EU Top Court Rejects Nord Stream 2 Bid to Escape Gas Market Rules

The Court of Justice of the European Union on Thursday rejected Nord Stream 2 AG's final appeal, ending a seven-year legal battle over EU gas market rules and leaving the Russia-to-Germany pipeline firmly inside the bloc's regulatory regime.

Nord Stream 2 AG, a Swiss company wholly owned by Russia's Gazprom, built two pipes to carry gas from Ust-Luga, Russia, under the Baltic Sea to Lubmin, Germany. It challenged a waiver provision in a 2019 EU law that extended gas rules to pipelines from outside the bloc. The company asked the Luxembourg court to strike down the entire law, or at least scrap the waiver provision or its cutoff date. It lost.

What did the court decide?

The judges upheld the EU General Court's 2024 ruling, which had dismissed the challenge. Nord Stream 2 argued on appeal that a 2022 top-court ruling, which revived part of its case after an initial procedural dismissal, had already established unequal treatment. The Court of Justice disagreed.

"It is clear from reading the judgment of the Court of Justice in Nord Stream 2 that the Court of Justice in no way examined whether there was any difference in treatment between the appellant and the other pipeline operators," the court wrote on Thursday.

The practical consequence: the pipeline's German offshore stretch stays subject to EU third-party access rules. A rival supplier could seek capacity to ship gas through the line without building a connection of its own, and Gazprom could not keep exclusive control while selling gas at unpublished terms.

Why did the waiver matter so much?

Germany could have exempted its stretch of the pipeline from EU rules for up to 20 years, with possible renewal, if the project had been finished before May 23, 2019. The pipeline was still under construction when that date passed. A waiver could help an operator recoup its investment, provided it didn't harm competition, the gas market or security of supply. For Gazprom, it could have meant keeping control of the pipeline while avoiding the requirement to let rivals use the line at published rates.

Nord Stream 2 argued the EU should have given it more time to comply or paid compensation. The judges found EU institutions had given the company no firm assurance the rules would leave its pipeline alone. By 2010, there were already signs the EU could apply its gas rules to pipelines from outside the bloc. The European Commission later sought permission to negotiate with Russia over which rules would apply to Nord Stream 2.

The judges agreed that extending rules already applied to overland import routes closed a gap for offshore pipelines in EU waters.

What was the wider context?

Nord Stream 2 was designed to double the gas-carrying capacity of the Baltic route established by Nord Stream 1. Germany put certification on hold just before Russia launched its full-scale invasion of Ukraine in February 2022. Sabotage damaged both pipeline systems that September.

Russian pipeline deliveries to Europe had already begun to fall in late 2021. In 2022, Russia sent European OECD countries about half as much gas by pipeline as the year before. That summer, a benchmark European wholesale gas price averaged four times its summer 2021 level. To prepare for winter, Europe imported record amounts of liquefied natural gas in 2022 and filled underground storage sites. Gas use fell sharply, especially in energy-intensive industries.

Moniek de Jong, an energy policy researcher at Friedrich-Alexander University Erlangen-Nuremberg, said the EU had used its market rules to pursue geopolitical goals. She suspected negotiations within the EU, where Germany was among the countries still backing the project, helped produce broader wording that made the link to Nord Stream 2 less obvious. The company had changed its operating structure before the invasion, she said, but the war and sabotage made it harder to tell whether those changes would have sufficed.

"How successful the EU or the commission was in this case, we will never know because of the Russian invasion of Ukraine," de Jong said.

Is anything left open?

Valentin Jeutner, a professor of international law at Lund University, said the ruling settles the dispute under EU law but leaves a separate international law question unanswered: whether Germany made binding promises to Russia about the pipeline through agreements or assurances. If so, Germany could still face responsibility for breaking those promises.

"Compliance with EU law does not necessarily absolve a state of responsibility under international law," Jeutner said.

The Council of the European Union declined to comment. The European Parliament and Nord Stream 2 AG did not respond to requests for comment.

There is no further ordinary appeal. The gas rules stay in force, and Nord Stream 2 AG must pay its own appeal costs plus those of the European Parliament and the Council.