90 percent work completed and the contract terminated. Dispute between a Polish company and the authorities of Lviv

The Lviv municipal company Zielone Miasto sent the contractor, the Polish company Control Process SA, a notice of termination of the contract for the construction of a mechanical-biological complex for the processing of municipal waste, the Lviv City Council informed. According to the Polish company, the Ukrainian contractor has no grounds to withdraw from the contract.

“In a relationship with systematic failure to fulfill its obligations by Control Process SA, and also due to failure to comply with the engineer's recommendations (…) and the lack of response to these comments, we decided to terminate the contract with this contractor,” said Oleksandr Yehorov, director of the Lviv Municipal Enterprise Green City, quoted on the website of the Lviv City Council.

Representatives of the Lviv authorities emphasize that the grounds for such a decision are important and well documented. The Polish contractor was to receive official notifications many times in 2025 about violations of contract terms and the need to remove them.

The company had, among others: failed to complete the preparation of the design documentation, and also refused to submit it to the ordering party – Lviv Municipal Enterprise Zielone Miasto. According to the Lviv authorities, it also failed to deliver some of the equipment financed by the Eastern European Partnership Fund for Energy Efficiency and the Environment.

The Polish company also allegedly refused to perform some of the works specified in the contract and allowed another contractor to the construction site to carry out work related to connecting the external power supply to the facility.

Despite additional deadlines granted to remedy the situation, Control Process SA did not remove any of these violations, the release stated.

Additionally – according to the Lviv authorities – the contractor tried to make it difficult to obtain the bank guarantee requested by Zielone Miasto. This became another reason for terminating the contract.

Control Process SA refutes Lviv's allegations: Delays are the ordering party's fault

According to the terms of the contract, the termination of the contract will enter into force 14 days after sending the notification, i.e. on April 6, 2026.

Control Process SA informed PAP on Tuesday that it has not yet received a formal notification of contract termination from the ordering party, in accordance with the contract procedure.

He believes that the actions of the ordering party, including a possible attempt to terminate the contract, are an element of the ongoing contract dispute. It questions the legitimacy of the Ukrainian contractor's actions and announced further legal and contractual steps “in accordance with the mechanisms provided for this project.”

Control Process emphasized that the project was burdened by special circumstances from the beginning, including the effects of a full-scale war in Ukraine and the formal suspension of construction works for over a year. After resuming work, as the statement reads, there were still “serious problems on the part of the ordering party, including long-term payment delays, lack of full and stable financing of the project and failure to complete part of the external infrastructure, without which the plant cannot be launched.”

The Polish company reported that it was During the implementation of the project, the Ukrainian side “repeatedly asked the company not to withdraw from the contract – both in connection with the outbreak of the war and subsequent payment problems”. Control Process stated that, acting in good faith, it continued the investment despite such circumstances.

Control Process reported that the progress of its work currently exceeds 90 percent, which means that – as it emphasized – the main part of the works covered by the contract have been completed.

“The company has carried out and is carrying out activities aimed at completing the investment and remains ready to complete it,” we read in the statement.

Dispute over the construction of a waste plant

The company also informed that the project was implemented from the beginning as an international undertaking, financed, among others, by by the European Bank for Reconstruction and Development, based on FIDIC contract standards (The International Federation of Consulting Engineers) and party protection mechanisms appropriate for this type of investment.

During the project implementation – as reported by the company – disputable issues were the subject of decisions by the FIDIC Dispute Adjudication Board and FIDIC arbitration procedures. “The issued decisions repeatedly indicated that liability for delays cannot be assigned to the contractorand the ordering party is obliged to take specific actions, including the payment of additional remuneration in the amount of EUR 6.8 million and compliance with the provisions of the contract,” Control Process stated and assessed that the FIDIC DAB arbitration decisions are not implemented by the ordering party. “This constitutes a significant violation of contract principles and dispute resolution mechanisms provided for international projects,” the Polish company said.

In her opinion, “the project can be completed provided that Lviv respects the basic principles of contractual cooperation, in particular the implementation of the FIDIC DAB decision, settlement of receivables and performance of work remaining on the part of the ordering party.”

In the company's opinion, “the matter has a broader significance than a single contract, because it concerns the practical functioning of international project standards in Ukraine.”

The Polish company suspends further contracts in Ukraine

Control Process also informed that despite winning another tender procedure on the Ukrainian market, it decided to postpone signing the contract until the situation related to the Lviv project was clarified.

At the beginning of August 2025, the authorities of Lviv appealed to Prime Minister Donald Tusk to intervene in the case of a Polish company that delayed the construction of a municipal waste processing plant.

According to the announcement, Control Process SA won the international tender for the implementation of the investment in 2021. According to the contract, all works, including putting the facility into operation, were to be completed by October 4, 2025.

Then, Control Process SA stated in a position sent to PAP that the delays in the construction of the waste processing plant in Lviv were solely due to the fault of the city authorities, and the Polish contractor continued the work despite the war and delays in payments. (PAP)

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