Naturgy presented to a court in New York (United States) a request to annul an award handed down in June this year by Uncitral, the United Nations arbitration tribunal, which condemned the Spanish energy company to compensate Energías de Portugal (EDP) $200 million (around €180 million) for non-compliance with a liquefied natural gas (LNG) supply contract in 2021.
In an attempt to overturn this award, Naturgy now alleges, in the Southern District Court of New York, among other things, that the decision in favor of the Portuguese energy company was “obtained by corruption, fraud or improper means “, according to the specialized site. Offshore. Alert. The case was filed in this New York court on September 27.
The award was rendered on June 28 by arbitrators Henri C. Alvarez, president of the tribunal, Aníbal Martín Sabater and Oscar M. Garibaldi, under the protection of the United Nations Commission on International Trade Law (UNCITRAL). It determined that EDP should receive $195.1 million in damages before the agreement between the two companies was terminated.
Naturgy and EDP refuse to comment on a process in which, according to sources close to the matter, the Spanish company decided, in an attempt to overturn this unfavorable judgment, to accuse its Portuguese rival of having hidden information from the arbitrators in order to have other parallel processes open.
In the 152-page award handed down in June, the three arbitrators required the Spanish company to pay EDP that $195.1 million, plus an additional $2 million for additional costs, including the fees of the three tribunal members, plus interests.
The judge who will decide Naturgy’s request in the Southern District of New York is Paul A. Engelmeyer. The company chaired by Francisco Reynés is represented in this process by the firm Quinn Emanuel Urquhart & Sullivan, LLP.
On June 28, the arbitrators appointed by the two parties reached the conclusion that Naturgy had violated the commitments made within the framework of a natural gas supply contract signed in June 2013 between the Spanish and the Portuguese under the terms of the clauses take or pay (fuel is paid for even if not used), as is usual in this sector.
The dispute is based on three contracts which made it possible to structure a to exchange between EDP and Naturgy. With this 2013 agreement, the Spanish company became the carrier for the unloading of LNG at the regasification plant at the port of Bilbao, whose long-term supply (until 2023) the Portuguese company had contracted in June 2000 to another company, Atlantic, for the supply of 39 million MMBtus per year.
The transport of the raw material was entrusted in February 2003 to Repsol, which was then one of the key shareholders of the Spanish company, still called Gas Natural at the time. It was then ordered from Naturgy. In April 2021, Atlantic informed EDP that due to production issues in Trinidad and Tobago, it would not be able to supply the committed gas.
And in May 2021, Naturgy began unilaterally reducing its gas deliveries to the Basque regasification company. This led EDP to accuse the Spanish company of breach of contract and putting it “in an unsustainable situation”, according to the arbitration request presented by EDP on November 24, 2021.
EDP brought this claim through its Spanish subsidiary EDP Clients SAU against Gas Natural Comercializadora SA, de Naturgy. He estimates the damage suffered at $280 million. Subsequently, EDP increased this figure to a total of 534 million, including interest, of which 236 million were damages before the termination of the contract and a further 298 million, after the termination of the agreement.
For its part, in its response to the arbitration request, the Spanish company demanded compensation of 56.5 million euros from EDP for various breaches.
