{"id":15626,"date":"2011-12-09T11:36:06","date_gmt":"2011-12-09T09:36:06","guid":{"rendered":"https:\/\/euea-energyagency.org\/english-category\/news\/euea-latest-accomplishments\/local-content-rule-the-opinion-of-euea-expert\/"},"modified":"2020-03-23T10:17:31","modified_gmt":"2020-03-23T08:17:31","slug":"local-content-rule-the-opinion-of-euea-expert","status":"publish","type":"post","link":"https:\/\/euea-energyagency.org\/en\/news\/euea-latest-accomplishments\/local-content-rule-the-opinion-of-euea-expert\/","title":{"rendered":"“Local content” rule. The opinion of EUEA expert"},"content":{"rendered":"\n
An additional condition for electricity production incentives is the use of solar modules at electricity production facilities. The share of raw materials of Ukrainian origin in the production cost of such solar modules shall make at least 30% starting from 1 January 2013 and 50 % starting from 1 January 2014, respectively.<\/div>\n
The Resolution of NERC # 32 as of 22 January 2009 \u201cOn approval of Procedure for the establishment, revision and termination of \u201cgreen\u201d tariffs for business entities\u201d states that a business entity seeking \u201cgreen\u201d tariff must submit, among other documents, a document proving its \u201clocal content\u201d.<\/div>\n
  <\/div>\n
2) <\/b>Conflict with international agreements<\/b><\/div>\n
 <\/div>\n
Ukraine ratified a number of international agreements in the energy sector. It is worth paying attention to their regulation relating to support of local producers.<\/div>\n
 <\/div>\n
European Energy Charter 1991<\/div>\n
 <\/div>\n
Ukraine ratified the Agreement and the Protocol on 06.02.98, these documents entered into force for Ukraine on 27.01.99. According to Article 5 of the Charter, \u201cA Contracting Party shall not apply any trade-related investment measure that is inconsistent with the provisions of Article III or XI of the GATT,\u201d which stipulates the principle of national treatment<\/a>[1]<\/a><\/a>.<\/div>\n
 <\/b><\/div>\n
WTO<\/div>\n
 <\/div>\n
On 5 February 2008 Ukraine joined the WTO, which is the successor to the General Agreement on Tariffs and Trade (GATT). The WTO Agreement on Subsidies and Countervailing Measures prohibits subsidies contingent upon the use of domestic over imported goods (Article 3.1).<\/div>\n
 <\/div>\n
 <\/div>\n
EnergyCommunity<\/div>\n
 <\/div>\n
On 15 December Ukraine ratified the Protocol on Ukraine\u2019s accession to the Treaty on European Energy Community. Pursuant to Article 18 of the Treaty, prohibited is \u201cany public aid that distorts or threatens to distort competition by favouring certain undertakings or certain energy resources.\u201d According to Article 41 of the Treaty, \u201cCustoms duties and quantitative restrictions on the import and export of Network Energy and all measures having equivalent effect, shall be prohibited between the Parties\u201d.<\/div>\n
 <\/div>\n
Thus, the requirements established by Ukraine for the use of domestic share stipulate less favorable treatment for foreign producers of renewable energy, as manufacturers are forced to buy locally produced equipment. Accordingly, the \u201clocal production\u201d requirement violates the provisions of the three agreements mentioned above.<\/div>\n
 <\/div>\n
3) Tips on how to proceed in case of refusal<\/b><\/div>\n
 <\/div>\n
What can be done, if NERC did refuse to approve a \u201cgreen\u201d tariff based on the lack of an appropriate share of raw materials \/ supplies \/ services of Ukrainian origin? PursuanttoArticle 9 oftheConstitutionofUkraine, \u201cCurrent international treaties that are binding under the approval given by the Verkhovna Rada (the Parliament) of Ukraine are part of the national legislation of Ukraine.\u201d Article 29 of the Law on Electricity, which establishes the local content requirement, sets forth the following: \u201cIf an international treaty to which Ukraine is a party, sets rules other than those provided by the Ukrainian legislation on electricity, the rules of the international treaty shall apply.\u201d<\/div>\n
 <\/div>\n
In other words, the provisions of international treaties (Article 5 of the European Energy Charter, Article 3.1 of the WTO Agreement on Subsidies, Article 18 and Article 41 of the Treaty on European Energy Community), which prohibit to establish requirements for the use of the share of Ukrainian origin, prevail over the provisions of the Law on Electricity establishing such a rule, so the plaintiff may directly invoke the norms of international treaties in court.<\/div>\n
 <\/div>\n
Therefore, in this situation a person that was refused the approval of a \u201cgreen\u201d tariff on the basis of its non-compliance with the local content rules has the right to resort to court, in order to challenge the legal act of individual action.<\/div>\n
 <\/div>\n
According to Para 2 Part 1 Article 17 of the Code of Administrative Procedure of Ukraine (hereinafter the CAPU), \u201cthe jurisdiction of administrative courts applies to public-law disputes, particularly to disputes of individuals or entities with an authority in terms of appealing against its decisions (normative legal acts or legal acts of individual action).\u201d<\/div>\n
 <\/div>\n
If the court allows an administrative action it may pass a decision as follows: <\/div>\n
    <\/div>\n
1) on recognizing the authority\u2019s decision or its single provisions as unlawful and on repealing or invalidating the decision or its single provisions;<\/div>\n
 <\/div>\n
2) on obliging the respondent to perform certain actions.<\/div>\n
 <\/div>\n
Accordingly, the plaintiff may file a suit seeking the court to recognize NERC\u2019s refusal to approve the \u201cgreen\u201d tariff as unlawful and to oblige NERC to approve the \u201cgreen\u201d tariff for the plaintiff.<\/div>\n

<\/p>\n
\n
\n
<\/a><\/a>[1]<\/a><\/a> In accordance with this principle, member countries are obliged to provide the treatment of sales of imported goods on national markets no worse than the treatment of similar domestic products.<\/div>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

\"Document-icon1\"Wolfram Rehbock
<\/b>Senior Partner at Arzinger Law Office
<\/b>Member of the EUEA Board<\/b><\/p>\n

LOCAL <\/b>CONTENT <\/b>RULE<\/b><\/div>\n
 1)<\/strong> Introduction <\/strong><\/div>\n
 <\/div>\n
The Law of Ukraine on Electricity contains a provision under which local content rules should be observed for obtaining a \u201cgreen\u201d tariff. Thus, the Law stipulates that the incentives for electricity production from alternative energy sources shall apply on condition that the share of raw stock, materials, main assets, works and services of Ukrainian origin in the cost of construction of the respective facility producing electricity from alternative energy sources makes at least 15% starting from 1 January 2012, 30% from 1 January 2013, and 50% from 1 January 2014.<\/div>\n","protected":false},"author":134,"featured_media":15603,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[124],"tags":[],"class_list":["post-15626","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-euea-latest-accomplishments"],"acf":[],"yoast_head":"\n"Local content" rule. The opinion of EUEA expert - EUEA - European-Ukrainian Energy agency<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/euea-energyagency.org\/en\/news\/euea-latest-accomplishments\/local-content-rule-the-opinion-of-euea-expert\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\""Local content" rule. The opinion of EUEA expert - EUEA - European-Ukrainian Energy agency\" \/>\n<meta property=\"og:description\" content=\"Wolfram Rehbock Senior Partner at Arzinger Law Office Member of the EUEA Board LOCAL CONTENT RULE  1) Introduction   The Law of Ukraine on Electricity contains a provision under which local content rules should be observed for obtaining a \u201cgreen\u201d tariff. 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