Assignment of the obligation to review the design and estimate documentation for the contract on public procurement of contract works to increase financing
By satisfying the LLP's claim, the court violated one of the main principles of legislation – freedom of expression, as stipulated in paragraph 1 of Article 380 of the Civil Code, according to which coercion to conclude a contract is not allowed.
LLP "A" (hereinafter referred to as LLP) filed a lawsuit against the State Institution "Akmola Regional Department of the Committee of Highways of the Ministry of Transport and Communications of the Republic of Kazakhstan" (hereinafter referred to as the Department) on the assignment of the obligation to review the design and estimate documentation to the contract dated February 1, 2012 on public procurement of contract works for the overhaul of the km section. 856-913 highway of republican significance "Border of the Russian Federation (to Yekaterinburg – Almaty)" highway "Astana-Kostanay-Chelyabinsk" and implement the procedures provided for by budget legislation to increase financing. By the decision of the specialized interdistrict economic court of Akmola region dated March 20, 2013, the claim of the LLP was satisfied. The Department is responsible for reviewing the project documentation for the contract dated February 1, 2012 and implementing the procedures provided for by budget legislation to increase funding.This decision has not been reviewed on appeal, and entered into force on April 5, 2013. By the ruling of the cassation judicial board of the Akmola Regional Court of February 6, 2014, the restoration of the term of the cassation appeal was refused, the cassation protest of the prosecutor was returned. In the protest, the Prosecutor General asked to change the decision of the court of first instance, canceling it in terms of satisfying the claim with a new decision to dismiss the claim, pointing to the incorrect application and violation of substantive and procedural law. It follows from the case file that, following the results of the public procurement tender, an agreement was concluded between the Department and LLP on August 4, 2008 for contract work on the overhaul of the km section. 856-913 highway of republican significance "Border of the Russian Federation (to Yekaterinburg-Almaty)" highway "Astana-Kostanay-Chelyabinsk" in the amount of 4,205,350,210 tenge for the period up to December 31, 2011. The contract work was carried out on the basis of a project developed in 2001 by Kazdorproekt Design and Research Institute LLP, adjusted in 2007 prices. In 2008, the LLP disbursed 84,383,110 tenge. In the period from 2009 to 2010, the project was postponed due to lack of funding. On November 4, 2011, the parties signed a contract to continue the work until December 31, 2011. On the basis of this agreement, the LLP performed works in the amount of 399,800,000 tenge, which is confirmed by relevant acts. On February 1, 2012, an agreement was signed between the LLP and the Department for the performance of works in the amount of 3,721,167,100 tenge for the period up to December 31, 2014.
Assignment of the obligation to review the design and estimate documentation for the contract on public procurement of contract works to increase financing
By this agreement and the supplementary agreement dated September 13, 2012, the parties stipulated that the cost of work for 2012 is 149,490,000 tenge, for 2013 – 1 848 810 000 tenge, for 2014 – 1 722 867 100 tenge. The requirements of the LLP are motivated by the fact that according to the SNiP "State standards in the field of architecture, urban planning and construction. The procedure for the development, approval, approval and composition of the design documentation for construction" the design documentation is valid for three years from the date of its approval. Referring to the expiration of the design and estimate documentation and the increase in the cost of work, the LLP appealed to the court with the above claim. By virtue of the second part of Article 66 of the CPC, the circumstances relevant to the proper resolution of the case are determined by the court on the basis of the claims and objections of the parties and other persons involved in the case, taking into account the applicable rules of substantive and procedural law, which in this case was not done by the court. Having recognized the LLP's claims as justified, the court proceeded from the preliminary draft submitted by the plaintiff to the LLP "Design Research Institute "K", drawn up in 2012, from which it follows that the cost of the work will amount to 6,379,170,830 tenge. In this regard, the court concluded that the cost of the work was almost doubled (by 2,658,003,730 tenge), which, by virtue of paragraph 3 of Article 655 of the Civil Code, gives the contractor the right to request a revision of the estimate. These conclusions of the court do not correspond to the actual circumstances of the case and contradict the norms of substantive law. According to paragraph 5 of Article 621, paragraph 3 of Article 655 of the Civil Code (hereinafter referred to as the Civil Code), the contractor has the right to demand an increase in the fixed price (estimate) only with a general increase in the market value of materials and equipment after the conclusion of the contract. At the time of the conclusion of the contract, the term of the design and estimate documentation had already expired, despite this, the LLP concluded a contract for the performance of work, agreeing to the terms of the transaction price.
By paragraph 41 of the Rules for the examination of pre-design (feasibility studies) and Design (design estimates) documentation for construction, regardless of the sources of financing, as well as approval of projects being built at the expense of public investments, approved by Government Decree No. 918 of August 19, 2002, previously approved design (design estimates) documentation may be processed., if, prior to the start of the project or during the construction of the planned facility, there is a justified need to make changes and (or) additions of a fundamental nature affecting the structural scheme of the facility, its spatial planning, engineering, technical or technological design solutions, as well as other objective factors affecting cost and other approved technical and economic indicators.. The plaintiff, in violation of Article 65 of the CPC, has not provided evidence reliably confirming the validity of the claims. Considering that the examination of the working draft of the Design and Research Institute "K" LLP in 2012, which was put forward by the court in support of its decision, was not carried out, it cannot be acceptable evidence. Meanwhile, by virtue of paragraph 3 of Article 652 of the Civil Code, the risk of an accidental increase in the cost of work is borne by the contractor. From the literal interpretation of the above rule, it follows that the contractor's right to demand an increase in the firm estimate does not entail the unconditional obligation of the customer to make changes to it in the direction of increase. The legislator has given the customer the opportunity to refuse such a change in the terms of the contract, which, in turn, gives the contractor the right to demand termination of the contract. The above indicates that if the cost of the work was exceeded, the LLP had the right to contact the program administrator with a request to increase the price, and if it refused, terminate the contract. The requirement to oblige the Department to review the design and estimate documentation and to comply with the procedures provided for by budget legislation to increase funding is illegal. By granting the LLP's claim, the court violated one of the main principles of civil law – freedom of expression, stipulated in paragraph 1 of Article 380 of the Civil Code, according to which coercion to conclude a contract is not allowed. When making the decision, the court did not take into account the provisions of article 39 of the Law "On Public Procurement", which prohibits amendments to the contract that may change the content of the terms of public procurement and the proposal that was the basis for choosing a supplier.
Assignment of the obligation to review the design and estimate documentation for the contract on public procurement of contract works to increase financing
These violations are significant because they led to an incorrect resolution of the case, which, in accordance with part three of Article 387 of the CPC and paragraph 30 of the Normative Resolution of the Supreme Court of the Republic of Kazakhstan dated March 20, 2003 No. 2 "On the application by courts of certain norms of civil procedure legislation", is the basis for a supervisory review of judicial acts that have entered into force.. By virtue of parts one and three of Article 384 of the CPC, a decision of the court of first instance that has not been appealed in cassation may be reviewed by judicial review upon the protest of the Prosecutor General in exceptional cases if the adopted judicial act may lead to serious irreversible consequences for the economy and security of the Republic of Kazakhstan. In accordance with subparagraph 10) of Article 5 of the Law "On National Security of the Republic of Kazakhstan", one of the threats to national security is damage to the economic security of the state, including the use of strategic resources contrary to the interests of the country. The budget is a centralized monetary fund of the state, designed to financially ensure the implementation of its tasks and functions, that is, a strategic resource, the use of which, contrary to the interests of the country, may lead to a threat to the national security of the Republic of Kazakhstan. By satisfying the requirements of the LLP, the court violated the principle of validity of the budget system of the Republic of Kazakhstan, provided for in the article of the Budget Code, which defines budget planning based on regulatory legal acts and other documents that determine the need to include certain receipts or expenditures in the draft budget and the validity of their amounts.
Assignment of the obligation to review the design and estimate documentation for the contract on public procurement of contract works to increase financing
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