Introduction

International pipeline investments are high risk investments that entail large upfront costs with long payback periods. Their construction is time consuming and involves several stages, including, among many other things, planning, environmental impact assessments and permitting, procurement of major contracts, line pipe production etc., transporting the material to site, laying the pipelines, testing and cleaning, before finally filling the pipeline. As Advocate General Bobek notes in his Opinion, embarking upon a major infrastructure project is not a business activity that begins overnight. Once the final investment decision is taken and the investments start, the pipeline project becomes vulnerable to legislative changes. This is connected to the sunk cost character of pipeline investments, which entails the project sponsors becoming locked into the project. Once construction has started, the project cannot be moved to another country or any other new location.  All this translates into a variety of risks for the project. To a certain extent this risk can be managed through contractual and investment treaty mechanisms, which, however, does not fully exclude it.

The Nord Stream 2 pipeline project, which will transport natural gas from the coast of Russia to the coast of Germany, is an example of a large international project where regulatory risk has materialized with significant consequences for the project. The company now disputes the changes made in European Union (EU) gas market regulation  at both EU  and international level.  This case note focuses on EU level litigation to overturn the amendments to the Gas Market Directive  and specifically discusses the Opinion of Advocate General Bobek in case C 348/20 P, Nord Stream 2 AG v European Parliament and Council of the European Union, which was delivered on 6 October 2021.

Footnotes omitted from this introduction.