Successfully represented a client in a contractual obligations dispute

In May 2022, the Dispute Resolution team initiated a documentary procedure on behalf of the client and obtained a preliminary ruling, which fully satisfied the client’s claim for unpaid VAT invoices, interest at 8% per annum and legal costs. The situation itself was aggravated by the fact that the respondent unilaterally terminated the contract for EUR 860k due to the claimant’s failure to deliver the shipment (raw materials) on time in accordance with the contractual deadlines (due to the outbreak of the war in Ukraine and the interruption of the client’s material supply chain as a result of the EU sanctions), and also by the fact that the respondent detained the deliveries made under the above-mentioned VAT invoice on the basis of the suspension of obligations clause.

In its reply, the respondent pointed out that the termination of the contract and the shipment that did not arrive on time from the claimant had forced the respondent to look for other suppliers, and that the difference between the contract with the claimant and the contracts with other suppliers had to be covered by the claimant. In total, the respondent declared losses of approximately EUR 700k. Moreover, one week before the initiation of the court proceedings, the respondent unilaterally set off the claimant’s monetary claim against the amount of its losses.

Although the proceedings were documentary, the court decided to hold an oral hearing. During the hearing, the team convinced the court that the respondent did not have an enforceable and unchallengeable claim of EUR 700k at the date of the claim was filed, and that it was not entitled to make a unilateral set-off. In addition, the hearing analysed the nuances of the impact of the EU sanctions on the logistical supply chain of raw materials, whether the outbreak of war and the sanctions constituted force majeure and whether the respondent had accepted the risk of buying raw materials at a higher price than the price offered by the claimant when the parties negotiated the modification of the contract.

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