COBALT achieves positive decision for employers in Constitutional Court

COBALT advised its client DNB Lizings SIA in lengthy litigation proceedings with its former employee. One of the issues had to be brought to the Constitutional Court for the client to recover certain amounts from the employee.

On 16 April 2015 the Constitutional Court passed a judgment whereby it held that Article 635(6) of the Civil Procedure Law, to the extent it relates to reversal of enforcement of judgment in matters concerning recovery of remuneration for work, does not comply with the first sentence of Article 92 of Satversme (the Constitution) and, therefore, will no longer be effective as from 1 November 2015.

The judgment puts an end to a long-lasting problem which was present in employment disputes where the court of lower instance orders with immediate effect an employer to pay an employee the amount sought by the employee but the employee’s action is finally dismissed. Pursuant to Article 635(6) of the Civil Procedure Law the employer was entitled to ask that the court orders the employee to repay the amount wrongly adjudged by the court of lower instance only if the judgment was based on false information or forged documents supplied by the employee.

The Constitutional Court held such situation not to be admissible as the employer was deprived of effective protection of his rights and a balance between effective enforcement of the judgment and protection of the employee’s rights was not ensured. In order for the legislator to have sufficient time for implementation of respective amendments to legislation, the Constitutional Court held that the contested legal provision will cease to be effective as from 1 November 2015.

Legal advice in the case was provided by Senior Associates Mārtiņš Aljēns and Uģis Zeltiņš.