NORDSTREAM 2

Recent arguments that EU law doesn’t apply to NS2 underline pipeline’s problems

In a flurry of recent articles, some advocates for Nordstream 2 have sought to close down arguments over the application of European Union law to the pipeline. The tenor of their argument is that various internal papers—most notably a paper from the Council’s Legal Service—indicate that EU law does not apply to Nordstream 2. Therefore the case is closed. It is, however, somewhat unusual to rely so heavily on internal documents which have been either leaked or informally circulated to defend the legality of a €8 billion pipeline. The more usual approach is to rely on precedent, case law and legal argument based on the normal canons of interpretation.

With respect to precedent and practice, the Council’s Legal Service and other internal documents alluded to by some Nordstream advocates have a significant problem. EU law has, in fact, been applied to natural gas being exported into the EU by pipeline.

The Yamal pipeline, to which EU law was fully applied, brings natural gas via Russia and Belarus into Poland. Some Nordstream 2 advocates have tried to get around this issue by arguing, for instance, that EU law was not applied to the Belarusian or Russian part of the pipeline. This is correct, but irrelevant. The question is whether EU law applies to export pipelines landing on EU territory.

There is a good argument to enter into arrangements with third states for common rules to apply to the whole pipeline. The EU often signs such arrangements, usually either fully or substantially applying EU rules beyond its territory—particularly in the environmental or transport sectors. In any event, EU law applies on EU territory whether or not common rules are agreed upon.

The other line of argument is that somehow Yamal is part of a larger pipeline system, so it can therefore be distinguished from Nordstream 2. However, the commission’s own opinion—which considers the application of the 2009 Gas Directive— is clear that it is applying the directive to the Polish section of the Yamal pipeline and only the Yamal pipeline.

Equally, the Southstream pipeline was subject to the application of EU energy law. Arguments have been raised that the infringement proceedings against Bulgaria for its participation also included state aid and public procurement questions. This is true but the fact remains that EU energy law, and specifically the third energy package were also the subject of infringement proceedings brought by the Commission against Bulgaria.

The final line of defense for some Nordstream advocates is to then to distinguish Yamal and Southstream by arguing that EU law only applies to onshore pipelines but not offshore ones. But this argument has no legal credibility. EU law in principle applies to all the territory of a member state, the soil of the nation, its inland waters and the territorial sea. There is no special exception in the 2009 Gas Directive that excludes EU law from applying to offshore pipelines within inland waters, territorial seas and potentially exclusive economic zones.

Once a pipeline enters EU territory—whether it passes into Polish territory from Belarus, or into Bulgarian territorial waters—EU law applies. There is no basis in the Gas Directive, or the EU acquis more broadly, to distinguish as to the application of EU law on the basis of whether a pipeline is offshore or onshore.

The reality of applying EU law to export pipelines such as Yamal and Southstream explains why the Council’s Legal Service opinion and other internal documents all wisely ignore both pipelines. They cannot be fitted into any argument that the third energy package does not apply to export pipelines.

The EU internal documents also wisely stick firmly to discussing export pipelines. Unlike some Nordstream advocates, they do not take the tempting but legally unsound approach of distinguishing between offshore and onshore pipelines. While this would let EU officials potentially distinguish Yamal and Southstream from Nordstream 2, such a step would have no basis in the legislation or jurisprudence of EU law. A further consideration for the Council’s Legal Services and the European Commission is that taking such a position in an opinion (rather than just remaining silent on the existence of contrary precedent with respect to Yamal and Southstream) could backfire on their institutions if the issue ended up before the European Court of Justice.

Nordstream advocates are rushing in where the EU’s own lawyers fear to tread. Trying to argue around the Yamal and Southstream pipelines merely underlines the extent to which these two cases are a huge problem for Nordstream 2. Equally, seeking to distinguish the pipelines by relying on a distinction between onshore and offshore pipelines that does not exist in EU law further underlines the weakness of Nordstream 2’s own case.

Given the stakes for Europe, perhaps now is a fine time to bring the legal debate over Nordstream 2 into the open—rather than relying on EU internal documents and leaks. Ideally, this would feature a clear legal argument by Nordstream 2’s owners that would draw extensively from case law, legislation and principles. Above all, it would clearly explain how EU law does not actually apply to the pipeline. If this is indeed the case, as some Nordstream 2 public advocates have argued, then the legal facts should be compelling. If they are not—then Europeans might ask the EU why the legal debate over Nordstream 2 remains so opaque.

Europe's Edge is an online journal covering crucial topics in the transatlantic policy debate. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis. Dr. Alan Riley is a Senior Fellow at the Institute for Statecraft, Temple Place in London. In the interests of full disclosure it should be noted that Riley advises PGNiG and Naftogaz.

Photo: Kremlin.ru
 

Dr. Alan Riley

27 October 2017

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