- Rivne Regional Commercial Court
LONG-TERM CONTRACTS - EASEMENT CONTRACT - BETWEEN TWO UKRAINIAN COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET THE APPLICABLE DOMESTIC LAW (UKRAINIAN LAW).
HARDSHIP - FUNDAMENTAL CHANGE OF CIRCUMSTANCES - REFERENCE TO ARTICLE 652 OF THE UKRAINIAN CIVIL CODE AND TO ARTICLE 6.2.2. OF THE UNIDROIT PRINCIPLES AS EXPRESSION OF INTERNATIONAL TRADE USAGES
Claimant, a Ukrainian housing and public utilities company, sued Respondent, a Ukrainian broadcasting company, asking for an early termination of an easement Agreement for access to perform technical utility services of telecommunication lines (the “Agreement”) they had previously entered into. According to Claimant due to a decision of the Rivne City Council, it was denied the right to grant Respondent the right to carry out the technical utility services in question, as another company had been designated responsible for providing these services. Claimant argued that this constituted a substantial change of circumstances which according to 652 article of the Ukrainian Civil Code, warranted the early termination of the Agreement.
The Court of First Instance found that the Agreement was governed by Ukrainian law.
As to the merits of the case, the Court denied the claim in its entirety, on the ground that the aforementioned Rivne City Council decision did not touch upon the already existing easement agreements, and therefore did not deprive the right of any of the utility companies to carry out their activity.
Moreover, the Court found that the concept of “substantial change of circumstances” as referred to in article 652 of the Code as a flexible concept and in this context it relied on article 6.2.2 of the UNIDROIT Principles 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.
According to the Court, although on the basis of the decision of Rivne City Council another company was appointed as a main municipal enterprise in this area, this did not cancel the already existing easement agreements, nor limit the conclusion of such agreements in the future. Consequently, the Court decided that Claimant was not entitled to terminate the existing contracts, including the Agreement in question.
Original in Ukrainian available at the Unified State Register of Court Decisions: http://www.reyestr.court.gov.ua/}}