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Supreme Court will not review the Competition Authority's appeal

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AS Tallinna Vesi would like to inform its shareholders that on 18th September
2012, the Supreme Court decided not to review the Competition Authority’s
appeal against the Tallinn District Court’s 31th May 2012 ruling that deemed AS
Tallinna Vesi’s Services Agreement an administrative contract, i.e. a public
law contract. 

This means that the Tallinn District Court ruling has now taken effect and AS
Tallinna Vesi’s tariffs case will now be remanded back to the Tallinn
Administrative Court. As per the instructions of the District Court, the court
of first instance will have to assess whether the Services Agreement is binding
on the Competition Authority. 

Under the Administrative Procedure Act (APA) unilateral changes of
administrative agreements may only happen if this is absolutely necessary to
avoid severe damage to a predominant public interest. Public law agreements are
not rendered void simply changing a law (PWSSA). To date the Competition
Authority has not presented any verifiable evidence to demonstrate that service
quality standards would equal AS Tallinna Vesi’s current standards for lower
tariffs had it regulated the Company since 2001. While the company has done
nothing but fulfil a valid public law agreement, unilaterally discarding this
agreement when issuing a negative tariff decision could potentially be
construed as a gross breach of procedure. 

The ruling validates the company’s complaint to the courts, although the
Tallinn District Court has still instructed the Tallinn Administrative Court to
assess whether the Services Agreement is binding on the Competition Authority.
Should the Tallinn Administrative Court agree that a public law agreement
concluded with a previous state appointed regulator is binding to the current
state appointed regulator, the court is expected to annul the contested
decisions on grounds of the Competition Authority’s gross violation of
disregarding important facts of the matter. If the Competition Authority is of
opinion that the Services Agreement  harms predominant public interest the 
authority should defend its views of the matter in a separate administrative
procedure. 

Should the Competition Authority be able to prove that the Services Agreement
severely damages a predominant public interests, the Company is entitled to
compensation. 

AS Tallinna Vesi has always fully complied with all the terms and conditions of
the international privatisation contract, all of which were established by the
Estonian Authorities themselves. In addition AS Tallinna Vesi has continuously
provided independently verified evidence to prove that the international
privatisation contracts have not led to unreasonably high profits, but on the
contrary, secured higher quality standards, lower tariffs and allowed profit
levels that are in accordance with international norms. 

Ian John Alexander Plenderleith

Chairman of the Management Board


         Mariliis Mia Topp
         Head of Communications
         AS Tallinna Vesi
         62 62 275
         [email protected]