Arbitration in Latvia: New amendments on law regulating Dispute Resolution
In 11th of September of 2014 new amendments on law regulating Arbitration were adopted, these new regulations will be in force from 1st of January 2015. Adopted amendments will allow controlling and raising overall level of arbitration courts and also level of trust of parties that are involved in arbitration. Also these new regulations will raise level of trust of arbitration courts in eyes of public. Arbitration court has to be registered in commercial register of Latvia. At the moment there are 124 arbitration courts in Latvia. With new amendments being in force from 1st of January 2015, it is estimated that number of arbitrage courts will decrease.
Why arbitration in Latvia is popular?
Arbitration in Latvia is very popular, because process of litigation is very time consuming. Time of litigation in Latvia is usually between 3-5 years. Costs of litigation can be very high, because of State duties. Arbitration is more effective and efficient way how to resolve civil matters, which have acquired between legal or natural persons.
Reasons to use arbitration:
- Disputes in arbitrations are settled usually within 2-3 month;
- Costs are about the same as for States courts, but there are no costs for appellation and it is not possible to submit protest;
- Confidentiality of arbitration court;
- Parties can agree on language and place of arbitration court;
- Judgments of arbitration are enforceable in more then 100 countries, Latvia has signed the New York Arbitration Convention of 1958.
Judges
From 1st of January 2015, minimum number of judges of arbitration court will be 10 and judges of arbitration court will have to meet the following criteria:
- Have a clean slate;
- Have higher academic or professional education in field of law;
- At least 3 year work experience in field connecting with legal field.
- Judges have to be independent, impartial and fair.
Arbitrability
It is possible to settle any dispute concerning civil matter by arbitration if parties have voluntary concluded arbitration contract. But accordingly to Art. 487 of Civil procedure Law, it is not possible to resolve following disputes by arbitration:
- Decision can affect rights of person or rights protected by law, which is not member of arbitration contract;
- One of the parties is state or regional authority;
- Judgments connected with changes in marital status;
- Decision affecting persons under the auspices of somebody;
- Disputes between employer and employee, if dispute arises in conclusion, amending, terminating or performing employment agreement.;
- Persons eviction from residential premises;
- About rights and obligations of persons who are involved in insolvency process or in legal protection process;
- Disputes in connection to special litigation processes.
Arbitration clauses
Arbitration and process of arbitration is regulated by arbitration law of Latvia and also by Civil procedure law of Latvia.
Art. 10 of Arbitration law, states that contract of arbitration is contract concluded between two parties to settle civil dispute in arbitration court. Parties can agree on settling dispute in arbitration court before our after dispute has acquired. Also parties can agree on: independent arbitration or ad hoc arbitration, place of arbitration, language of arbitration, number of judges, order of covering of litigation expenses, other questions that are concerning parties.
Arbitration process
Process of arbitration starts with submission of claim or in case of ad hoc arbitration claim and nomination of judge , after defendant have received claim, in time specified in articles of arbitration court or in arbitration contract, but not less then in 15 days, defendant have to submit review of claim. In review of claim defendant states, if he acknowledges claim, objections about claim and other circumstances that are significant to hear this case in court. Counterclaim by defendant have to be submitted within terms stated in regalement of arbitration court. In case of ad hoc arbitration, if parties have not agreed otherwise, counterclaim have to be submitted in submission period of review of claim. If parties have not agreed otherwise, it is possible to add something or amend claim before court hearing.
Taking into account concluded arbitration contract between parties, court settle dispute by oral or written procedure. In case of verbal hearing, arbitration court hear out arguments of parties, but in case of written process only submitted materials and evidence are taken into account.
Decision is made by majority of judges. Court makes judgment within 14 days after examination of civil dispute. Judgment is in force from date of judgment.
Enforcement of Arbitration decision
Judgments of arbitration court are decided by majority votes of judges, if there are more then one judge. Judgment is written within period of 14 days after case has been reviewed by essence. Courts judgments are not appealable. Parties are bound and voluntary have to act according to courts judgment. If parties do not act according to decision of arbitration court, other party can go to regional court to receive application to execute arbitration courts decision.
New amendments in arbitration law will raise overall level of competence and trust of Arbitration courts. Judgments will be more trustworthily. Natural and Legal persons will be more willing to settle disputes in arbitration courts, knowing that courts and judges are competent to settle disputes.
Eduards Dzintars, lawyer of the Gencs Valters Law Firm in Riga.
Practising in fields of Dispute Resolution Law in Latvia, Estonia, Lithuania
T: +371 67 24 00 90
F: +371 67 24 00 91