(CN) — In a significant ruling that binds the European Union closely together on matters related to energy and national security, the bloc's high court on Thursday dismissed as illegal an attempt by Germany and EU bureaucrats to give Russia a sweetheart pipeline deal that hurts the interests of Poland and its neighbors.
The European Court of Justice upheld a lower tribunal's ruling that said EU regulators must take into consideration the complaints and fears expressed by Poland and Lithuania about efforts to boost imports of natural gas from Russia.
Poland is challenging Germany's intention to expand its gas imports from Russia, arguing that the EU's treaties make it a legal requirement for energy projects within the 27-member bloc to be a common good.
Poland and other EU nations along the border with Russia fear the Kremlin is gaining more power over Eastern and Central Europe by reducing its reliance on Soviet-era pipelines that run through Ukraine. By expanding the pipeline to Germany under the Baltic Sea, Russia won't need the pipelines in Ukraine to deliver gas to Europe, a prime market, and therefore it could try to exert more pressure on Ukraine.
The United States too has strongly opposed German plans for the Baltic Sea pipeline, which is known as the Nord Stream system, and it imposed sanctions on it in an attempt to stop its expansion. But the sanctions, which were recently lifted by U.S. President Joe Biden, did not stop the work and Russia has nearly completed Nord Stream 2, a new pipeline that will double the amount of gas Russia can deliver through the Baltic Sea route. Nord Stream delivers gas from Gazprom, the state-run Russian gas giant.
Thursday's ruling by the Court of Justice was not about the Nord Stream pipeline but rather related to a line that feeds gas from Nord Stream into Central Europe. That pipeline, known as OPAL, runs through Germany and connects into European gas grids.
The high court agreed with Poland and said “energy solidarity” is a core principle within EU law.
“The principle of solidarity forms the basis of all of the objectives of the European Union’s energy policy,” the court said. “It cannot be ruled out that that principle produces binding legal effects.”
The high court cited a clause on energy solidarity in the Treaty on the Functioning of the European Union, a wide-ranging agreement that came into force in 2009.
The treaty acts a kind of regulatory and constitutional statute book for the EU. It was crafted as part of the bloc's expansion into former communist countries in Eastern and Central Europe. The treaty seeks to deepen the integration of EU member nations into a loose federation.
The court said the treaty says the EU must act in a “spirit of solidarity” between different member states to “ensure the functioning of the energy market and security of energy supply” in the EU.
The court's ruling throws out an appeal Germany made against a judgment by the lower European General Court that annulled a 2016 decision by the European Commission granting Gazprom control over the OPAL gas line. Germany got the commission to give Gazprom special conditions to exclude rivals from using the OPAL pipeline.
But the General Court ruled that the EU should curtail Gazprom's control of OPAL. Previously, a magistrate at the Court of Justice said the high court should uphold the lower court ruling.
In 2009, Germany's Federal Network Agency exempted the OPAL pipeline from EU rules that require gas lines to be made available to companies other than those that own or operate a pipeline. This gave Gazprom full use of the pipeline.
The European Commission then ruled that Gazprom could use only 50% of the pipeline unless it released gas to third parties. That never happened and only 50% of OPAL's capacity was used by Gazprom.
But in 2016, the Federal Network Agency issued a new exemption allowing Gazprom to use all of the pipeline's capacity. The European Commission agreed with this change and allowed Gazprom to use almost all of OPAL's capacity.
After that, Gazprom reduced the amount of gas it delivered to the EU through the Yamal and Brotherhood pipelines running through Belarus and Ukraine. This also strengthened Gazprom's position in Europe’s gas markets.
Poland and Lithuania, two EU nations that are deeply concerned by Russia, challenged the exemption given to Gazprom and the General Court ruled in their favor in 2019.
Germany argued that the principle of energy solidarity is “no more than a ‘purely political notion’ and not a legal criterion.” In Germany's view, the principle was abstract and of an “indeterminate nature” that is not legally binding.
Germany also argued that the energy solidarity principle is only triggered in crisis situations. According to Germany, making energy solidary legally binding blocks energy policy decision-making.
Gazprom said it was disappointed by the ruling and said it creates “artificial barriers for the effective use of investments in the gas transportation system of Europe.”
The ruling may only have a limited effect on Gazprom's delivery of gas through Nord Stream. Interfax, a Russian news agency, said Gazprom has found other ways to get its gas into the European market and has delivered record amounts of gas through Nord Stream. Last year, Gazprom pumped 59.2 billion cubic meters of gas through Nord Stream, Interfax reported.
The Nord Stream pipeline is deeply problematic for the EU and split opinions in Germany. Because Nord Stream is mostly in international waters in the Baltic Sea and Germany’s political leaders support it, opponents have found it difficult to challenge its construction and operation in European courts.
Courthouse News reporter Cain Burdeau is based in the European Union.
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