The Vilnius Regional Court has granted the requests of Energesman, operator of the Vilnius waste treatment plant, and imposed interim protective measures in two separate cases. The court has prohibited VAATC from claiming, and the Lithuanian branch of BTA Baltic Insurance Company from paying, the contract performance guarantees. The total value of the guarantees under the operation and modernization contracts is approximately EUR 1.3 million.
The payments are prohibited until final and binding court decisions are issued in the two cases concerning the legality of the termination of the Vilnius waste treatment plant’s operation and modernization contracts. VAATC had already approached the insurance company and requested payment of the guarantees.
“The interim protective measures imposed by the court demonstrate that the issue of the contract terminations has not yet been resolved. It will take proceedings through at least two levels of court before a final and binding decision is reached. The question is whether, by then, the people who made these decisions and caused all this turmoil will still be leading VAATC and the Vilnius City Municipality,” says Algirdas Blazgys, CEO of Energesman.
Last week, the Vilnius Regional Court accepted for consideration two separate claims filed by Energesman challenging the termination of the plant’s operation and modernization contracts. Energesman is asking the court to order VAATC to continue performing both contracts in kind, effectively restoring the situation that existed before their termination.
In parallel, the Regional Administrative Court has begun examining Energesman’s complaint concerning decisions by the Vilnius City Municipality’s Emergency Operations Centre (ESOC) and its head (ESOC Head). The defendant in this case is the administration of the Vilnius City Municipality.
“The Vilnius City Municipality and the mayor personally played an important role in this redistribution of the waste management market. We hope the court will annul the decisions of the ESOC Head and the ESOC, as they clearly exceeded the powers granted to municipal officials under the Law on Civil Protection following the declaration of a municipal-level emergency,” emphasizes Dr Paulius Miliauskas, partner at the law firm Miliauskas ir Lauraitytė.
The head of the Vilnius City Municipality Administration, Adomas Bužinskas, still has the status of a special witness in another law-enforcement investigation into alleged abuse of office and failure to perform official duties in connection with street-narrowing projects. In the spring, searches were carried out at A. Bužinskas’ home and workplace.
Until a final court decision is issued, Energesman maintains that both the operation and modernization contracts for the Vilnius waste treatment plant remain valid. The company bases its position on the operation contract, which provides that it may be terminated only if two conditions are met: there are material grounds for termination and the other party is given 20 working days’ notice.
According to Energesman, the reasons cited by VAATC are not material, while the decisions of the ESOC Head and the ESOC deliberately discriminated against the company. The company also maintains that the accumulation of waste at the plant resulted from the Vilnius cogeneration plant being unable to accept waste for incineration, rather than from any fault on the part of the operator.
Meanwhile, VAATC itself failed to perform its obligations under the modernization contract by not paying Energesman the EUR 4.4 million initial payment within the contractual deadline.
According to preliminary estimates, Energesman’s losses will amount to approximately EUR 20 million. The losses may increase further for as long as VAATC remains in control of the plant.
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