The administrative district court has recognized as justified the claim of the company “CATA” against the Directorate of Road Transport (ATD) and decided that the extension of the contract granted by the ATD to the company “Nordeka” in the lots of Cēsu and Sigulda/Limbažu is not valid.
We already wrote that AS “Nordeka” was supposed to start passenger transportation in the mentioned lots on July 1 of last year, but a few months before this deadline, ATD approached “CATA”, offering to continue the work until July 1 of this year. At that time, ATD explained to “Druva” that the geopolitical situation in connection with the war in Ukraine and the sanctions introduced against the Russian Federation and Belarus in Europe have created consequences that hindered the availability of raw materials necessary for the production of buses, as a result of which possible delays in bus production and delivery deadlines, therefore “Nordeka” will not be able to start the performance of the contract.
It can be recalled that there was a clause in the procurement contract which stipulates that in a situation where the specified buses are not in the ownership, possession or possession of the carrier within the stipulated period, the customer has the right to terminate the concluded contract, but this was not done.
Now the Administrative Court has decided that ATD had no reason to give the company “Nordeka” additional time to start transportation. The court concluded that the Road Transport Directorate arbitrarily amended the procurement contracts with “Nordeka” and extended the deadline for presenting the new buses and starting transportation. Since “Nordeka” has not yet started transporting passengers in Vidzeme, the court recognized that ATD is obliged to terminate the procurement contracts without looking for other solutions favorable to “Nordeka”.
The court recognized that the extension of the deadline can be considered as a significant amendment of the procurement rules and easing of the contract execution rules, making the execution of the contract more advantageous for the company “Nordeka” compared to other applicants. It can be added here that two other businessmen were able to start work within the set deadline, on July 1 last year. According to the court’s decision, neither the procurement regulation nor the contract provides for the possibility to change the start time of public transport services.
The court found that the contract amendments did not actually reveal the reason for the extension of the deadline for the start of service provision. From the evidence in the case, the court concluded that the delay in bus deliveries occurred directly as a result of “Nordeka’s” inactivity, that is, the company did not make the advance payments stipulated in the contracts with suppliers in full, which delayed the start of bus production.
Evaluating the impact of the war in Ukraine on the fulfillment of contractual obligations, the court noted that hostilities began ten months after the conclusion of the contracts and three months before the deadline for the delivery of buses. Therefore, the sanctions imposed on Russia and Belarus in connection with the hostilities could not have a significant impact on the preparation for the execution of the contract and could not serve as a reason to postpone the deadline for the delivery of buses.
“Druva” asked the Autotransporta Directorate to comment on this verdict, which replied in an e-mail: “The Autotransporta Directorate confirms the fact that the Valmiera court recognized AS “CATA”‘s claim as justified. The Road Transport Directorate will decide on the further action plan after a thorough study of the case materials.”
It should be added here that on Wednesday’s “Panorama” ATD representative Viktors Zaķis said that ATD will most likely not appeal the verdict. The Directorate evaluates this decision also in the context of the cartel case established by the Competition Council, in which AS “Nordeka” was one of the participants. True, “Nordeka” promises to appeal the ruling of the Administrative District Court, and the company has also rejected the allegations put forward by the Competition Council regarding, in its view, a prohibited agreement, as a result of which “Nordeka” was fined EUR 637,635.80.
To the question of what will happen after July 1, when the contract of the carrier “CATA” ends, ATD stated that the issue is still open, as the judgment has not yet entered into force.
The chairman of the board of AS “CATA” Māris Ozoliņš explained that the company is ready to continue working: “The current contract also provides that we can continue working after July 1st, so public transport passengers do not need to worry.”
Time will tell what ATD’s next action will be. First, the contract with “Nordeka” should be terminated, then a new tender for these two lots should be announced.
Recently, “Druva” wrote that the municipality of Sigulda region has decided to sell its “CATA” shares. According to the company’s statutes, the right of first refusal belongs to the shareholders of “CATA”, if they do not show interest, the shares will be offered in a public offering.
