PGNiG charges a penalty for uncollected gas volume – court rules no penalty is due (Part II)

A case concerning PGNiG’s demand for a Client of a law firm to pay contractual penalties resulted in a ruling by the Commercial Division of the Regional Court in Kielce, announced on July 5, 2024. More details on this case can be found here.

The justification of this ruling is significant due to the increasing number of lawsuits filed by PGNiG for contractual penalty claims against gas consumers who, during the pandemic or the energy crisis caused by the war in Ukraine, failed to collect the previously ordered gas volumes.

The Court acknowledged that the provisions of the gas supply contract regarding the imposition of contractual penalties were binding on the parties. However, it agreed with the law firm’s arguments that the contract stipulated penalties only if the non-performance resulted from the consumer’s fault. The Court also reaffirmed the principle that if a debtor proves that the non-performance or improper performance of an obligation resulted from circumstances beyond their control, they are exempt from liability.

In this specific case, although there were no administrative bans on the Client’s business operations, the spread of the SARS-CoV-2 virus created market conditions that forced the Client’s management to suspend its extraction activities. As a result, the Client was released from the obligation to pay the penalties.

The Court also agreed with the law firm’s argument that force majeure applied to the fulfilment of the gas supply contract in 2020. In its justification, the Court stated that: “Typical examples of force majeure include floods, hurricanes, lightning strikes, earthquakes, acts of war, and pandemics—including the SARS-CoV-2 pandemic. The occurrence of force majeure excludes liability for non-performance if the debtor can demonstrate a causal connection between the force majeure event and the non-performance or improper performance of the obligation, which, in the Court’s opinion (…), was established in this case.”

Another key argument made by the defence lawyers was the claim of abuse of rights. The Court supported this argument as well, ruling that in a lawsuit seeking contractual penalties, such a claim is permissible and does not equate to a request for penalty reduction. Furthermore, PGNiG’s conduct during the contract’s execution amid the pandemic justified the application of this legal principle.

The judgement is not final.