A contractor may be not allowed to claim payment for works – even if the acceptance certificates have been signed – where the contractor is unable to prove that it in fact completed the work by reference to as-built documentation and other direct evidence. It may also be even more difficult to claim payment for additional works as not all unforeseen costs of the contractor trigger the client’s duty to provide additional payment. 

The Supreme Court is guiding lower courts to increase control over the recovery of payment for works under construction contracts. This trend is particularly evident in cases involving government customers and the use of budget financing.

In one case, the Supreme Court completely rejected all of the evidence of the performance of works presented by the contractor, ranging from acceptance certificates signed by the client to correspondence between the parties and the client’s formal acknowledgement of debt. At the same time, since the contractor was unable to present primary and as-built documentation for the works performed, the court could not order the expert study in order to determine the scope and cost of the works.

As for disputes relating to additional works, the Supreme Court has clarified that courts should always examine the reasons why the contractor exceeded the agreed contract price. Even where a court-appointed expert confirms that the contractor has performed works that were not envisaged in the original project, the court should determine whether such works can be legally classified as “additional works” and what caused the need for their performance. For example, if the additional works were caused by the contractor’s delay in construction, the contractor is not entitled to demand payment for such works. The contractor is also not entitled to argue that ordinary auxiliary works such as the provision of temporary electricity and site fencing are additional works and require separate payments, unless the contract expressly provides otherwise.

Local authorities have the right to reserve land plots for comprehensive development of the territory. In this case developers may not apply for such land plots if the requested purpose of their use does not correspond to the city plans. Moreover, the courts may not second guess the local authorities’ zoning decisions since the approval of the town-planning documents falls within the competence of local authorities.

The Supreme Court confirmed the right of local authorities to refuse to grant a land plot to developers if the planned use of the land plot requested by the developer does not comply with the city plans for comprehensive development of the territory (CDT). At the same time, the local authority need not prove that the CDT is already being implemented by another developed under a specific contract or is reflected in approved detailed documentation. The mere fact that the land plot in question is classified as falling within the comprehensive development zone is sufficient to consider it reserved for this purpose. Once this classification is made, any prior planning documentation that allowed to place other objects in a territory is considered to have lapsed.

In another case, the Supreme Court highlighted the fact that the approval of the town-planning documents falls within the competence of municipal authorities. In that case, the lower court had ordered the municipality to adopt a new general plan to move the claimant’s land plot outside a designated zone for the placement of a pre-school. The municipality did not comply with the court order, which caused the claimant to seek relief in court again to confirm that it is entitled to build an office building on its land plot. However, the Supreme Court held that courts are not entitled to second guess the municipality’s zoning decisions. Since the approval of the general plan is a matter of municipal discretion, only the municipality is entitled to make the relevant decision.