Finland's Fennovoima denies Rosatom claims on Hanhikivi arbitration

1 March 2024

According to Rosatom Director General Alexey Likhachev there is "an opportunity to continue legal proceedings in respect of specific material damage" after the Paris Arbitration Court recognised Finland’s actions in respect of Hanhikivi NPP project as ungrounded. "The first stage of hearing ended. The Paris Arbitration recognised actions of our Finnish partners as ungrounded and politically motivated. This provides us with an opportunity to continue legal proceedings in respect of specific material damage then," he said.

However, Finnish nuclear power plant consortium Fennovoima denied that there had been any decision by an arbitration court against it in its dispute with Rosatom over cancellation of a joint plan to build NPP in Finland.

In May 2022, Fennovoima unilaterally scrapped a €7bn ($7.6bn) contract for Rosatom to build a plant at Hanhikivi in Finland, citing delays and increased risks due to Russia's special military operation in Ukraine. The following August Fennovoima and Rosatom initiated proceedings against each other to claim compensation for damages arising from the termination of the planned Hanhikivi 1 project. At the time, Fennovoima said its claims totalled almost €2bn. Rosatom in turn said it was seeking $3bn from Fennovoima.

A Dispute Review Board DRBin December 2022 found that Fennovoima had unlawfully terminated the engineering, procurement & construction (EPC) contract for the construction of the Hanhikivi 1 plant. The DRB also found that Fennovoima's termination of the Hanhikivi 1 project was in breach of the EPC contract, which gave RAOS Project Oy the right to claim damages from Fennovoima. A DRB is a standing body composed of one or three members usually set up upon the signature or commencement of performance of a mid- or long-term contract. The working procedure of the DRB as an independent expert body is determined by the rules of the International Chamber of Commerce.

DRBs issue recommendations that are not immediately binding on the parties but become so if no party objects within 30 days. Fennovoima said noted that the DRB's recommendation is "neither final, nor binding, as both Parties submitted notices of dissatisfaction shortly after it was issued".

Following the Paris Arbiration decision, Fennovoima CEO Matti Suurnakki said in an emailed statement to Reuters: "The statements by Mr Likhachev as reported are incorrect; in particular, no arbitral tribunal in any proceedings concerning the Hanhikivi-1 project has issued any decision or award, let alone made a finding that action by Fennovoima was 'unreasonable and politically motivated'." However, the Paris Arbitration's ruling paves the way for further legal proceedings and discussions regarding compensation.

Image: The Hanhikivi nuclear power plant site in Pyhäjoli, Finland (courtesy of Fennovoima)

Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.