Polish state-controlled oil and gas company PGNiG stated that Russian oil giant Gazprom has failed to comply with the final award issued by the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) in response to a suit brought by PGNiG.
At the end of March, the Arbitral Tribunal in Stockholm ruled in favour of PGNiG, ending a five-year-long dispute with Gazprom concerning the price of gas. According to preliminary estimates of PGNiG, Gazprom would have had to refund approximately 1.5 billion US dollars as a result of the award being issued.
Now, PGNiG announced that Gazprom is not honouring the award, continuing to issue invoices based on the invalid pricing formula.
PGNiG has requested the supplier to correct the invoices issued in recent weeks, indicating that the arbitration award is final and binding on both parties. Therefore, PGNiG believes the supplier’s failure to respond can be considered willful disregard of the award. This constitutes a gross breach of the terms of the Yamal contract as, at the time when the arbitration award was handed down, the new pricing formula became automatically its part.
At the same time, PGNiG states that it fully respects the award of the Stockholm Arbitration Institute and its consequences, making timely payments for the gas supplied in amounts resulting from the new pricing terms.
PGNiG will take all the necessary steps to fully enforce the arbitration award and to recover any overpayments for gas supplied under the Yamal contract since November 2014. In PGNiG’s opinion, the conduct of Gazprom consisting of its failure to comply with the arbitration award may be perceived as a continued abuse of its dominant position. The Polish company is now considering the possibility of notifying the Commission of Gazprom’s anti-competitive practices involving its failure to comply with the arbitration award.