Fortum files legal action against Russia for unlawful assets seizure

The Finnish majority state-owned energy company Fortum ,has initiated arbitration proceedings against the Russian Federation and will claim compensation for the unlawful seizure of its assets in order to protect its legal position and shareholder interests.

The commencement of arbitration proceedings follows the Russian Federation’s violations of its investment treaty obligations under the Bilateral Investment Treaties that Russia has with the Netherlands and Sweden, said Fortum in a press release on Tuesday.

In July 2023, Fortum sent notices of dispute to the Russian Federation, which were the first steps required for the arbitration proceedings.

The Russian Federation however failed to engage in any settlement discussions with Fortum. Fortum will seek compensation for the value of its shares in PAO Fortum and its investments in Russia, amounting to several billions of euros.

The dispute stems from the hostile actions taken by the Russian Federation which culminated with the Presidential Decree No. 302 issued on 25 April 2023, whereby the Russian authorities seized control of Fortum’s assets in Russia and deprived Fortum of its shareholder rights.

The expropriation of the Russian assets triggered a full financial deconsolidation and impairment of those assets, as reported in Fortum’s second quarter 2023 results.

Subsequently, the Russian assets were fully separated from Fortum, and the new management put in place by the Russian Government renamed PAO Fortum as Forward Energo.

Fortum will continue to take all necessary steps to protect its investments and rights.