On 5 October 2006, the Latvian Parliament adopted a new Law on Implementation of Sanctions of International Organizations in the Republic of Latvia. The law will enter into force on 1 January 2007 and will replace the existing Law on Regime of Sanctions of International Organizations in the Republic of Latvia which has been in place since April 2000.
The new Law is applicable only to the sanctions imposed either by the United Nations Organization or by the European Union and, thus, limits the potential scope of those international organizations whose sanctions are subject to implementation in Latvia. The current regulation grants the Cabinet of Ministers power to implement sanctions of an unspecified range of international organizations. That power, however, has never been used, and so far only sanctions of either the United Nations or the European Union have been implemented by the Cabinet of Ministers.
The sanctions imposed by the United Nations Organization or the European Union are implemented in Latvia by Regulations of the European Union or the Regulations of the Cabinet of Ministers of Latvia. The Cabinet of Ministers has broad authority to determine the measures necessary to implement the sanctions and their duration in the Republic of Latvia.
The sanctions may be implemented by applying any of the three types of implementation measures recognized by the Law on Implementation of Sanctions of International Organizations, i.e., financial restrictions, transactional (contractual) restrictions and travel restrictions.
Financial restrictions apply to financial instruments and financial resources of the country subject to the sanctions and the persons related to that country. When such restrictions are imposed, none of Latvia’s financial and capital market participants may carry out any operations involving financial instruments or resources that are owned (either directly or indirectly) by the countries or persons subject to such financial restrictions. Implementation of these restrictions will be supervised by the financial and capital markets regulator in Latvia.
Transactional restrictions prohibit entry into any transactions involving economic resources or assets which result in the change of ownership, possession or holding of such resources or assets with an aim to create financial instruments or resources where a contracting party is a country subject to sanctions or persons related to that country. These restrictions include a prohibition to record in any public registries or other registries confirming property rights of a person the identity of persons subject to the transaction restrictions, as well as any property owned or effectively controlled by such persons. In addition, transaction restrictions include a generally applicable prohibition on the entry into any transaction concerning or involving any economic or financial resources or assets or which is subject to transaction restrictions. According to Latvian contract law, any such transaction would be considered void ab initio.
Travel restrictions prohibit entry into the Republic of Latvia of any persons subject to the travel restrictions pursuant to the Regulation of the European Union or the Regulations of the Cabinet of Ministers.
The Regulation of the European Union and the Cabinet of Ministers on implementation of sanctions is enforceable against the relevant persons by way of decisions of the competent authorities. The implementation and enforcement decisions of the competent authorities are appealable in accordance with the rules of administrative procedure and are subject to enforcement by the relevant authorities in accordance with the rules of civil procedure.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
