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  • Writer's pictureDaniel Müller

A new beginning of the dispute between Nord Stream 2 and the European Union?

On 20 May 2020, the General Court of the European Union declared the actions for annulment of the Amending Directive to the European Gas Directive brought by Nord Stream and Nord Stream 2 inadmissible. Nord Stream 2 has already started arbitration proceedings under the Energy Charter Treaty against the European Union concerning this measure.

By two orders dated 20 May 2020, the General Court of the European Union considered that the annulment actions brought by Nord Stream (T-530/19) and Nord Stream 2 (T-526/19) against the Directive 2019/692 amending Directive 2009/73 concerning common rules for the internal market in natural gas inadmissible. From the entry into force and the transposition of Directive 2019/692, the obligations imposed on pipeline operators under Directive 2009/73 and the relevant national legislations apply also to parts of transmission lines between EU Member States and third States. This is the case of the gas pipelines operated by Nord Stream AG, owned at 51% by Russian Gazprom, and the still to be completed pipeline constructed by Nord Stream 2 AG, wholly owned by the Gazprom. Both companies argued that these new regulation requires significant changes in their projects and imposes a heavy burden.

The General Court considered that neither Nord Stream 2, nor Nord Stream is directly and individually concerned by the Directive 2019/692, a necessary requirement for bringing an annulment action under Article 263(4) TFEU. In the opinion of the Court and in accordance with settled case law, the obligations set out in the Directive will only become applicable to operators like Nord Stream and Nord Stream 2 through the national legislation transposing that directive and under the conditions and modalities chosen by the relevant Member State. The General Court pointed out that the Member States have a certain margin of discretion in respect of the form and content of the measures transposing the Directive.

This does not mean that the Directive 2009/73 is indeed valid under EU law. The General Court pointed out that even if the applicants cannot challenge directly EU acts of general application under Article 263 TFEU, like in the present cases, they enjoy protection against the application of those acts before the competent national courts by way of a preliminary ruling request under Article 267 TFEU. It explained to Nord Stream 2:

In the applicant’s case, it is open to it to request, from the German regulatory authority, a derogation under Article 49a of Directive 2009/73, as amended, or even an exemption under Article 36 thereof and, as the case may be, to challenge that authority’s decision before a German court by claiming that the contested directive is invalid and causing that court to put questions to the Court of Justice by way of questions referred for a preliminary ruling regarding the validity of the contested directive on the basis of Article 267 TFEU. (T-529/19, para. 122)

Nord Stream 2 might now have the opportunity to test the General Court’s explanations. On 15 May 2020, the German Bundesnetzagentur (Federal Network Agency) rejected Nord Stream 2’s application for derogation under the relevant German rules transposing Directive 2019/692. Nord Stream has reported that its application for derogation was granted on 20 May 2020.

In parallel, Nord Stream 2 is conducting arbitration proceedings against the European Union under the Energy Charter Treaty claiming that the Directive 2009/73 was a discriminatory and unreasonable measure, affecting Nord Stream 2 and its investment. These proceedings are pending before an UNCITRAL tribunal composed of Ricardo Ramirez Hernandez (Chair), David Unterhalter (replacing the disqualified Peter Rees) (appointed by the Nord Stream 2), and Philippe Sands (appointed by the EU).

The two orders of the General Court of the European Union are available online, together with a press release:

  • Order of 20 May 2020, Nord Stream 2 AG v European Parliament and Council of the European Union, T-526/19, ECLI:EU:T:2020:210

  • Order of 20 May 2020, Nord Stream AG v European Parliament and Council of the European Union, T-530/19, ECLI:EU:T:2020:213

  • Orders of the General Court in Cases T-526/19 and T-530/19 Nord Stream 2 AG and Nord Stream AG v Parliament and Council, Press Release No 62/20, 20 May 2020

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