€14 Bn Arbitration Award Against Gazprom

John is joined by Philippe Pinsolle, Head of International Arbitration for Continental Europe and partner in Quinn Emanuel’s Geneva office, and Simon Vorburger, partner in Quinn Emanuel’s Zurich office. They discuss the €14 billion international arbitration award, one of the largest arbitration awards ever, that Philippe and Simon obtained for Quinn Emanuel client, Uniper, a German gas supplier, against Gazprom Export, a Russian gas company. The case began in mid-2022 when Gazprom unexpectedly halted gas supplies to Uniper, which severely impacted the German energy market, as Gazprom had been supplying 40% of Germany’s gas. Uniper then had to purchase gas at prices as high as ten times the previous price to fulfill its obligations, leading the company to the verge of bankruptcy. Gazprom’s justification for stopping the gas was based on force majeure, claiming that unforeseen events, such as the ongoing war in Ukraine and damage to the Nord Stream pipeline, made it impossible for Gazprom to deliver the gas. These justifications lacked credibility because, for among other reasons,  some of the claimed force majeure events occurred after Gazprom stopped delivering the gas. Philippe explains that the arbitration process moved quickly with the arbitration beginning in November 2022. The arbitration hearings were held in The Hague, but Gazprom did not participate directly, opting to obtain an anti-arbitration injunction from a Russian court. Despite Gazprom’s absence, the team had to rigorously prove up their case, because default judgments are not permitted in international arbitration. This made the UNIPER’Sclaimant’s burden more challenging in some ways in that without an opponent making specific claims, the Quinn Emanuel team had to convince the arbitrators that there were no plausible defenses to Uniper’s claims and despite every force majeure event Gazprom had asserted, it still could have fulfilled the contract at issue. Another key legal challenge was Uniper’s “take-or-pay” contracts, which required Uniper to pay for gas whether it was delivered or not. The team convinced the tribunal to allow Uniper to terminate these contracts. Philippe addresses the challenge of staying focused on the contractual claim at issue despite the broader geopolitical context of the arbitration, including the 2022 European energy crisis and Russia’s role in manipulating gas supplies to Europe. The podcast concludes with a discussion about the German government’s bailout of Uniper and that the proceeds of the arbitration will benefit the German state.