Constitutional Court risks becoming laughable: provisional measures stripping defendants of all the money, except LVL 200, are OK

December | 2012

It is now official: the Constitutional Court found no constitutionality issues to be analysed concerning the provisional measures regime in commercial litigation stripping defendants of all the money and leaving the defendant, including also companies, with approximately EUR 300 to live and defend the case.

In England, for example, a freezing injunction would usually leave a reasonable amount of money unattached to let the defendant live normally and pay legal fees to defend the case. We are not aware of any English frezing injunctions forcing the defendant to live and defend the case on EUR 300. It is laughable.

Some might say that a cross undertaking in damages is what protects the defendant. Not in Latvia because any such cross undertakings are dscretionary and are almost never ordered.

What does a company do if all of its money, except EUR 300, is taken away as a result of such provisional measures and no cross undertaking in damages is ordered? It is a powerful tool to intimidate an opponent. The Constitutional Court saw no problem in the context of the right to a fair trial. We would invite foreign investors to seek legal assistance immediately when the risk of provisional measures being imposed is in the air.