OREANDA-NEWS  Finnish energy concern Fortum has decided to file a lawsuit against the Russian Federation in international arbitration, hoping to return investments in its assets in Russia, which it considers lost. Fortum estimates the amount of claims at "several billion euros", expecting the trial to begin at the end of 2023. According to Fortum, the Russian authorities violated international agreements on investment protection when they transferred its Russian structure of PJSC Fortum under the management of Rosimushchestvo and replaced its CEO. The trial will take several years, lawyers say, and even if they win, it will be extremely problematic to get the money back. Fortum will file lawsuits against Russia in international investment arbitration in order to return investments worth "several billion euros," the Finnish company announced on July 13. The concern wants to recover from the Russian Federation the value of shares in the Russian structure of PJSC Fortum (98.23% from Fortum), which was transferred in April under the temporary management of the Federal Property Management Agency. The trial may begin at the end of 2023.

Fortum claims that the lawsuit is caused by "hostile actions of the Russian Federation", which violated the rights of shareholders of PJSC Fortum.

On April 25, Russian President Vladimir Putin signed a decree on the introduction of external management in Fortum. The next day, the Board of directors of Fortum, at the request of the Federal Property Management Agency, dismissed CEO Alexander Chuvaev and elected a new head of the company — the chief power engineer of Bashneft-Dobycha (part of Rosneft) Vyacheslav Kozhevnikov.

Anton Siluanov, Minister of Finance of the Russian Federation, on the introduction of external management in Fortum, April 28:

"When our assets abroad are taken away from us by unfriendly decisions, it would probably be absolutely wrong not to respond."

Fortum believes that Russia has violated its obligations under international bilateral investment treaties with the Netherlands (ratified in 1991) and Sweden (ratified in 1996), which provide for the protection of the rights of foreign investors. According to these agreements, Fortum can apply to international arbitration or ad hoc arbitration (created for a specific case according to the rules of the UN Commission on International Trade Law).

Finnish Fortum is one of the largest foreign investors in the Russian electric power industry. During the reform of RAO UES, the company acquired TGC-10, renaming it PAO Fortum. Now Fortum owns seven thermal power plants with a total capacity of 4.6 GW in the Urals and Western Siberia, and also manages about 1 GW of wind farms. Fortum's revenue under IFRS in 2022 is 83.6 billion rubles, net profit is 12.5 billion rubles.

Fortum's net assets at the end of 2022, according to the company's statements, amounted to 95.8 billion rubles, says Matvey Taits from the Sinara investment bank.

Fortum and Uniper were responsible for attempts to nationalize Russian property in the EU
The Federal Property Agency explained in the spring that the temporary external management regime does not deprive the owners of their assets. However, the Finnish concern Fortum decided to completely write off Russian assets, recording an impairment loss of € 1.7 billion. They also claimed that the management "unsuccessfully applied for permission to sell assets to both Russian and foreign buyers."

The Russian Federation has been a defendant at least 27 times in proceedings initiated by claims of various foreign investors, says Stanislav Dobsevich, adviser, head of dispute resolution practice at Better Chance law firm. The most famous trial against the Russian Federation is the case of ex-YUKOS shareholders initiated in 2005. In 2014, the Hague Arbitration partially satisfied the claims, awarding the plaintiffs $50 billion, but the issue of recognition and enforcement of this decision is still being considered in the Dutch state courts.