Lviv kicked the Polish company out of the construction site. Control Process wins in the courts, but loses on the ground
What the Polish company Control Process experiences while implementing a Ukrainian investment in a waste processing plant is unbelievable in a civilized country. You do everything in accordance with the contract, you do not agree to proposals to break it and to secretly introduce foreign contractors, and for this you get hit on the head, and the contractor uses all opportunities to rob you of your money and lead to bankruptcy.
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Control Process won all arbitration processes, but this does not change anything for now and it must count losses on the contract. “With the plant 95 percent complete we have an overdraft of EUR 17-18 million on this project” – the company tells Business Insider.
This amount includes EUR 10 million unpaid by the city for work performed, as well as EUR 3.6 million in broken performance bonds and EUR 1 million in non-contractual works performed. There are also penalties to add to this EUR 4.9 million that the arbitration (DAB – Dispute Adjudication Board) of the engineering organization FIDIC awarded to the city of Lviv together with interest for causing a delay in the implementation of works, and the city did not pay it.
And finally, according to Control Process information there is a risk that the Polish ING Bank Śląski will pay another part of the guarantee in the amount of EUR 1 millionalthough bankers are aware that everything is not in accordance with the contract, because this is confirmed by the courts (DAB) in seven decisions in favor of the Polish company and 75 confirmed topics. Not forgetting the latest in this whole puzzle, the ICC decision in Paris. Control Process informs that ING's lawyers agreed with the interpretation of this situation, and yet… the bank intends to pay out the guarantee.
We have asked the bank to respond to the matter and we are waiting for a response. As soon as we obtain it, it will appear here in the article.
Almost 3,000 jobs people at risk
The lax approach of Lviv officials to the law may have serious consequences for many families in Poland. – We have 700 employees in the entire Control Process group and approximately 2,000 people at suppliers and manufacturers throughout Europe. This is a huge network of people and companies who have gone unpaid because of this the city of Lviv deceived and robbed us – comments the Polish company.
Among the injured, Control Process lists such Polish entities as: MTM based in Tarnów, Wola in Olsztyn, NeoJKF Odpylanie, “other suppliers from Italy, Germany and Europe”.
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“If ING bank pays out this next money, it will be simple theft in broad daylight“- warns the company.
Polish contractor cut off from construction
Since Business Insider's last article on the subject, the situation has not only remained unresolved, but has escalated further. Currently, the Polish contractor has actually become cut off from the construction site, where his assets remain, worth, as he estimated, approximately EUR 9.3 million. The city of Lviv still refuses to pay due payments and respect the agreements stipulated in the contract.
May 28 this year a city council session was held. Deputies once again dealt with the issue of building a mechanical-biological waste processing plant adopted another appeal addressed to Prime Minister Donald Tusk. At the same time, the Lviv authorities still do not implement the binding decisions of the DAB and do not respect the arbitration decisions of the International Chamber of Commerce (ICC) in Paris of May 16 this year.
The video recording of the city council session is on YouTube.
“In our opinion, the actions of the Lviv authorities constitute a gross violation of the contract and the rules of cooperation with a foreign investor. The city of Lviv not only fails to fulfill its own obligations, but also tries to present the Polish contractor as the party responsible for the investment problems, even though the city is responsible for unfinished external works necessary to launch the plant,” Control Process comments.
Ukrainians blocked access to the construction site
As reported on May 29 this year Control Process's access to the construction site was actually blocked. Employees of the Polish contractor were not allowed to enter the investment area.
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“Equipment, technological devices, containers, offices, laptops, printers, documentation and other company property with a total value of approximately EUR 9.3 million remain at the construction site.. Control Process is currently unable to freely enter the construction site, secure property or properly organize security,” warns the Polish company.
A representative of the Embassy of the Republic of Poland appeared on siteKrzysztof Łukasiewicz. Despite talking to the deputy director of LKP “Zelene Misto”, Bohdan Romańczuk, he was also not allowed to enter the construction site, the company informs.
“This is a very serious signal and proof that the Lviv authorities are not ready to resolve the matter transparently, even in the presence of a representative of the Polish state,” comments the Polish company.
95 percent contract completed
Control Process carried out the main part of the investment – approximately 95%. its scope. Despite this, he has not received the payments due, has no access to his own property and cannot normally exercise his rights under the contract. Lviv has still not performed key external works that are necessary to launch the plant, which it was obliged to do under the contract.
The plant in Lviv built by Polish Control Process is waiting for launch
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Control Process / Control Process
Numerous Polish, European and Ukrainian companies were involved in the project, including manufacturers of bio-drying systems, scrubbers, pipes, sorting machines, dedusting technologies, technological equipment and building materials. Ukrainian companies are also harmedwho cooperated in the implementation of the project. The lack of payment by the city to Control Process causes payment backlogs in the entire implementation chain.
The mayor of Lviv ignores the Ukrainian authorities
The information discussed during the session of the Lviv City Council shows that the Deputy Prime Minister of Ukraine, Taras Kaczka, and representatives of the Ukrainian government are taking actions to encourage the city of Lviv to respect European law, contracts and arbitration decisions. Despite this The mayor of Lviv, Andriy Sadowy, remains unmoved.
During the city council session on April 30, he publicly downplayed numerous proceedings and actions of law enforcement agencies regarding this investment, suggesting that even a dozen or so cases, including criminal ones, were not a real problem for the city.
— Lviv, as a large Ukrainian city benefiting from international support and declaring European standards, should, first of all, respect contracts, DAB decisions, arbitration decisions and the basic principles of investor protection. Meanwhile, the city's current actions show the opposite: lack of payments, blocking access to the construction site, ignoring contract decisions and attempts to transfer the dispute to local arbitration, Control Process comments.
“Court is court, but justice is supposed to be on our side”
Despite the ICC's May 16 decision in Paris highlighting the importance of neutral jurisdiction for an international dispute, Lviv continues to try to have the arbitration transferred to Kiev, apparently expecting the Ukrainian court to side with it.
“In our opinion, this is an action aimed at bypassing the neutral dispute resolution forum and weakening the position of the Polish contractor,” says the Polish company.
— This is an issue of economic, political and international importance. If such a situation remains unaddressed, this will be it a very bad signal for all Polish companies considering participation in the reconstruction of Ukraine and in projects financed from international funds – comments Control Process.
The city of Lviv has already given a clear signal that it does not want a Polish contractor, even though part of the construction was financed by the European Bank for Reconstruction and Development from EU funds. If the case is not resolved in accordance with the law and the content of the contract, other Polish construction companies can only be discouraged from participating in any investments in this city. International procedures would then turn out to be just a meaningless pile of papers.
The people of Lviv themselves will lose. Without Polish contractors who offer lower prices than Western competitors, all works financed from EU funds will simply be more expensive.
Author: Jacek Frączyk, editor of Business Insider Polska
