burden of proof. This state must provide evidence to international bodies (like the United Nations or International Court of Justice) to support its claims.

• Evidence Required: This might include satellite imagery, intelligence reports, witness testimonies, and other forms of documentation that support the claim of an aggressive act.

Accused State:

• The state accused of committing the act may need to provide counter-evidence to dispute the claims. This could involve showing that the act did not occur as alleged or that it does not constitute an act of aggression or armed attack under international law.

RELATED POSTS:

160 - January 2022 - Nord Stream 2 AG has founded a German subsidiary Gas for Europe Gmb

104 - How the Nordstream 2 did not got its certification

162 - February 2022 - Germany suspends Nord Stream 2: Q&A on what happens next

015 - Have sanctions against Nordstream Insurers created Catch-22 situation?

151 - Nord Stream 2 AG insurers deny policies covered war risks in UK lawsuit

136 - Nordstream and Lack of Jurisdiction by Sweden and Denmark

088 - The partnership between United Kingdom and Sweden - Conflict of interests

***

- INDEX -

***

Uncovering the truth took over two years of self-funded, tireless investigation.

I decided to open it for free, no paywall, despite huge investment.
Because the truth matters.
Please consider supporting my work with a donation.

Every bit helps keep this mission alive!

mortymer001

(retweet and follow)

152 - Did USA specify how they will End the Nordstream 2 project in February 2022?

Biden, after negotiations with Scholz,

said that if Russia invades Ukraine,

there will be no Nord Stream 2

Biden said THIS: 

"There will no longer be a Nord Stream 2.

We will bring an end to it.

I promise you we'll be able to do that."

BUT HOW?

 Yes, they did say how exactly

It was a commitment between Germany (Scholz) and USA (Biden).

(source)

See another post describing the event in wider perspective:

Data show Biden has not ordered Nordstream destruction

Just check the January, February politics to learn who said what.

Germans voluntarily agreed that it is not good to support Russia

by approving NS2 with certification so a condition was agreed:

"IF Russia enters Ukraine, the Nordstream 2 will be stalled"

NOTE: This was NEVER about the Nordstream 1 pipeline.

***

IF you remove the Biden´s statement what evidence there is that the USA 

has planned to physically destroy pipelines?

***

Someone else was against ALL RUSSIAN ENERGY EXPORTS

The UK government does not like Nordstream

***

- INDEX -

***

Uncovering the truth took over two years of self-funded, tireless investigation.

I decided to open it for free, no paywall, despite huge investment.
Because the truth matters.
Please consider supporting my work with a donation.

Every bit helps keep this mission alive!

mortymer001

(retweet and follow)

151 - Nord Stream 2 AG insurers deny policies covered war risks in UK lawsuit

18 April 2024 - Nord Stream 2 AG insurers deny policies covered war risks in UK lawsuit

In their written defence, dated April 8 and first reported by Kommersant daily on Thursday, the insurers said Nord Stream's policy did not cover damage "directly or indirectly" resulting from war, military actions or the detonation of explosives.

The insurers also stated that the policy does not cover any damage which happened "under the order of any government".

"The defendants will rely on ... the fact that the explosion damage could only have – or, at least, was more likely than not to have – been inflicted by or under the order of a government," the insurers' lawyer said.

[MRT: The conclusion that it was a government who was behind was confirmed by the by the Swedish main investigator here. It was also stated that Russian, US and pro-Ukrainian group have been excluded as suspects in several rounds. The amount of suspects has therefore shrank. See the original post of identifying suspects here and here.] 

[MRT: Note that statements are in sync with Mats Ljungqvuist the head of the SWE investigation team - collection of statements here] 

***

- INDEX -

***

Uncovering the truth took over two years of self-funded, tireless investigation.

I decided to open it for free, no paywall, despite huge investment.
Because the truth matters.
Please consider supporting my work with a donation.

Every bit helps keep this mission alive!

mortymer001

(retweet and follow)

150 - The USS Gerald R. Ford and multi-national #NATO Strike Group after Nordstream affair

USS Gerald R. Ford

Exploring its role in preventing the Russian rightful retaliation
against the NATO member perpetrator

29 Sept 2022: USS Gerald R. Ford safely received more than 100,000 tons of ordnance over three days in preparation for the ship’s deployment this fall.

[MRT: The fast resupply has been done in a haste on the sea and with helicopters]

29 Sept 2022: The US Navy aircraft carrier, USS Gerald R. Ford @Warship_78, will deploy next week and operate throughout the North Atlantic during a short deployment surrounded by a multi-national #NATO Strike Group.+

[MRT: One important flag is missing - the UK. The deployment is for unspecified time. It includes unnamed port call.]

29 Sept 2022 Comment by Paul Mc Leary:

"FIVE years after its commission, the Navy's $13.3 billion, much-delayed new aircraft carrier Gerald R. Ford will head for Europe next month, but the Navy won't call it a deployment...

The term of art is a “service-retained deployment,” which no one can fully explain, but basically means it's going out with part of an air wing, and will practice with NATO allies in the Atlantic...

The Navy won't say how long it'll be at sea, but does say the ship will remain under 2nd Fleet control, instead of  under a combatant commander...

The Ford will exercise w/ ships from Canada, Denmark, Finland, France, Germany, the Netherlands, Spain, and Sweden in the N. Atlantic.

It'll make a port call, but the Navy won't say where...

Keep an eye on Norway however, as the Norwegian defense minister just visited the ship at its home port in Virginia last week. 

The Ford will go on its first actual deployment, where it is under the operational control of a combatant commander, some time in 2023, 14 years after construction began and a decade after it was put in the water."

[MRT: Again not UK flag in the group.]  

19 Oct 2022 - NATO: NATO Partnerships in Action: Allied Officers Serve Aboard Ford

Two officers belonging to NATO nations, Germany and Spain are walking the deck plates of the first-in-class aircraft carrier USS Gerald R. Ford (CVN 78) to enhance integration with allies and partners during Gerald R. Ford Carrier Strike Group’s (GRFCSG) deployment. 

23 October 2022 - CARRIER STRIKE GROUP 4 EXERCISE ENHANCES BEGINNING OF GERALD R. FORD INAUGURAL DEPLOYMENT WITH NATO ALLIES

NORFOLK, Va. -- The Gerald R. Ford Carrier Strike Group and ships from three North Atlantic Treaty Organization (NATO) countries completed a three-week exercise orchestrated by Carrier Strike Group (CSG) 4 called Task Force Exercise (TFEX) 23-2 from Oct. 5 to 23.

24 October 2022 - USA/SPA/GER: GRFCSG and three Nato allied nations conclude Task Force Exercise 23-2

The exercise coincided with GRFCSG’s inaugural deployment with Nato allied nations in the Atlantic.

One ship each from the three Nato countries, including Spain, Canada and Germany, participated in the exercise.

Participating vessels included the Royal Canadian Navy’s Halifax-class frigate HMCS Fredericton (FFH 337), Spanish Navy’s Alvaro De Bazan-class ship ESPS Alvaro De Bazan (F 101) and German Navy’s Sachsen-class ship FGS Hessen (F 221).

[MRT: Again not UK flag in the group.]  

8 Nov 2022 - USA/CAN/GER/FRA/NED/SPA/DK: Navy’s newest aircraft carrier joins allies for exercise Silent Wolverine

USS Gerald R. Ford (CVN 78), the U.S. Navy’s newest and most advanced aircraft carrier, joined six NATO allies for exercise Silent Wolverine in the Eastern Atlantic Ocean, Nov. 8, 2022. Exercise participants include Canada, Denmark, Germany, France, the Netherlands, Spain, and the United States. 

[MRT: Again not UK flag in the group.] 

RELATED POSTS:

213 - Collection of NATO related posts in the Nordstream Affair

***

- INDEX -

***

Uncovering the truth took over two years of self-funded, tireless investigation.

I decided to open it for free, no paywall, despite huge investment.
Because the truth matters.
Please consider supporting my work with a donation.

Every bit helps keep this mission alive!

mortymer001

(retweet and follow)