News 25 August 2017

Moscow court denies request by Siemens to return gas turbines

The Moscow Arbitration Court has denied a request by German engineering company Siemens to return gas turbines which were re-exported from Russia to Crimea in breach of EU sanctions. It has also denied a request to ban their installation. The court ruling on 20 August came ahead of preliminary hearings scheduled for mid-September.

In July, Siemens filed a suit against Technopromexport (‘TPE’), the state-owned firm it contracted with to supply the four gas turbines to Russia. The onwards export contravened EU sanctions prohibiting EU firms from supplying energy technology to Crimea and Sevastopol, imposed following Russia’s annexation of the region in 2014.

The EU responded by imposing further sanctions in August over three Russian individuals, including Russia’s deputy energy minister, Andrey Cherezov, as well as TPE and Interavtomatika, the company responsible for installing the turbines into two new power plants in Crimea.

The EU commented in Council Implementing Regulation (EU) 2017/1417 that the action ‘undermined the EU’s non-recognition policy of the illegal annexation of Crimea and Sevastopol’ and ‘supported their separation from Ukraine’, as the purpose of the power plants was to establish an independent power supply for Crimea and Sevastopol, which is currently reliant on Russian energy.

Siemens released a statement when the export of the turbines to Crimea came to light stating that ‘this development constitutes a blatant breach of Siemens’ delivery contracts, trusts and EU regulations’.