Vilnius CHP received a favourable arbitration ruling in the case on biomass unit construction

AB “Ignitis grupė” (hereinafter – the Group) informs that the Arbitration Institute of the Stockholm Chamber of Commerce made a favourable ruling (hereinafter – the Ruling) in the legal dispute between a Polish company Rafako S.A. (hereinafter – Rafako) and a subsidiary of the Group UAB Vilniaus kogeneracinė jėgainė (hereinafter – Vilnius CHP) regarding the contract signed on 29 September 2016, under which, among other things, Rafako undertook an obligation to design and construct the biomass incineration unit of the combined heat and power plant as well as its feeding infrastructure (hereinafter – the Contract).

The Ruling of Arbitration Institute of the Stockholm Chamber of Commerce favouring Vilnius CHP states that (i) Rafako was not entitled  to terminate the Contract and its unilateral Protocol of taking-over of executed works is null and void; (ii) Vilnius CHP was entitled to terminate the Contract unilaterally due to violations made by Rafako during the performance of the Contract; (iii) Rafako was not entitled to claim remuneration based on the Contract, which it claims for in the arbitration proceedings; (iv) Vilnius CHP has the legal right to claim delay damages and reimbursement of damages from Rafako; (v) Rafako is not entitled to invoke to its benefit the contractual limitation of liability, established in the Contract  ; (vi) Vilnius CHP was entitled to enforce the performance securities (vii) Rafako must and is obligated to hand over the construction documents of Vilnius CHP.

In principle, the Ruling officially confirms that Rafako is responsible for the unfinished construction of Vilnius CHP biomass unit. This Ruling will have preliminary powers.  Arbitration Institute of the Stockholm Chamber of Commerce set a mandatory period for the parties to try to reach the amicable settlement agreement. The issues of reimbursement of damages incurred by Vilnius CHP and the size thereof  are scheduled  to examine on the second stage of the arbitration proceedings.

The Group will inform about further arbitration proceedings and the rulings made in accordance with the procedure set out in legal acts.

For more information please contact:

Artūras Ketlerius

Head of Public Relations at Ignitis Group