June 23. 2024. 6:57

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Russian wind turbines at heart of million-euro Danish-Finnish arbitration dispute

Danish wind turbine manufacturer Vestas has asked the state to help in an arbitration dispute with Finnish company Fortum over the construction of wind farms in Russia that was blocked by EU sanctions.

The agreement on the construction of the wind turbines was concluded between Vestas and Fortum in September 2021, which mentioned the possibility of Vestas delivering and installing the turbines and being responsible for servicing them.

However, after the Russian invasion of Ukraine, Vestas withdrew from the Russian market following EU sanctions on the energy sector and therefore, declared that there was no way the company could honour the contract without violating them.

Fortum blames Vestas for not honouring its part of the contract and is now seeking a resolution through arbitration, which Vestas’ CEO Henrik Andersen deplored.

“I hope there is no longer anyone in the Western world who thinks we should continue our activities in Russia. We don’t believe that, and we certainly don’t believe that we should participate in activities in Russia that either strengthen their energy supply or can be used electronically in other parts of the Russian war machine,” he told Denmark Radio.

He expressed his surprise that Fortum and Vestas are attempting to settle their dispute in arbitration – a move that could cost Vestas DKK 1.5 billion (€201 million), especially since the largest shareholder in Fortum is the Finnish state.

“At some point, you have to make a decision. You can’t be in the EU, and you can’t be in NATO and, at the same time, favour the Russians with critical infrastructure. There will be one of the three that you will have to choose from,” said Andersen.

Vestas contacted both the Danish ambassador in Finland and the Foreign Affairs Ministry to put political pressure on the state-owned Finnish company, with the Ministry confirming to Danish media that the matter is being discussed at the highest level.

“At the request of Vestas, the Ministry of Foreign Affairs has raised the matter with the Finnish authorities through all relevant channels. (…) The Finnish side has replied that they see it as a matter between two companies, to be resolved according to the contract terms between them,” the Danish Foreign Affairs Ministry has said.

Martin Lidegaard, leader of the opposition Danish Radical Party (Renew Europe), declared that this is an essential matter of principle and emphasised that it is important that EU countries stick together when it comes to the EU sanctions that have been decided.

“I understand why Vestas is crying out. Wasn’t the whole idea that we should stop all energy exports to Russia? If there is one thing we do not need, it is two EU and NATO countries that appear divided and disagree on how the EU sanctions should be interpreted,” said Lidegaard.

According to Søren Pape Poulsen, leader of the opposition Conservative Party (PPE), the Finnish government must stop the legal action and wants the Danish government to take action against Finland.

“The foreign minister or the prime minister must contact the Finns again and ask them if they really think it is compatible with their NATO and EU membership that they are behind a company that is taking legal action against a Danish company that wants to comply with the sanctions,” said Poulsen.

(Charles Szumski | EURACTIV.com)