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Magistrate opens door for Nord Stream to sue EU over pipeline

Gazprom scored a win after a European Union magistrate found the Russian gas giant should be allowed to get its day in court to challenge EU rules targeting its control of the Nord Stream 2 pipeline into Germany.

(CN) — The legal fight over the controversial Nord Stream 2 natural gas pipeline from Russia into Germany may get more complicated after a European Union magistrate on Wednesday said the pipeline’s owners should be allowed to challenge the bloc over restrictions it imposed on the project.

Russian gas giant Gazprom scored its win after Advocate General Michal Bobek, a legal adviser for the European Court of Justice, found that the company has a right to sue the EU. In 2019, the bloc passed rules to prevent Gazprom and its Swiss unit from both supplying the gas that goes into Nord Stream 2 pipeline and controlling the line.

The gas line is one of the most hotly contested issues in European politics and its opponents, led by the United States, have tried to stop it from being built. But those efforts failed, in large part because of Germany's support for the project, and last month work to finish the line was completed.

The pipeline crosses through the Baltic Sea and it will be able to double the amount of gas Russia already sends to Europe via another Baltic Sea line it built, Nord Stream 1. The fear is that Europe will become more subservient to Russia by becoming even more reliant on its gas riches. Opponents contend Russia will gain more leverage in Ukraine and other parts of Eastern Europe because it will no longer need Soviet-era infrastructure in former communist countries to deliver gas to Western Europe.

As part of the campaign to counter Russia's control over Nord Stream 2, the EU passed new rules in early 2019 to stop Gazprom from both supplying the gas going into Nord Stream 2 and controlling the pipeline.

Similar rules already applied to gas lines in the EU but the new rules covered gas lines coming from outside the bloc. The so-called “unbundling” rules are meant to encourage competition and prevent market distortions.

Nord Stream 2 sued the EU, arguing the rules discriminated against the Russian pipeline. But in May 2020, the EU's second-highest court, the European General Court, dismissed the case and said Nord Stream 2 had no legal standing. Nord Stream 2 then appealed to the Court of Justice, the EU's highest court.

In his nonbinding opinion, Bobek advised the high court to overturn the lower court's findings and give Nord Stream 2 a chance to have its case heard.

Bobek said the EU deliberately targeted Nord Stream 2 with the 2019 rule, making it only appropriate for the company to be able to contest it.

“The appellant was in many ways in a unique position vis-à-vis the contested measure,” Bobek said.

He said EU institutions “acted with the very intention of subjecting the appellant to that new regime” and that it was “a matter of common knowledge” that the EU's rules were aimed at the Russian project.

“Justice is often depicted as being blind,” Bobek wrote. “However, at least in my recollection, that allegory is not meant to be interpreted as justice being unable to see something that is blindingly obvious to everyone else.”

Bobek said the EU rules were a big burden on Nord Stream 2 because it had to make major changes in a short time frame to adhere to the new rules. He added that the rules were also intended “to affect significantly the appellant’s market position.”

Courthouse News reporter Cain Burdeau is based in the European Union.

Follow @cainburdeau
Categories / Appeals, Business, Energy, Government, International

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