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02.06.2020 PGNiG: No grounds for reversing the arbitration award
Based on the assessment of the Management Board of the POlish Oil and GAs Company (PGNiG), there are no grounds for reversing the Stockholm Arbitration Institute’s award of March 30th 2020, which is favourable to the Company.
PGNiG has been notified that Gazprom filed an appeal with the Stockholm Court of Appeals for the reversal of the Arbitration Institute’s award establishing a new price formula under the Yamal contract. PGNiG will be able to express its detailed position on the contents of the appeal after it has been formally served on the Company. However, it should be emphasised that the Stockholm Court of Appeals will exclusively review procedural matters relating to the contested arbitration proceedings and cannot change the substance of the arbitration award. In particular, the appeal lodged by Gazprom does not affect enforcement of the arbitration award, which means that both parties are obliged to apply the new price formula.
PGNiG reminds that on March 30th 2020, the Stockholm Arbitration Institute issued an award whereby it accepted the Company’s arguments and changed the procedure for determining gas supply prices under the Yamal contract. The new price formula is directly and closely linked to gas quotations on Western European markets. In this way, the Institute confirmed that the prices previously applicable under the Yamal contract had not been market prices.
According to the award, the new price formula has been effective since November 1st 2014, when PGNiG applied for a change of the price determination procedure.