A major dispute over a construction project worth EUR 40 million. The Polish company denies Lviv's accusations
Mutual accusations of failure to fulfill the contract, arbitrations in Paris and Kiev, financial claims amounting to tens of millions of euros and involvement of the parties at the highest level – the dispute related to the construction of the Lviv plant by a Polish contractor has turned into a public scandal that, instead of dying out, is spreading more and more widely.
The Lviv City Council, which terminated the contract with the Polish contractor, turned to the Prime Minister of Poland, Donald Tusk, on this matter. In turn, Control Process SA publicly accuses the city of violating the contract and failing to implement the decisions of international bodies.
On Thursday, May 28, during the session of the Lviv City Council, councilors adopted an appeal to the Prime Minister of Poland, Donald Tusk, in connection with the situation surrounding the construction of the waste processing complex. The mayor of Lviv, Andriy Sadowy, stated that the city tried to avoid public escalation until the last moment, but the contractor's actions forced it to transfer the conflict to the intergovernmental level.
According to him, the Lviv community has already paid over EUR 30 million (PLN 127 million) for the work performed, but the facility is still not completed. Sadowy also mentioned attempts by some Polish officials to interfere in this situation and lobby for the contractor's interests.
We know about attempts to put pressure on the Ukrainian government with calls to convince Lviv to continue cooperation with a company that systematically failed to meet the terms of the contract. We consider such lobbying and interference to be completely unacceptable
– said Sadowy.
During the session, councilor Nazarij Berbeka emphasized that the contract concerns one of the largest infrastructure facilities implemented by a Polish contractor in Ukraine.
In an appeal to the Polish government, councilors emphasized that this project could become a symbol of successful cooperation between Ukraine and Poland in the context of the future reconstruction of the country. The city council also recalled that in August 2025 they contacted Donald Tusk due to the contractor's systematic failure to comply with the terms of the contract.
Separately, the councilors asked the Council of Ministers of Ukraine and the Ministry of Economy to support Lviv in communication with the Polish side and to prevent “double interpretations or speculations” surrounding the construction of the plant.
“Green City” position
Director [spółki, która złożyła zamówienie na budowę zakładu] LKP “Zielone Miasto” Oleksandr Egorov claims that the international emergency arbitrator rejected the demands of the Polish side, which tried to prohibit the city from terminating the contract and continuing work on the facility.
According to Egorov, the arbitration also obliged the Polish company to return almost PLN 13,000 to the city. euro (PLN 55,000) of legal costs.
The idea was to prohibit us from terminating the contract and taking any action. This lawsuit was dismissed
– says Egorov.
At the same time, the director of the LKP informs that the main trial is underway in the International Commercial Arbitration in Kiev, in which a jurisdiction hearing was already held on May 11. Within a month, he expects to issue a decision, after which consideration of the merits of the case will begin.
According to the director of LKP, all works covered by the protocols, which the contractor completed until the contract was terminated, have been paid in full. The final intermediate certificate will only be approved by the FIDIC engineer after a full cross-clearance and audit has been carried out.
Financial claims
Oleksandr Egorov also claims that the Polish company has not yet returned the city's EUR 1 million (PLN 4,231,000) advance payment. For this reason, Lviv turned to the guarantor bank and expects payment of the bank guarantee.
In addition, “Zielone Miasto” talks about other financial claims against the contractor, in particular:
- over 1 million 300 thousand Ukrainian hryvnias (PLN 106,513) compensation for electricity;
- equipment rental debt;
- fuel costs;
- failure to submit design documentation.
The LKP claims that some of the documentation must be recreated from scratch, and all additional costs will be included in the arbitration claims.
Despite the lawsuits, Lviv assures that construction of the plant will continue.
The city council plans to start the first stage of work after obtaining the necessary permits. According to Egorov, the estimated completion date for the first stage is approximately eight months, and the entire construction is expected to be completed within 8-10 months.
The response of the Polish company Control Process
Control Process SA categorically rejects all allegations of the Lviv authorities. In his extensive open letter to the councilors of the Lviv City Council, the executive committee and the Lviv Regional State Administration, the Polish contractor emphasizes that the termination of the contract is completely illegal, and the city authorities consciously distort information about the actual state of affairs at the facility.
Polish builders emphasize: the plant is currently approximately 95% ready, and the shortest way to launch it is for the parties to return to the negotiating table under the current contract.
The continuation and successful completion of work on the facility became impossible solely due to systematic violations on the part of the client. We were faced with a chronic lack of payment for work actually performed and accepted by the FIDIC engineer, a lack of confirmed further financing for the project, as well as a complete failure of the city to complete the external infrastructure
— we read in the statement of the Polish contractor.
Arbitration in Paris and jurisdiction dispute
Representatives of the Polish company argue that LKP “Zielone Miasto” is manipulating interim court decisions, presenting the refusal to apply protective measures as a victory in the dispute regarding the merits of the case.
The company's representative, Krzysztof Haber, in a comment for Espreso.Zachid, stated that Lviv is manipulating the arbitrator's decision.
What Mr. Egorov says is manipulation. The fact that the emergency arbitrator refused to impose additional interim protective measures at this stage in no way invalidates his conclusions. The arbitrator considered the previous decisions of the DAB Commission to be valid, which impose full responsibility for the construction delay on the client – LKP “Zielone Miasto”
– said the company representative.
Furthermore, Control Process declares that the extraordinary arbitrator of the International Chamber of Commerce in Paris (ICC) has clearly confirmed that this city, and not the Ukrainian authorities, is the only competent and authorized jurisdiction to hear this dispute.
Control Process denies Lviv's statements about full settlement with the contractor. The company claims that the total value of the contract is PLN 40,900,000. euro (PLN 173 million), while she received only about EUR 30 million (PLN 127 million) in payment.
The contract is worth PLN 40 million 900 thousand. euro, the plant is 95% ready, and PLN 30 million has been paid. A logical and very serious question arises for the city authorities and LKP: where is the remaining almost EUR 11 million (PLN 46,500,000) included in the project budget?
– said the company representative.
Political scandal and Poland's reaction
Statements about possible political pressure became a separate element of the conflict. In Lviv, it was found that some Polish officials tried to influence the situation and lobby for the contractor's interests. In turn, Control Process claims that Lviv's actions may damage Ukraine's reputation and scare away European investors.
— If an international contract can be terminated contrary to DAB decisions and basic FIDIC regulations, it undermines the foundations of European integration – explains Krzysztof Haber.
Haber also reminds that complaints regarding the actions of the management of LKP “Zielone Miasto” and the city hall in Lviv have already been directed to the relevant anti-corruption bodies, the European Anti-Fraud Office (OLAF), as well as to international financial institutions that supervise the use of EBRD loan funds in Ukraine.
What's next?
Currently, the conflict has reached an impasse, and the parties have completely different visions for the future of the plant. The Lviv authorities are determined to launch the plant – they plan to do it with another contractor.
In turn, the Polish side is convinced that an attempt to remove the rightful contractor one step before the final stage will delay the construction for years, and the judicial epic in international instances will end with heavy financial sanctions for the Lviv budget. For now, one thing is certain – international arbitration institutions will put an end to this great infrastructure dispute.
