In December 2022, the Estonian Environmental Board found fuel retailer Olerex guilty of failing to meet biofuel content requirements for 2022. The agency imposed an initial fine of €8 million, citing insufficient quantities of renewable fuel among the company's sales.

Olerex contested the decision, leading the Tartu County Court to reduce the fine to €1 million in March 2023. However, on Thursday, the Supreme Court annulled that ruling, issuing a new decision that lowered the fine to €300,000. Additionally, the Supreme Court ordered the state to compensate Olerex €4,000 for legal defense costs incurred during the cassation proceedings. The ruling is final and cannot be appealed.

In a similar case concerning 2021, the Environmental Board fined Olerex €12,000 for a comparable violation, with the penalty upheld after a lengthy legal battle.

Estonia's biofuel quota requirements are outlined in the Liquid Fuel Act and the Ambient Air Protection Act. These laws mandate that at least 7.5 percent of liquid fuels placed on the market must be sustainably produced, aiming to reduce greenhouse gas emissions.

To meet these requirements, fuel sellers have several options, including adopting bio-methane for transportation, incorporating solar or wind energy or offering second-generation biodiesel (HVO) as an alternative to conventional diesel derived from fossil oil.

Oliver Nääs, Olerex's legal counsel, emphasized that the case underscores the need for clearer legislative guidance in the biofuel sector. He noted that the regulations associated with the green transition are extensive and sometimes contradictory, complicating compliance for businesses.

In June 2023, the Central Criminal Police and the Environmental Board initiated a criminal investigation into allegations that Olerex knowingly provided false information to the Tax and Customs Board to circumvent biofuel obligations.

These legal issues prompted competitors, such as AS Terminal, to seek redress, including filing complaints with the European Commission over alleged unfair market advantages gained by Olerex's non-compliance.

Last year, Olerex reported a turnover of €559.3 million and a profit of nearly €6.4 million.

Legal expert: Supreme Court gives green light to fines stretching into millions

Ellex Raidla partner and economic criminal law expert Marko Kairjak said that Thursday's Supreme Court decision has given a clear green light to multimillion-euro fines driven by European Union law.

"The EU has been pressuring member states for years to impose large and impactful fines for economic violations, often reaching tens of millions of euros. Estonia has been quite cautious in introducing such measures, especially considering that our misdemeanors typically carry a maximum penalty of just a few tens of thousands of euros," he explained.

According to Kairjak, the main reason for reducing the initial €8 million fine in the Olerex case was the limitation of the previous framework, which did not allow fines exceeding €400,000. However, changes to the general part of the Penal Code have now paved the way for larger penalties.

"The Supreme Court essentially confirmed that it is possible to foresee higher fines in misdemeanor cases in the future, and that this aligns with the principles of Estonian law. This primarily affects the financial sector but is increasingly relevant in areas such as environmental protection and data privacy. A new era is beginning for economic violations, with entirely different levels of sanction risks," Kairjak said.

The article was updated to add comments from Marko Kairjak.

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