The Intersection of Geopolitics, Economic Warfare and Arbitration

The Intersection of Geopolitics, Economic Warfare and Arbitration

In an effort to pressure Europe to end its extensive financial sanctions, Russia has been progressively cutting natural gas.  On Monday, explosions were detected near the coast of Denmark that have effectively eliminated any chance natural gas will flow through the Nord Stream 1 and 2 pipelines for the foreseeable future, which will drive up the price of natural gas and further strain the supply of natural gas to Europe.  This is becoming a significant crisis for Europe as its stockpiles for winter are insufficient.

In the opening of a new front in the economic war taking place between Russia and Europe, Russia’s main natural gas company, Gazprom, is threatening to sanction a Ukrainian gas pipeline operator, Naftogaz Ukrainy, for failing to ship Russian gas to Europe pursuant to a sales contract.  

Naftogaz Ukrainy has made claims in arbitration that Gazprom has not paid for the services rendered.  Should Russia sanction Naftogaz Ukrainy, Gazprom would not be able to make payments and the Ukrainian gas pipeline operator would not be paid transit fees for physical shipments of natural gas.

Typically, such international sales contract disputes are handled by arbitration.  Indeed, the parties had agreed to submit disputes to arbitration in Sweden and Switzerland.

However, Russia claims that they cannot receive a fair arbitration hearing and it has rejected all claims from Naftogaz Ukrainy in arbitration proceedings currently pending.  

Inasmuch as Ukraine’s pipeline is the only remaining viable route for sending large amounts of natural gas to Europe, Russia is utilizing the ruse of an unfair arbitral process to weaponize energy against Europe via its last available substantial supply route.  

Social Media Companies Battle States for the Right to Moderate Content

In an effort to regulate big social media companies, Florida and Texas, among other states, have passed laws that prohibit companies such as, Google, Facebook, and Twitter from moderating content.  This has become an extremely controversial topic as speech and content has been limited in the highly politicized climate in the United States.  Various topics and individuals have been censored over the past few years, which raises the question of whether social media companies, as private enterprises, have the right to regulate content in the face of First Amendment rights.

In Florida, on May 23, 2022, the Eleventh Circuit Court of Appeals blocked key parts of Florida’s Stop Social Media Censorship Act (the “Act”) on First Amendment grounds.  The Act prohibited, in part, social media platforms from banning or de-platforming political candidates from their sites, and it required companies to consistently apply standards about issues such as banning users or blocking their content.  The Act subjected social media companies to large daily fines.  The Act was quickly challenged in federal court, and a District Court Judge had issued a preliminary injunction that was mostly upheld by the Eleventh Circuit, finding that the government cannot tell a private person or entity what to say or how to say it.

In contrast, just this month, the Fifth Circuit Court of Appeals upheld a Texas’ law known as HB 20, which regulates social media platforms with more than 50 million monthly users and prohibits censoring or limiting users’ speech based on viewpoint expression.  Texas’s HB20 is much like Florida’s Act, and it attempts to achieve similar goals.  In essentially the opposite holding as the Eleventh Circuit, the Fifth Circuit opined that corporations do not have “a freewheeling First Amendment right to censor what people say”.  This decision by the Fifth Circuit allows HB 20 to go into effect, which the United States Supreme Court had temporarily blocked in May 2022, pending the ruling by the Fifth Circuit.

It is likely only a matter of time before the Supreme Court takes on the issue of the regulation of social media platforms. Florida has already asked the Supreme Court to act, as Florida filed a petition for review following the Eleventh Circuit’s ruling.  With the Fifth Circuit’s ruling, there is now a circuit split, which increases the likelihood that the Supreme Court will hear the issue.