We successfully represented Saaremaa Laevakompanii (an Estonia-based shipping company) in a dispute over the recovery of a compromise agreement of EUR 60 million.
Significant economic impact
The dispute started in 2018, when the plaintiffs filed claims against Saaremaa Laevakompanii (SLK) to revoke specific clauses of the compromise agreement in recovery, claiming that they were damaging the interests of SLK’s creditors.
The recent court ruling has a major economic impact on the client, as it precludes approximately EUR 60 million in total claims against SLK, all based on the recovery of a single clause in the disputed compromise agreement. The latter in turn means that the company has more assets than liabilities and SLK is able to exit bankruptcy and continue offering ferry services.
A pioneering dispute
Tallinn Circuit Court confirmed that recovery of a clause in the compromise agreement in bankruptcy proceedings is precluded if the clause in the compromise agreement is inextricably linked to other clauses in the compromise agreement, and if without the contested clause the contested agreement would not have been entered into.
This is a landmark court decision as the current Estonian Bankruptcy Act does not regulate partial recoveries of the transactions. However, this new court decision provides additional instructions for the partial recovery of a transaction and creates a balance in bankruptcy proceedings between the interests of creditors and the interests of the debtor, in a situation where the creditor wishes to challenge a clause of a concluded compromise contract to ensure that the creditor’s performance is returned to them, but when at the same time the performance to the creditor remains valid. Figuratively speaking, the decision of Tallinn Circuit Court precludes abuses in situations in which the creditor is demanding the return of the car price from the debtor but the creditor does not wish to return the car to the debtor.
Our team and services
We represented Saaremaa Laevakompanii throughout the dispute before the Harju County Court and the Tallinn Circuit Court.
The client team was led by partner Carri Ginter and senior associate Mari Agarmaa, supported by senior associate Piret Schasmin and associate Liisa-Maria Puur.