„In arbitration, it is uncommon for one party to have its claim fully upheld, so this is a major victory for TGS Baltic and VKJ. This victory is also significant because the arbitral award will not subject the contractor to contractual limitation of liability. This means that the arbitral tribunal will award all the damages VKJ deems justified,“ explains Vilius Bernatonis, managing partner at TGS Baltic, explaining the significance of the victory.
The contractor, Rafako, a Polish boiler manufacturer, worked with several law firms during the process. The company was initially represented by Squire Patton Boggs, an international law firm, which was later replaced by Wardynski, a Polish law firm. VKJ worked with TGS Baltic professionals throughout the preparation and litigation. The firm's lawyers prepared the case thoroughly, looked into the nuances of the dispute, worked consistently with the client, and successfully represented its interests in the international court.
Tadas Varapnickas, senior associate at TGS Baltic, details that Rafako was one of the two contractors involved in the power plant construction project, responsible for the design and construction of the biofuel unit. Since the start of the project, the company encountered difficulties in the implementation of the project and finally withdrew from the project on the 1st of October without completing the works. The arbitral tribunal ruled that Rafako's actions, which not only delayed the project completion date but also caused difficulties in completing the construction, were unlawful.
„Although the arbitration does not set precedents, the decision not to impose a limitation of liability is significant for both contractors and clients: contractual limitations of liability are not absolute, so it is important to be careful in the execution of your contracts. In the context of Russia's war against Ukraine and rising gas prices, the VKJ project is strategic. The decision will allow the project to be completed more quickly and will help to ensure that the residents of Vilnius are supplied with heat using biofuels,“ said Mr Bernatonis.
VKJ is responsible for the installation of a new cogeneration plant in Vilnius, which has been recognised by the Government as a project of national economic importance. Once completed, VKJ will be one of the most modern plants of its type in Europe.
TGS Baltic specialises in finance, retail and wholesale, energy, life sciences, manufacturing, technology, real estate development, private equity, and transport. Last year, TGS Baltic was ranked as the best and most recommended law firm in the Baltics in Kantar's Prospera Law Firm Review 2021.
