- Kyiv 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 UNIDROPIT PRINCIPLES AS EXPRESSION OF INTERNATIONAL TRADE CUSTOMS
Claimant, a Ukrainian public utility company, entered into an easement agreement for access to perform technical utility services of telecommunication lines (the "Agreement") with Respondent, a Ukrainian broadcasting company.
Subsequently, Claimant filed suit asking the Court to declare the easement agreement for access to perform technical utility services of telecommunication lines as terminated on the ground of substantial change of circumstances. It argued that Respondent wrongfully continued to utilize the easement right after the termination of the Agreement. Respondent objected that the Agreement was prolonged, in accordance with its provisions.
The Court found that the Agreement was governed by Ukrainian law.
The Court rejected the claim on the ground that the Agreement was lawfully prolonged.
Concerning the argument that the Agreement was terminated due to substantial grounds under the Ukrainian law to terminate the Agreement, the Court referred to article 652 of the Civil Code of Ukraine, which lays down the general rule on substantial change of circumstances and requires the change to be of such nature that if the parties have foreseen it, they would have not entered into the Agreement or entered into it on other terms.
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.
The Court concluded that in the case at hand there was no such substantial change of circumstances justifying termination of the Agreement.
Original in Ukrainian available at the Unified State Register of Court Decisions: http://www.reyestr.court.gov.ua/}}