Litigation & Arbitration / 30 Apr 2020

Borenius successfully represented Alva-yhtiöt Oy and Jyväskylän Voima Oy in two connected energy arbitrations worth tens of millions of euros

We represented Alva-yhtiöt Oy (“Alva”) and Jyväskylän Voima Oy (“JVO”) in a high-stakes dispute where the opposing parties disputed their obligation to pay the operating costs of a jointly operated thermal power plant. The opposing parties contested the applicability of the so-called Mankala principle incorporated in the articles of association and further argued that the relevant operating agreement in any case included an obligation to renegotiate and adjust the operating costs.

The Mankala principle refers to a cost-price model used in the Finnish energy sector where the shareholders are obligated to pay the power company’s operating costs and in turn are entitled to receive electricity and heat produced by the power company. The model enables the shareholders to receive electricity and heat at cost price.

In the two connected arbitrations that ensued under the articles of association and the operating agreement, the opposing parties were ordered to pay the operating costs that had fallen due. In addition, the right of the company to charge the operating costs was confirmed and all claims of the opposing parties, including the claims for renegotiation and adjustment, were dismissed in full. The opposing parties were ordered to bear the legal fees of JVO and Alva.

This dispute likely marks the first time when the obligations under the Mankala principle have been arbitrated in Finland.

Share on LinkedInTweet about this on TwitterShare on Facebook