40.1. Proceedings before the President of the Polish Office of Competition and Consumer Protection (UOKiK)

Anti-trust proceedings instigated on December 28th 2010

On December 28th 2010, the President of the Polish Office of Competition and Consumer Protection (UOKiK) instigated, ex officio, anti-trust proceedings concerning abuse of dominant position on the domestic natural gas wholesale market by PGNiG S.A., consisting in:

• inhibiting sale of gas against the interest of trading partners or consumers and
• impeding the development of market conditions necessary for the emergence or development of competition

by refusing to sell gas fuel under a general gas supply contract to an entrepreneur that intended to resell the gas, i.e. Nowy Gaz Sp. z o.o. of Warsaw.

In its decision of July 5th 2012, the President of UOKiK found these actions to be anti-competitive practices, concluded that PGNiG S.A. discontinued those practices as of November 30th 2010, and imposed on the Company a fine of PLN 60m. On July 24th 2012, PGNiG S.A. filed an appeal against the decision of the President of UOKiK with the Competition and Consumer Protection Court at the Regional Court of Warsaw. Under the ruling passed on May 12th 2014, the Competition and Consumer Protection Court dismissed the appeal in its entirety and ordered PGNiG S.A. to pay the costs of proceedings to the President of UOKiK. On June 4th 2014, PGNiG S.A. filed an appeal against the ruling. By the date hereof, the date of the appeal hearing had not been set.

Anti-trust proceedings instigated on February 22nd 2013

On February 22nd 2013, the President of UOKiK instigated anti-trust proceedings concerning practices employed by PGNiG S.A. which infringe collective consumer interests. The President of the UOKiK accused PGNiG S.A. of using provisions classified as abusive clauses in contract forms based on which comprehensive gas fuel supply contracts are concluded. PGNiG S.A. voluntarily agreed to revise the above contract forms with respect to the questioned clauses. By virtue of a decision of June 28th 2013, the President of UOKiK resolved not to impose a fine on PGNiG S.A. and obliged the Company to fulfil its commitment. On July 29th 2014, PGNiG S.A. notified the President of the UOKiK that it had fully complied with the obligation imposed on it by virtue of the above decision.

Anti-trust proceedings instigated on April 3rd 2013

On April 3rd 2013, the President of UOKiK instigated anti-trust proceedings concerning abuse of dominant position by PGNiG S.A. on the domestic wholesale and retail natural gas market, consisting in impeding the development of market conditions necessary for the emergence or development of competition through:

• limiting the ability of business customers to reduce the ordered volumes of gas fuel and contractual capacity,
• limiting the ability of business customers to resell gas fuel,
• requiring that business customers define the maximum volume of gas fuel purchased for resale in the contract,
• refusing to grant wholesale customers the right to a partial change of supplier.

In the course of the proceedings, PGNiG S.A. submitted a motion to the President of the UOKiK for a commitment decision, in which it voluntarily agreed to revise certain provisions in its contracts with non-household customers. By virtue of a decision of December 31st 2013, the President of UOKiK resolved not to impose a fine on the Company and obliged the Company to fulfil its commitment. PGNiG S.A. performed its obligations set out in the President of UOKiK's commitment decision within the deadlines specified therein. On August 1st 2014, PGNiG Obrót Detaliczny Sp. z o.o. (PGNiG OD) took over the existing retail gas trading business from PGNiG S.A. and assumed all the rights and obligations arising from the decisions issued by the President of UOKiK under the Act on Competition and Consumer Protection in respect of agreements to which PGNiG OD became a party. PGNiG OD is in the course of performing the obligation (in the part corresponding to its scope of business) imposed under the decision of the President of UOKiK dated December 31st 2013.

Proceedings concerning non-compliance with the decision of December 31st 2013

On October 17th 2014, the President of UOKiK commenced administrative proceedings to impose a fine under Art. 107 of the Act on Competition and Consumer Protection of February 16th 2007 (Dz.U. No. 50, item 331, as amended) on PGNiG S.A. and PGNiG Obrót Detaliczny Sp. z o.o. on suspicion of a delay in compliance with Section I).4) of the conclusion of the President of UOKiK's decision of December 31st 2013. On the same date, PGNiG S.A. and PGNiG OD were requested to provide explanation within 21 days. In their response, PGNiG S.A. and PGNiG OD presented grounds for their actions and their position whereunder such actions comply with Section I).4) of the conclusion of the President of UOKiK's decision of December 31st 2013. By the date hereof, the President of UOKiK had not issued any final ruling on the case.

40.2. Dispute between PGNiG S.A. and PBG S.A.

On June 27th 2011, PBG S.A. filed with the Regional Court an action against PGNiG S.A. for payment of a disputed amount, representing the equivalent of liquidated damages for delay in the performance of a contract, deducted by PGNiG S.A. from PBG's consideration.

The Company believes that the claim is unjustified due to the fact that the deliverable under the contract handed over by the contractor had material defects, and also due to actual significant delays in the performance of the contract, which constituted grounds for charging the contractual penalties. Further, according to PGNiG S.A., the plaintiff's claims became prescribed. On July 27th 2011, the Company filed its response to the claim, requesting that the action be dismissed in its entirety.

By virtue of its decision of April 9th 2012, the Court resolved to refer the dispute between PBG S.A. and PGNiG S.A. to mediation. On September 20th 2012, an out-of-court settlement was made between PGNiG S.A. and PBG S.A. w upadłości układowej (in company voluntary arrangement). As a result of the settlement, having obtained the approval of its court supervisor, PBG S.A. withdrew in full the action pending before the Regional Court.

By virtue of its decision of October 31st 2012, the Regional Court discontinued the proceedings.

On June 13th 2012, PBG S.A. was declared insolvent in voluntary arrangement. On September 21st 2012, a Statement of Claims against the insolvent company was lodged with the District Court of Poznań, Division for Bankruptcy and Recovery Cases, by an attorney-in-fact acting for and on behalf of PGNiG S.A., which included a claim related to incorrect performance of the contract concerning the Grodzisk Nitrogen Rejection Unit Construction Project. The claim related to the Grodzisk Nitrogen Rejection Unit Construction Project was not included in the list of claims. As the date of prescription of the claims filed to be included in the bankruptcy estate of PBG S.A. approached, PGNiG S.A. took due care to interrupt the operation of the prescription period related to the claims under the contract. To this end, on November 5th 2013, the attorney-in-fact of PGNiG S.A. filed with the District Court for Poznań-Stare Miasto in Poznań a request to call for a conciliation hearing. In this request, all consortium members, i.e. parties to the contract concerning the Grodzisk Nitrogen Rejection Unit Construction Project, were called to pay PLN 159m to PGNiG S.A. as compensation for the damage resulting from improper performance of the EPC contract for delivery of the Grodzisk Nitrogen Rejection Unit.

On February 18th 2014, PGNiG S.A. was requested to make, by February 25th 2014, a prepayment for costs of translation of the request to call for a conciliation hearing. The date of the conciliation hearing was set for September 16th 2014.

On September 16th 2014, the District Court for Poznań–Stare Miasto of Poznań, 10th Commercial Division, considered PGNiG S.A.'s request to call for a conciliation hearing. Given the incorrect representation of the party called upon, the Court decided to summon the court supervisor and postpone the hearing until November 7th 2014.

On November 7th 2014, a hearing was held before the District Court of Poznań - Stare Miasto concerning PGNiG S.A.'s request to call on PBG S.A. w upadłości układowej (in company voluntary arrangement) for a conciliation hearing concerning PGNiG S.A.'s claims for compensation under the contract for the "Grodzisk Nitrogen Rejection Unit Construction Project". Due to the absence of representation of the court supervisor, despite effective serving of a correct notice of the date of the hearing, the settlement was not made, which concluded the proceedings with respect to PBG S.A.

As regards the two other entities covered by the request, i.e. Chart Inc. and Thermo Design, the case has been suspended for a year from March 17th 2014 until PGNiG S.A. makes the prepayment for costs of translation of the request together with appendices, for the purpose of its delivery to these entities. The proceedings will be reopened once the prepayment is made, but failure to make the prepayment within one year from the suspension thereof will result in discontinuance of the proceedings without interrupting the limitation period for PGNiG S.A.'s claims against the other contractors.