LATVIA Law and Practice Contributed by: Agita Sprūde, Artūrs Kazāks and Valts Nerets, Sorainen
2. Latvia–United Kingdom (BIT signed 1994) – 26 Jan- uary 2023, terminated by mutual agreement (termina- tion instrument). 3. Latvia–Belarus (BIT signed 1998) – denounced by the Saeima (Latvian parliament) on 6 October 2022. The denunciation triggers expiry after the treaty’s notice period (Saeima press release states the agree- ment will expire in 12 months, and investment protec- tions continue for 20 years under the usual sunset clause). In short, Latvia denounced the Latvia–Belarus investment agreement in October 2022 (expiry/denun- ciation timed per the treaty’s clause). 1.2 Arbitration Conventions Latvia is party to the major arbitration conventions relevant to investor–State arbitration. It has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) and is a Contracting State to the ICSID Convention. Latvia has also ratified the European Convention on International Commercial Arbitration. Therefore, Lat- via accepts international recognition and enforcement mechanisms relied on by investors and States in treaty arbitration. 1.3 Prevalence of Investor–State Arbitration Investor–State arbitration is a persistent, though not dominant, method for resolving disputes involving Latvia. Treaty-based arbitrations (ICSID, UNCITRAL and other institutional fora) have been used selec- tively – particularly in the energy and infrastructure sectors – and Latvia has defended several high-profile treaty claims. Domestic litigation remains important for contractual and administrative disputes, but inves- tors with treaty protections commonly use arbitration where available because it provides neutral fora and enforceable awards under international conventions. Since 1 January 2021, Latvia has designed the Court of Economic Matters to be competent to hear intra- EU investment disputes against Latvia. However, this domestic instrument is yet to be tested. 1.4 Key Industries Energy and municipal utilities (district heating, elec- tricity), financial services and construction/infrastruc- ture have seen the most investor–State activity. This is explained by: (i) significant privatisations and conces-
sions in the 1990s–2000s that gave rise to long-term contracts and regulatory interaction; (ii) the strategic nature of utility assets, which can generate expropria- tion or regulatory-review claims; and (iii) complex valu- ation and stranded‑assets issues that typically pro- duce treaty claims (for example, the UAB E energija electricity/heating dispute). 1.5 Major Arbitrations The most legally significant investor–state arbitrations include: • UAB E energija v Latvia (ICSID ARB/12/33), in which the tribunal found violations of the Latvia– Lithuania BIT (including under the fair and equitable treatment (FET) standard) and awarded compensa- tion (the award and subsequent annulment/annul- ment-related proceedings were widely reported); • Eugene Kazmin v Latvia (ICSID ARB/17/5), which resulted in the proceedings being discontinued and the claimant being ordered to bear costs after failure to comply with tribunal directions (including security for costs); and • Staur Eiendom AS, EBO Invest AS and Rox Hold- ing AS v Latvia (ICSID ARB/16/38), in which the tribunal decided that actions of the State-owned company were not attributable to the State, as it did not act as a de facto organ of the State or exer- cise governmental authority. These cases are essential for applying FET and for determining jurisdictional and procedural issues (security for costs, non‑compliance with tribunal orders) against Latvia. 1.6 Reaction to Awards Made Against the State Latvia has vigorously defended itself in cases where adverse awards have been rendered and has pursued available remedies under applicable rules and domes- tic procedures. Latvia has participated in annulment and post‑award proceedings in ICSID arbitrations (eg, seeking annulment or raising jurisdictional/procedural objections), and domestic courts have engaged with enforcement questions in line with the New York Con- vention and the Civil Procedure Law.
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