Arbitration Guide LATVIA

The Arbitration Guide for Latvia, published by the International Bar Association Arbitration Committee, provides a comprehensive overview of the arbitration framework, procedures, and the latest trends in Latvia.

Key Topics Covered

1. Background & Legal Framework

• Arbitration is widely used and seen as an effective method for resolving disputes in Latvia.
• Main advantages of arbitration in Latvia: swift arbitral proceedings (on average four to six months), procedural flexibility & lack of an appeal mechanism.
• Governing law: Latvian Arbitration Law (entry into force: 2015, last amendments in 2024) and the Latvian Civil Procedure Law (entry into force: 1999, last arbitration-related amendments in 2024).
• Although the Latvian Arbitration Law is not based on the UNCITRAL Model Law, following the latest amendments in 2024, the Latvian Arbitration Law incorporates the core elements of the UNCITRAL Model Law.

2. Arbitration Agreement

• Arbitration agreement must be in writing (any form). Amendments / termination possible only by written agreement of the parties.
• Arbitration agreement is enforceable unless revoked or annulled either by an agreement of the parties or by a court.
• The principle of separability upheld. In case of an assignment, the assignee is transferred only the right of claim, but, due to the principle of separability, not the arbitration agreement contained in the underlying contract. Thus, the assignee is not bound by the arbitration agreement.

3. Arbitrability & Jurisdiction

• Disputes, such as those involving government entities, individual employment disputes or disputes on the rights and obligations of persons declared insolvent are non-arbitrable (full list in the Guide).
• The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. The arbitral tribunal may rule on its jurisdiction either as a preliminary question or in an award on the merits.
• Parties may challenge in courts both the validity of arbitration agreements and an arbitral tribunal’s decision on jurisdiction.

4. Selection and Challenge of Arbitrators

• The parties are free to agree on number of arbitrators and on a procedure of appointing them. Where the appointment procedure agreed by the parties fails, any party may request the court to assist with appointment.
• Before accepting appointment, the arbitrator shall disclose in writing any facts and circumstances which may cast reasonable doubt on his impartiality or independence. If such circumstances arise or become known after the commencement of the arbitration but before the arbitration is completed, the arbitrator shall promptly disclose such facts and circumstances to the parties.
• A party may challenge the arbitrator within five days from the date on which it became aware of the appointment of that arbitrator or became aware of any of the circumstances which cast reasonable doubt on his impartiality or independence.
• Arbitration institutions commonly have lists of arbitrators. The list of arbitrators must be published by the arbitration institution on its website. For arbitrator candidates included in the list, additional restrictions apply, for example, such person may not provide legal services to the parties in dispute under the rules of such arbitration institution.

5. Evidence & Interim Measures

• Interim measures and security measures issued by the arbitral tribunal are not directly enforceable.
• Parties may request interim measures and security measures from the court both prior to commencement of arbitration and at any stage of the arbitration proceedings.
• Parties may use as evidence their own submissions, documentary evidence (written documents, audio recordings, videotapes, electronic media, digital video discs, etc.), physical evidence, witness statements and expert reports.
• The Court can provide support for arbitration to the same extent as the court can provide support for its own court proceedings, both in relation to securing and obtaining of evidence and granting interim measures. The court may hear the witnesses upon request from the arbitral tribunal.

6. Confidentiality

• Arbitration proceedings are confidential unless agreed otherwise. Arbitral hearings are closed, and arbitrators are statutorily required not to disclose any information in relation to arbitration to third parties.
• All court proceedings related to arbitration (for example, appointment and challenge of arbitrators, challenge to jurisdiction, securing of evidence, etc.) are heard in camera. Court decisions in relation to setting aside of arbitral awards and enforcement of arbitral awards are public.
• Arbitral awards are not published by any arbitral institution.

7. General principles of arbitral proceedings

• The parties are free to determine the arbitration procedure, unless otherwise provided by the Latvian Arbitration Law.
• The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.
• The parties exercise their procedural rights in an adversarial manner.
• If a party fails to object, it shall be deemed to have waived its right to object, except where the failure to object is for reasons beyond the party’s control.

8. Awards

• Arbitral awards must meet specific formal requirements outlined in the Latvian Arbitration Law.
• If the parties settle during the arbitral process, the arbitral tribunal shall set the terms of the settlement in the arbitral award.
• Interim arbitral awards are not enforceable in Latvia, unless interim arbitral award finally resolves a certain part of a dispute.

9. Setting-Aside & Enforcement

• Latvian Arbitration Law provides for the UNCITRAL Model Law-type “4+2” approach, differentiating between grounds that are to be proved by the applicant and grounds that may be invoked by the court ex officio.
• Annulment of an arbitral award may be requested within 30 days from the date of the award.
• Waiver of the right to challenge an arbitration award is not possible.
• Arbitral awards cannot be appealed on merits.
• Grounds for refusing enforcement of arbitral awards mirror the grounds for setting-aside of arbitral awards.

10. Costs

• Arbitration costs are typically borne by the unsuccessful party unless the arbitral tribunal decides otherwise.
• Arbitral tribunals seated in Latvia have broad discretion in relation to the awarding of costs. Costs in relation to legal assistance, in comparison to national court proceedings, are not capped.

The 2024 amendments to the Latvian arbitration law have modernized Latvia’s arbitration framework elevating it to the internationally recognized standards of the UNCITRAL Model Law. Comparing with other Baltic and Nordic countries, arbitration is widely used in Latvia, especially for domestic disputes with rather small amounts of claim.

Full guide available here.