Investor–State Arbitration 2025 Comparisons

Latvia’s position concerning investor–State arbitration is pragmatic and aligned with its EU membership. Latvia participates in international arbitration frameworks and has used treaty-based arbitration (notably under bilateral investment treaties (BITs) and the ICSID Convention). Since EU accession (1 May 2004), Latvia has had to consider EU law limits on intra‑EU BIT arbitration (notably the CJEU’s Achmea judgment), and many EU-related issues have reduced reliance on intra‑EU BIT claims. The Latvian government has not pursued a wholesale denunciation campaign of its remaining BITs in 2024–25. Still, it has managed its treaty relationships in line with EU law and has been active in updating domestic arbitration rules to reflect international standards. Following the Russian full-scale invasion of Ukraine in February 2022, the BIT with Belarus was denounced and consequently was terminated as of 18 October 2023.

Latvia has terminated the following BITs because of the Achmea decision:

1. Latvia–France (agreement between the Republic of Latvia and the French Republic; signed 15 May 1992, in force 1 Oct 1994).

2. Latvia–Denmark (signed 30 Mar 1992, in force 18 Nov 1994).

3. Latvia–Netherlands (signed 14 Mar 1994, in force 1 Apr 1995).

4. Latvia–Estonia (signed 7 Feb 1996, in force 23 May 1996).

5. Latvia–Germany (signed 20 Apr 1993, in force 9 Jun 1996).

6. Latvia–Lithuania (signed 7 Feb 1996, in force 23 Jul 1996).

7. Latvia–Spain (signed 26 Oct 1995, in force 14 Mar 1997).

8. Latvia–Portugal (signed 27 Sep 1995, in force 17 Jul 1997).

9. Latvia–Greece (Hellenic Republic) (sig. 20 Jul 1995, in force Feb 1998).

10. Latvia–Slovakia (signed 9 Apr 1998, in force 30 Oct 1998).

11. Latvia–Belgo-Luxembourg Economic Union (BLEU) (signed 27 Mar 1996, in force 4 Apr 1999).

12. Latvia–Hungary (signed 10 Jun 1999, in force 25 Aug 2000).

13. Latvia–Romania (signed 27 Nov 2001, in force 22 Aug 2002).

14. Latvia–Bulgaria (signed 4 Dec 2003, in force 23 Jul 2004).

15. Latvia–Croatia (signed 4 Apr 2002, in force 25 May 2005).

The above Latvia BITs are listed in Annex A of the 2020 Termination Agreement and were terminated pursuant to that agreement (the instrument that implemented Achmea’s practical effect across signatory EU member states).

Latvia has terminated the following BITs via bilateral terminations/denunciations, where termination was done by mutual agreement or domestic denunciation:

1. Latvia–Norway (BIT signed 1992) – 27 March 2023, terminated via mutual termination/exchange of notes.

2. Latvia–United Kingdom (BIT signed 1994) – 26 January 2023, terminated by mutual agreement (termination instrument).

3. Latvia–Belarus (BIT signed 1998) – denounced by the Saeima (Latvian parliament) on 6 October 2022. The denunciation triggers expiry after the treaty’s notice period (Saeima press release states the agreement will expire in 12 months, and investment protections continue for 20 years under the usual sunset clause). In short, Latvia denounced the Latvia–Belarus investment agreement in October 2022 (expiry/denunciation timed per the treaty’s clause).

Latvia is party to the major arbitration conventions relevant to investor–State arbitration. It has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) and is a Contracting State to the ICSID Convention. Latvia has also ratified the European Convention on International Commercial Arbitration. Therefore, Latvia accepts international recognition and enforcement mechanisms relied on by investors and States in treaty arbitration.

Investor–State arbitration is a persistent, though not dominant, method for resolving disputes involving Latvia. Treaty-based arbitrations (ICSID, UNCITRAL and other institutional fora) have been used selectively – particularly in the energy and infrastructure sectors – and Latvia has defended several high-profile treaty claims. Domestic litigation remains important for contractual and administrative disputes, but investors with treaty protections commonly use arbitration where available because it provides neutral fora and enforceable awards under international conventions. Since 1 January 2021, Latvia has designed the Court of Economic Matters to be competent to hear intra-EU investment disputes against Latvia. However, this domestic instrument is yet to be tested.

Energy and municipal utilities (district heating, electricity), financial services and construction/infrastructure have seen the most investor–State activity. This is explained by: (i) significant privatisations and concessions in the 1990s–2000s that gave rise to long-term contracts and regulatory interaction; (ii) the strategic nature of utility assets, which can generate expropriation or regulatory-review claims; and (iii) complex valuation and stranded‑assets issues that typically produce treaty claims (for example, the UAB E energija electricity/heating dispute).

The most legally significant investor–state arbitrations include:

• UAB E energija v Latvia (ICSID ARB/12/33), in which the tribunal found violations of the Latvia–Lithuania BIT (including under the fair and equitable treatment (FET) standard) and awarded compensation (the award and subsequent annulment/annulment-related proceedings were widely reported);

• Eugene Kazmin v Latvia (ICSID ARB/17/5), which resulted in the proceedings being discontinued and the claimant being ordered to bear costs after failure to comply with tribunal directions (including security for costs); and
• Staur Eiendom AS, EBO Invest AS and Rox Holding AS v Latvia (ICSID ARB/16/38), in which the tribunal decided that actions of the State-owned company were not attributable to the State, as it did not act as a de facto organ of the State or exercise governmental authority.

These cases are essential for applying FET and for determining jurisdictional and procedural issues (security for costs, non‑compliance with tribunal orders) against Latvia.

Latvia has vigorously defended itself in cases where adverse awards have been rendered and has pursued available remedies under applicable rules and domestic procedures. Latvia has participated in annulment and post‑award proceedings in ICSID arbitrations (eg, seeking annulment or raising jurisdictional/procedural objections), and domestic courts have engaged with enforcement questions in line with the New York Convention and the Civil Procedure Law.

Latvia has concluded and ratified several BITs and participates in multilateral instruments applicable to investment protection (including the ICSID Convention and the New York Convention). The complete list of Latvia’s international investment agreements (IIAs) is maintained in the UNCTAD investment treaty database, which currently lists nine BITs in force with Armenia, Azerbaijan, Canada, Iceland, Kyrgyzstan, Moldova, Singapore, Uzbekistan and the United States.

Latvia’s treaty practice includes BITs with other Baltic states and a range of third countries concluded in the 1990s and 2000s. Some older intra‑EU BITs have been subject to scrutiny following the CJEU jurisprudence. Latvia continues to manage its treaty network pragmatically, but there has been no mass accession to new BITs in 2024–25.

Many of Latvia’s BITs follow the classic 1990s Eastern European model BIT (broad protections for investors: FET, protection from expropriation, full protection and security, national and MFN treatment, and investor-state arbitration). While Latvia has not published a uniform ‘model BIT’ in recent years, its older treaties share those standard provisions. Recent practice and EU obligations have required careful revision in how those provisions are interpreted vis‑à‑vis EU law.

Latvia is an EU member state (since 1 May 2004). As an EU member state, it is a party to EU trade and investment frameworks. Intra‑EU treaty arbitration has been restricted by the CJEU jurisprudence (Achmea) and later EU policy developments. Investment protection for EU investors is often channelled through EU law remedies and state courts. For non‑EU investors, BITs and multilateral treaties (including the ICSID Convention) remain available where treaty language allows.

Interpretive aids for investment treaties involving Latvia are limited to the standard diplomatic exchanges and the treaty texts. Latvia (like many states) publishes treaty texts on official channels, and the wider IIA community relies on tribunal decisions, UNCTAD and national foreign ministry materials as interpretive guidance.

In the classic sense, Latvia does not have a standalone, comprehensive Foreign Investment Act. Investment protection in Latvia is provided through constitutional guarantees, sectoral laws, corporate law and treaty protections. Sectoral regimes (national security‑sensitive sectors, land rules, gambling, M&A screening in certain circumstances) interact with treaty protections. Where national law provides protections or restrictions, those interact with treaty standards and may be relevant to disputes, but do not replace treaty claims available to covered investors.

Latvian State-owned companies are typically cautious concerning arbitration, and many State-owned companies consider the law as prohibiting such engagement. For the State institutions, it is forbidden to conclude arbitration agreements. Nevertheless, some State-owned entities agree to the use of international arbitration, particularly in concession and procurement contexts, but their prevalence varies by sector. Such clauses can provide potent contract‑based remedies (including direct contractual damages and injunctive mechanisms) complementary to treaty protection. Treaty protections often offer a broader public‑international-law standard (eg, FET) plus access to international arbitration. In contrast, contract clauses create private law obligations enforceable under chosen arbitration rules and seats.

Common treaty complaints brought against Latvia include: (i) indirect or direct expropriation (including de facto dispossession following regulatory change); (ii) breaches of FET and legitimate expectations; (iii) breach of contract by state entities or improper interference with concession/lease arrangements; (iv) failure to ensure full protection and security (in narrower physical-security contexts); and (v) denial of justice or procedural irregularities. The relative importance of each depends on the sector and the factual matrix. Historically, in Latvia, regulatory decisions affecting energy/utilities and municipal concessions have been a frequent source of claims.

Latvian law permits broad party autonomy in selecting arbitrators. The Arbitration Law (and generally applicable rules) uphold party‑choice principles. There are statutory safeguards as to the number of arbitrators (an odd number defaults for three‑member tribunals) and specific professional requirements in domestic contexts. Still, no broad restriction prevents parties from choosing appropriately qualified arbitrators from outside Latvia for international disputes.

The Arbitration Law and the rules of permanent courts of arbitration (for example, the Latvian Chamber of Commerce and Industry Court of Arbitration) provide default procedures for selecting arbitrators. These specify appointment defaults where parties fail to appoint and contain mechanisms for ad hoc panels (each party appoints one arbitrator; the two co‑arbitrators appoint the presiding arbitrator; failing agreement, appointment by an institution or court). Multiparty situations are governed by the applicable arbitral rules or, failing that, by the law providing institutional or court appointment mechanisms.

Latvian courts can intervene in arbitrator appointments in limited circumstances, mainly where the parties’ agreed appointment mechanisms fail or where institutional rules call for court assistance. Such intervention is supportive (to preserve arbitration) rather than supervisory. Courts will avoid interfering with substantive tribunal selection except to secure the parties’ agreement or to ensure procedural propriety.

The Arbitration Law and institutional rules govern challenges or removals of arbitrators. Grounds mirror international practice: justifiable doubts as to independence or impartiality, failure to disclose circumstances giving rise to conflicts, incapacity, or serious misconduct. Procedural rules provide for challenge procedures and replacement mechanisms.

The Arbitration Law requires disclosure of potential conflicts and upholds standards of independence and impartiality. Institutional rules (eg, ICC, ICSID, UNCITRAL practice for international seats) require arbitrators to disclose relevant relationships and potential conflicts at the outset.

The Arbitration Law provides that national courts can assist arbitration by granting interim and provisional measures to preserve assets, evidence or the status quo upon the parties’ request. An arbitral tribunal seated in Latvia and subject to the Arbitration Law does not have the right to award preliminary relief. Possible preliminary relief entails seizing property or funds, registering attachments in public registers (such as the Land Register) or prohibiting specific actions by the defendant (such as enforcing a bank guarantee).

Domestic courts play a supportive but essential role in interim relief. They can grant interim measures in aid of arbitration where necessary. Courts generally act to facilitate arbitral measures to the extent that the finality of the enforceable decision can be substantiated. However, purely interim, provisional or protective (non-final) measures granted by a tribunal are unlikely to be recognised and enforced by Latvian courts.

The Arbitration Law does not provide the tribunal with the power to issue a decision on security for costs in local arbitral proceedings. However, decisions of international tribunals on security for costs are allowed and may be enforceable if it can be substantiated that they are final and binding decisions on that particular matter.

Third‑party funding of investor–State claims is permitted and has become more common. Latvia’s procedural rules do not expressly prohibit third‑party funding. International tribunals hearing Latvian disputes have dealt with funding-related issues in the procedural orders.

Domestic Latvian jurisprudence specifically addressing third‑party funding in investment arbitration is sparse. However, international tribunals involving Latvia have treated funding disclosures and related procedural consequences per standard international practice. The recent trend across the EU to require transparency about funding has influenced practice in Latvian matters.

Tribunals and courts may require disclosure of third‑party funding arrangements where relevant to conflicts of interest or to applications for security for costs. While Latvia lacks a detailed statutory regime for funding disclosure, common practice – particularly in ICSID and other major institutional arbitrations – has been to require disclosure where funding affects fairness or the tribunal’s impartiality.

Pre‑arbitration steps vary by treaty. Many Latvian BITs (and other IIAs) require notice and a cooling‑off/consultation period (often 3–6 months) before recourse to arbitration. Procedural preconditions in a treaty (eg, negotiation periods, exhaustion of local remedies in narrow circumstances) must be observed. Claimants typically follow the treaty’s notice requirements and attempt consultations before initiating arbitration.

Balancing confidentiality with transparency, Latvia follows the international arbitration norm of private proceedings. However, there is growing demand for transparency in investor–State disputes (public interest, environmental and human rights dimensions). Latvia‑related tribunals have released redacted documents or published awards when required by treaty or tribunal practice. Domestic reforms increasing public access to dispute information and the influence of multilateral instruments (eg, UNCITRAL rules on transparency for certain treaty disputes) are relevant.

Arbitral tribunals typically award compensatory monetary relief rather than punitive damages. Injunctive forms of relief are rare in treaty arbitration (and may be difficult to enforce against sovereign states). Still, tribunals can grant restitutory or declaratory relief within their competence and order specific performance only to the extent practically available. Punitive damages are typically not awarded, as this would be against the Latvian public policy and thus not recognised.

Quantum methodologies commonly used in Latvia‑related disputes include discounted cash flow (DCF) for business valuation, market‑value approaches, and cost‑based methods for replacement or reconstruction. The DCF remains the leading methodology for claims of loss of profits, subject to careful assumptions about cash flows, discount rates and mitigation.

Parties commonly recover interest on awards (pre‑ and post‑award interest). Tribunals regularly award legal and expert costs where the arbitration rules or governing treaty permit and where the tribunal finds appropriate. Cost allocation is case‑specific, but many tribunals follow a “costs follow the event” approach (loser pays) with adjustments for conduct. ICSID awards commonly allocate costs and may order the losing party to pay the winning party’s costs.

Investors have a duty to mitigate losses. Tribunals routinely assess whether claimants took reasonable steps to limit damages and may reduce awards where mitigation was lacking. This duty is a standard element of damages quantification in arbitration.

Enforcement of awards in Latvia follows the New York Convention and the Civil Procedure Law. A foreign award set aside at its seat will face significant enforcement hurdles in Latvia (courts will consider the set‑aside but apply the New York Convention framework and national rules). Latvian courts respect ICSID awards (enforceability under the New York Convention) and will follow statutory procedures for recognition and enforcement. In the face of pending set‑aside proceedings at the seat, Latvian courts may stay enforcement or assess enforceability under the ICSID Convention and domestic law. Sovereign immunity is limited with respect to commercial assets. Pure sovereign immunity claims may still be raised and have succeeded in narrow circumstances.

Latvian courts adopt a pro‑arbitration approach consistent with the New York Convention and the UNCITRAL Model Law principles embedded in domestic law. Refusal of enforcement on public policy grounds is narrow and follows the New York Convention’s limited grounds (eg, invalid arbitration agreement, lack of due process, public policy violation). Latvian courts have considered domestic and international public policy in rare cases. In terms of sovereign immunity, courts distinguish between sovereign acts and commercial assets. Enforcement against commercial assets is generally permitted.

Asset tracing and recovery follow standard civil‑enforcement techniques under the Civil Procedure Law (searches, seizures, attachment of assets). When State‑owned entities hold discrete commercial assets, tribunals and claimants have pursued enforcement against those commercial assets. Courts apply corporate‑veil principles reluctantly and cautiously, and will pierce the veil only in minimal circumstances where abuse or sham is shown.