Several potential solutions are being discussed for resolving the situation with NIS, but the introduction of state administration into the company is increasingly seen as the most likely option.
One key question is how the state could take control of NIS without resorting to nationalization. Forbes Serbia examined what imposing state administration would mean in practice and whether such a move is legally feasible.
Attorney and former minister Milan Parivodić argues that Serbia would need to adopt a specific law on administrative takeover. He believes it should be a general, systemic law that could also apply to future cases, similar to the approach taken by Germany and Bulgaria. Germany, for example, assumed control of Rosneft’s assets in 2022 under its Energy Security Act. Parivodić notes that Serbia’s current energy legislation does not provide a mechanism for such intervention in the case of NIS, which he considers unusual given the potential national interest at stake.
Parivodić says a special law should clearly define all necessary steps. It would authorize the Government to appoint a new management team at NIS, require the existing management to comply, and impose a deadline on the majority owner to sell its shares. If the owner fails to do so, the state-appointed administration would be empowered to sell the shares on behalf of Gazprom and deposit the proceeds into its account.
Attorney Tomislav Šunjka disagrees that a new law is needed, arguing that Serbia already has a legal basis that allows it to take over NIS shares. He cites the still-valid agreement between the former FR Yugoslavia and Russia on mutual protection of investments. According to Article 4, investments cannot be expropriated or nationalized except in the public interest, through non-discriminatory legal procedures, and with fast and adequate compensation. Šunjka believes this framework already allows Serbia to act due to the threat to national and energy security.
A separate agreement from 2008 between Serbia and Russia on cooperation in the oil and gas sector specifies that infrastructure such as pipelines, the Banatski Dvor storage facility, and NIS facilities cannot be expropriated or nationalized. Šunjka says this does not conflict with the earlier agreement, because the 2008 law protects infrastructure assets, but does not protect the shares held by Gazprom. In his view, the state cannot expropriate NIS infrastructure, but it can acquire the shares if compensation is paid.
Šunjka stresses that true nationalization implies confiscating property without compensation, which is not an option in this case. Instead, he says the Government could declare that a certain number of shares become state property due to public interest and threats to energy security, while offering compensation to the Russian owner. However, any transfer of funds to a sanctioned entity requires approval from the U.S. Treasury’s Office of Foreign Assets Control (OFAC).
“OFAC issues the necessary licenses. The Government may determine the value of compensation, but the transaction cannot be executed without OFAC approval,” Šunjka said.
