Does the Gas Distribution System Operator Have the Right to Disconnect Gas During a Debt Dispute: Court Decision

The Pyriatyn District Court of Poltava Region considered a consumer’s lawsuit against JSC "Gas Distribution System Operator "Lubnygaz" regarding the recognition of actions to terminate gas supply as unlawful. The plaintiff argued that the GDS operator illegally stopped the distribution of natural gas during the court proceedings on the dispute over the amount of debt, while the defendant insisted on the legality of its actions due to the presence of overdue debt.

Essence of the Case

There had been long-standing court disputes between the parties regarding the calculation of fees for natural gas distribution services and the legality of gas supply termination.

The plaintiff used natural gas distribution services based on a natural gas distribution agreement concluded by joining its terms. Previously, the court had already recognized the termination of gas supply that occurred in 2021 as unjustified, after which the GDS operator resumed gas distribution. Subsequently, a new dispute arose between the parties regarding the correctness of the fee calculation for natural gas distribution services, as a result of which the court of first instance partially satisfied the claim, obliging the operator to recalculate and recover material damages in favor of the consumer. This decision was appealed by the GDS operator to the appellate court.

After filing the appeal, the GDS operator again stopped the distribution of natural gas to the consumer’s house due to the presence of debt. The plaintiff considered these actions illegal because, in his opinion, until the court proceedings on the correctness of the debt calculation were completed, the operator had no right to stop gas supply. In addition, he claimed that the debt notification contained inaccurate calculations because the operator incorrectly determined the annual contracted capacity and the actual volume of consumed gas, which unjustifiably inflated the cost of natural gas distribution services for 2020. The plaintiff also noted that the disconnection was done remotely, without employees visiting the site and without drawing up the appropriate act of gas supply termination, which, in his opinion, contradicted the requirements of the Gas Distribution System Code.

During the case consideration, the plaintiff amended the claims since the operator had already restored gas supply and conducted a recalculation for 2020. At the same time, he continued to insist on recognizing the actions to terminate natural gas distribution as unlawful, stating that the very fact of a court dispute over the amount of debt deprived the operator of the right to apply such a measure.

The representative of JSC "Lubnygaz" opposed the claim. The defendant explained that the disconnection was carried out due to the presence of overdue debt for natural gas distribution services, while the consumer had not paid current payments for a long time. The defendant also provided cost calculations according to the requirements of the Gas Distribution System Code, informed about the recalculation for 2020, and stated that the procedure for determining the annual contracted capacity complied with current regulatory requirements.

Position and Conclusions of the Court

After examining the case materials No. 544/2402/25, the court established that there were contractual relations between the parties regarding natural gas distribution. After the court recognized the previous termination of gas supply as unjustified, natural gas distribution was restored. At the same time, during the disconnection period, the consumer did not pay for natural gas distribution services, which led to the formation of debt, the amount of which became the subject of a separate court dispute.

Analyzing the provisions of the Civil Code of Ukraine, the Law "On the Natural Gas Market," the Gas Distribution System Code, and the Model Natural Gas Distribution Agreement, the court noted that payments for natural gas distribution services are made according to the annual contracted capacity of the consumer’s facility, and the consumer is obliged to pay such services on time. At the same time, the Gas Distribution System Code provides the right of the GDS operator to suspend or limit natural gas distribution in case of absence of a debt repayment schedule, its non-compliance, or non-payment of current payments.

The court found that the GDS operator followed the procedure for terminating gas supply as defined by the Gas Distribution System Code. The consumer was notified in advance in writing about the debt, the grounds and date of natural gas distribution termination, as well as the deadline for its repayment. Since the debt was not repaid within the specified period, the operator exercised the legislatively provided right to terminate natural gas distribution.

Rejecting the plaintiff’s arguments, the court emphasized that current legislation does not contain provisions prohibiting the GDS operator from terminating natural gas distribution solely because the consumer disputes the amount of debt in court. Also, the legislation does not define a minimum debt amount that grants the operator the right to terminate gas supply. The court noted that the basis for terminating natural gas distribution was the debt that mainly arose after July 2021 due to non-payment of current payments, while the dispute over the recalculation of charges for 2020 did not affect the legality of the disconnection. Moreover, the plaintiff did not provide his own calculation of the debt amount that would refute the operator’s calculations.

Based on the case review, the court concluded that the termination of natural gas distribution on May 17, 2024, was carried out in compliance with the requirements of the Gas Distribution System Code, and the plaintiff did not provide evidence of the unlawfulness of the GDS operator’s actions. Therefore, the court denied the claim.

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