Over the past 18 months, Ukraine hit the international headlines time and again as it battled months of widespread demonstrations, bloodshed, the annexation of Crimea, snap elections, the downing of Flight MH17 and a tumbling currency, the beleaguered hryvnia. The country’s long-running spat with Russian state-owned gas giant Gazprom, which has a monopoly over the European gas market, has also been well documented since the feud first began ten years ago.
Ukraine is still largely reliant on gas from Russia and disputes over payments have crippled supply numerous times over the past decade as the two countries continue to come to contractual blows. The pipeline that transits the country also carries around half of Gazprom’s exports to the rest of Europe, meaning that the problems have also been felt much further afield.
Over the years, contracts between Russia and Ukraine have been signed, amended and restructured in an unregulated and often arbitrary way. This finally came to a head last year when Gazprom launched a case against Ukraine’s state-owned gas utility, Naftogaz, in the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), claiming the Ukrainian company owed it billions of dollars in unpaid debts on gas delivered since 2009.
As Western sanctions against Russia stepped up a further gear last week, a contractual dispute brewing between France and Russia threatens to have legal and economic ramifications.
It all started back in 2011 when Russia commissioned France to build two Mistral navy assault ships (bâtiment de projection et de commandement, or BPCs) for a cost of €1.2 billion. However, in recent months France’s participation in the venture has been brought under increasing scrutiny amid growing tensions over Russia’s continued involvement in the unrest in eastern Ukraine.
The French government initially resisted pressure to halt the delivery, saying it would respect the existing contract.
Despite this unwillingness to budge, the mood suddenly changed on the eve of the NATO summit in Wales on 3 September, when France announced it would suspend delivery of the two ships due to concerns over the ongoing unrest, saying in a statement:
‘The recent actions of Russia in the east of Ukraine violate basic security in Europe. The President…has found that, despite the prospect of a ceasefire, which has yet to be confirmed and implemented, the conditions for France to authorise the delivery of the first BPCs are not in place.’
The current turmoil in Ukraine continues to dominate the headlines in Europe, but the ripple effect has been felt much further afield. ‘The crisis in Ukraine has once again shown a close correlation between extreme political volatility and energy markets,’ says Pablo Alliani, Chair of the IBA Section on Energy, Environment, Natural Resources and Infrastructure Law and senior partner at Alliani & Bruzzon Abogados in Argentina. ‘Globalisation has interconnected the energy markets in such a manner that a crisis of this sort in any part of the globe will affect the whole world, regardless of any distance.’
For Alliani, there is cause for concern much closer to home: in Venezuela, where civil unrest and political demonstrations continue. ‘Venezuela’s role as one of the region’s leading oil producers means that a crisis in the country would have regional and international ramifications if the oil flow were disrupted,’ he says.
Although protests have been concentrated in the country’s main cities, far away from key production centres such as the Orinoco Belt, Lake Maracaibo and Monagas, the disorder threatens to destabilise the global energy market further. ‘In this respect,’ Alliani adds, ‘even if the oil industry remained insulated, prolonged unrest could severely affect Venezuela’s economy, with major consequences for its key trading partners.’
As the first posthumous trial in modern Russian history continues to be plagued by setbacks, a report published by the European Parliamentary Assembly may be the strongest indication yet that Europe is getting closer to following the US and passing the Magnitsky Act.
The posthumous trial of Russian lawyer Sergei Magnitsky, who died in a Moscow prison cell in 2009, began in March in Moscow’s Tverskoi court (see Russia: historic Magnitsky trial brings corruption and rule of law into focus). At that point the trial had already been delayed for two months after Magnitsky’s family and the other defendant, the founder of Hermitage Capital and Magnitsky’s former boss, William Browder, refused to take part in the trial.
The Russian authorities then appointed two lawyers, Nikolai Gerasimov and Kirill Goncharov from Law Office No5, to represent Magnitsky and Browder, respectively. However, the trial has continued to be wracked by delays as one of the state-appointed lawyers, Nikolai Gerasimov, also refused to participate. ‘I have not found a single declaration from relatives requesting the case be reopened,’ he said in court in April to Judge Igor Alisov. ‘Since my participation contradicts the opinion and position of the defendant’s relatives, I suggest that I do not have the right to participate in the trial.’
This is my latest feature piece for IBA Global Insight:When Russia finally joined the World Trade Organisation (WTO) on 22 August 2012, after an 18-year-long hard-fought slog, there were many left wondering if the wait had been worth it – and whether membership would bring any significant change. In a year that saw Vladimir Putin embark upon his third term as the country’s president, it’s unsurprising that few things have changed since last August. Changes that have been implemented appear largely at odds with the new era of transparency promised by WTO membership, instead suggesting some worrying consequences for the rule of law.
One of the most striking incidents to bring Russia’s rule of law into focus in recent years has been the highly publicised case of Moscow-based lawyer Sergei Magnitsky, who died in pre-trial custody in November 2009. While it’s just one incident, Magnitsky’s plight continues to dominate the headlines worldwide and is a stark reminder of Russia’s track record for human rights violations.
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