ART DE LEX defends the Far East Development Corporation
In 2016, based on the results of an open request for proposals, JSC Far East Development Corporation (FEDC) engaged a contractor to design a boiler house in Primorsky Krai.
Breaking the terms of the agreement, the contractor refused to perform the work, accusing FEDC of defaulting on its obligation to provide the data needed to undertake the construction.
The contractor demanded payment for unfinished design materials, but FEDC claimed it was impossible to pay for incomplete construction documents that were unusable.
Because of FEDC’s failure pay, the contractor filed a complaint. During the court proceedings, the plaintiff insisted on receiving payment for the designs it had produced before the contract’s cancellation, arguing that the early termination of the contract allowed the plaintiff to demand payment for the work it had done, regardless of its degree of completion or usefulness for the customer.
Payment for this work had the potential of unjustly enriching the contractor, at the expense of the federal budget.
During the trial, the FEDC proved that it had acted in good faith and that the materials the contractor had submitted did not comply with the terms of the contract, the terms of reference, and the requirements of normative and technical documentation. Furthermore, they did not have any value to the customer.
The Moscow Arbitration Court refused to satisfy the claim brought against FEDC.
REFERENCE
The JSC Far East Development Corporation is a management company the government of the Russian Federation established to advance the social and economic development of the Far East. The Federal Law On the Free Port of Vladivostok charted the corporation with implementing and developing a special regime for carrying out entrepreneurial activities in the territory of the free port of Vladivostok. In the regions of the Far Eastern Federal District, representative offices strive to establish favorable conditions for doing business, in order to create new jobs and increase the population of the Far East.
