LATVIA Law and Practice Contributed by: Edward Kuznetsov, Marine Legal Bureau
does not prevent Latvian courts from granting arrest, provided that the claimant establishes a prima facie maritime claim and the statutory requirements for interim relief are satisfied. 7.5 Domestic Arbitration Institutes Latvia does not have a domestic arbitration institute that specialises exclusively in maritime arbitration comparable to established international maritime arbitration centres. Maritime disputes seated in Latvia may nonetheless be referred to arbitration under the general arbitra - tion framework, and Latvian courts adopt a support - ive approach to arbitration, including enforcement of arbitration agreements and awards. 7.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses Where proceedings are commenced in Latvia in breach of a valid foreign jurisdiction or arbitration clause, the defendant may seek a stay or dismissal of proceedings. In arbitration cases, Latvian courts will generally decline jurisdiction and refer the parties to arbitra - tion. In jurisdiction clause cases, courts apply EU law or private international law principles, as applicable. Anti-suit injunctions are not granted by Latvian courts, but procedural remedies are available to prevent par - allel proceedings and to enforce the agreed dispute resolution mechanism. 8. Ship-Owners’ Income Tax Relief 8.1 Exemptions or Tax Reliefs on the Income of Ship-Owners’ Companies Latvia does not operate a tonnage tax regime or any shipping-specific income tax exemption comparable to those available in certain traditional maritime juris - dictions. Shipping companies incorporated in Latvia are sub - ject to the general corporate income tax regime, under which corporate income tax is levied only upon dis - tribution of profits, rather than on annual accounting
profits. Retained or reinvested profits are not subject to corporate income tax until distribution. Latvian tax law does not provide shipping-specific accelerated depreciation or other sector-specific tax reliefs applicable exclusively to ship-owners’ income. Depreciation of vessels follows the general tax depre - ciation rules applicable to fixed assets. As a result, tax planning for shipping businesses in Latvia typically focuses on corporate structuring, financing arrangements and dividend policy, rather than on dedicated shipping tax incentives. Latvia’s tax framework may nevertheless be attractive in certain cases due to the deferred taxation of undistributed profits and compliance with EU state aid rules. 9. Implications of Non-Performance, IMO 2020, Trade Sanctions and International Conflict 9.1 Force Majeure and Frustration Under Latvian law, non-performance of contractual obligations is assessed primarily under the Civil Law, which adopts a restrictive approach to force majeure and frustration. Force majeure requires circumstances that are extraordinary, unforeseeable and unavoida - ble, and which objectively prevent performance. Typical shipping-related events such as late deliv - ery, slow loading or discharging, or non-arrival of a chartered vessel will not automatically qualify as force majeure or frustration. Each case is assessed on its facts, with significant weight given to the con - tractual allocation of risk, including express force majeure clauses. Frustration is applied narrowly and only where performance has become legally or physi - cally impossible, rather than merely more onerous or unprofitable. 9.2 Enforcement of the IMO 2020 Rule Limiting the Sulphur Content of Fuel Oil Latvia has implemented IMO 2020 through EU legis - lation and domestic enforcement mechanisms. The applicable sulphur limit is 0.50% m/m, with stricter limits applicable in designated emission control areas where relevant.
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