Case No. SPC-63

On legal consequences, when the parties, according to the procedure stated by the law, have agreed to forward the presumable civil dispute for trial to the arbitration court.

Riga, 24 October 2001

Decision 

The Senate of the Supreme Court of the Republic of Latvia in the following composition – chairman of the hearing, senator Z. Gencs, senators I. Fridrihsons and M. Zagere -, with participation of prosecutor of Prosecutor General Office of the Republic of Latvia A. Bule, in an open court hearing tried the case regarding the application of Gatis Flinters, authorized representative of Dmitrijs Kovals, on disputeless enforcement of obligations.

Having heard the report by senator I. Fridrihsons, explanations of R.Bortascenoks, an authorized person of Dmitrijs Kovaļs, that the protest is not grounded, and the opinion by a prosecutor A. Bule, that the court decision shall be cancelled and litigation in this case shall be dismissed, the Senate of Supreme Court of the Republic of Latvia

established:

In 18 December 2000. by and between Dmitrijs Kovals (as a lender) and LLC «Balt- mura» (as a borrower) the loan agreement on the sum of 120 000 US dollars was concluded , stipulating that loan shall be repaid till 28 December 2001. In accordance with amendments made to the mentioned loan agreement on 22 January 2001 the lender acquired rights to claim from the borrower payment of the loan prior to the stated term, providing a written notice on that is given to the borrower 45 days beforehand. The loan is secured by a public mortgage.

As LLC «Balt-mura» did not in due time fulfill its obligations set forth in the agreement, Dmitrijs Kovals, basing on Article 1775 of Civil Law and Articles 400.-406. of Civil Procedure Law, in 14 May 2001 submitted to Riga Center Regional court the application on disputeless enforcement of obligations .

According to decision of Riga Center Regional Court made on 14 May 2001 the debt in the amount of LVL 75 480 and litigation costs in the amount of LVL 100 were collected from LLC «Balt-­ mura» in favor of Dmitrijs Kovals.

The chairman of Civil Cases Department of Senate of the Supreme Court of the Republic of Latvia submitted a protest regarding cancellation of the mentioned court decision, alongside asking to dismiss the litigation in this case, because he considered that the court has substantially violated the procedural rule.

Having considered the arguments specified in the protest, the Senate is of the opinion that the protest is grounded and shall be sustained.

According to the will of parties stated in point 11 of the loan agreement and point 15 of the mortgage agreement concluded on 27.12.2000., a separate condition (arbitration clause) anticipates that all disputes arising out of the mentioned agreements will be tried in Baltic International Arbitration Court. The above mentioned corresponds to provisions of Article 23 of Civil Procedure Law, in accordance with which, a dispute arising from civil relations, upon a mutual agreement of the parties, may be forwarded for trial to the arbitration court.

By this provision of the agreement the parties have excluded the possibility to apply the procedural rules set forth in Chapter 50 « Disputeless enforcement of obligations » (Articles 400.- 406.) of the Civil Procedure Law.

In accordance with provisions of Article 488 of Civil Procedure Law, only the rules set forth in part «D» of Civil Procedure Law shall be applicable to arbitration courts.

In the current case the court has not taken into account that the parties, according to the procedure anticipated by the law, have agreed to forward the case for trial to the arbitration court. Thereby the court did not have legal grounds for applying provisions of Chapter 50 of Civil Procedure Law and in compliance with provisions set forth in Article 223, point 6 of the Civil Procedure Law, the litigation in the current case shall be dismissed.

R.Bortascenoks, an authorized person of Dmitrijs Kovals, clarified in the court hearing of Senate, that currently a claim on acknowledgment of the loan agreement of 18 December 2000 as invalid is submitted to the Baltic International Arbitration Court.

Pursuant to Article 474 of Civil Procedure Law, the Senate of the Supreme Court of the Republic of Latvia

ruled :

To cancel the decision of 14 May 2001 by Riga Center Regional Court and to dismiss the litigation in this case.

 

Chairman of the hearing, senator Z. Gencs,

senators I. Fridrihsons

M. Zagere

 
 
 
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