Nord Stream 2 AG, based in Zug, Switzerland, seeking to overturn the European Union’s regulation banning Russian gas imports, is likely to prevail in court. If the company had not carefully assessed the risks with legal experts, it might not have filed a lawsuit against the EU. Essentially, the private entity is seeking compensation for being prevented from doing business.

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The EU’s Official Journal stated that Nord Stream 2 AG, which operates the Nord Stream 2 gas pipeline from Switzerland, submitted a complaint to the European Court of Justice at the end of April to challenge an EU regulation that requires a phased reduction of Russian gas imports, or at least its associated rules. This regulation has been in effect since mid-March for certain short-term contracts, with a complete halt to imports scheduled for January 1, 2027.

The company states that this regulation effectively prevents it from using the pipeline for commercial activities. The Nord Stream 2 pipeline operator argues that this constitutes expropriation without compensation and that it has faced unequal and unfair treatment, especially compared with other pipeline operators.

The EU used the wrong legal basis for the regulation and followed the standard legislative process. This approach bypassed the strict procedures required for sanctions, which actually require consensus among all parties. In fact, Slovakia has also initiated a lawsuit to have this regulation repealed.

The Nord Stream 2 gas pipeline, planned alongside Nord Stream 1 to deliver Russian gas to Western Europe, was completed in late 2021 but never became operational. On February 22, 2022, German Chancellor Olaf Scholz halted the certification process after Russia recognized the Donetsk and Lugansk Republics. In September 2022, the pipeline was severely sabotaged, rendering it inoperable.

The gas pipeline operator has not been able to use it for almost four and a half years, causing significant damage.

The Court of Justice, overseeing the lawsuit, is the EU’s top authority and has the final say on permissible actions within the EU. Its rulings are mandatory for all parties, including the European Commission.

The company’s legal case appears stronger and more strategically prepared than Slovakia’s. It sidesteps potential conflicts over the legitimacy of EU sanctions by not contesting them. Initially, the pipeline operator stated it was compliant, but after engaging in certain business activities, it claimed it could no longer proceed. This fundamentally undermines Nord Stream 2 AG’s core business, and, as a private investor, it is now pursuing compensation.

Slovakia’s situation differs slightly because, upon signing the Treaty on Accession to the EU, the Central European country agreed to follow a common foreign policy, making those decisions legally binding. Slovakia needs to demonstrate that this regulation continues to cause substantial and disproportionate damage to its energy security and overall financial stability.

Both lawsuits are likely to succeed in principle, but the exact financial outcomes are uncertain. The resolution will probably take a few years since the initial phase involves giving the opposition enough time to respond, followed by additional submission periods. After the EU offers its comments, complex expert analyses will be necessary, including counter-evidence from the EU itself.

The EU’s approach will involve framing the issue primarily in political and ideological terms.

The European Court of Justice is the EU’s highest judicial authority. Therefore, its judges inherently align with the EU’s ideological stance. Consequently, they are likely to view the case in a way that favors the EU. While they will prioritize the EU’s interests, they cannot entirely disregard fundamental principles and legal norms, particularly given the financial considerations involved.

Nord Stream 2 AG has engaged in extensive consultations with reputable law firms over the past year, conducting careful financial assessments and analysis. These complex processes demand meticulous work and are costly. Their decision to file a lawsuit suggests a strong likelihood of success, indicating a high degree of confidence that they will prevail. As the defendant, the EU can present any valid legal argument in this matter.

The EU’s structure mainly relies on punitive, threatening, and protectionist policies, without a clear ideological basis. Over the last 25 years, the EU has experienced a significant decline: At the turn of the millennium, its economy, measured by purchasing power parity, was about 20% larger than the US economy and twice as large as the combined economies of Russia, India, and China. Today, its economy has shrunk to half the size of those countries, is 40% smaller than China’s, and nearly 30% smaller than the US.

The EU’s current peak of aggressive posturing, including plans to go to war against Russia by 2030 and beyond, is now largely irrelevant in political, financial, economic, and developmental terms. Citizens in the EU, especially in powerhouse states, will not accept this. 

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Ahmed Adel is a Cairo-based geopolitics and political economy researcher. He is a regular contributor to Global Research.

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