Spilbridge achieve another proceedings against the Latvian Parliament in the Constitutional Court

March | 2012

TM SECURITY have alleged that AS KALIJA PARKS have failed to pay over LVL 2 million under an alleged services contract. Nearly LVL 1.8 million of the alleged debt is purported to be a “contractual penalty” for late payment. AS KALIJA PARKS have issued legal proceedings against TM SECURITY seeking a declaratory judgement that:

(A) the alleged services contract is null and void;

(B) should the court reject the plea in “A”, reduce the amount of the contractual penalty as overly excessive.

The Supreme Court ruled that such prioritising of legal pleas is impermissible in the Latvian civil procedure. The Supreme Court ruled that pleas of the nature “if plea A is rejected, then plea B is to be examined” are alien to the Latvian civil procedure. Instead, the claimant must choose whether the nullity of the contract is argued or the excessiveness of the contractual penalty. The approach of AS KALIJA PARKS is usual in the Court of Justice of the European Union and domestic courts of various European Union Member States. Governments and even courts themselves resort to this approach in proceedings for preliminary rulings. However, the Latvian Supreme Court ruled that it has no place in the Latvian civil procedure.

The position taken by the Supreme Court (Chairman of the panel justice Gunars Aigars) is surprising. There is not a word in the Latvian Civil Procedure Rules supporting the position taken by the Supreme Court. Moreover, it contradicts the principle of expediency in justice and hence – the right to a fair trial. Within the framework of the Latvian Constitution and the European Convention of Human Rights there is simply no legitimate reason why the position AS KALIJA PARKS should not be allowed in the Latvian civil procedure. As a result, AS KALIJA PARKS has filed a constitutional complaint with the Latvian Constitutional Court, the proceedings have been initiated and the Latvian Parliament are to file its explanations by May 2012. The ruling is expected in the second half of 2012.