Public Procurement Dispute

Point of argument

Recovery of a debt and penalty under the state contract for the maintenance of cemetery territories.

Plaintiff’s case

Our client was a participant of government procurement (Contractor, Plaintiff), with a concluded municipal contract. However, after the work began, the Contractor received the decision of the municipal customer on the municipal contract unilateral repudiation. The Contractor decided to appeal to the court with a request to declare the decision on the municipal contract repudiation illegal and unreasonable. The claim contained documentary evidence of the work actually performed, all necessary reporting documentation and photographic materials attached to it. The claim also declared the penalty in the amount of 258 816 rubles 15 kopecks and expenses for legal fees  in the amount of  120 000 rubles.

Defence

The municipal customer made a decision to refuse to perform the municipal contract unilaterally, giving as a reason that the work was carried out partially, improperly, and deadlines were violated. The municipal customer had not signed work acceptance protocols.

The Defendant stated that one of the breaches of the contract execution is the late submission of work acceptance protocols, as well as the lack of reporting documentation confirming the implementation of these works.

Later, the customer sent a response to the Plaintiff’s claim.

Problem solution stages

• documents analysis;
• preparation and filing of the claim and related documents;
• Plaintiff’ interests representation in court.

Court judgement

The commercial court examined the case materials, listened carefully to the representatives of the parties and decided to partially satisfy the plaintiff’s claims for the following reasons.

As under the municipal contract the Contractor undertook to provide services to the municipal customer and the customer undertook to pay for them, the Defendant was obliged to pay for the services rendered within the terms specified by the municipal contract.

Despite the fact that the customer had the right to carry out an independent examination of the case materials for compliance with the date of the works and their results, no such evidence was provided. The court found that the municipal customer had debts to the Plaintiff in the amount of 8,803,270 rubles 48 kopecks.  The arguments of the Customer that the said works could have been performed in other territories served by the Plaintiff were not taken into consideration by the court.

The court stressed that, in accordance with civil legislation, unilateral repudiation of obligations or their modification is not permitted, except in cases provided by law.

The penalty claimed by the Plaintiff under the municipal contract was satisfied in the amount of 244 437 RUB. 48 kopecks, as well as expenses for legal representation were reimbursed in the  amount of 70 000 rubles.