Supreme Court Upholds Penalty Judgement in Favor of Global Agricultural Trader

13/ 11/ 2024

The Commercial Cassation Court within the Supreme Court upheld the judgement of the Eastern Commercial Court of Appeal to collect a penalty from a private agricultural enterprise for breach of supply agreement in favor of a Ukrainian seed processing plant, which is a subsidiary of one of the world’s largest agricultural traders. The relevant Supreme Court judgement was issued on 24 October 2024. The dispute concerned penalties under the contract for sunflower seeds supply from Ukraine. This contract was concluded between the plant and a private agricultural enterprise. The agricultural enterprise breached the contract by not delivering the goods by the deadline, which resulted in a penalty. The agricultural enterprise attempted to justify its breach of the contract by force majeure and absence of guilt, referring to a hostile takeover, unfavourable weather conditions and, as a result, a poor grain harvest. As part of the comprehensive client protection strategy, Ilyashev & Partners’ attorneys collected irrefutable evidence that the agricultural enterprise unlawfully cultivated crops on a state enterprise’s land. Therefore, the agricultural enterprise’s allegations of land hostile takeover were unfounded, the drought could not be the excuse for non-performance of the supply contract, and there was no force majeure, despite the presence of the Ukrainian Chamber of Commerce and Industry Certificate. During the case hearing, Ilyashev & Partners’ team proved that the plant’s claims for the penalty were legitimate and reasonable. The agricultural enterprise was found guilty of breaching contractual obligations. The Supreme Court ended the legal dispute by upholding the appeal courts decision, which ordered the agricultural enterprise to pay the penalties and reimburse the plant’s legal expenses. The Supreme Court’s decision is final and not appealable. Ilyashev & Partners Law Firm represented the seed processing plant at all stages of litigation up to the Supreme Court. The case was handled by Andriy Lytvyn, Head of the Kharkiv Office, Valeriia Gudiy, Partner, and Vyacheslav Sytyi, Counsel at Ilyashev & Partners Law Firm.

The dispute concerned penalties under the contract for sunflower seeds supply from Ukraine. This contract was concluded between the plant and a private agricultural enterprise. The agricultural enterprise breached the contract by not delivering the goods by the deadline, which resulted in a penalty.

The agricultural enterprise attempted to justify its breach of the contract by force majeure and absence of guilt, referring to a hostile takeover, unfavourable weather conditions and, as a result, a poor grain harvest.

As part of the comprehensive client protection strategy, Ilyashev & Partners’ attorneys collected irrefutable evidence that the agricultural enterprise unlawfully cultivated crops on a state enterprise’s land. Therefore, the agricultural enterprise’s allegations of land hostile takeover were unfounded, the drought could not be the excuse for non-performance of the supply contract, and there was no force majeure, despite the presence of the Ukrainian Chamber of Commerce and Industry Certificate.

During the case hearing, Ilyashev & Partners’ team proved that the plant’s claims for the penalty were legitimate and reasonable. The agricultural enterprise was found guilty of breaching contractual obligations.

The Supreme Court ended the legal dispute by upholding the appeal court’s decision, which ordered the agricultural enterprise to pay the penalties and reimburse the plant’s legal expenses. The Supreme Court’s decision is final and not appealable.

Ilyashev & Partners Law Firm represented the seed processing plant at all stages of litigation up to the Supreme Court. The case was handled by Andriy Lytvyn, Head of the Kharkiv Office, Valeriia Gudiy, Partner, and Vyacheslav Sytyi, Counsel at Ilyashev & Partners Law Firm.