Construction Disputes Before The Newly Formed Court Of Economic Affairs In Latvia

• Published date: 23 June 2021
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Arbitration & Dispute Resolution, Construction & Planning, Real Estate
• Law Firm: Vilgerts
• Author: Ms Anda Staltmane

On 31 March 2021, the newly formed Court of Economic Affairs (CEA) of the Republic of Latvia. The CEA now has sole jurisdiction over complex disputes of commercial nature, including a certain category construction disputes. The law states the CEA reviews 'claims arising from contractual obligations between participants of the construction process, including subcontractors, for the construction of second and third group buildings, which are subject to a building permit, except construction of individual one- or two-apartment buildings and functionally related buildings'(Clause 9 Article 24 (1.¹) of the Civil Procedure Law).

The wording of the aforementioned provision could cause confusion and questions could arise as to which construction related claims should indeed be brought before the CEA, and which construction related claims are to be brought before the district (city) court. A comprehensive practice is not yet available and only time will show how the laws regulating the CEA's jurisdiction will be applied. Currently, some answers can be found in publicly available legislation documents and in the laws regulating the overall construction process and relevant definitions. The author has prepared a brief summary of the main findings on how to distinguish jurisdiction of the CEA from the jurisdiction of district (city) courts in Latvia with regard to construction disputes. In order to bring a claim before the CEA, the construction dispute must meet all the following three preconditions.

Precondition No 1 - the dispute has arisen between construction participants

The law stipulates the CEA has jurisdiction over disputes between construction participants, including subcontractors. As defined in Article 19 of the Construction Law, the construction participants are the owner of the land, owner of the building, designer, constructor, construction supervisor and expert.

The CEA, however, will not revise disputes concerning the construction participants' liability towards third parties. For example, a neighbor, who owns a real estate adjacent to the construction site, will not be entitled to bring a claim before the CEA against a construction participant and claim losses for the damaged property; a seller of construction materials will not be entitled to file a claim before the CEA regarding a constructor's debt for goods delivered to the construction site. The CEA will also not have jurisdiction over disputes arising from the employment relationship between a...