- Volyn Regional Commercial Court
LONG-TERM CONTRACTS - GAS SUPPLY CONTRACT - BETWEEN TWO UKRAINIAN COMPANIES - UNIDROIT PRINCIPLES APPLIED AS MEANS OF INTERPRETING DOMESTIC LAW (UKRAINIAN LAW)
HARDSHIP - SUBSTANTIAL CHANGE OF CIRCUMSTANCES - REFERENCE TO ARTICLE 652 OF THE UKRAINIAN CIVIL CODE AND TO ARTICLE 6.2.2 UNIDROIT PRINCIPLES
Claimant, a Ukrainian public utility company, entered into an Agreement with Respondent, a Ukrainian company, for transformation of natural gas, supplied by Claimant, into heat for the local community (the “Agreement”). When Claimant requested the National Commission, the government body supervising the public utilities Sector, to check the conformity of the Agreement with the Ukrainian laws and regulations, the National Commission declared that the tariffs envisaged for the supply of heating were excessive, prompting thereby Claimant to ask for termination of the Agreement on the ground of a substantial change of circumstances. In support of its claim, Claimant invoked Article 652, on modification or termination of contracts due to a substantial change of circumstances, of the Civil Code of Ukraine.
The Court rejected Claimant's request of termination.
The Court found that the opinion issued by the National Commission did not constitute a substantial change of circumstances, but even if it did Claimant was not entitled to terminate the Agreement because the risk of such a change in circumstances would be on Claimant. In support of its decision the Court referred to Article 652 (1) of the Civil Code of Ukraine, which requires the change to be of such nature that if the parties had forseen it, they would not have entered into the Agreement or entered into it on other terms. It also pointed out that the concept of “substantial change of circumstances” as referred to in article 652 of the Code was a flexible concept and in this context it also referred to Article 6.2.2 of the UNIDROIT Principles of International Commercial Contracts which likewise defines hardship as the occurrence of events which fundamentally alter the equilibrium of the contract either because the cost of party's performance has increased or because the value of the performance a party receives has diminished.
Original in Ukrainian available at the Unified State Register of Court Decisions: http://www.reyestr.court.gov.ua/}}