Gazprom’s Complaint Rejected by Swedish Court

Source: 12/23/2020, Location: Europe

The Svea Court of Appeal in Stockholm rejected Gazprom’s complaint to set aside the partial award of the Arbitral Tribunal concerning the dispute over the pricing terms under the Yamal contract. The ruling is final.

“This is another success of PGNiG in the dispute over gas prices under the Yamal contract. We have consistently argued that Gazprom’s complaint was groundless, and now the Court of Appeal’s ruling confirms our position,” said Pawel Majewski, President of the Management Board of PGNiG SA.

The Svea Court of Appeal decided that the complaint filed by PAO Gazprom and OOO Gazprom export (“Gazprom”) to set aside the partial award of the Arbitral Tribunal regarding the revision of the contract price for gas supplied under the Yamal Contract was inadmissible due to formal reasons with regard to the decision of the Tribunal on jurisdiction and the Tribunal’s mandate to change the contract price and, consequently, ruled to reject the complaint.

The Court also dismissed as unjustified Gazprom’s complaint in the remaining part regarding the decision of the Tribunal confirming the validity of PGNiG’s price revision request of 1 November 2014 and that the contractual prerequisites entitling PGNiG to demand a downward revision of the contract price had been met.

The Court did not grant consent to appeal the ruling, which means that the ruling is final.

Moreover, the Court ordered Gazprom to reimburse PGNiG for its legal representation costs.

Gazprom’s complaint referred to the partial award issued by the Arbitral Tribunal on 29 June 2018, in which the Tribunal ruled inter alia that the prerequisite entitling PGNiG to demand a downward revision of the contract price had been met. Each party then had the right to appeal against the award to the Svea Court of Appeal in Stockholm, which Gazprom did in October 2018.

The partial award of the Arbitral Tribunal confirmed the grounds for validity and effectiveness of PGNiG’s 2014 request, in which it demanded that Gazprom adjust the prices of gas supplied to Poland under the Yamal Contract to prevailing market conditions. The arbitral proceedings were finally concluded on 30 March 2020, when the Tribunal issued a final award amending the pricing formula for gas purchases. As a result, PGNiG’s trading position improved, while Gazprom was made to refund the overpayment of approximately USD 1.5bn for previously settled gas supplies.

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