International arbitration law and rules in Latvia

Latvia is historically infamous in the arbitration domain due to its large number of institutional arbitration courts. As of the end of 2013, there were 214 such courts. However, by 2021, following new arbitration legislation, the total number of institutional arbitration courts fell significantly to 68. Moreover, the local arbitration law contains considerable inconsistencies that conflict with the essential doctrines and foundational principles of arbitration. For example, it lacks any mechanism to contest an arbitral award and it only permits experts designated by the arbitral tribunal (with no provision for party-chosen experts or fact witnesses). This leads to a complex and restrictive framework for carrying out arbitration in Latvia.

1.1 On 18 November 1918, Latvia proclaimed its sovereignty as an independent nation, with the global community acknowledging this status in 1921. However, in 1940 Latvia was incorporated into the Soviet Union, and the legal system was consequently dominated by Soviet law for almost five decades. This period saw the prioritisation of state courts over private dispute resolution mechanisms, which led to the virtual disappearance of arbitration. Following the re-establishment of Latvia’s independence in 1991, the nation embarked on a comprehensive legal reform process, including the revitalisation of arbitration as a feasible alternative dispute resolution method.

1.2 The primary legislation governing arbitration in Latvia is the Arbitration Law 1  (AL), which came into force on January 1, 2015. The Arbitration Law is based on the UNCITRAL Model Law, with some modifications to suit the Latvian context. Nevertheless, AL encompasses significant irregularities that contravene the fundamental tenets of arbitration.

1.3 The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention) applies to arbitration in Latvia. Latvia is a signatory to the New York Convention, having ratified it on 14 April 1992.

2.1 Latvia holds a unique position within the realm of arbitration, primarily attributable to its unparalleled number of institutional arbitration courts. As of November 2013, this small Baltic nation boasted 214 arbitration courts. However, following the implementation of the recently enacted Arbitration Law, the number of institutional arbitration courts in the country witnessed a significant decline, with the total dropping to 68 by February 2021.

2.2 Among the most eminent of Latvia’s permanent arbitration courts is the Riga Arbitration Court (RAC), which has carved a prestigious niche for itself since its inception in 1999. Having presided over more than a thousand disputes to date, RAC has gained considerable experience and expertise in the field of arbitration. Furthermore, the RAC has developed and implemented its own set of arbitration procedure rules, 2  which have reinforced its prominence within the Latvian arbitration landscape.

3.1 The AL governs the process of arbitration in Latvia and establishes the legal framework for the conduct of domestic and international arbitration proceedings in Latvia. 3

4.1.1 Arbitration agreement is defined as “an agreement entered into between the parties in accordance with the procedures laid down in this Law in order to refer a civil legal dispute for resolution by an arbitration court”. 4

4.2.1 An arbitration agreement is a legally binding contract that can be entered into by any individual possessing the capacity to act, a legal entity governed by private law, or a public law entity operating within the realm of private law. 5

4.2.2 This agreement is required to be in writing and can be incorporated as an independent clause (referred to as the arbitration clause) within any contract containing a liability that has given rise to, or may potentially give rise to, a civil legal dispute. Parties can modify or terminate an arbitration agreement through a mutual, written agreement.  6

4.2.3  A written agreement may also be constituted by the exchange of documents sent by mail or through electronic means of communication, provided that both parties’ intention to submit a current or potential civil legal dispute to arbitration is captured using a secure electronic signature. 7

4.2.4 In an arbitration agreement, the parties involved have the option to stipulate various conditions, including:

1. the selection of one of the permanent arbitration courts, or an ad hoc arbitration institution;
2. the venue for conducting the arbitration proceedings;
3. the language to be used throughout the arbitration process;
4. the number of arbitrators that will comprise the arbitral tribunal;
5. the procedures for handling the expenses associated with the arbitral tribunal; and
6. any other conditions that the parties deem significant to their arbitration agreement. 8

4.3.1 An arbitration court is responsible for resolving civil legal disputes, as long as the involved parties have willingly entered into and finalised an arbitration agreement. However, there are certain disputes that fall outside the jurisdiction of an arbitral tribunal, including:

1. cases where the decision may infringe upon the rights of an individual who is not party to the arbitration agreement;
2.  instances where one or more parties are a state or local government authority, and an arbitration court’s ruling could potentially violate the rights of said state or local government authority;
3. disputes related to entries within the civil records register;
4.  matters concerning the rights and obligations, or legally protected interests, of individuals under guardianship or trusteeship;
5. conflicts over the establishment, modification, or termination of property rights related to immovable property when one party involved in the dispute is subject to legal restrictions on acquiring the property for ownership, possession, or use;
6. cases involving the eviction of natural persons from residential premises;
7. disputes between an employee and an employer arising from the conclusion, amendment, termination, or fulfilment of an employment contract, or due to the application or interpretation of legal norms, provisions of a collective agreement, or workplace procedural regulations (individual employment relations disputes); and
8. matters regarding the rights and obligations of individuals who have entered into insolvency procedures. 9

4.4.1 The AL follows the doctrine of separability. It provides that an arbitration clause contained in a contract should be considered a separate agreement from the other provisions of the contract. As a result, nullifying, revoking, or terminating the main contract does not affect the validity of the arbitration agreement. 10

4.5.1 In the event of a valid and binding arbitration agreement between parties concerning a dispute, neither side can request a national court to unilaterally resolve the matter.

4.5.2 Individuals who have willingly entered into an arbitration agreement with the intention of resolving a civil legal dispute through arbitration are not permitted to retract from the agreement. Withdrawal from such an agreement can only occur if the arbitration agreement is amended or annulled in compliance with the legal procedures stipulated by law or the terms of the agreement itself (for example, if one of the parties lacked the legal capacity to enter into the arbitration agreement). 11

4.5.3 In addition, under Latvian law, not all matters can be settled through arbitration. If parties attempt to arbitrate a matter that falls outside the permissible scope of arbitration, the arbitration agreement can be invalidated. Entering into an arbitration agreement for such matters would be contrary to Latvian law, rendering the agreement void.

4.5.4 The validity of an arbitration agreement is maintained as long as the legal relationship that originally necessitated its establishment remains unaltered. 12

5.1.1 An individual is eligible for appointment as an arbitrator if they are of legal age and have provided written consent to be included in the list of arbitrators for a permanent arbitration court. 13 Furthermore, they must satisfy the following conditions:

1. they must not be subject to a trusteeship;
2. they must possess an unblemished reputation (for instance, no criminal convictions, ethical breaches, and sound financial integrity);
3. they must have obtained higher vocational or academic education (excluding first-level vocational education) and hold a lawyer’s qualification; and
4. they must have a minimum of three years of practical experience working in a legal capacity, either as an academic staff member at a higher education institution or in another legal role. 14

5.1.2  Individuals who do not meet the above requirements are ineligible for appointment as arbitrators. Additionally, those who fall into the following categories are also prohibited from serving as arbitrators:

1. individuals who have been identified as suspects or accused in criminal proceedings involving intentional criminal offences;
2. individuals against whom criminal proceedings involving intentional criminal offences have been terminated for reasons other than exoneration;
3. individuals who have been penalised for committing intentional criminal offences, regardless of whether the conviction has been expunged or removed;
4. individuals who have been convicted of intentional criminal offences, even if they have been released from serving the punishment due to the expiry of the statute of limitations, clemency, or amnesty; and
5. individuals who have undergone insolvency proceedings as a natural person within the past five years. 15

5.1.3 It should be noted that an arbitrator of a permanent arbitration court may not be listed with more than three such courts. 16

5.2.1 The parties involved in an arbitration process have the liberty to decide on the number of arbitrators comprising the arbitral tribunal, ensuring that the total constitutes an odd number. The parties may agree to have a single arbitrator. 17 In cases where the parties have not reached a consensus on the number of arbitrators and the permanent arbitration court’s procedural rules do not specify otherwise, a tribunal of three arbitrators shall be constituted.  18

5.2.2 The appointment procedures for arbitrators are determined by the parties involved.  19  These parties reserve the right to delegate the responsibility of appointing arbitrators to any natural person possessing the capacity to act or to any legal entity. 20

5.2.3 When parties agree to resolve a civil legal dispute through a permanent arbitration court, arbitrators are selected from the court’s list of arbitrators in accordance with its procedural rules.  21  Each of these courts is required to have a roster consisting of a minimum of 10 arbitrators. Around 60% of arbitration courts adhered to the minimum requirement by listing exactly 10 arbitrators. A further 31% have expanded their lists to include up to 15 arbitrators, while only 9% have extended their rosters beyond 16 arbitrators. Thus, the selection pool of arbitrators is very limited. Such limitation becomes more pronounced when considering the qualifications and language proficiencies of the listed arbitrators. For instance, if the parties prefer their proceedings to be conducted in a language other than Latvian, their choices may be restricted to a subset of arbitrators proficient in the chosen language. Similarly, if parties prioritise having an attorney-at-law as their arbitrator, they may find that not every arbitrator will meet this criterion. 22

5.2.4 In instances where the dispute resolution is entrusted to an ad hoc arbitration institution, each party appoints one arbitrator. Subsequently, the two chosen arbitrators mutually appoint a third arbitrator, who will act as the chairperson of the arbitral tribunal. The parties may also agree to have a single arbitrator. 23

5.2.5 Once a party has appointed an arbitrator and informed the other party, the appointed arbitrator cannot be dismissed without the consent of the opposing party.  24

5.3.1 An arbitrator is prohibited from participating in the examination of a case under the following circumstances:

1. if they have previously served as a representative, expert, or witness for any of the parties involved in a matter with the same participants;
2. if they share a third-degree kinship or second-degree affinity with any participant or their representative in the case;
3. if they share a third-degree kinship or second-degree affinity with another arbitrator on the arbitral tribunal examining the civil legal dispute;
4. if they are in an employment relationship with any participant in the civil legal dispute or their representative, or if the arbitrator provides legal assistance to any of the parties; and/or
5. if the arbitrator, their spouse, third-degree kin, business partner, or a commercial company involved in the civil legal dispute, in which the arbitrator or their third-degree kin is a participant, shareholder, member, or part of the supervisory, control, or executive body, has a financial interest in the outcome of the civil legal dispute. 25

5.3.2 An arbitrator is obliged to recuse themselves within five days of discovering their appointment or learning about any circumstances that could reasonably cast doubt on their objectivity and independence. In doing so, the arbitrator must provide the reasons for their recusal. 26

5.3.3 In the event of an arbitrator’s recusal, a new arbitrator shall be appointed following the procedures established in the agreement or the permanent arbitration court’s rules of procedure. 27

5.4.1  A party has the right to remove an arbitrator under the following conditions:

1. if the arbitrator is subject to the restrictions regarding participation in the examination of a matter and has not voluntarily recused themselves;
2. if the arbitrator does not meet the requirements established by the AL;
3. if the arbitrator does not fulfil the criteria agreed upon by the parties; and/or
4. if other circumstances reasonably cast doubt on the arbitrator's objectivity and independence (for instance, if an arbitrator stands to gain financially from a specific outcome of the arbitration or there are familial relationships or other close associations between the arbitrator and one of the parties). 28

5.4.2 An individual who is requested to consent to their appointment as an arbitrator must disclose to the parties any situation that could reasonably raise doubts about their objectivity and independence. If such circumstances arise or become known after the initiation of arbitration proceedings but before their completion, the arbitrator is obliged to promptly inform the parties. 29

5.4.3 A party may only remove an arbitrator it has appointed or participated in appointing if the grounds for removal become known after the arbitrator’s appointment.  30

5.4.4 The parties may establish procedures for the removal of an arbitrator within an agreement. If a permanent arbitration court or an ad hoc arbitral tribunal is resolving a dispute and the parties have not agreed on removal procedures, they will be determined in accordance with the AL. 31

5.4.5 To apply for the removal of an arbitrator, a party must submit a notice to the arbitration court within five days of becoming aware of the arbitrator’s appointment or the circumstances allowing the removal of an arbitration. The notice should specify the arbitrator the party wishes to remove and the reasons for the removal. 32

5.4.6 In the event that the arbitrator facing removal does not voluntarily step down from their duties, the arbitral tribunal or the arbitrator themselves must decide on the removal within five days of receiving the notice. 33

5.4.7 If an arbitrator’s removal is accepted, a new arbitrator will be appointed following the procedures set forth in the agreement or the rules of procedure of the permanent arbitration court. 34

6.1.1 The arbitral tribunal is responsible for determining its jurisdiction in a civil legal dispute, which includes assessing the validity of an arbitration agreement. The arbitral tribunal retains the authority to rule on matters pertaining to jurisdiction over a dispute at any stage during the arbitration proceedings.  35  A party may submit a claim asserting that a civil legal dispute falls outside the purview of an arbitration. 36

6.2.1Within the realm of arbitration proceedings, it is crucial to recognise that arbitral tribunals lack the jurisdiction to mandate interim measures. This prerogative is solely vested in the Latvian state courts. Latvian state courts can endorse interim measures in aid of arbitration only prior to the inception of arbitral proceedings.

7.1.1 Arbitration proceedings, whether conducted by a permanent arbitration court or ad hoc, are initiated under specific conditions.

7.1.2 For arbitrations conducted by a permanent arbitration court, proceedings commence upon the submission of a statement of claim (regardless of whether the parties have agreed or not agreed on the composition of the arbitration court within the arbitration agreement ). 37

7.1.3 For ad hoc arbitrations established to resolve a particular dispute without an agreed-upon arbitration court composition, proceedings begin when the defendant receives a copy of the application for a claim and a notification regarding the appointment of an arbitrator. 38

7.1.4  A written application for a claim must be submitted to the arbitration court 39 , containing the following information:

1. Contact details of the parties and their representatives.
2. In cases of monetary recovery claims, the name of the credit institution and the account number where payment is to be made, if applicable.
3. The claim subject, the total sum of the claim, and the calculation of the claim sum.
4. The basis for the claim and supporting evidence.
5. The plaintiff's raised claims.
6. A list of attached documents.
7. Any additional information necessary for the examination of the matter. 40

7.1.5 The application for a claim should be accompanied by:

1. An arbitration agreement, unless it is already included in the agreement connected to the dispute.
2. The agreement connected to the dispute.
3. Documents referenced by the plaintiff in the statement of claim. 41

7.1.6 Additionally, the statement of claim should be submitted to the arbitration court with the application for a claim with as many true copies as there are participants in the matter. 42

7.1.7 The defendant shall submit a response to the claim within the time period specified by the parties or by the arbitration court. The time period for the submission of the response may not be less than 15 days, counting from the day of sending the statement of claim to the defendant.

7.2.1 Within the context of arbitration proceedings, it is essential to ensure that all parties involved are granted equal procedural rights. The arbitral tribunal bears the responsibility of guaranteeing that parties have a fair and equal opportunity to exercise their rights in the defence of their interests. 43

7.2.2 As the arbitration process unfolds, parties engage in an adversarial manner, allowing them to exercise their procedural rights effectively. Through these adversarial proceedings, parties have the ability to present evidence, offer explanations, address applications to the arbitral tribunal, participate in the examination and evaluation of evidence, and undertake other procedural actions. 44

7.2.3 The parties are free to define the procedures for arbitration proceedings, as long as they operate within the framework of the AL. The permanent arbitration court’s procedures are organised in accordance with its rules of procedure, unless the parties have agreed on alternative procedures within an arbitration agreement, provided that these alternative procedures do not conflict with the permanent arbitration court’s rules of procedure. 45

7.2.4 Arbitrators are obliged to carry out their duties in good faith, without succumbing to any external influence. They must exhibit objectivity and independence in all aspects of their work and decision-making processes. 46

7.3.1 Parties are free to decide on the seat of the arbitration. The chosen seat is crucial in determining the application of Latvian arbitration laws and in classifying the award as either domestic or foreign.

7.3.2 The arbitral tribunal has the discretion to independently determine the location of arbitration proceedings, provided that the parties have not reached a prior agreement on this matter. In making this decision, the arbitral tribunal takes into consideration the efficiency of the process, ensuring that the chosen location is conducive to a fair and expedient resolution of the dispute. 47

7.4.1The parties involved in arbitration proceedings possess the right to reach a mutual agreement on the language to be used during the process. In the absence of such an agreement, the responsibility of determining the language for the arbitration proceedings falls on the arbitral tribunal. 48

7.4.2  Furthermore, the arbitral tribunal may request that the parties provide translations of any documentary evidence into the language used for the arbitration proceedings. This ensures that all relevant materials are accessible and comprehensible to everyone involved, facilitating a fair and efficient resolution of the dispute. 49

7.5.1 Law does not explicitly prohibit multi-party arbitration agreements. In practice, multi-party arbitration agreements can be employed if all the involved parties consent to such arrangements and include the appropriate provisions in their arbitration agreements.

7.6.1 In line with the arbitration agreement established by the parties, an arbitral tribunal is tasked with resolving a civil legal dispute through either oral or written procedures.  50 When employing the oral procedure, the arbitral tribunal conducts hearings to listen to the parties’ explanations and objections and examine the evidence presented. 51  On the other hand, the written procedure entails resolving disputes solely based on the documentary evidence and materials submitted by the parties. 52

7.6.2 The arbitral tribunal will settle a civil legal disagreement through an oral procedure, unless the parties specify a different type of proceeding in their arbitration agreement. However, if one party requests oral proceedings before an award is made, it must be conducted orally. 53

7.6.3 Additionally, it is the responsibility of the arbitral tribunal to ensure that the parties are acquainted with all submissions, documents, and other relevant information obtained during the process, including expert opinions and evidence. 54

7.7.1 In the event that a party, without justifiable cause, fails to attend an arbitration hearing or submit the necessary documentary evidence, the arbitral tribunal is entitled to proceed with the arbitration process and resolve the civil legal dispute based on the available evidence. 55

7.7.2 The death of a natural person who is a party or the cessation of existence of a legal person who is a party does not automatically terminate the arbitration agreement, unless the parties have expressly agreed otherwise and the disputed legal relations permit the transfer of rights. 56  In such instances, the arbitral tribunal will suspend the proceedings until a successor in rights for the party has been identified. 57  If there is a cession of a claim, it will serve as the basis for terminating the arbitration proceedings, unless the parties have agreed to resolve the civil legal dispute through a new arbitration process. 58

7.8.1 Evidence serves as the foundation upon which an arbitral tribunak establishes the presence or absence of facts that are crucial in resolving a civil legal dispute. 59 The responsibility of providing evidence falls on the parties involved, with each party required to substantiate the circumstances supporting their claims and objections. 60 Acceptable forms of evidence in an arbitration court may include explanations from the parties, documentary evidence (such as written documents, audio recordings, video recordings, electronic data carriers, and digital video discs), tangible evidence, and expert opinions. 61

7.8.2 Documents must be submitted either as originals or as duly certified true copies, copies, or extracts. If a party provides a true copy, copy, or extract of a document, the arbitral tribunal can request the submission of the original document, either on its own initiative or at the request of the other party. Upon request, the arbitral tribunal will return the original document to the submitting party, including a duly certified true copy, copy, or extract of the document in the arbitration proceedings. 62

7.8.3 The arbitral tribunal is responsible for determining the admissibility and relevance of evidence. 63  No evidence has a predetermined impact that would bind the arbitral tribunal. 64  In the reasoned section of its judgement, the arbitral tribunal must explain the rationale behind favouring one piece of evidence over another and the reasons for considering specific facts as proven or unproven. 65

7.9.1 Unless specified otherwise in an arbitration agreement, the arbitral tribunal has the authority to commission an expert examination upon a party’s request. This examination can be assigned to one or multiple experts, who are to be appointed by the arbitral tribunal. 66 The parties are required to provide any necessary information, documents, or present goods or other items to the expert at the arbitral tribunal’s request. 67  If a party requests, the arbitral tribunal can invite the expert to participate in a court hearing, during which the parties may pose questions to the expert regarding their opinion. 68

7.9.2 It is important to note that the law permits only those experts appointed by the arbitral tribunal and parties are not able to challenge the appointment of an expert. While parties are allowed to submit expert reports, such as those addressing quantum or causation, as written evidence by experts they have engaged separately, the examination of a party-appointed quantum expert is not permitted. Instead, the focus remains on the evidence and insights provided by the tribunal-appointed experts in the arbitration process. 69

7.9.3 Furthermore, the law does not recognise factual witnesses, which means that written witness statements are not permitted. In practical terms, this can be somewhat sidestepped by having a party empower a factual witness, such as a board member of a company, a financial officer or an account, with a power of attorney. This would then allow the said witness to offer clarifications on their behalf as an authorised representative. 70

7.10.1 The costs associated with arbitration proceedings encompass both the expenses related to the examination of a civil legal dispute and the arbitrators’ fees.  71 Costs of arbitration proceedings usually comprise the following:

1. costs relating to the examination of a civil legal dispute;
2. fees paid to arbitrators;
3. payment for the performance of an expert-examination;
4. payment for the participation of a secretary in arbitration proceedings;
5. payment for the participation of an interpreter in arbitration proceedings; and/or
6. payment for the participation of an expert in arbitration proceedings.

7.10.2 The exact amount of these costs, as well as the timeline and procedures for payment, will be set by the arbitration court. In doing so, they will consider factors such as the value of the claim, the complexity of the dispute, stipulations within the arbitration agreement, and any other pertinent details. 72

7.11.1 The confidentiality of arbitration proceedings is a cornerstone of the process, unless the involved parties mutually agree otherwise. 73  Arbitration court hearings are conducted behind closed doors, and the arbitral tribunal is obligated not to divulge any information about the proceedings to third parties or release it publicly, barring any agreement to the contrary by the parties. 74

7.11.2 Attendance at arbitration court hearings is restricted to individuals who are parties to the proceedings, and those who are not directly involved may only be present if the parties consent to their attendance. 75

7.11.3  Information pertaining to arbitration proceedings may only be disclosed to individuals who have a legal entitlement to access such information for the fulfilment of functions prescribed by law. 76  This can include parties to the arbitration, arbitrators, legal representatives, court officials, experts or witnesses, and regulatory or supervisory authorities.

7.12.1 The arbitration process is designed to function self-sufficiently and independently, to the greatest extent possible, from the national court system. As a result, state courts do not assist in the gathering of evidence during arbitration proceedings. However, an arbitral tribunal may, upon a well-founded request from one party, direct the opposing party to produce specific documentary evidence believed to be in their possession. 77  In making such a request, the requesting party must adequately describe the evidence and provide reasons for presuming that it is held by the other party. 78

7.12.2 Should the party in possession of the requested documentary evidence refuse to submit it within the specified time frame set by the arbitral tribunal, without denying their possession of the evidence, the tribunal may consider the facts that the requesting party sought to establish through the evidence as proven. 79

8.1.1 In arbitration courts where the arbitral tribunal consists of three or more arbitrators, decisions regarding awards should be reached through a majority vote. 80  This practice ensures that the collective wisdom of the arbitral tribunal guides the resolution of the dispute. However, there may be instances where procedural matters require a prompt decision. In such cases, the chairperson of the arbitral tribunal may be granted the authority to make independent decisions, either by the consent of the disputing parties or through the delegation of power by the other arbitrators. 81

8.2.1 Upon reviewing the subject matter of a dispute, an arbitral tribunal is obligated to deliver a written judgment within a 14-day period. 82  In cases where the arbitral tribunal is composed of multiple arbitrators, the judgment must bear the signatures of all the arbitrators involved. Should any arbitrator fail to sign the judgment, an explanation for the absence of their signature must be provided within the document. 83

8.2.2 The judgment is required to contain the following information:

1. the composition of the arbitral tribunal;
2. the date of the award and the location of the arbitration proceedings;
3. identification of the involved parties, including relevant personal or organisational details;
4. the subject matter of the dispute;
5. the rationale behind the judgment, unless the parties have agreed otherwise;
6. the outcome of the claim, detailing whether it has been satisfied fully, partially, or dismissed;
7. the amount awarded in cases involving monetary recovery, specifying principal debt, interest, and any associated details;
8. the specific property and its value, in cases involving recovery of property in specie;
9. any required actions, the responsible parties, and the deadlines for fulfilling these actions;
10. the apportionment of the award among multiple plaintiffs or defendants, if applicable;
11. the arbitration expenses and their distribution among the parties;
12. legal assistance expenses, if any, and their distribution among the parties; and
13. any additional information deemed necessary by the arbitral tribunal. 84

8.2.3 Within three working days of the award being issued, the arbitration court must send the judgment to all involved parties. This comprehensive approach to documenting and communicating the awrad ensures transparency, accountability, and fairness in the arbitration process. 85

8.3.1 It is permissible for parties involved to reach a settlement agreement. 86  However, such a settlement should not be allowed if its terms infringe upon the rights and interests of another individual, as protected by law. 87

8.3.2 During the course of arbitration proceedings, if the disputing parties manage to reach a settlement, the arbitral tribunal is obliged to terminate the proceedings. At the request of the parties involved and with the consent of the arbitral tribunal, the settlement can be documented in the form of an arbitration court judgment, outlining the agreed-upon provisions. 88

8.3.3 These arbitration court judgments, which encapsulate the settlement agreements, possess the same status and legal force as any other arbitration court judgment that resolves the subject matter of a civil legal dispute. 89

8.4.1 In cases where monetary recovery is involved, the arbitral tribunal may award interest in addition to the principal debt, specifying the period for which interest has been awarded and any rights the plaintiff may have regarding the receipt of interest prior to the execution of the judgment. 90

8.4.2 Furthermore, the arbitral tribunal can determine the allocation of legal assistance and arbitration proceedings expenses among the parties. 91

8.5.1 An arbitral tribunal is required to terminate the arbitration proceedings under the following circumstances:

1. the plaintiff decides to withdraw their claim;
2. the parties reach settlement;
3. the arbitration agreement is no longer in effect, as determined by the law or the agreement itself;
4. the arbitral tribunal concludes that the arbitration court lacks jurisdiction over the civil legal dispute; and/or
5. a party to the dispute, either a natural person or a legal entity, ceases to exist due to death or dissolution, and the disputed legal relationship does not permit the transfer of rights, or the parties have agreed that the proceedings should be terminated under such circumstances. 92

8.5.2 In cases where the arbitration proceedings are terminated due to reasons outlined in  (a) or (b) in the paragraph above, the parties are prohibited from reinitiating the same dispute, involving the same subject matter and basis, in either an arbitration court or a state court. 93  However, if the arbitration proceedings are terminated for reasons specified in  (c), (d), or €, the parties may pursue their claim in a state court. 94  This approach ensures that disputes are resolved fairly and efficiently, and that parties retain the ability to seek legal recourse where appropriate.

8.6.1 The ruling of an arbitration court becomes effective immediately upon its issuance, reflecting the finality and binding nature of the decision reached. 95

8.6.2 An arbitration court’s judgment is binding on the parties and requires voluntary compliance within the timeframe specified. The period for compliance must not be shorter than 10 days, thereby providing parties with a minimum duration to fulfil their obligations as outlined in the judgment. 96

8.7.1  An arbitral tribunal possesses the authority to rectify clerical or mathematical errors in an award, either on its own initiative or at a party’s request. These errors can be corrected without requiring the participation of the parties involved. 97

8.7.2 In the absence of an agreement to the contrary, a party may, within 30 days of receiving a true copy of the judgment, request the arbitral tribunal to clarify the judgment without altering its content, provided they inform the other party. Once issued, the explanation becomes an integral part of the judgment. 98

8.7.3 Similarly, unless the parties have agreed otherwise, a party may request the arbitral to issue a supplementary judgment within 30 days of receiving the judgment. This request is applicable if any claims, supported by evidence and explanations from the parties, have not been addressed in the original judgment. If the arbitral tribunal deems the request justified, it will issue a supplementary award accordingly. 99

8.7.4 The arbitral tribunal must notify the parties of the hearing date, during which the issues concerning the correction or explanation of the award, or the issuance of a supplementary award, will be decided. This notification must be provided no later than 15 days prior to the hearing. If the award’s operative part may be altered as a result of the correction, but its essence remains unchanged, the arbitral tribunal will invite the parties to express their opinions. The absence of any party will not hinder the process of correcting or explaining the award, or issuing a supplementary award. 100

9.1.1 facilitate the referral of parties to arbitration when a valid arbitration agreement exists;

9.1.2 issue interim measures before the establishment of an arbitral tribunal;

9.1.3 recognise and declare an award enforceable by issuing a writ of execution; and

9.1.4 adjudicate claims concerning the existence and validity of arbitration agreements.

10.1 In the Council of Europe, Latvia stands out as the sole Member State that has not incorporated a mechanism within its national legislation for contesting an arbitral award. Consequently, under Latvian law, there exists no avenue for parties to set aside an arbitral award, whether the arbitration proceedings are domestic or international in nature.

10.2 If a party is dissatisfied, they must wait until the other party seeks the court’s approval to enforce the arbitration decision. Only then can they raise concerns about the arbitral tribunal’s potential failure to adhere to procedural requirements or other crucial norms during the arbitration. The national court has the authority to deny the issuance of a writ of execution for its compulsory enforcement. This means that, upon review, if the court finds merit in the concerns raised about the arbitration’s adherence to procedural or normative requirements, it can choose not to grant the writ of execution. 101

10.3 Similarly, the law is silent on the fate of an arbitral award when a national court denies its enforcement. This gap leaves no legal recourse for challenging a flawed award, which remains legally binding. As a result, a party can seek to enforce the unexecuted award in foreign jurisdictions to attempt enforcement abroad. 102

10.4 In February 2023, the Latvian Constitutional Court ruled that the existing lack of a setting aside procedure in arbitration proceedings is unconstitutional. This ruling mandates the government to create a method for setting aside arbitration awards made within the country. However, the exact approach the legislature will adopt remains uncertain. 103

11.1 In the event that a party does not voluntarily comply with an arbitration court’s judgment in Latvia, the aggrieved party has the right to seek assistance from the state court by submitting an application for a writ of execution, which will mandate the compulsory enforcement of the arbitral award. 104

11.2 Furthermore, the arbitral tribunal is required to provide any necessary information requested by the state court to facilitate the decision-making process concerning the issuance of a writ of execution for compulsory enforcement or the refusal to issue such a writ. 105

11.3 While international ad hoc arbitration awards are enforceable under the New York Convention, domestic ad hoc awards lack enforceability. The rationale provided by lawmakers is the challenge in overseeing ad hoc arbitration processes, leading to a decision that only awards from institutional arbitrations are recognised by the state. Nonetheless, the law does not forbid entering into ad hoc arbitration agreements. Thus, parties might enter into a legally binding domestic ad hoc arbitration agreement, only to discover later that an award issued under such an agreement cannot be enforced 106