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Plast manages to extend land plot lease term with the Council’s facilitation

08.08.2019

Complainee: Mykolaiv Regional State Administration (Mykolaiv RSA)

Complaint in brief: Plast, a company with French investments, turned to the Council complaining about inactivity of Mykolaiv RSA. Running before the hounds we would like to point out land issues remain the most topical subject in business relations with local municipalities. As it turned out, this complaint was not an exception
 
Since 2017 the company has leased a land plot near the quarry where it extracted minerals – kaolin. After enrichment, raw kaolin is used for ceramics production. The company's products are exported to many countries around the world.
 
Some time before the lease period expired the company appealed to Mykolaiv RSA for its extension. Mykolaiv RSA ignored the Complainant’s inquiries for almost a year. During 2018-2019 the company applied five times to Mykolaiv RSA for lease extension, but all appeals were in vain. Despite the actual refusal to extend the lease period, the Complainant continued paying a lease fee.
 
Realizing that further appeals would not make sense, the Complainant asked the Business Ombudsman Council for help. Moreover, the issue raised was already the subject of the French Embassy's attention in Ukraine.

Actions taken: During complaint investigation the Council’s investigator in charge traced the plot of the “story”. In particular, we were interested in the existence of specific legal barriers for extending the lease agreement validity term (such as violation of the agreement terms and conditions with regard to lease payments, misuse of land, approval of certain decisions on inexpediency of extending the lease term) by state or local authorities. Being unable to find any apparent reason for refusal to extend the term of lease, the Council’s investigator in charge repeatedly appealed to Mykolaiv RSA in writing emphasizing the necessity for compliance with the good administration principle. This principle requires government agencies to act in the most consistent and predictable manner, while any negative decision for a private individual should be substantiated. In addition, the Council’s investigator provided the relevant practice of the European Court of Human Rights illustrating similar cases and containing court criticism of the states that did not ensure proper administration in such an important area as land use. Besides, the Council’s investigator in charge made a working visit to Mykolaiv RSA during which he emphasized the need for practical implementation of the good administration principle in Mykolaiv RSA everyday activities.

Result achieved: With the Council’s facilitation Mykolaiv RSA finally extended quarry lease agreement term. The Complainant thanked the Council’s team for assistance in resolving the case.