Finnish state-owned company Fortum has hit back at Danish wind turbine manufacturer Vestas in the ongoing arbitration case over the construction of wind farms in Russia, saying that the Danish are only using Russian sanctions as an excuse not to pay for the wind turbines it failed to deliver.

The Danish company has said that Vestas cannot honour the contract with Fortum after the Russian invasion of Ukraine without violating Russia sanctions.

Speaking to Denmark Radio, Vestas’ CEO Henrik Andersen said he was “surprised” Fortum had taken the issue to the International Chamber of Commerce arbitration in Stockholm to settle the €201 million dispute.

Vestas also upped the ante by politicising the matter by contacting the Foreign Ministry and the Danish ambassador in Finland. One politician, the Chair of the Danish Radical Party Martin Lidegaard, was quick to swallow the bait and called for sticking to EU sanctions against Russia.

However, Fortum quickly launched a counter-offensive and interpreted the issue as a blatant attempt by Vestas to get off the hook and free itself from repaying the turbines it failed to deliver.

In its press release on Wednesday, Fortum vigorously defended itself against ”false” claims by Vestas that it flouted sanctions against Russia in a commercial dispute between the two companies.

According to the company, Fortum and Vestas entered the contract together before the Russian invasion of Ukraine and before 2022 energy-related sanctions against Russia were in place.

Fortum also said it has made ”sizeable” advance payments to Vestas, but the Danish company has not ”delivered on its contractual obligations and refused to repay the advance payments and other project-related costs”.

“We are at a loss to understand why our long-standing business partner Vestas would suddenly question our adherence to EU sanctions in this case. There is absolutely no doubt about Fortum’s commitment to upholding and defending EU laws, EU sanctions, and ultimately EU unity,” said Nora Steiner-Forsberg, the General Counsel of Fortum.

Fortum commenced its divestment process and exit from Russia in May 2022, but it requires approval by the Russian authorities.

”To my understanding, they (Vestas) have quite widely discussed the matter with political leaders. This is something we consider very peculiar when the question is about the matter between two listed companies. The Finnish government or its ownership steering does not have a role in this case. We expect the companies to solve it,” Senior Ministerial Adviser of Financial Affairs at the Finnish government’s Ownership Steering Department Maija Strandberg told YLE.

Several international media outlets have taken up the story.

According to the Financial Times, “the case is among the largest sanctions-related contractual disputes to become public. Lawyers expect more to come, across various industries, over deals terminated because of sanctions compliance.”

Contacted by EURACTIV, the European Commission said it could not comment on the situation as it is not a party to the arbitration case.

(Pekka Vänttinen, Charles Szumski| EURACTIV.com)