COBALT wins a landmark case before the Constitutional Court on the lack of setting aside mechanism for arbitral awards

COBALT has successfully represented a client before the Constitutional Court, challenging national law provisions which do not provide for the right to file an application for the setting aside of arbitral awards before national courts.

On 23 February 2023, the Constitutional Court rendered its judgment in Case No. 2022-03-01, recognising that the currently existing mechanism of court control over arbitration proceedings is incomplete, as in certain cases, such control is not carried out at all.

As recognised by the Constitutional Court, although a person may waive its right to have the case heard by a court, and instead submit it to arbitration, the principle of the rule of law prohibits a person from waiving, even voluntarily, such fundamental guarantees enshrined in Article 92 of the Constitution as party equality, independence and impartiality of the court, and the right to be heard. The State is obliged to ensure supervision of arbitration proceedings, providing persons with a possibility to protect their infringed rights. Otherwise, both the obligations of the State and the fundamental rights of individuals would become illusory.

In the opinion of the Constitutional Court, the legislator’s prolonged failure to introduce an effective mechanism for the supervision of arbitration proceedings has undermined public confidence not only in arbitration proceedings, but also in the State and the law itself.

The above judgment is a significant milestone in the development of the Latvian arbitration landscape. COBALT hopes that the Constitutional Court’s judgment will be a long-overdue impulse for the legislator to not only introduce the setting aside mechanism, but also remedy other notable shortcomings of the Latvian arbitration law.

The client was represented before the Constitutional Court by COBALT Senior Associates Maija Tipaine and Dr. Toms Krūmiņš.