LATVIA Trends and Developments Contributed by: Agita Sprūde and Valts Nerets, Sorainen
Earlier precedents inform trends. EBO Invest AS, Rox Holding AS and Staur Eiendom AS v Republic of Lat- via (ICSID Case No. ARB/16/38, 2016, Latvia–Norway BIT) ended in Latvia’s favour in 2020, dismissing air- port development claims and imposing EUR2.6 million in costs on claimants. Discontinuities highlight settlement efficacy: Eugene Kazmin v Republic of Latvia (ICSID, 2017, Latvia– Ukraine BIT) over steel plant insolvency ended without an award, as did Indrek Kuivallik v Latvia (UNCITRAL, 2014, Estonia–Latvia BIT) on a wind energy takeover. A prior R.S.E. Holdings AG v Latvia (I) (ad hoc, 2014, Latvia–Switzerland BIT) on Parex Bank nationalisation settled amicably, while Bryn Services Ltd. v Latvia (ad hoc, 2013, Latvia–Switzerland BIT) was resolved via negotiation. These outcomes reveal trends: tribunals favour states on jurisdiction (eg, denial of benefits) and merits (eg, regulatory deference), with Latvia winning or settling 75% of decided cases. Renewables disputes like R.S.E. Holdings align with global surges, while finan- cial claims test AML–EU tensions. Latvian investors as claimants in investor–state disputes Information on Latvian investors initiating arbitrations against host states remains limited, mainly due to the confidentiality of many proceedings and Latvia’s modest outbound FDI profile, with an outward stock of approximately EUR2.5 billion as of 2024, primarily in neighbouring Baltic and Nordic markets. Nonethe- less, Latvian entities have pursued claims in several jurisdictions, particularly within Eastern Partnership countries like Ukraine and Moldova, and further afield in Central Asia and Scandinavia. These disputes often stem from alleged contract breaches, abrupt regula- tory changes, discriminatory treatment, or expropria- tory measures in energy, finance, insurance and fish- eries, highlighting emerging markets’ regulatory and political risks. Latvian investors have invoked BITs and the ECT in several notable cases, yielding mixed outcomes that underscore the potential for recourse and enforce- ment challenges. A prominent early example is Lim- ited Liability Company AMTO v Ukraine (SCC Case
No. 080/2005), where the Latvian claimant alleged breaches of promotion and protection standards under Article 10 (1) of the ECT arising from the Ukrain- ian state’s failure to safeguard AMTO’s minority share- holding in Ukrtansgaz, a subsidiary tied to contracts with the bankrupt Zaporozhye nuclear power plant. In its 26 March 2008 final award, the tribunal found a lim- ited breach but rejected most claims, awarding only EUR3.5 million in damages plus interest, far below the EUR133 million sought, while emphasising the state’s margin of appreciation in commercial disputes. In a more recent intra-EU context, Oļegs Roščins v Republic of Lithuania (ICSID Case No. ARB/18/37, often associated with the Latvian insurer RO-INS) challenged Lithuania’s 2018 revocation of the claim- ant’s insurance licence and subsequent liquidation proceedings under the 1992 Latvia–Lithuania BIT. The Latvian investor contended that these measures con- stituted unfair and inequitable treatment and indirect expropriation, driven by discriminatory enforcement amid solvency concerns. The tribunal’s May 2023 award acknowledged a breach of the FET standard due to procedural deficiencies. Still, it awarded no damages, deeming moral harm unquantifiable and the claimant’s losses non-attributable to the breach. While affirming partial liability, this outcome illustrates tribunals’ reluctance to impose financial penalties in regulatory-heavy sectors without clear causation. Perhaps the most high-profile case is Valeri Belokon v Kyrgyz Republic (UNCITRAL, PCA Case No. AA518), initiated under the 2008 Latvia–Kyrgyzstan BIT. The Latvian investor alleged expropriation and denial of justice following the Kyrgyz authorities’ 2010 seizure and liquidation of Manas Bank on money-laundering suspicions. The tribunal upheld the claims in its 24 October 2014 award, granting USD15 million in com- pensation for the bank’s value. However, the Paris Court of Appeal annulled the award on 21 February 2017, citing public policy violations due to evidence of the claimant’s involvement in illicit activities, a deci- sion upheld by the French Supreme Court in 2022. This annulment exemplifies the fragility of awards tainted by fraud allegations, particularly in politically volatile environments.
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