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On September 30, 2014, the VEGAS LEX law firm won a RUR 120 mln case for its client, the Second Generating Company of the Wholesale Power Market (OGK-2)* in a court of cassation.

In March 2013, the Rosprirodnadzor Department for the Southern Federal District collected an overdue payment for polluting atmospheric discharges from power generator OGK-2. The company hired VEGAS LEX after a local court supported the environmental watchdog’s multimillion claim. According to Rosprirodnadzor, the regular environmental levy was to be augmented by 25 times (to RUR125mln from RUR5mln) as a fine for discharging atmospheric pollutants without a proper permit.

However, VEGAS LEX lawyers won the case in the Commercial Court of the North Caucasus District, even despite the absence of a relevant positive court practice. The VL team proved that its client had failed to obtain the required permit on time due to an unfounded formal approach of the regulator to OGK-2’s allocation that contained a technical mistake in the document title. The court was presented with evidence that proved the regional regulator’s abuse of power in its public (environmental) relationships at law, i.e. proved that the client lacked the required permit doe to a fault of the regulator.

As a result, the court of cassation overruled the lower courts’ verdicts and fully rejected the Rosprirodnadzor department’s claim without sending the case for a revision. There is a high probability that the ruling will create a relevant precedent. It did not only save OGK-2 a large sum of money, but also dotted the i's and crossed the t's in the company’s relationship with the regulator with regard to calculating its environmental payments due for 2011.

The favorable ruling was passed largely due to the contribution of the VL team led by Managing Partner Alexander Sitnikov and Southern Directorate chief Maxim Grigoryev.

“This dispute is certainly very indicative and is likely to create a precedent for the development of a new legal concept (approach) of rejecting public claims in case of abuse of power by federal and municipal authorities due to excessive legal purism*,” Mr. Grigoryev said.

For more information on VEGAS LEX’s energy-related services, please go here.

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* The Second Generating Company of the Wholesale Power Market (OGK-2) is a Russian power generation company established during the reorganization of the RAO UES energy giant. It is part of Gazprom Energoholding. The company runs ten major federal-level thermal power plants including Pskovskaya, Serovskaya, Stavropolskaya, Troitskaya, Ryazanskaya, Novocherkasskaya, Kirishskaya, Cherepovetskaya, Krasnoyarskaya GRES-2 and Surgutskaya GRES-1.

** Legal purism is a term describing unnecessarily formal approach to applying laws and regulations instead of concentrating on their purpose (essence or idea).