After a lengthy drafting process and more than a year after the introduction of new administrative procedure in Latvia, on 2 June 2005 the parliament of Latvia finally adopted the Law on Reparation of Damages Caused by State Administrative Institutions. The Law entered into force on 1 July 2005.
The Law has been adopted to implement the rights of private persons provided for in the Constitution of Latvia and the Administrative Procedure Law to have an entitlement to reparation of material and personal, including moral, damage caused to private persons by an unlawful administrative act or unlawful action of a state institution. The Law sets out the conditions that a private person must satisfy in order to be entitled to claim damages from a state institution and the limits up to which the damage claims are satisfied by the state institutions.
Several preconditions must be met in order for the obligation to compensate damages to arise. Thus, first, the person claiming the damages must show that the state institution has either issued an unlawful administrative act or performed an unlawful action. Damages may also be claimed if the state institution has failed to act when it had an obligation to do so. Secondly, damages can be claimed only by the private person to whom the unlawful administrative act has been directed at, or a third party, the rights or lawful interests of which may be affected by the unlawful administrative act, or the private person directly affected or targeted by the state institution’s unlawful action or failure to act. Third, there must be a direct causal link between the unlawful act or action and the damage caused to the private person, i.e. the unlawful administrative act or action must have caused and determined a real possibility for the damage to arise and must be the main contributing factor to the arousal.
Three types of damage may be compensated pursuant to the Law on Reparation of Damages Caused by State Administrative Institutions – material, personal and moral. Personal damage relates to the harm or loss caused to the life, physical integrity, health, freedom, reputation, honor, personal and family secrets, commercial secrets, copyright and other rights of an individual. A legal person may claim personal damages in respect of business reputation, commercial secrets and copyrights. Lost profits may be claimed as part of material damages if the claimant can prove that such profits would have been obtained in the ordinary course of business. Moral damages may be claimed by individuals in respect of personal suffering due to a material abuse of its rights or legally protected interests. A private person does not have a right to reparation of damages and his/her entitlement to damages may be proportionally reduced if that person has not used all of their knowledge, abilities and practical possibilities to do everything possible to prevent or mitigate the damages. No damages may be claimed if the person has deliberately facilitated the arousal of damages or the increase of their amount.
The burden of proof in a damages claim is on the person claiming the damage. The moral damage is presumed to have been suffered if it can be proved that the abuse of the individual’s rights or legally protected interests has occurred. Nevertheless, the individual claiming moral damage needs also to substantiate the amount of damages claimed.
One of the most controversial issues during the drafting process of the Law on Reparation of Damages Caused by State Administrative Institutions was the issue of the limitation of damages to be paid. Currently the Law on State Liability provides that material damage is "usually" compensated in the following amounts:
a) if the amount of damages does not exceed 100 000 LVL (~142 290 EUR) – the entire amount of the damages is paid;
b) if the amount of damages is between 100 001 LVL and 1 000 000 LVL – the damages are compensated in an amount from 50% to 100%;
c) if the amount of damages exceeds 1 000 000 LVL – the amount of damages to be compensated can be less than 50%.
It remains to be seen whether the use of the word "usually" in determination of the damage compensation limits will be interpreted and applied so as the award the claimant damages in the actual amount in excess of the above limits.
Personal damages are normally limited to 5 000 LVL (~7 115 EUR), and moral damages to 3 000 LVL (~4 270 EUR). In case of grave personal or moral damage the limit of damages can be increased to respectively 7 000 LVL (~9 960 EUR) or 5 000 LVL (~7 115 EUR). LVL 20 000 (~28 470 EUR) can be claimed in personal or moral damages if harm to a person’s life or significant harm to person’s health has been caused.
The claims for damages must be submitted to the same institution which has caused the damage. The institution must forward the claim to its supervising institution, which is under an obligation to review the claim and make a decision in respect of the claim within one month. The decision may be appealed to the courts of general jurisdiction.
Damages may be claimed within one year of the date the claimant became aware or should have been aware of its entitlement to damages, however not later than five years after the date the unlawful administrative act entered in force or the unlawful action (failure to act) was committed.
So far no major legal controversies have yet arisen in enforcement of the Law on Reparation of Damages Caused by State Administrative Institutions.
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.
