Dmitry Uryakin has explained to Mashnews why the court was able to recover almost RUB 17bn from Volkswagen under the framework agreement

The Commercial Court of  the Nizhny Novgorod Region, applying Swiss law, recovered RUB 16.9 bn from Volkswagen Acciengesellschaft in favour of Gorky Avtomobilny Zavod (Gorky Automobile Plant). The companies entered into a contract under which Volkswagen undertook to supply diesel engines and spare parts to Nizhny Novgorod. At the same time, the contract itself was considered a framework contract, and the volume of deliveries was regulated by bids. In total, since 2021, Gorky Avtomobilny Zavod (Gorky Automobile Plant) applied for 10884 engines, but received 768. Accordingly, when calculating lost profits, the court took into account how much Gorky Avtomobilny Zavod (Gorky Automobile Plant) would have earned if it had received all the engines, assembled the cars and sold them at the prices in effect from 2021 to 2023.

Dmitry Uryakin, Senior Associate, Head of General Business Law Practice at Maxima Legal, told Mashnews that in a framework supply contract, if no other conditions are specified, the supplier’s obligations arise at the moment of receiving the order. “Consequently, from the moment such a bid is received, the contract actually loses its ‘framework’ character,” Dmitry Uryakin emphasised and drew attention to the fact that bids from Gorky Avtomobilny Zavod (Gorky Automobile Plant) to the German partner were received but not executed.

“Because of the non-transfer of engines, according to the court, and the plaintiff had losses in the form of lost profits, as the latter was unable to produce cars and sell them to its counterparties,” the expert said and summarised that since the contract was “concretised” by application and actually lost its framework nature, it is possible to both carry out recovery or oblige to perform the obligation in kind, and recover lost profits.

However, according to Dmitry’s estimation, the prospect of receiving funds from the German company still looks doubtful.

To read the full article (in Russian), please, see Mashnews website>>>>