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IDGC of Centre to challenge the judgement to recover 5,122 million rubles in favour of NLMK

27 February 2013

The Ninth Arbitration Court of Appeal upheld the decision of the Moscow Arbitration Court to recover more than 5 billion rubles from IDGC of Centre, JSC in favour of Novolipetsk Metallurgical Plant (NLMK), received as unjust enrichment under the «last mile» contract.

IDGC of Centre Court considers the decision illegal and unfounded, since the money was received for the services actually rendered to deliver electricity to NLMK in accordance with existing contracts and rules of the so-called «last mile».

The essence of the mechanism of the «last mile» is that by increasing the cost of electricity for large companies to reduce rates for citizens and other small consumers.

The «last mile» is now the subject of widespread litigation in the power industry and therefore the taken judicial decision may have systemic implications not only for IDGC of Centre, but for all businesses of the power grid complex.

Already March 12, 2013 the Supreme Arbitration Court will consider in exercise of supervisory functions a similar dispute between IDGC of Urals and Chelyabinsk Electric Metallurgical Plant (CHEMK).

If a verdict of the Supreme Arbitration Court is in favour of IDGC of Urals, it could be the basis for review of the decision on the dispute of IDGC of Centre and NLMK. Meanwhile, law officers of IDGC of Centre plan within the statutory period to file a cassation appeal.

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