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Today the Supreme Court of Lithuania which has reopened the proceedings against Gazprom after delivery of the preliminary ruling of the Court of Justice of the European Union has recognised and permitted enforcement of 31 July 2012 award of the arbitration tribunal of the Arbitration Institute of the Stockholm Chamber of Commerce in the Kingdom of Sweden.

In the pronounced ruling the court of cassation has found that, according to the laws of Lithuania, the main issue addressed in the arbitral award for which recognition and enforcement is sought does not fall within the category of non-arbitrable disputes.

The Supreme Court of Lithuania declared the reasoning of the Ministry of Energy acting on behalf of the Republic of Lithuania unfounded and noted in the ruling which was pronounced today that “the sanctions imposed by the arbitral award for which recognition and enforcement is sought should be defined as the obligation on the party to perform the contract (arbitration agreement) in kind, i.e. observe the chosen dispute resolution method and not to carry out any actions that could be detrimental to the arbitration proceedings or effectiveness of the arbitral award that may be delivered in the future”. Therefore, the chamber of judges has decided that there exist no grounds for refusing recognition and enforcement of the arbitral award on the basis of the public policy clause.

The Court has noted that, in this case, the sanctions imposed by the arbitration only protects the will expressed by the parties as to the dispute resolution method and the very arbitration proceedings. From the point of view of the Supreme Court of Lithuania, “the sanctions imposed by the arbitration do not restrict the party’s right to apply to the court with all issues in general, but imply that the party should not address the national court only with certain requests that are covered by the arbitration agreement and that may be satisfied by an arbitral award taking into account, inter alia, the requested remedies.

Furthermore, the Supreme Court of Lithuania has made a finding that the arbitral award and the obligation established therein are not against the court, but against the respective party to the proceedings. Recognition and enforcement of the arbitral award establishing the obligation not to litigate in court in the Republic of Lithuania have no effect and on the right of the national courts to address the issue of jurisdiction and the right to examine the merits of the case.
According to the extended chamber of 7 judges that has adjudicated the case, the very circumstance that one of the parties to the proceedings is the state involved in private legal relationship on the same grounds as private persons is not relevant in legal terms.
The arbitration tribunal of the Arbitration Institute of the Stockholm Chamber of Commerce in the Kingdom of Sweden in its 31 July 2012 award for which recognition was sought in the present case has found that the proceedings instituted by the Ministry of Energy acting on behalf of the Republic of Lithuania in the national court has partially breached the agreement on dispute resolution method established in the agreement of the shareholders of Lietuvos dujos AB. The arbitration ordered to abandon the pleas raised before Vilnius Regional Court due to the obligation on Lietuvos dujos AB to initiate bona fide negotiations over fair and equitable purchase price of natural gas and the terms and conditions for provision of natural gas supply transit service the with Gazprom OAO.

More details on the Supreme Court of Lithuania is available at www.lat.lt, the judgement of the Court of Justice of the European Union in the proceedings against Gazprom is available at:http://curia.europa.eu/juris/document/document.jsf?text=&docid=164260&pageIndex=0&doclang=lt&mode=lst&dir=&occ=first&part=1&cid=428116