Nord Stream 2 opens arbitration claim over new EU gas rules

The Russian-owned Nord Stream 2 gas pipeline filed a notice on Thursday (26 September), requesting that a tribunal of independent arbiters be assembled to determine where the European Union is in breach of its own obligations under the Energy Charter Treaty (ECT).

The move is the latest escalation in the ongoing dispute that has led to neither side reaching an agreement. The arbitration comes after changes were made to the bloc's Gas Directive that require Germany, the destination country of Nord Stream 2, to apply internal market rules to the EU part of the planned 55 Bcm/year offshore link.

Nord Stream 2 argues that this change of the Directive means the EU has breached its obligations under Articles 10 and 13 of the Energy Charter Treaty, a legally-binding treaty the original treaty signed in 1991.

A Nord Stream 2 spokesperson said on Thursday that an arbitration notice had been served and that the company was looking to have its case heard at an arbitration court outside of the EU.

"Nord Stream 2 has decided to ask the arbitral tribunal to determine that the EU is in breach of its international law commitments under the Energy Charter Treaty (ECT) and to make orders requiring the EU to discontinue its breach," he said. "A notice of arbitration was served today."

The EU's Gas Directive was updated earlier this year and extends gas liberalisation rules to cover new offshore gas pipelines from non-EU member states. The change in the rules was an attempt to bring the controversial Russian project under the EU's regulatory umbrella. The project is opposed by the European Commission most eastern and central European countries and the US, but supported by Germany and given financial backing from five major Western European companies — Austria’s OMV, Anglo-Dutch Shell, France’s Engie, and Germany’s Uniper and Wintershall.

Nord Stream 2 says that the new rules are discriminatory. The Commission says they are not.

The pipeline is to run 1,200 kilometres from Russia to Germany, but the new rules would only apply to the section of Nord Stream 2 in German territorial waters, a stretch of 54 kilometres.

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