Article by Andrejs Lielkalns
In an effort to combat various abuses of arbitration process in Latvia, the Latvian parliament ("Saeima") has passed an amendment to the Civil Procedure Law tightening the regulation of arbitration process and arbitration courts in Latvia. The amendment introduces a mandatory registration requirement for institutional arbitration bodies, expands the scope of issues which may not be referred to arbitration in Latvia, sets out new rules of enforceability of arbitral awards, clarifies certain procedural deadlines and contents of procedural documents.
In Latvia arbitration is governed by a separate stand-alone section of the Civil Procedure Law. The current amendments to the law constitute the first major change in the regulation of arbitration since the enactment of the Civil Procedure Law in 1998.
According to the amendments, as of 1 April 2005 all new permanent arbitration courts (institutional arbitration) to be established in Latvia are required to be registered in the Arbitration Courts Register. Only the registered arbitration courts will have the status of permanent arbitration courts and will be allowed to provide the arbitration services on a permanent basis.
The permanent arbitration courts which have been established prior to the amendments to the Civil Procedure Law had to notify themselves to the Ministry of Justice of Latvia by 31 March and are required to register themselves in the Arbitration Courts Register by 15 August 2005. The permanent arbitration courts which have not been registered in the Arbitration Courts Register by 30 September 2005 will cease to have the powers of arbitration, and the parties which have agreed to settle their disputes in these arbitration courts will be need to agree on another arbitration court as their dispute settlement forum. In case of failure to agree, their disputes will be referred to courts of general jurisdiction.
Only legal entities will be permitted to establish permanent arbitration courts in Latvia. However, no specific requirements or restrictions concerning the background, experience, standing or reputation are imposed on the legal entities wishing to establish a permanent arbitration court. The registration procedure is straightforward and is not subject to any qualification or authorisation requirements. In order to have the arbitration court registered, the founding entities need to take a formal decision to establish the arbitration court and file the decision together with rules of procedure of the arbitration court (regulations) with the Register of Enterprises of Latvia. Apart from the registration requirement, the permanent arbitration courts will not be subject to any licensing or supervision.
As an alternative to arbitration in a permanent arbitration court the Civil Procedure Law preserves the option of ad hoc arbitration. Ad hoc arbitration tribunals are not subject to any registration or notification requirements. However, as distinct from the permanent arbitration courts, the arbitration awards rendered by ad hoc arbitration will not be enforceable in Latvian courts, except if these awards qualify as foreign arbitral awards under the 1958 New York on Recognition and Enforcement of Foreign Arbitral Awards or if their enforcement would be required under another international treaty obligation of the Republic of Latvia.
The amendments to the Civil Procedure Law have considerably widened the scope of those disputes which cannot be submitted to arbitration. In addition to the existing five categories of non-arbitrable disputes the amendments have added the disputes concerning eviction of tenants from residential premises and individual labour disputes. A dispute would also be non-arbitrable if one of the parties is a state or municipal institution or if the award may affect the rights of state or municipal institutions, or if it concerns the rights or obligations of an insolvent entity. The other categories of non-arbitrable disputes include disputes resolution of which may affect the rights or lawful interests of parties which are not party to arbitration agreement, disputes involving changes in matrimonial registers, disputes concerning rights in rem if at least one of the parties has restricted rights to acquire the rights of ownership, possession or use to the real estate in Latvia and disputes concerning the rights and obligations of persons with a limited capacity to act.
The amendments have eliminated the gap that existed under the previous regulation concerning the scope of persons that have a legal capacity to enter into arbitration agreement. If previously only individuals and registered legal entities had the capacity, the amend law grants the right also to partnerships and various other formations which are capable to act as the subjects of private law but which does not have the status of a legal entity under the laws of Latvia.
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