25.05.2026
At the Energy Club professional discussion “Public Procurement of Electricity: Legal Certainty, Retrospective Risks, and Energy Security,” held in Kyiv on May 11, representatives of business, state authority, and the legal community discussed one of the most acute problems of the Ukrainian energy market — the crisis in the field of public electricity procurement.
The focus of the discussion was the question: is the state able to provide such rules of the game under which businesses will not bear liability “retroactively” for actions that complied with the regulation in force at that moment, and the public sector will not be left without stable supply due to legal uncertainty.
Oleksii Hnatenko, Partner in the Dispute Resolution Practice at Juscutum, outlined the key causes of the current crisis in his speech and emphasized: the problem has long gone beyond the limits of just the energy market and concerns the state’s general approach to business and legal certainty.
According to Oleksii Hnatenko, today’s situation in the electricity market is shaped under the influence of three main factors: formula pricing, an expanded interpretation of prosecutorial powers, and the retrospective application of norms.
He noted that there is currently no alternative to formula pricing, but the formula itself needs a review.
“It is necessary to keep formula pricing, but to approach it wisely. The formula must take into account market volatility and not be limited by a mechanical 10% when the market can change cardinally due to regulatory impact or force majeure circumstances,” explained the Partner in the Dispute Resolution Practice at Juscutum.
Separately, the lawyer drew attention to the necessity of methodological clarifications from the state. In his opinion, business should have the opportunity to receive the official position of the Ministry of Economy regarding pricing mechanisms and use such clarifications as proper evidence in court proceedings.
No less acute, according to Oleksii Hnatenko, remains the problem of prosecutorial powers and its attempts to review legal relations many years after their emergence.
He cited an example of a case regarding land plots in Kozyn, where the prosecution is trying to challenge legally acquired property rights two decades after the conclusion of the relevant transactions: “After 20 years, the prosecution files lawsuits because there are practically no statutes of limitations. This is a violation of the principle of legal certainty.”
The speaker emphasized that an identical approach is being applied today to the electricity market, where the prosecution attempts to review concluded contracts retrospectively.
Oleksii Hnatenko noted that currently business is practically forced to lead a constant defense in courts:
“Now the courts, when they receive a lawsuit from a prosecutor, perceive it as presumptively lawful and well-founded. Attorneys literally have to ‘bend over backwards’ to prove obvious things.”
According to him, the problem concerns not only electricity procurement but also criminal and administrative processes in general. He also cited his own example of a case that reached the European Court of Human Rights and lasted for over ten years.
In this case, the court of appeal opened proceedings after the expiration of the appeal deadlines without any procedural grounds, and national courts did not see a violation in this. Only after 11 years did the ECHR recognize a violation of the applicant’s rights, and the pensioner, after a multi-year legal struggle, received compensation amounting to only 1,000 euros.
“After 12 years, we proved the obvious: there was no need to open appeal proceedings. But my client received only 1,000 euros in compensation for this entire period. This is absolutely unfair and disproportionate in relation to the balance of the rights of the state and business,” the speaker emphasized.
In the lawyer’s opinion, the key problem remains the virtual absence of personal liability of officials for unlawful decisions.
Oleksii Hnatenko paid special attention to the impact of legal uncertainty on the market itself. He emphasized that more and more companies are refusing to participate in public procurement due to excessive legal risks:
“It is not normal when business says: ‘I do not want to work with public procurement.’ This testifies to the distortion of the market and the regulatory environment.”
As one of the possible solutions, the Partner in the Dispute Resolution Practice at Juscutum suggested introducing the principle of the lawfulness of a market participant’s actions into special legislation — by analogy with the principle of the lawfulness of a taxpayer’s decisions in the Tax Code. In his opinion, it is the state that must prove the unlawfulness of business actions, not the other way around.
Analyzing current judicial practice in disputes between the prosecution and electricity suppliers, Oleksii Hnatenko drew attention to the necessity of a very thorough justification for price modifications in contracts.
He emphasized that today courts demand not just a demonstration of short-term price fluctuations, but a full analysis of market dynamics from the moment of contract conclusion to the moment of introducing changes.
“It is necessary to show the cause-and-effect relationship between market changes and the consequences for the supplier. Precisely this can be an argument that the court will hear,” advised the lawyer.
At the same time, he warned that current judicial practice proceeds from the basis that 10% is a limit for the entire contract, and not for each supplementary agreement separately.
Also, according to him, reviewing the price of already delivered electricity is unacceptable from the perspective of the principle of legal stability.
At the end of his speech, Oleksii Hnatenko expressed hope that with the launch of the market coupling mechanism and new market rules from January 1, 2027, the approaches to price formation for electricity will change.
However, without eliminating the three key problems — imperfect formula pricing, excessive prosecution intervention, and the state’s retrospective approach — the market will continue to remain in a state of legal instability.
The Partner in the Dispute Resolution Practice at Juscutum emphasized: the state must not only establish rules for business but also bear liability for its own mistakes and the legal uncertainty that has been destroying trust in the judicial system and state institutions for years. After all, under conditions of war and constant economic pressure, it is precisely the predictability of rules and the balance of interests between the state and business that are critically important for the stability of the energy market.
“If the state makes a mistake, it, just like business, must pay a heavy price for its mistake,” the lawyer summarized.
