Data
- Date:
- 28-05-2025
- Country:
- Russian Federation
- Number:
- A55-26979/2024
- Court:
- Arbitrazh Court of Samara Region
- Parties:
- Eltecho v the Department of Municipal Property
Keywords
CONSTRUCTION CONTRACT - BETWEEN A RUSSIAN COMPANY AND A STATE AGENCY - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET NATIONAL APPLICABLE LAW (RUSSIAN LAW)
RIGHT TO TERMINATE THE CONTRACT - NOTION OF FUNDAMENTAL NON-PERFORMANCE - NON-PERFORMANCE SUBSTANTIALLY DEPRIVING THE OTHER PARTY OF ITS EXPECTATIONS - REFERENCE TO UNIDROIT PRINCIPLES (ART. 7.3.1)
Abstract
The dispute arose from a demolition contract between the claimant (a company) and the respondent (a municipal agency). The respondent terminated the contract unilaterally, citing repeated and unremedied defects in the contractor’s performance, particularly failure to document hidden works and comply with waste disposal obligations. The claimant contested the termination of the contract as invalid.
The Court held that the respondent's termination was lawful under Articles 721 and 723 of the Russian Civil Code, which allow the buyer to terminate the sales contract when defects are substantial, irremediable, or not corrected within a reasonable time.
The court also relied on Article 7.3.1 of the UNIDROIT Principles of International Commercial Contracts, according to which non-performance is fundamental if it substantially deprives the aggrieved party of what it was entitled to expect under the contract, unless the defaulting party could not reasonably have foreseen that result.
By quoting UNIDROIT Principles in its reasoning, the court reinforce the idea that persistent failure to remedy essential defects amounts to fundamental breach justifying termination of the contract.
Abstract in English kindly provided by Roman Zykov.
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