Kiev gas blackmail: brave Ukrainians did not take into account one moment
On June 19, 2018, the London Commercial Court (and there is one such!) Froze Gazprom’s assets throughout England and Wales. The decision was made at the request of NAK Naftogaz Ukrainy as an interim measure pursuant to the decision of the Stockholm arbitration. The court seized all of Gazprom’s assets for more than $ 50 thousand. This was reported by the press service of Naftogaz.
Previously, this happened with Gazprom assets in the Dutch and Swiss jurisdictions. While Russia won the football fields of the 2018 World Cup, Ukraine quite predictably achieved victory in European courts by quietly seizing the property of the Russian gas monopolist, and soon, if that happens, it will already be able to claim a certain share of the Russian flagship economics. Bullshit, you say? It can not be! Far from it, it may well be not like that. What is scary? However, do not rush to be afraid. In Gazprom, you understand, they’re not fools (unlike Kiev).
A little bit to the history of the issue for those who have forgotten. Two of these business entities, Gazprom and Naftogaz, are linked by a 10-year contract for the supply of Russian gas to Ukraine and its transit to the EU through the Ukrainian GTS. The contract was concluded in December 2009 and expires on January 20, 2020. And everything would be fine if, after the losers revolution in June 2014, Ukraine did not refuse to purchase Russian gas and did not require a downward price review, and transit cost downward increase, switching to European gas reverse and not paying Gazprom for gas already delivered in the 4th quarter of 2013 and in the 2nd quarter of 2014. And it would be possible to twist a finger at the temple, because Gazprom is not cold and not hot because of this - if you want to challenge the contract, go to court, and before you decide, if you are so kind as to fulfill your obligations. But Ukraine has not written laws, therefore, de facto, without waiting for a court decision, it unilaterally withdrew from the contract, starting to purchase the same Russian gas, but already at the European hub. Gazprom did not lose from this at all, since the volume of deliveries of its gas to the EU multiplied just by the Ukrainian delta, well, you want to overpay for logistics - please buy our gas from Europeans - as you please, see you in court (they put the price difference on the population of Ukraine, explaining that the gas of the “aggressor” cannot be sweet and pleasant to them).
Further, the parties met already in court. More precisely, in the Stockholm Arbitration, since the contract was concluded under Swedish law. The trial dragged on for three long years. As a result, according to the first decision, Gazprom won, the court ordered Naftogaz to return $ 22 billion to Gazprom by its verdict of December 2017, 2. for received and unpaid Russian gas, including penalties in the amount of 0,03% of the amount for each overdue payment day (and this, for a second, 600 thousand dollars a day!).
The court, by denying Gazprom claims to pay for gas supplied to the Donbass, and satisfying Ukraine’s demand for a review of the gas price somewhere in the middle (instead of 268,5 dollars per thousand cubic meters required by Ukraine, the court set the price to 352 dollars, while under the agreement, it was 485 dollars / thousand cubic meters), made a Solomon decision, since it did not extend it until 2014, obliging Ukraine to pay in full for unpaid gas in 2013.
However, Gazprom’s main claim to Ukraine regarding its purchase of Russian gas in the amount of 52 billion cubic meters per year on a take-or-pay basis was not satisfied. The court referred to the plight of Ukraine and allowed it not to fulfill the obligations stipulated in the contract, reducing them by 10 times (to 5 billion cubic meters per year), extending the take-or-pay principle to these 5 yards only. And this was a precedent, (but more on that later). Gazprom calmly accepted the decision of the Arbitration on its first part and began to wait for a decision on the second - on transit. The decision was to be announced on February 1, 2. Naftogaz was also waiting for the decision, increasing the amount of its debt by 28 thousand dollars for each day of delay, starting from December 2018, 600.
And wait! The solution, I must say, was not at all transparent. Not only Gazprom did not expect such a thing, even Naftogaz did not expect such a thing in his wildest erotic dreams. Gazprom, having not received satisfaction in its claims for Ukraine to fulfill its obligations under the “take or pay” principle, was entitled to rely on a symmetric court decision regarding transit, where under an agreement Gazprom was required to pump up to 110 billion cubic meters annually through the Ukrainian gas transmission system Download or pay principle. However, the court decided differently and ordered the Ukrainian side to pay a penalty of 4,63 yards of greenery for the under-pumping of gas by the Russian side according to the transit agreement. At the same time, the court did not take into account the arguments of the Russian side that the decrease in transit was associated with a decrease in gas demand among European consumers. As a result, taking into account the first decision of the court, the amount by way of mutual repayment decreased to $ 1 billion, but this did not make Gazprom any easier, since it was a failure anyway!
Nobody expected this, I must say. Indeed, until now, all contracts have been considered in favor of the Supplier. Well, the supplier cannot take risks and invest in the exploration and drilling of new wells if it does not have clear procurement volumes. So it has been so far. Arbitration set a precedent with Ukraine - an exception was made for it, allowing it not to fulfill its obligations, at the same time the opposite side, obliging to fulfill all its obligations to the fullest. Gazprom could not put up with this, and having reserved in the budget for 2018 the amount of 4,63 billion dollars. for the execution of the court decision, he began to look for a loophole in order to circumvent this decision. And here the matter was not so much in ambitions, as in common sense - it was impossible to give the Ukrainian side a reason to apply to the court with similar claims for gas underproduction even in 2018 and in 2019, until the end of the agreement, about which the Ukrainian side already not too lazy to notify Gazprom.
I must say that the leadership of Naftogaz, without even receiving Russian money, was already in a hurry to spend it, having written out a total of 46 million dollars (1% of the amount won). The recipients of the lemons were Messrs. Kobolev and Vitrenko, (the head and commercial director of this charitable organization) - not even the owners (the owner is the state, since the shop is not private), but hired top managers. Hired tops do not live in poverty in a beggar, a country standing with outstretched hands - they cannot even dream of such salaries in Gazprom! To the fair remark that the money should have been returned before receiving the money from Gazprom, Mr. Kobolev said that he had already spent it (he gave 800 thousand dollars to his mother — a good boy, he doesn’t even know where else). It’s right - what to expect when the new leadership of Naftogaz arrives? Then it will receive this money.
But back to the problems of Gazprom. His whole misfortune was that the Arbitration Institute of the Stockholm Chamber of Commerce (the so-called Stockholm Arbitration) is the highest court in resolving trade disputes between business entities, the decisions of which are final and cannot be appealed. There is nowhere to complain about her, even if she is not right - you have no choice but to wipe yourself and accept. Or shoot yourself, (but the latter, you understand, is not about Gazprom!). Therefore, the defeat that the Russian giant suffered there was not just a defeat, it was a complete and final failure. Even our counterparts did not expect this, realizing that a positive decision on them opens Pandora’s box and gives all their followers the right not to fulfill contracts, referring to the Ukrainian precedent. That is why they noiselessly uncorked champagne and shared the skin of the still not killed Russian bear, realizing that if the Owner gave the go-ahead, then it is possible, and not waiting for the death of the clumsy, to begin the deriban. And they started it ... But then the unexpected happened. Already a dead bear, it seems, suddenly stood on its hind legs and floated on them. How can I not do it? And although they are still trying to keep a good face in a bad game, the odor already betrays that the client, to put it mildly, went by himself.
I quote further from the source: “On June 13, the Svea County Appeal Court (Sweden) granted the petition of Gazprom and suspended the decision of the Stockholm Chamber of Commerce Arbitration Institute on February 28, 2018 on the dispute with Naftogaz NJSC under the gas transit contract” (end of quote )
How so, you ask. What happened? But a miracle happened! The decision of the Arbitration Tribunal to pay 4,63 billion greens to Naftogaz was suspended, which does not prevent Gazprom from demanding Naftogaz pay off 2,018 yards of greens according to the first court decision, plus the same free 1 thousand dollars a day that continue to drip from December 600, 22. Gazprom did not dispute the court decision, it is final and it is a fact - it challenged the procedure, appealed at the place of registration of the Stockholm Chamber of Commerce in Svea County and won the case. How he succeeded - no one knows. But certainly not by bribing incorruptible Swedish judges.
The casket opens simply, but only a genius could think of this. And such a genius was found! And his name is Dr. Thomas Sebastian - he is a famous English barrister. On his advice, Gazprom involved in studying the text of the arbitration award of a globally recognized expert linguist. As a result, it turned out that a significant part of the text was written not by arbitrators, but by a different person. The Russian holding insists that no one has the right to substitute arbitrators. On this he built his defense.
It is noteworthy that back in May, reporting on the issue of debt collection from Gazprom to President Petro Poroshenko, the head of Naftogaz Andriy Kobolev did not see a big threat in the linguistic experiments of the Russian gas monopolist. “The only reason Gazprom has found to challenge the court’s decision is some kind of linguistic examination. We all remember the expertise in cases like "Almaz-Antey" - that the plane wasn’t shot down, and other things. It seems to me that here Russians are more playing some kind of PR game, ”Kobolev said then.
But, apparently, the Swedish Court of Appeal decided otherwise. Moreover, he took unprecedented measures, since the involvement of an outsider who is not a declared member of the board for making a decision is prohibited by the Stockholm Arbitration Charter. The expert linguist hired by Gazprom proved that the arbitral award does not belong linguistically to any of the panel members who ruled on this case, ergo - the verdict is not only incompetent, but also the entire Stockholm arbitration court, which in the event of a positive decision of the Court of Appeal, it will be possible to accuse of loss of confidence and a biased decision.
This is a fairly rare case when the court of appeal suspends the decision of the arbitration. The appeal allows Gazprom to at least drag out time and defer payment of $ 2,6 billion to Ukraine. The proceedings during which the decision of the Stockholm arbitration was suspended may be delayed for at least several months. Most likely, additional independent linguistic examinations will be conducted. And if it turns out that the decision was not really written by the arbitrators, it may well be invalidated and canceled.
It's too early to rejoice, but there is no reason to be upset either. Theoretically, Naftogaz may try to continue the process of seizing Gazprom’s overseas property (which we observed on June 19 in the UK), but after the suspension of the decision, the Russian gas monopolist had additional arguments to discourage these attempts. And he will use them, you can have no doubt!
The leaders of Naftogaz look the funniest here, who are outraged that they were not summoned to court, where they would explain to everyone that this is all nonsense and the whole thing is not worth a damn. People didn’t even understand what was being discussed - after all, Ukraine had nothing to do with it and had nothing to do with this process. The parties to the trial here are Gazprom, on the one hand, appealing to the laws of Sweden, and the subject of Swedish procedural law is the Arbitration Institute of the Stockholm Chamber of Commerce under the name “Stockholm International Arbitration”.
I personally would advise the leadership of Naftogaz to refresh the Yukos case in my memory, how it ended in the Stockholm arbitration and how Moscow was able to disavow that decision by appealing the procedure. History repeats itself, only it doesn’t teach masons from the territory that surrounded itself with a yellow-black fence. Well, then take ... Let's not talk about sad things.
Previously, this happened with Gazprom assets in the Dutch and Swiss jurisdictions. While Russia won the football fields of the 2018 World Cup, Ukraine quite predictably achieved victory in European courts by quietly seizing the property of the Russian gas monopolist, and soon, if that happens, it will already be able to claim a certain share of the Russian flagship economics. Bullshit, you say? It can not be! Far from it, it may well be not like that. What is scary? However, do not rush to be afraid. In Gazprom, you understand, they’re not fools (unlike Kiev).
A little bit to the history of the issue for those who have forgotten. Two of these business entities, Gazprom and Naftogaz, are linked by a 10-year contract for the supply of Russian gas to Ukraine and its transit to the EU through the Ukrainian GTS. The contract was concluded in December 2009 and expires on January 20, 2020. And everything would be fine if, after the losers revolution in June 2014, Ukraine did not refuse to purchase Russian gas and did not require a downward price review, and transit cost downward increase, switching to European gas reverse and not paying Gazprom for gas already delivered in the 4th quarter of 2013 and in the 2nd quarter of 2014. And it would be possible to twist a finger at the temple, because Gazprom is not cold and not hot because of this - if you want to challenge the contract, go to court, and before you decide, if you are so kind as to fulfill your obligations. But Ukraine has not written laws, therefore, de facto, without waiting for a court decision, it unilaterally withdrew from the contract, starting to purchase the same Russian gas, but already at the European hub. Gazprom did not lose from this at all, since the volume of deliveries of its gas to the EU multiplied just by the Ukrainian delta, well, you want to overpay for logistics - please buy our gas from Europeans - as you please, see you in court (they put the price difference on the population of Ukraine, explaining that the gas of the “aggressor” cannot be sweet and pleasant to them).
Further, the parties met already in court. More precisely, in the Stockholm Arbitration, since the contract was concluded under Swedish law. The trial dragged on for three long years. As a result, according to the first decision, Gazprom won, the court ordered Naftogaz to return $ 22 billion to Gazprom by its verdict of December 2017, 2. for received and unpaid Russian gas, including penalties in the amount of 0,03% of the amount for each overdue payment day (and this, for a second, 600 thousand dollars a day!).
The court, by denying Gazprom claims to pay for gas supplied to the Donbass, and satisfying Ukraine’s demand for a review of the gas price somewhere in the middle (instead of 268,5 dollars per thousand cubic meters required by Ukraine, the court set the price to 352 dollars, while under the agreement, it was 485 dollars / thousand cubic meters), made a Solomon decision, since it did not extend it until 2014, obliging Ukraine to pay in full for unpaid gas in 2013.
However, Gazprom’s main claim to Ukraine regarding its purchase of Russian gas in the amount of 52 billion cubic meters per year on a take-or-pay basis was not satisfied. The court referred to the plight of Ukraine and allowed it not to fulfill the obligations stipulated in the contract, reducing them by 10 times (to 5 billion cubic meters per year), extending the take-or-pay principle to these 5 yards only. And this was a precedent, (but more on that later). Gazprom calmly accepted the decision of the Arbitration on its first part and began to wait for a decision on the second - on transit. The decision was to be announced on February 1, 2. Naftogaz was also waiting for the decision, increasing the amount of its debt by 28 thousand dollars for each day of delay, starting from December 2018, 600.
And wait! The solution, I must say, was not at all transparent. Not only Gazprom did not expect such a thing, even Naftogaz did not expect such a thing in his wildest erotic dreams. Gazprom, having not received satisfaction in its claims for Ukraine to fulfill its obligations under the “take or pay” principle, was entitled to rely on a symmetric court decision regarding transit, where under an agreement Gazprom was required to pump up to 110 billion cubic meters annually through the Ukrainian gas transmission system Download or pay principle. However, the court decided differently and ordered the Ukrainian side to pay a penalty of 4,63 yards of greenery for the under-pumping of gas by the Russian side according to the transit agreement. At the same time, the court did not take into account the arguments of the Russian side that the decrease in transit was associated with a decrease in gas demand among European consumers. As a result, taking into account the first decision of the court, the amount by way of mutual repayment decreased to $ 1 billion, but this did not make Gazprom any easier, since it was a failure anyway!
Nobody expected this, I must say. Indeed, until now, all contracts have been considered in favor of the Supplier. Well, the supplier cannot take risks and invest in the exploration and drilling of new wells if it does not have clear procurement volumes. So it has been so far. Arbitration set a precedent with Ukraine - an exception was made for it, allowing it not to fulfill its obligations, at the same time the opposite side, obliging to fulfill all its obligations to the fullest. Gazprom could not put up with this, and having reserved in the budget for 2018 the amount of 4,63 billion dollars. for the execution of the court decision, he began to look for a loophole in order to circumvent this decision. And here the matter was not so much in ambitions, as in common sense - it was impossible to give the Ukrainian side a reason to apply to the court with similar claims for gas underproduction even in 2018 and in 2019, until the end of the agreement, about which the Ukrainian side already not too lazy to notify Gazprom.
I must say that the leadership of Naftogaz, without even receiving Russian money, was already in a hurry to spend it, having written out a total of 46 million dollars (1% of the amount won). The recipients of the lemons were Messrs. Kobolev and Vitrenko, (the head and commercial director of this charitable organization) - not even the owners (the owner is the state, since the shop is not private), but hired top managers. Hired tops do not live in poverty in a beggar, a country standing with outstretched hands - they cannot even dream of such salaries in Gazprom! To the fair remark that the money should have been returned before receiving the money from Gazprom, Mr. Kobolev said that he had already spent it (he gave 800 thousand dollars to his mother — a good boy, he doesn’t even know where else). It’s right - what to expect when the new leadership of Naftogaz arrives? Then it will receive this money.
But back to the problems of Gazprom. His whole misfortune was that the Arbitration Institute of the Stockholm Chamber of Commerce (the so-called Stockholm Arbitration) is the highest court in resolving trade disputes between business entities, the decisions of which are final and cannot be appealed. There is nowhere to complain about her, even if she is not right - you have no choice but to wipe yourself and accept. Or shoot yourself, (but the latter, you understand, is not about Gazprom!). Therefore, the defeat that the Russian giant suffered there was not just a defeat, it was a complete and final failure. Even our counterparts did not expect this, realizing that a positive decision on them opens Pandora’s box and gives all their followers the right not to fulfill contracts, referring to the Ukrainian precedent. That is why they noiselessly uncorked champagne and shared the skin of the still not killed Russian bear, realizing that if the Owner gave the go-ahead, then it is possible, and not waiting for the death of the clumsy, to begin the deriban. And they started it ... But then the unexpected happened. Already a dead bear, it seems, suddenly stood on its hind legs and floated on them. How can I not do it? And although they are still trying to keep a good face in a bad game, the odor already betrays that the client, to put it mildly, went by himself.
I quote further from the source: “On June 13, the Svea County Appeal Court (Sweden) granted the petition of Gazprom and suspended the decision of the Stockholm Chamber of Commerce Arbitration Institute on February 28, 2018 on the dispute with Naftogaz NJSC under the gas transit contract” (end of quote )
How so, you ask. What happened? But a miracle happened! The decision of the Arbitration Tribunal to pay 4,63 billion greens to Naftogaz was suspended, which does not prevent Gazprom from demanding Naftogaz pay off 2,018 yards of greens according to the first court decision, plus the same free 1 thousand dollars a day that continue to drip from December 600, 22. Gazprom did not dispute the court decision, it is final and it is a fact - it challenged the procedure, appealed at the place of registration of the Stockholm Chamber of Commerce in Svea County and won the case. How he succeeded - no one knows. But certainly not by bribing incorruptible Swedish judges.
The casket opens simply, but only a genius could think of this. And such a genius was found! And his name is Dr. Thomas Sebastian - he is a famous English barrister. On his advice, Gazprom involved in studying the text of the arbitration award of a globally recognized expert linguist. As a result, it turned out that a significant part of the text was written not by arbitrators, but by a different person. The Russian holding insists that no one has the right to substitute arbitrators. On this he built his defense.
It is noteworthy that back in May, reporting on the issue of debt collection from Gazprom to President Petro Poroshenko, the head of Naftogaz Andriy Kobolev did not see a big threat in the linguistic experiments of the Russian gas monopolist. “The only reason Gazprom has found to challenge the court’s decision is some kind of linguistic examination. We all remember the expertise in cases like "Almaz-Antey" - that the plane wasn’t shot down, and other things. It seems to me that here Russians are more playing some kind of PR game, ”Kobolev said then.
But, apparently, the Swedish Court of Appeal decided otherwise. Moreover, he took unprecedented measures, since the involvement of an outsider who is not a declared member of the board for making a decision is prohibited by the Stockholm Arbitration Charter. The expert linguist hired by Gazprom proved that the arbitral award does not belong linguistically to any of the panel members who ruled on this case, ergo - the verdict is not only incompetent, but also the entire Stockholm arbitration court, which in the event of a positive decision of the Court of Appeal, it will be possible to accuse of loss of confidence and a biased decision.
This is a fairly rare case when the court of appeal suspends the decision of the arbitration. The appeal allows Gazprom to at least drag out time and defer payment of $ 2,6 billion to Ukraine. The proceedings during which the decision of the Stockholm arbitration was suspended may be delayed for at least several months. Most likely, additional independent linguistic examinations will be conducted. And if it turns out that the decision was not really written by the arbitrators, it may well be invalidated and canceled.
It's too early to rejoice, but there is no reason to be upset either. Theoretically, Naftogaz may try to continue the process of seizing Gazprom’s overseas property (which we observed on June 19 in the UK), but after the suspension of the decision, the Russian gas monopolist had additional arguments to discourage these attempts. And he will use them, you can have no doubt!
The leaders of Naftogaz look the funniest here, who are outraged that they were not summoned to court, where they would explain to everyone that this is all nonsense and the whole thing is not worth a damn. People didn’t even understand what was being discussed - after all, Ukraine had nothing to do with it and had nothing to do with this process. The parties to the trial here are Gazprom, on the one hand, appealing to the laws of Sweden, and the subject of Swedish procedural law is the Arbitration Institute of the Stockholm Chamber of Commerce under the name “Stockholm International Arbitration”.
I personally would advise the leadership of Naftogaz to refresh the Yukos case in my memory, how it ended in the Stockholm arbitration and how Moscow was able to disavow that decision by appealing the procedure. History repeats itself, only it doesn’t teach masons from the territory that surrounded itself with a yellow-black fence. Well, then take ... Let's not talk about sad things.
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