Supreme Court has decided to open proceedings on AS Tallinna Vesi´s appeal in cassation regarding the tariff dispute between AS Tallinna Vesi and the Estonian Competition Authority

On 20th of June 2017 Supreme Court decided to open proceedings on AS Tallinna Vesi´s appeal in cassation that was lodged in February 2017. Opening of proceedings means that the dispute will continue in the highest court.

AS Tallinna Vesi lodged an appeal in cassation with the Supreme Court against the Tallinn Circuit Court’s decision of 26th January 2017 in which the Tallinn Circuit Court dismissed the Company’s claim against the Competition Authority as regards to the tariff dispute. The Supreme Court’s decision to open proceedings means that the dispute has not yet reached its final verdict.

Until the final verdict, the interim injunction applied by Estonian courts against the Competition Authority’s precept to reduce the tariffs remains in force. The claim for damages submitted by the company against the Estonian Competition Authority to the Tallinn Administrative Court on 2nd May 2014 to avoid the expiry of the monetary claim, has also been suspended until the final verdict is established.

Background of the tariff dispute:

Since May 2011, the Estonian Competition Authority has so far refused to approve AS Tallinna Vesi’s water and sewerage tariff applications. In October 2011, the Estonian Competition Authority issued a precept to AS Tallinna Vesi to reduce tariffs. The Estonian Competition Authority has not changed its opinion, irrespective of the fact that the Estonian courts have previously declared the tariffs’ part of the Services Agreement, which was entered into between AS Tallinna Vesi and the City of Tallinn back in 2001, to be a public law contract.

AS Tallinna Vesi’s belief is that under the Administrative Procedure Act, the state is obliged to comply with a public law contract until amendment or repeal thereof.

By its decision of 5th June 2015, Tallinn Administrative Court dismissed the company’s complaint (the Court published the reasoning of the decision on 12th October 2015) and Tallinn Circuit Court also dismissed the company’s appeal by its decision made on the 26th January 2017. AS Tallinna Vesi disagreed with the decisions made by the Tallinn Administrative Court and Tallinn Circuit Court, because AS Tallinna Vesi is of the opinion that the Courts had incorrectly applied the law, and wrongly assessed the submitted evidence.

International arbitration proceedings are running separately and in parallel to the local court dispute. The hearings in the international arbitration proceedings were held in November 2016 and the decision is expected in 2017. The procedural orders and decisions issued during the arbitration proceedings, subject to the redaction of confidential information, are available on the ICSID webpage.