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The performance from year to year

Dispute with Government Concerning Unilateral Increase of Rent

Objective

Our client, one of the largest private operators in housing and communal services, requested our assistance in a dispute with the administration of one of Russia’s regions concerning unilateral raising of the rental rate for using the housing and communal services infrastructure in the region. The situation had been further complicated by a number of factors: there were over 15,000 facilities under lease; the tariff adjustments needed to be taken into account; and the legality of the administration’s decision regarding the rent increase had been upheld by court. The project was of special importance for the client as losing the case could have meant higher than 400 million ruble losses a year.

Resolution

We entered the project at a stage when the arbitral tribunal was already prepared to issue a decision against our client. We adopted a new position to avoid discussion of the legality of the decision made by the administration and concentrated on its economic impact on the region. A well-structured and emotion-charged presentation compelled the court to question the administration’s position and eventually take our client’s side.

Result

We managed to carry the case against the administration whose claim to the right to unilaterally change the rent rates was dismissed. As a result, our client avoided multi-million ruble losses and managed to keep its business in the region.

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