Danish turbine maker Vestas is being sued for more than €200mn by a Finnish client, Fortum, over the termination of contracts to deliver wind turbines into Russia.
The case is among the largest sanctions-related contractual disputes to become public so far. Lawyers expect more to come, across a range of industries, over deals terminated because of sanctions compliance.
The dispute centres on a contract for Vestas to deliver around 50 wind turbines to client WEDF, which is jointly owned by Fortum and Rusnano, a Russian state-owned nanotechnology company.
Vestas terminated the contract in June 2022, a move it says was necessary to comply with EU sanctions following Russia’s invasion of Ukraine.
Fortum, a power company that is majority owned by the Finnish state, alleges Vestas failed to return any of an advanced payment made as part of the order, and is pursuing its case in the International Chamber of Commerce in Stockholm. For a typical wind turbine order, the prepayment represents around 25 per cent of the total contract, according to Vestas.
Vestas chief executive Henrik Andersen said he was “astonished and dismayed” at the lawsuit and that the company would “defend itself vigorously”.
He added that “questioning whether sanctions apply, can only benefit the interests of Russia and its sympathisers”.
Fortum said that it had no choice but to pursue legal action after several months of discussions with Vestas proved unsuccessful.
“We are at a loss to understand why our longstanding business partner Vestas would suddenly question our adherence to EU sanctions in this case,” said Fortum’s general counsel Nora Steiner-Forsberg in a statement. “There is absolutely no doubt about Fortum’s commitment to upholding and defending EU laws, EU sanctions, and ultimately EU unity.”
Vestas spent years building its business in Russia, and had nearly 1GW of turbine orders there before the war began in February 2022.
The company exited Russia last year, and took a writedown of €269mn related to the impact of the war, including for inventories stranded in Ukraine and in Russia. It also had two manufacturing facilities in Russia — a blade factory in Ulyanovsk and a factory for turbine components in Dzerzhinsk — both in conjunction with Rusnano.
Andersen said Vestas had worked well with Fortum over many years. “I would compare it with something like natural marriage,” he told the Financial Times in an interview. “And I would say that the partners have now decided to break away from each other.”
