One of Gazprom's former key partners in Europe, Wintershall Dea, has initiated two arbitration proceedings against the Russian Federation, citing the expropriation of assets. After leaving the Russian Federation, the company estimated its losses at €5.3 billion, part of which it apparently wants to recover through arbitration. Lawyers say that the prospects of the case depend on the interpretation of the concept of "expropriation", and the enforcement of the court decision may be complicated by sanctions.

German Wintershall Dea (a structure of the BASF concern), a participant in several major Gazprom projects, has initiated two arbitration proceedings against the Russian Federation, citing the "expropriation" of Russian assets, the company reported. Wintershall Dea believes that the Russian Federation has violated its obligations under a bilateral investment protection agreement with Germany and the Energy Charter Treaty.

Wintershall Dea in the Russian Federation owned 25.01% in the Achim Development project for the development of two blocks of the Achimov deposits of the Urengoy field and 35% in Severneftegazprom. The latter is developing the giant Yuzhno-Russkoye field with reserves of more than 1 trillion cubic meters of gas in the ABC1+C2 category. Wintershall's partner in the two projects was Gazprom, and Austria's OMV also had a stake in Severneftegazprom. In addition, Wintershall owned 15.5% in the operator of the Nord Stream 2 gas pipeline along the bottom of the Baltic Sea from Russia to Germany.

In January 2023, Wintershall announced its intention to leave the Russian market. And at the end of 2023, Russian President Vladimir Putin signed decrees on the sale of shares of foreign shareholders, including Wintershall, in joint ventures to national owners. In 2024, by government decree, Russian companies were created to manage these enterprises without the participation of foreign shareholders within the framework of special economic measures - Severneftegazprom LLC, Gazprom YURGM Trading LLC and Gazprom YURGM Development LLC.

Wintershall estimated the losses from the deconsolidation of joint ventures with Gazprom in Russia at €5.3 billion.

The former head of the company, Mario Mehren, said that Wintershall was considering options to minimize the damage from leaving Russia, including filing lawsuits against the Russian authorities. At the end of 2023, Wintershall announced the sale of its oil and gas business, excluding projects with Gazprom, to Harbour Energy. Wintershall itself will continue to operate until the completion of proceedings on the status of assets in the Russian Federation and the sale of the remaining enterprises.

Birch Legal lawyer Vladislav Berlin explains that arbitration allows foreign investors to protect their rights outside the jurisdiction of the country in which they do business. She believes that despite potential difficulties, Wintershall has a chance of success if it can effectively prove the right to protect investments and provide convincing evidence of losses. Rostislav Katz, a leading lawyer at KIAP, notes that investment arbitration is a “very complex procedure,” and Wintershall’s lawyers will need to collect a huge array of arguments. For example, it will be necessary to prove that the termination of operations in the Russian Federation was not the company’s free will or a forced decision due to sanctions from Western countries, but the result of decisions or actions by Russian government agencies, he says. According to Mr. Katz, historically, the prospects for satisfying a dispute are usually on the side of states.

Nordic Star partner Anna Zabrotskaya recalls that over the past two years, Russia has faced a number of similar lawsuits, including the ExxonMobil and Uniper cases.

In 2022, ExxonMobil filed a lawsuit in connection with the termination of its participation in the Sakhalin-1 project, and Uniper initiated arbitration over losses related to Nord Stream 2. According to Ms. Zabrocka, the prospects of the Wintershall Dea case will depend, among other things, on the interpretation of the concept of "expropriation", the application of possible exceptions for reasons of security or public necessity, as well as the objections of the Russian Federation. But even if the plaintiff wins, sanctions could complicate the process of enforcing the arbitration tribunal's decision, she adds.