When the market is at a standstill: why the strength of business lies in unity

26.06.2025

In recent months, Ukrainian energy suppliers have found themselves in a stalemate. On the one hand, there is an unstable market, where gas and electricity prices are constantly fluctuating due to objective factors. On the other, there is judicial practice that actually prohibits bringing prices in contracts with budgetary institutions into line with these market realities.

This is not just a legal conflict. This is a systemic threat, which is already resulting in dozens of lawsuits against suppliers across the country. Companies are being demanded to return “overpaid” funds, additional agreements are being declared invalid, and businesses are facing millions in financial risks.

This is a decision of the Grand Chamber of the Supreme Court of January 24, 2024 (case No. 922/2321/22), which established a strict rule: the price per unit of goods within the framework of public procurement cannot be increased by more than 10% in total for the entire term of the contract. This rule, which was perhaps intended to combat unscrupulous participants, has turned into a tool for putting pressure on honest business in a volatile energy market.

The situation is absurd: the market requires flexibility, and the law, according to the court’s interpretation, prohibits it. This is a path to nowhere, which threatens not only suppliers, but also the stability of energy supply to schools, hospitals and other budget institutions.

However, there is a glimmer of hope. Recently, the Economic Court of Cassation referred another case (No. 920/19/24) to the Grand Chamber, questioning the previous position and pointing out its risks for the market. This is our chance to present our arguments and achieve a fair decision.

It is in such situations that the true mission of professional associations is manifested. When one company is left alone with a systemic problem, its voice is weak. But when the entire industry unites, we get the opportunity not only to defend ourselves, but also to form civilized rules of the game. This is the main task of Energy Club – to be a platform for joining forces for the sake of common interests.

Therefore, responding to this challenge, we are launching a joint initiative. At the suggestion of a member of the Club, the company “Ukrgazresurs”, we are combining the efforts of Energy Club member companies to order a comprehensive scientific and legal examination at the leading scientific institution of the country – the V.M. Koretsky Institute of State and Law of the NAS of Ukraine.

This will not be another abstract document. We want to get clear and scientifically based answers to the most painful questions that prosecutors and courts are asking businesses today. We seek to understand:

• Which law is the main one when determining liability for changing the terms of the contract: general (Civil Code) or special (Law “On Public Procurement”)?
• Does the Law “On Public Procurement” take precedence over the Civil Code, and is it necessary to take into account the provisions of the specialized Law “On the Electricity Market”?
• Can the supplier be liable for changing the contract if Article 44 of the Law “On Public Procurement” imposes it exclusively on the customer’s officials?
• What type of liability (administrative, civil law) is provided for an unlawful change in the essential terms of the contract?
• If the court declares the contract invalid because it “contradicts the interests of the state”, can the standard legal consequences provided for by the Civil Code be applied?
• In the event of a contract being declared invalid, Is the customer obliged to reimburse the cost of actually consumed energy at market prices at the time of reimbursement?
• Does the law allow repeatedly increasing the price per unit of goods by up to 10% each time, responding to market fluctuations (especially taking into account the Resolution of the Cabinet of Ministers of Ukraine No. 1178), provided that the total amount of the contract does not increase?
• Is the collection of funds from the supplier for already supplied energy an interference with his property rights (in accordance with Article 1 of the First Protocol to the Convention for the Protection of Human Rights) and the imposition of excessive liability?
• What is the practice of applying similar norms in the field of public procurement in the European Union, to whose legislation Ukraine is adapting its own?

The answers to these questions, set out in the format of an official examination by a leading scientific institution, will become a powerful tool. Companies that join our initiative will be able to use this document as a strong argument in courts to protect their interests.

We at Energy Club are convinced that only through joint efforts can we overcome such systemic crises. Therefore, I invite all member companies of the Club, for whom this problem is relevant, to join the initiative and support its financing. Together, we will not only solve the current problem, but also take a step towards building a more transparent, predictable and fair energy market.