Latvia: The Constitutional Court explains the role of general jurisdiction courts in supervising arbitrations as well as new rules for operating arbitration
In a landmark ruling in the arbitration field delivered on 28 November 2014 the Latvian Constitutional Court declared that general jurisdiction courts must accept claims for review of the competence of arbitration.
In a particular dispute adjudicated by arbitration, one of the parties ascertained that there was no arbitration agreement and accordingly no competence for the arbitration court because that party’s signature on the arbitration agreement was false. The arbitration court rejected a request to investigate the signature and proceeded with adjudication. The general jurisdiction courts rejected attempts to invoke review by arguing that according to the law an arbitration court has exclusive competence to decide issues as regards the existence and validity of an arbitration agreement.
The Constitutional Court confirmed that although the state is not responsible for supervising justice in arbitration proceeding, nevertheless it is vital for courts of general jurisdiction to have a mechanism to review situations where doubt exists as to a person’s free will when giving consent to arbitration.
In parallel with this clarification a new arbitration law is in force in Latvia since 1 January 2015. Albeit the final version of the law is considerably ‘softer’ than the draft, it sets additional requirements for arbitration to be allowed to operate. Thus the new law aims to reduce the option to establish ad hoc arbitration for a particular dispute and seeks to enhance the professionalism of arbitration. The most important new requirements for arbitration include:
- publication of each court’s list of arbitrators comprising not less than ten persons;
- a mandatory lawyer’s qualification for judges;
- public availability of the rules of procedure of each court.
The official list of arbitration courts allowed to operate as well as the rules of procedure of each arbitration court will be published on the website of the Latvian Register of Enterprises.
Source: Judgment of the Constitutional Court of the Republic of Latvia (28.11.2014)
Arbitration Law (2015)