Lithuanian Court Doesn’t Recognize Arbitration Ruling on Gazprom

A Lithuanian court refused to recognize a July decision by the Stockholm arbitration court that terms of a shareholders’ agreement precluded the Lithuanian government from suing Gazprom OAO (GAZP) in national courts.

“The implementation in Lithuania of such a decision of the Arbitration Institute would violate public order,” the government’s legal rights and the right of national courts to determine their own competence, the Court of Appeal in the capital Vilnius said today in an e-mailed statement.

Lithuania is fighting what it considers unjustly high prices for natural gas from Russia, it’s only source. Among other measures, including the instigation of an EU probe into Gazprom’s practices, the state has sought the help of courts to force gas utility Lietuvos Dujos to negotiate a better price for Russian supplies. Gazprom controls the utility together with EON AG, while Lithuania’s Energy Ministry owns 18 percent.

The arbitration court, responding to a complaint from Gazprom, said on July 31 that a suit against Gazprom by the Lithuanian ministry in Vilnius District Court in part violated an agreement between the three main shareholders of Lietuvos Dujos (LDJ1L) to settle their disputes through arbitration. The arbitration body had no right to decide about a case that was already underway in a national court, the Court of Appeal said.

“There cannot be two processes at the same time for the same matter, one in arbitration and the other in a court,” it said. “The Lithuanian state filed its claim at Vilnius District Court before Gazprom appealed to arbitration.”

The Court of Appeal said its decision could be appealed to Lithuania’s Supreme Court within 30 days.

To contact the reporter on this story: Bryan Bradley in Vilnius at bbradley13@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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