Vestas and Fortum ‘lost significant amounts of money’ in arbitration – legal expert

The settlement may also have had high-level political support, according to Tsegaye Laurendeau, a partner at Signature Litigation. 

“Both companies have undoubtedly lost significant amounts of money… given the political background to the dispute between Fortum and Vestas, I expect the settlement deal was supported or facilitated at the top political level in both Finland and Denmark. There may even have been some compensatory long-term benefits of financial value on the table from the relevant states,” Laurendeau said. 

Danish wind turbine manufacturer Vestas and Finnish state-owned electricity company Fortum announced a settlement to their €200 million-plus arbitration related to wind power projects in Russia earlier this month. 

Fortum launched the arbitration in 2022 in the International Chamber of Commerce in Stockholm after the Danish manufacturer terminated wind turbine supply contracts in Russia following the invasion of Ukraine. However, details of the case only emerged in 2023.

Vestas had previously explained that it terminated the contracts in order to comply with EU sanctions preventing manufacturers from delivering, installing and servicing wind turbines for Russian wind farms.

Fortum had sought to recover more than €200 million after Vestas pulled out of the contracts. 

Future projects

The CEOs of both companies confirmed their intention to continue working together after the settlement was made public. 

“Vestas and Fortum’s differences have been both significant and uncharacteristically public, but over time it became clear it’s in both parties’ interest to settle the dispute. We look forward to keeping existing wind parks running and exploring new ones with Fortum for the benefit of Fortum, Vestas and Europe’s energy system,” Vestas CEO Henrik Andersen said. 

Fortum president and CEO Markus Rauramo, meanwhile, stated that the settlement “pleased both parties” and “enables us to now move on and look at future prospects going forward”. 

Laurendeau said he expected some of the previous work undertaken together by both firms on the projects in Russia to be redirected for future projects where possible. 

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

He added: “In the context of rising competition and costs, an agreement by two major players in this space to continue working on existing projects makes a lot of commercial sense.”

The details of the settlement between both companies remains confidential. Vestas and Fortum declined to comment further.

Additional reporting by Craig Richard.