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Deal 5: Termolink Director Valdas Garmus on Dispute with General Contractor

Lithuania
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On October 28, 2020, CEE Legal Matters reported that Triniti Jurex had successfully helped Termolink obtain damages from a general contractor for work the company performed on an unspecified project. CEEIHM spoke with Valdas Garmus, Director at the Termolink, to learn more about the dispute.

CEEIHM: To start, please tell our readers a few words about Termolink.

Valdas: Termolink is a Lithuanian construction company. We specialize in the construction, reconstruction, modernization, repair, and maintenance of energy facilities. We are a team of around 50 employees and have more than 20 years of experience in this market.  

CEEIHM: What, specifically, gave rise to the dispute? What was the contractor's reasoning for not paying initially?

Valdas: The dispute started because we were seeking full payment for construction work we executed. Our client was a general contractor who hired us as a subcontractor to install a boiler house in a newly built dairy plant according to the technical design provided by the client. When we had done all the work and handed it over to the general contractor, and the work was handed over to the relevant authorities and the boiler house was put to use, the general contractor refused to pay us in full for the work we had done. According to the general contractor, we carried out work that was not foreseen in the technical design, worksheet, and estimate. They treated it as additional work that had not been agreed upon. Also, according to the general contractor, some of the work performed was, in their opinion, of poor quality.

CEEIHM: What was the final outcome of the dispute and what were the winning arguments?

Valdas: The dispute was settled in two phases. In phase I, the general contractor challenged the acceptance-transfer deeds, which handed over the works for which the general contractor refused to pay. The court of first instance dismissed the general contractor's claim. The appellate court essentially upheld the decision. The Supreme Court of Lithuania refused to accept the cassation appeal of the general contractor. In phase II, the general contractor challenged his obligation to pay under the acceptance-transfer deeds, which transferred the additional work we provided. The court upheld our claim and awarded the full amount we asked for. The appellate court left the judgment of the court of the first instance unchanged.

The main arguments for winning this case were that, according to the contract between the general contractor and us, the construction design documentation had to be provided by the general contractor, which puts them at risk of having all the necessary construction work included in the construction documents. When we started fulfilling our contractual obligations, it became clear that the design documentation was inaccurate, and certain parts of the technical design were in conflict with each other. It would be impossible to perform all the agreed works, the boiler house would not comply with the requirements of legal acts and would not be able to function if we would be carrying only those works and using quantities of materials specified in the technical documentation. Despite the incorrect documentation, we did all the necessary work, which allowed us to achieve the required result: to install the boiler house, which was handed over to the client, approved by the mandatory supervisory authorities together with the completed diary plant, it was commissioned, and is successfully being used.

CEEIHM: What was Triniti Jurex's mandate exactly? At what stage of the dispute was the firm involved?

Valdas: We addressed Triniti Jurex and specifically Attorney at Law Arturas Vaisvila from the beginning of the dispute. They consulted with us, prepared the initial documents, and proceeded with all the claims. They also formulated the strategy and represented us in court.    

CEEIHM: Why did you opt to use this firm, in particular, to assist in this matter?

Valdas: We received good recommendations, so we contacted them. I am very happy with the work Arturas Vaisvila and the Triniti Jurex team performed and the results we achieved. All the processes and the results fully met our expectations.

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