- Kyiv Commercial Court of Appeal
LONG-TERM CONTRACTS - LEASE CONTRACT - BETWEEN TWO UKRAINIAN COMPANIES - UNIDROIT PRINCIPLES APPLIED AS MEANS FOR INTERPRETING DOMESTIC LAW (UKRAINIAN LAW)
HARDSHIP - REFERENCE TO ARTICLE 652 OF THE UKRAINIAN CIVIL CODE AND TO ARTICLE 6.2.2 UNIDROIT PRINCIPLES
Claimant, a Ukrainian company 100 % owned by a foreign company, had entered into an operating lease Agreement(hereinafter “Agreement”) with Respondent, another Ukrainian company, for the lease of a vehicle needed for carrying out its construction activities. When subsequently due to the recent global economic crisis Claimant's business volume substantially decreassed, Claimant terminated the Agreement, invoking a substantial change of circumstances on which the parties have relied when concluding the Agreement.
The Court of First Instance decided in favour of Claimant pointing out that the occurrence of the global economic crisis and the subsequent drop in the demand of Claimant's services constituted an unforeseeable event beyond its control and a valid ground for the termination of the contract. On appeal the Court of Second Instance confirmed the decision and in this respect referred to the UNIDROIT Principles of International Commercial Contracts, which may be applied to interpret the applicable domestic law. In particular, it referred to article 6.2.2. “Definition of Hardship” to interpret part 1 of para. 2 of Article 652 of the Civil Code of Ukraine.
Original in Ukrainian available at the Unified State Register of Court Decisions: http://www.reyestr.court.gov.ua/}}