1. The contract (including a PPP agreement) concluded without procurement procedure is nul and void ab intio under Art 116 I CC. The title of the agreement and a reference to the acts of legislation in its content serve as an indication as to the qualification of the agreement.

Facts of the case

The claimant leased educational buildings for 30 years to the respondent on 18 October 2018 through PPP. In early 2022 the claimant demanded the declaration of invalidity due to the violation of PD-3931, CC and LRU-537.

The Supreme Court’s position

Nr 3 of RPL dd 28 November 2014 No 269 clarifies that invalidation of a legal transaction is allowed on the grounds stipulated in Arts 115-126 CC.

The claimant was able to lease existing [state-owned] education facilities with a low load factor or requiring reconstruction or major repairs (Nr 10 (3) of UP-3931). Such PPP agreement shall be concluded through tender held by the Ministry (Nr 10 (8) of PD-3931).

[The Collegium has also cited is Art 15 LRU-537 on initiation of PPP project, which entered into force substantially later after the conclusion of the agreement.]

The agreement stated that it was concluded in accordance with PD-3931. Although the title of the agreement contained PPP, the content of the agreement provided for the transfer of the educational facilities to the respondent for 30 years of long-term and intended use.

However, in concluding this agreement, the above-cited requirements are not complied with, and the agreement was concluded in violation of the legislation.

Pursuant to Art 574 II, IV CC failure to comply with the form of a lease agreement for a building or structure entails its invalidity, a lease agreement for a building or structure concluded for a term of at least one year is subject to state registration and is deemed to have been concluded from the moment of such registration. 

The court of first instance, believing that the transaction was concluded with the content that does not meet the requirements of the legislation, recognised the transaction as invalid in accordance with Art. 116 CC and came to the correct conclusion.