January
2015
VEGAS LEX continues to represent OGK-2 in its gas turbine engine quality dispute
On January 14, 2015, the VEGAS LEX law firm won an appeal case in the Sixteenth Commercial Court of Appeals for the sake of the Second Generating Company of the Wholesale Power Market (OGK-2)* in a dispute over the quality of a gas turbine engine (GTD-110) supplied by NPO Saturn to compel the defendant to restore the equipment’s operation after a breakdown. The court ordered NPO Saturn to repair the broken GTD-110, with the cost of repairs adding up to RUB1bln, which is comparable with the cost of new equipment.
According to prior reports, NPO Saturn, a major Russian gas turbine manufacturer, supplied a GTD-110 engine as part of gas turbine equipment for OGK-2’s Ryazanskaya thermal power plant. However, the engine failed to meet the quality requirements stipulated by the supply contract, which led to several engine shutdowns during its service, and finally to a serious breakdown. The situation gave VEGAS LEX’s client the grounds to file for free repair of the substandard equipment.
The case was considered by the Commercial Court of the Stavropol Territory for more than two years. The court ordered an expert evaluation of the equipment, which revealed improper quality of the materials used for the engine’s components as well as flaws in the equipment’s assembly. This, according to the expert conclusion, was the reason for the frequent engine shutdowns as well as for the eventual breakdown in 2012.
Based on the evaluation results, VEGAS LEX proved that the defendant had supplied to its client a low quality product, and consequently, NPO Saturn’s claim of an overdue payment under the purchase agreement was not to be satisfied until the product is improved. The supplier was required to repair the GTD-110 free of charge.
The ruling in favor of OGK-2 was facilitated by the VL team led by Managing Partner Alexander Sitnikov and head of Litigation Practice Kirill Trukhanov.
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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.
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