Federal Administrative Court dismisses Rosneft’s lawsuit – order for trusteeship lawful Federal Ministry for Economic Affairs and Energy extends order for trusteeship by another six months

In today's decision, the 8th Senate of the Federal Administrative Court dismissed Rosneft group’s action against the trusteeship order. The order for the trusteeship issued by the Federal Ministry for Economic Affairs and Climate Action (BMWK) was lawful and proportionate. The BMWK expressly welcomes today’s court decision.

The BMWK intends to extend the trusteeship, which expires on 15 March 2023, for a further six months. It is taking into account today’s court decision as it does so. The extension of the trusteeship will be published in the Federal Gazette on 15 March 2023, upon which it will become effective.

Federal Minister for Economic Affairs and Climate Action, Dr Robert Habeck, said: “This is good news for security of supply and the future of PCK Schwedt. Security of supply is the top priority guiding our actions. This was and continues to be the purpose of the trusteeship.”

Background to proceedings before the Federal Administrative Court:

The Federal Ministry for Economic Affairs and Climate Action had placed the two German Rosneft subsidiaries Rosneft Deutschland GmbH (RDG) and RN Refining & Marketing GmbH (RNRM) under the trusteeship of the Federal Network Agency for an initial period of six months on 14 September 2022, on the basis of the Energy Security of Supply Act. This gave the Federal Network Agency control over Rosneft Deutschland and thus also over its respective share in the three refineries PCK Schwedt, MiRo (Karlsruhe) and Bayernoil (Vohburg). The trusteeship was used to counter the threat to the security of energy supply by ensuring the continued operations of the affected refineries. The threat emerged as central critical service providers such as insurance companies, IT companies and banks were no longer willing to work with Rosneft at the time of the order.

The Russian-controlled owners had filed legal action against the order before the Federal Administrative Court in October 2022. This action was dismissed today at first and last instance.

In justifying its decision, the Federal Administrative Court emphasised that, in terms of the factual and legal situation at the time of its issuance, the order had been in compliance with the provisions of the Energy Security of Supply Act in all respects. It also ruled that it had been a suitable and necessary measure to counter the risks to security of supply that were known and projected at the time.

Following the decision of the Federal Administrative Court, which is the first and last instance for the lawsuit under the Energy Security of Supply Act, there is now legal and planning certainty for all parties involved in the proceedings.

Extension of the trusteeship

The Federal Ministry for Economic Affairs and Climate Action intends to extend the trusteeship due to expire on 15 March 2023 for a further six months. The planned extension would mean that Rosneft’s German subsidiaries RDG and RNRM will remain under trusteeship. An extension of the trusteeship is necessary for maintaining the operations of the refineries concerned.

Section 17 of the Energy Security of Supply Act provides the legal basis for the envisaged extension of the trusteeship. Accordingly, a company or affiliated companies operating critical infrastructure in the energy sector may be placed under fiduciary management if there is a specific danger that, without it, the company will not fulfil its tasks serving the functioning of the commonweal in the energy sector, and there is a danger that the security of supply will be impaired. The order precludes the exercise of the shareholders' voting rights and restricts their power of disposal and management. The Federal Network Agency continues to act as trustee. The voting rights from the shares will continue to pass to them as before.

The extension of the order for the trusteeship will be made by the Federal Ministry for Economic Affairs and Climate Action. It will take effect upon its publication in the Federal Gazette on 15 March 2023 and will apply for a further six months. RDG and the RNRM must bear the costs of the trusteeship themselves.