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

SUMMARY:

Uniper has successfully terminated its long-term gas supply contracts with Gazprom Export, securing over €13 billion in damages due to non-delivery of gas, as determined by an arbitration ruling.

In response, Gazprom is pursuing legal action against Uniper and other European companies in Russian courts to obstruct or counter international arbitration. 

KEY TAKEAWAYS:

Contract Termination and Damages: Uniper has terminated its gas supply contracts with Gazprom Export and was awarded more than €13 billion in damages.

Binding Arbitration: The decision of the arbitration tribunal is both legally binding and final.

Gazprom's Legal Challenges: Gazprom is actively contesting these international arbitration proceedings in Russian courts, raising concerns about sanctions and the fairness of trials.

Counterclaims Filed: Gazprom has initiated several counterclaims against European companies in Russian courts to prevent international arbitration.

Significant Financial and Legal Implications: The Uniper case underlines the considerable financial impacts and legal intricacies resulting from Russia's reduction of gas supplies to Europe.

Future EU Gas Supply Impacts: This ruling could have profound implications for future gas supplies to the EU and ongoing negotiations.

Exploring Alternative Transit Routes: Various European stakeholders are evaluating alternative gas transit routes, including those through Ukraine.

DATA:

12 June 2024 - Düsseldorf, Uniper terminates Russian gas supply contracts

• Formal end to gas supply relationship with Gazprom Export after positive ruling for Uniper in arbitration proceedings 
• Arbitration tribunal has awarded Uniper the right to terminate its long-term gas supply contracts and an amount of more than €13 billion in damages for non-delivery of gas 
• Uniper CEO Michael Lewis: “The ruling provides legal clarity for Uniper” 

Uniper decided today to terminate its long-term Russian gas supply contracts and thus legally ended the long-term gas supply relationship with the Russian state-owned company Gazprom Export. The decision was made possible after an arbitration tribunal on June 7 awarded Uniper the right to terminate the contracts and awarded it an amount of more than €13 billion in damages for the gas volumes not supplied by Gazprom Export since mid-2022. Although only limited gas volumes had been delivered since June 2022 and no gas volumes since the end of August 2022, the long-term gas supply contracts between the two companies were still legally in force and individual contracts would have continued to exist until the mid-2030s.

After Uniper suffered substantial losses due to the Russian gas supply restrictions, the company initiated arbitration proceedings against Gazprom Export at the end of 2022. The option of dispute resolution via an arbitration tribunal was contractually agreed and had in the past in respect of other disputes been invoked repeatedly by both sides. The tribunal, seated in Stockholm, ruled in accordance with Swiss law. The arbitration ruling is legally binding and final.

7 May 2024 - Uniper appeals Russian court ruling as legal tussle with Gazprom drags on

Uniper, opens new tab has appealed a Russian court decision requiring the German utility to pay more than 14 billion euros ($15 billion) if it continues arbitration proceedings against its former main gas supplier Gazprom, opens new tab, it said on Tuesday.

24 May 2024 - Russian court bans Czech CEZ from disputing with Gazprom Export abroad

The Arbitration Court of St. Petersburg and the Leningrad Region has upheld Gazprom Export's claim against the Czech Republic’s CEZ banning it from continuing foreign arbitration proceedings, a TASS correspondent reported from the courtroom.

In case of violation of the ban, the court ruled to recover 57.7 mln euro from the Czech company in favor of Gazprom Export.

 27 May 2024 - European court tells Gazprom not to run away from its responsibility for halting gas supplies

Gazprom's counter-claims

Since the end of last year, Gazprom Export has filed 11 counterclaims with the same arbitration court in St. Petersburg, Russia, against its former European customers and shippers.

The company has already obtained eight rulings in writing, ordering European companies to halt their international arbitration proceedings or pay penalties in Russia.

Russian arguments

In eight already rubber-stamped rulings, the court in St. Petersburg argued that the arbitration cases against Gazprom Export should be moved to Russia because Gazprom Export will be unable to have a fair trial in courts in so-called “unfriendly nations”.

In 2022, Moscow designated more than 50 foreign states as “unfriendly” after they approved wide-ranging sanctions against Russia in response to its invasion of Ukraine.

The Russian court has lashed out at European sanctions, saying in rulings that Russian lawyers who could have represented Gazprom Export in arbitration hearings in Europe face the denial of entry visas, while their laptops and smartphones may be confiscated by authorities on arrival. 

13 March 2024 - Russian court bans Uniper subsidiaries from disputing with Gazprom Export abroad

In case of violation of the ban, the court ruled to recover 14.3 billion euros from German companies in favor of Gazprom

Lawyers for Gazprom Export stated the impossibility of equal adversarial participation in foreign arbitration due to sanctions against Russia and Russian companies, as well as due to the lack of complete freedom to choose legal services, since some European law firms publicly announced their refusal to work with companies from Russia.

About legal dispute

In late November 2022, it became known that the German concern Uniper filed a lawsuit against Gazprom Export to compensate for losses incurred from the short supply of Russian gas. Uniper then estimated the current costs of replacing Russian gas at no less than 11.6 billion euros. The Russian company, in turn, stated that it was studying the received statement of claim from Uniper, but did not recognize the violation of contracts and the legality of the German company’s stated claims for damages.

Uniper considered the force majeure declared by Gazprom on gas supplies to be a violation of the contract. Since the end of August 2022, the German concern has completely stopped receiving gas from Russia and considers this a violation of contractual obligations on the part of Gazprom. Uniper stated that it does not expect the resumption of Russian gas supplies and is awaiting a decision in the court case with Gazprom Export due to their termination in 2024.

Previously, Gazprom also filed lawsuits in the Russian court against the Polish Orlen, the Dutch gas transport company Gasunie Transport Service (GTS), the Czech NET4GAS, Naftogaz of Ukraine and the Polish-Russian company Europol GAZ, which owns the Polish section of the Yamal-Europe gas pipeline, demanding prohibit the continuation of arbitration proceedings in foreign courts. For the last three lawsuits, the Russian company achieved a ban on the continuation of arbitration, for the lawsuit against GTS, the court hearing is scheduled for March 15, for Orlen - for April 10. 

16 March 2023 -  Gazprom in arbitration proceedings with ENI, Engie, RWE, PGNIG, Gasum, Naftogaz - report

Ukraine's Naftogaz has requested arbitration against Gazprom at the International Chamber of Commerce's International Court of Arbitration. Naftogaz is demanding payment for services not rendered by it under an agreement on the provision of services for the transportation of natural gas through the territory of Ukraine dated December 30, 2019. On September 27, Gazprom sent letters of objection regarding arbitration's jurisdiction to consider the demands of Naftogaz due to a fundamental change in circumstances. On February 15, 2023, Gazprom was notified by the ICC secretariat about a decision by the ICA to allow the arbitration tribunal to consider the case on the merit. Gazprom currently has no information as to whether an arbitration tribunal has been formed.

Finland's Gasum Oy on May 13, 2022, notified Gazprom Export LLC that arbitration proceedings had commenced on the termination of the contract for natural gas supply dated March 12, 1994 and the cancellation of obligations to pay invoices previously served to it. A ruling was issued on November 14, 2022. Gasum's claims and Gazprom Export's counterclaims were partially satisfied. The arbitration tribunal, among other things, ordered Gasum Oy to pay Gazprom Export LLC debt of more than 300 million euros for gas supplies and in connection with the failure to honor a take or pay obligation, as well as interest for payment arrears. In addition, the tribunal recognized the issuance of a Russian presidential decree No. 172 dated March 31, 2022 on the transition to payment for gas in rubles as a force majeure circumstance under the contract and confirmed the legitimacy of the suspension of natural gas supplies in the event the buyer fails to pay in rubles in accordance with the Decree No. 172. The tribunal also ordered the parties to continue negotiations on the contract in order to resolve the situation with further gas supplies.

*******

12 June 2024 - ICIS VIEW: Uniper arbitration award could shape future EU gas supplies

Given the sheer size of the award and the estimated 25 billion cubic meters that Uniper imported annually from Russia before Gazprom Export curtailed them, there is no doubt that the steps taken by Uniper to recover the award could impact future gas supplies to Europe at least in the mid term.

The award made on 7 June came nearly three weeks after Austria’s OMV Gas Marketing and Trading, which has a long-term supply contract with Gazprom Export, said it had received a notice from an unnamed European company seeking to seize payments due to the Russian producer as part of a court ruling.

 FALLING PRODUCTION:

This makes it mindful of the fact that low production could lead to shut-ins with irreversible damage to gas wells.

The alternative for Uniper and Gazprom, therefore, might be to settle for an option where Gazprom would keep its production going while Uniper would receive the equivalent of the award’s financial value in natural gas deliveries.

The issue may in fact gather momentum as various European stakeholders are now considering the possibility of continuing the transit of gas through Ukraine once the existing agreement expires on 1 January 2025.

It may not be mere coincidence that just hours before Uniper announced the arbitration award, the German economy minister Robert Habeck said Europe was engaged in ‘intense’ work to keep gas flowing via Ukraine.

 

***

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

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

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156 - Nordstream affair - Does this mean the red phone is working again?

There is no real "RED PHONE"

It is more analogy for a secure direct de-escalation link.

[Extra: Small history lesson about the RED PHONE] 

SUMMARY:

This post raises concerns about potential legal repercussions for the US, UK, and Norway, while highlighting top level communication between the US and Russia through the so called "red phone" channel.

KEY TAKEAWAYS:

The blog asserts that the US had prior knowledge of the UK's intentions to destroy the Nord Stream pipelines but chose not to intervene, was unable, or started to cooperate with the perpetrator choosing the position suiting best its own strategy thus coordinating their moves along, synchronizing the UK´s mission plans but hidden in order not to alleviate its ally Germany, France and other EU states.

Would this hypothesis proven correct that the USA was in a position to stop the attack but has deliberately passed the responsibility to its allies or has consciously chosen not to do so could be an issue handled by the international court and it could also seriously upset the Trans-Atlantic alliance.

The author posits that there could be legal accountability for the actions of the US, UK, and Norway regarding this incident and that is also the reason for the media blanket over the case.

Communication channels between the US and Russia, notably the "red phone," are referenced in relation to the events.

It is suggested that the US took steps to de-escalate tensions with Russia in the lead-up to the Nord Stream incident.

The potential for legal actions is explored, including scenarios involving the International Court of Justice and the International Criminal Court.

 

DATA: 

 25 Sept 2022 - Meet the Press - National Security Advisor Jake Sullivan, Rep. Jamie Raskin (D-Md.), Rep. Nancy Mace (R-S.C.), Sara Fagen, Mike Memoli, Amna Nawaz and Jen Psaki

...Globally, the existential threat to democracy is Vladimir Putin, whose decision to invade Ukraine has produced the biggest conflict in Europe since the Second World War. Putin is now threatening to use Russia's nuclear weapons, saying in a televised address, "This is not a bluff." President Biden responded at the United Nations. 

CHUCK TODD:

While you were talking, we were able to show some footage of people voting with – under the supervision of armed Russian guards, so just to give folks a taste of what kind of referendum this is. I want to talk about the nuclear threats from Vladimir Putin.There was a report this week that folks in the Biden administration have made it clear, privately, of the severe consequences. Does this mean the red phone is working again? Because at the beginning of this conflict there was a lot of concern that some of the basic communications that we had from military to military, intel to intel, you had a hard time getting your counterparts to return calls. Does this mean the red phone is working again?

JAKE SULLIVAN:

Well, Chuck, we've been careful to protect the timing and the content of the conversations we have with the Russian government, with the Kremlin.

But the answer to your question is yes.

We do have the capacity to speak directly at senior levels and to be clear about our messages to them and to receive their messages.

That has happened frequently over the course of the past few months.

It has happened even in just the last few days.

Update: 

20/11/2024 - RU: Peskov: "Red phone" between Moscow and Washington is not in use

Kremlin spokesman Dmitry Peskov said that the special telephone line, which was established for communication between Moscow and Washington after the Cuban crisis, is currently not in use.

"We have a special secure line for communication between the two presidents - Russia and the USA. Moreover, even for video communication," said Peskov.

Summary (see also other posts) partial result, more research needed:

The USA started to de-escalate before the Nordstream affair happened.

The USA had a knowledge about the UK´s plan to blow up Nordstream pipelines

The USA did not stop the mission

The USA decided to step aside and protect NATO cohesion

This is why Russia later blamed Anglo-Saxons as guilty and not a single state. 

Legally:

The UK could be charged under Violation of sovereignty (Act of Aggression, Violation of the United Nations Charter), Sabotage or International Terrorism and/or Environmental damage.    

The USA and Norway could be charged under Complicity in Aggression, Failure to prevent, Neglecting duty to act.  

Legal Accountability and Consequences

1. International Court of Justice (ICJ):

• State Responsibility: Russia and Nordstream AG hareholders (the victim) could bring a case against States USA, Norway, and the main perpetrator the UK in the ICJ for violations of international law, including aggression and failure to prevent an unlawful act.

• United Nations Security Council (UNSC):

  • Security Council Action: The UNSC could be called upon to address the situation, potentially leading to sanctions or other measures against the UK, and possibly against other States for their roles.

• International Criminal Court (ICC):

• Individual Accountability: Leaders or individuals in the UK who planned and executed the "sabotage" (or the unlawful act) could potentially be prosecuted by the ICC for crimes of aggression or terrorism, depending on the circumstances and evidence.

RELATED POSTS:

113 - Russian nuclear positioning before the Nordstream is attacked

069 - Was Norway briefing USA about possible threat to undersea pipeline infrastructure on 19-09-2022?

094 - The USA de-escalates possible Russian nuclear response even before Nordstream is hit, NATO protect Trans-Atlantic alliance afterwards

 

199 - Consistency of Russian claims about Nordstream affair

***

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***

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

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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.

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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

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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.

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