Legal tensions have escalated between Linde Holdings Netherlands No.3 B.V. and RusKhimAlliance, the Russian entity involved, after the Arbitration Court of St. Petersburg and Leningrad Region issued significant rulings restricting the Dutch company’s ability to pursue legal action against RusKhimAlliance outside of Russia.
This legal saga began when RusKhimAlliance filed its claim on November 30, 2024, seeking to bar Linde’s Dutch subsidiary from continuing any litigation efforts related to their failed gas processing plant project at their planned site in Ust-Luga, Leningrad Region. The Russian company also requested the removal of its claims from the District Court of Rotterdam, aiming to prevent any new arbitration and judicial proceedings.
According to court documents, the arbitration court fully met the demands of RusKhimAlliance, ensuring their requests were granted comprehensively. The genesis of the conflict traces back to prior agreements made between RusKhimAlliance and Linde back in 2021 for the construction of the gas processing facility, which was abruptly halted by Linde due to European Union sanctions imposed on Russia following geopolitical developments in 2022.
Subsequent to Linde’s withdrawal from the project, RusKhimAlliance was left footing the bill for advance payments made to the German partner, leading them to pursue compensation through the courts. They demanded damages related to the abandoned contract and sought interest on the amounts involved, culminating in litigation indexed under case number A56-129797/2022.
Remarkably, the Russian court found against Linde, ordering the companies involved, including Linde GmbH and Linde plc of Ireland, to pay 112 billion rubles (approximately $1.5 billion) to RusKhimAlliance, alongside the transfer of stakes Linde held within its subsidiary structures to the Russian firm.
Adding another layer to the case, on April 24, 2024, the St. Petersburg court again ruled against Linde GmbH and its parent company, Linde plc. They were prohibited from initiating or proceeding with any legal actions linked to their previous contracts within the Hong Kong International Arbitration Centre, as well as the High Court of the Hong Kong Special Administrative Region. The ruling also asserted they could not file new claims anywhere outside of Russia concerning the matter at hand.
The ramifications of breaching these orders could be severe, with Linde facing potential penalties exceeding 200 billion rubles. The court's decisions reflect growing constraints on foreign businesses engaged with Russian companies as geopolitical tensions influence legal landscapes. The Russian judiciary’s decisive actions highlight the increasing resistance against foreign corporate legal maneuvers, as they uphold local interests amid sanctions.
Supporting these restrictions, the court issued counterclaim bans against Bayerische Landesbank, who acted as guarantors for Linde, indicating their potential exposure to penalties amounting to €272.6 million should violations occur.
This situation signifies how legal battles are intertwined with the broader geopolitical climate, showcasing how companies must navigate not just contractual disputes but also the ramifications of international sanctions and local judicial stances.
These developments provide insight for international corporations considering engagements within Russia, as the rulings reflect the judiciary’s firm stance on protecting national interests against foreign legislative encroachment.