Vestas and Fortum “lost significant sums of money” in arbitration – legal expert

According to Tsegaye Laurendeau, a partner at Signature Litigation, the companies may also have lost out on “lucrative” future projects in Russia once sanctions against the country are eventually lifted.

“Both companies have undoubtedly lost significant amounts of money, not to mention the prospects of future lucrative projects in Russia. Given the political background of the dispute between Fortum and Vestas, I assume that the agreement was supported or facilitated at the highest political levels in both Finland and Denmark. There may even be some compensatory long-term benefits of financial value on the table from the states concerned,” said Laurendeau.

Danish wind turbine manufacturer Vestas and Finnish state-owned power company Fortum announced earlier this month an agreement in their more than 200 million euro arbitration case related to wind power projects in Russia.

Fortum initiated the arbitration proceedings in 2022 at the International Chamber of Commerce in Stockholm after the Danish manufacturer canceled its wind turbine supply contracts in Russia following the invasion of Ukraine. However, details of the case only came to light in 2023.

Vestas had previously said it had terminated the contracts to comply with EU sanctions that prevent manufacturers from supplying, installing and servicing wind turbines for Russian wind farms.

Fortum had tried to reclaim more than 200 million euros after Vestas pulled out of the contracts.

Future projects

After the settlement was published, the CEOs of both companies confirmed their intention to continue working together.

“The differences between Vestas and Fortum were both significant and unusually public, but over time it became clear that it was in the interests of both parties to resolve the dispute. We look forward to keeping existing wind farms running and exploring new wind farms together with Fortum for the benefit of Fortum, Vestas and the European energy system,” said Vestas CEO Henrik Andersen.

Meanwhile, Markus Rauramo, President and CEO of Fortum, stated that the agreement “satisfied both parties” and “now allows us to move forward and examine future prospects for the future.”

Laurendeau said he expects some of the previous work the two companies did together on the projects in Russia to be redirected to future projects where possible.

“Reading between the lines, I would expect that in order to mitigate the losses and, to the extent possible, to redirect the advance payments made by Fortum to Vestas and the equipment manufactured by Vestas for Fortum for the project in Russia to future projects “ The parties have agreed on this,” Laurendeau said.

He added: “With increasing competition and rising costs, an agreement between two major players in this space to continue work on existing projects makes a lot of business sense.”

Vestas has been contacted for comment. Fortum declined further comment.

Additional reporting by Craig Richard.