Ilyashev & Partners Law Firm successfully represented a Ukrainian state-owned enterprise for export and import of military and special products and services, achieving an arbitration award for the collection of EUR 15 million from a Czech military equipment supplier.
The specified state-owned enterprise entered into a military equipment purchase and sale agreement with a foreign supplier to support Ukraine’s Armed Forces in combating Russian aggression. The Ukrainian state enterprise fulfilled its contract obligations on time by making an advance payment in full. However, the foreign supplier did not deliver the equipment within the contractual terms nor during the additional period provided by the Ukrainian buyer.
For the protection of the Ukrainian state enterprise, Ilyashev & Partners Law Firm filed a claim with the Vienna International Arbitral Centre (VIAC) to collect the full purchase price paid by the Ukrainian state enterprise in advance, contractual penalties, restitution interest for the use of the advance payment and late payment interest from the foreign supplier.
In arbitration proceedings, the foreign supplier used every defence possible to avoid responsibility. According to the Czech seller, the contract was considered void under Czech law and there was a force majeure in the form of third country government decisions to provide Ukraine, as it turned out, with the procurement of goods in international technical assistance, serving as a ground that allegedly exempts the foreign supplier not only from responsibility for breach of the contract, but also from fulfilling obligations after termination of the contract, lack of grounds for contract termination, and enough grounds for reducing the penalty and interest rate for late payment.
Ilyashev & Partners’ International Arbitration team developed several alternative legal positions and successfully proved that the foreign supplier failed to fulfil its obligations to supply military equipment and did not provide a delivery schedule within the additional period granted. That entitled the Ukrainian state enterprise to validly terminate the contract under the 1980 United Nations Convention on Contracts for the International Sale of Goods and raise the relevant claims.
Through the joint efforts of Ilyashev & Partners’ team, the VIAC rendered its award in favor of the Ukrainian state enterprise and ordered the Czech company to pay almost EUR 15 million, including:
· the full purchase price paid by the Ukrainian state enterprise in advance;
· restitution interest for the use of the advance payment accrued until the Respondent’s failure to file a claim for the return of the advance payment;
· a contractual penalty for breaching a contractual obligation;
· late payment interest on the principal under Czech law for the entire period of delay until the full payment of the principal debt;
· reimbursement of all costs incurred by the state-owned enterprise to pursue its claims in VIAC, including 100% of the expenses for legal representation provided by Ilyashev & Partners.
The case was handled by Roman Protsyshyn, Counsel and Kateryna Solodovnyk, Lawyer at Ilyashev & Partners Law Firm.