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25.09.2018

ARIO LAW FIRM DEFENDED MUNICIPAL ENTERPRISE IN THE SUPREME COURT

ARIO LAW FIRM DEFENDED MUNICIPAL ENTERPRISE IN THE SUPREME COURT

Julian Khorunzhyi, the senior partner of Ario Law Firm, and Kyrylo Yukhno, the counsel, defended the interests of Lviv Municipal Enterprise Lvivteploenergo in a dispute with the State Enterprise Energorynok in the Court of Cassation as part of the Supreme Court of Ukraine. The amount of the dispute is more than UAH 29 million.

SE Energorynok filed a lawsuit to recover more than UAH 29 million from LME Lvivteploenergo, claiming that it paid the defendant this amount as an advance and the defendant had to supply electricity for this amount, but did not fulfill its obligation. The position of the defendant was that the funds received from SE Energorynok in the amount of UAH 29 million were not an advance payment for the electricity supply, but repayment of overdue debt, which at the time of payment exceeded UAH 40 million. In addition payment of UAH 29 million was implemented at the expense of budget funds for the implementation of the General Protocol Decision, concluded between 12 legal entities, in a special manner provided for by the decision of the Cabinet of Ministers of Ukraine.

The courts of the first and second instances dismissed the claim of SE Energorynok. In its cassation appeal Energorynok requested to cancel the decision of the Economic Court of Lviv region dated on 14.02.2018 and the decision of the Lviv Economic Court of Appeal dated on 25.04.2017 and transfer the case to the first instance court for a new consideration, considering that the decision on this case affects the rights of the National Energy and Utilities Regulatory Commission, which was not involved in the consideration of this case.
The Supreme Court drew a line under this process, dismissed the cassation appeal of the SE Energorynok and left the previous decisions of the courts of both instances unchanged.

The defense side of ME Lvivteploenergo, the lawyers of Ario Law Firm note that the court decisions in this case comply with both the current legislation, which determines the special procedure for settlements on the wholesale electricity market through adoption of the General Protocol Decisions and conducting mutual settlements at the expense of budget funds, and the supremacy of the law principle, after all, SE Energorynok violated the fundamental legal principle – pacta sunt servanda (from lat. “contracts must be fulfilled”).

“In fact, SE Energorynok acknowledged that it had the overdue debt to our client in amount of more than UAH 40 million, but at the same time believed that the funds paid in the amount of UAH 29 million should be used not for repayment of debt, but as payment for electricity to be supplied in future periods. However, such a position of the plaintiff was recognized by the courts as unjustified, since in the presence of overdue debt, funds paid by the debtor should be primarily used for repayment of debt, and not as payment for electricity to be supplied in future periods,” Julian Khorunzhyi said.

At that, as Kyrylo Yukhno, the counsel of Ario Law Firm, noted, the court decisions in this case do not affect the rights and interests of the National Energy and Utilities Regulatory Commission, and the court practice cited by the plaintiff in support of the petition on involvement of the National Energy and Utilities Regulatory Commission is unreasonable, as it concerns regulation of debt collection for electricity produced by energy suppliers located in the temporarily occupied territory.

“For sure, the regulations of the National Energy and Utilities Regulatory Commission and the court practice in cases on debt collection against the claims of energy suppliers located in the temporarily occupied territory cannot be applied to the legal relations that regulate payment for electricity produced by LME Lvivteploenergo and supplied to the wholesale electricity market,” he said.

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