1© rödl & partner31.03.2011 legal ∙ tax ∙ audit ∙ business advisory toward a level...
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1© Rödl & Partner 31.03.2011
Legal ∙ Tax ∙ Audit ∙ Business Advisory
Toward a level playing field in Latvia
Outlook Thought Leadership Forum:
“Will Latvia remain an attractive place for doing business?”June 30, 2011 – Jens Pastille, Attorney at law
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Dieser Bereich steht für Texteund Grafiken zur Verfügung
excellent location at the crossroads of Scandinavia, Germany and Russia
special appeal to Germans and Scandinavians (“recall factor”)
multilingual populace well-educated work force
at low wages newly regained
international credit standing
(still) low taxes ice-free ports and
generally good infrastructure
Riga: Great life, low costs
Why Latvia is attractive for business01
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underspending – underestimating investment costs “management by helicopter” – failing to allocate sufficient
management capacity / not trusting local staff and expertise
„Corruption everywhere!“ – confusing the smallness of the country and personal relations with graft and nepotism
greed – having unrealistic profit expectations
02 What investors often get wrong
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German investors’ top three investment criteria
1. legal certainty
2. efficiency of public administration
3. check on corruption
03 Where Latvia could do better
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German investors’ top three investment criteria
1. legal certainty
2. efficiency of public administration
3. check on corruption
German investors’ top concerns in Latvia2. legal uncertainty (tax is first)
3. inefficient and intransparent bureaucracy
4. corruption and crime
(Source: Konjunkturumfrage 2011, German-Baltic Chamber of Commerce)
03 Where Latvia could do better
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German investors’ top three investment criteria
1. legal certainty
2. efficiency of public administration
3. check on corruption
German investors’ top concerns in Latvia2. legal uncertainty (tax is first)
3. inefficient and intransparent bureaucracy
4. corruption and crime
03 Where Latvia could do better
“Am I welcome?”
“Am I reasonably protected when
things get rough?”
“Does my business get a fair shot on a level playing field?”
TR
AN
SL
AT
ION
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German investors’ top three investment criteria
1. legal certainty
2. efficiency of public administration
3. check on corruption
German investors’ top concerns in Latvia
2. legal uncertainty (tax is first)
3. inefficient and intransparent bureaucracy
4. corruption and crime
03 Where Latvia could do better
“Am I welcome?”
“Am I reasonably protected when
things get rough?”
“Does my business get a fair shot on a level playing field?”
TR
AN
SL
AT
ION “Or are any such
shortcomings outweighed by
disproportionately high profits?”
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Flaws in the legal system
length of civil proceedingsabuse of insolvency proceedingsabuse of interim relief proceedingsabuse of the criminal process
04 For example: The legal system
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length of civil proceedings three instances of court; two full trial stages practically no default judgments; ineffective rules for late submissions unregulated and vast arbitration landscape
abuse of insolvency proceedings
abuse of interim relief proceedings
abuse of the criminal process
04 For example: The legal system
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length of civil proceedings
abuse of insolvency proceedings …unreasonably broad insolvency criteriaomnicompetence of insolvency judgeeffectively no appeals process
abuse of interim relief proceedings
abuse of the criminal process
04 For example: The legal system
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length of civil proceedings
abuse of insolvency proceedings
abuse of interim relief proceedingsfocus on securitization by attachment (“civil arrest”), rather than injunctive relief or TROslow-level single judgeinsufficient appeals process; no statutory time-limits
abuse of the criminal process
04 For example: The legal system
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length of civil proceedings
abuse of insolvency proceedings
abuse of interim relief proceedings
abuse of the criminal processinvestigative (pre-trial) proceedings outside judicial reviewnumerous overly broad offenses on the booksseveral special police forces operating with near-impunity and without judicial review
04 For example: The legal system
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length of civil proceedings
abuse of insolvency proceedings
abuse of interim relief proceedings
abuse of the criminal process
04 For example: The legal system
… are often a product of poorly reflected legal imports unsuitable for a small country.
… result from “technical” deficiencies.
… lend themselves to abuse and stalling tactics.
… damage the reputation of the legal system, thus jeopardizing its pacifying commission.
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Latvians are by no means more prone to corruption than others, but the Latvian legal system is.
The uneven playing field in Latvia is in large part a product of bad laws, i.e. laws that fail to function in their own socio-economic context.
The most serious normative dysfunction attaches not to substantive legislation but to procedure - the core of the legal system: civil procedure, insolvency laws and the criminal process lack safeguards against abuse.
Laws can be changed faster than mindsets or institutions. Better laws do work.
05 Conclusions
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Your contact
Jens-Christian Pastille, LL.M.Rechtsanwalt
Managing Partner Baltic States
Rödl & Partner Krišjāna Valdemāra iela 33
LV-1010 RīgaLettland
Tel.: +3 71 67 33 81 25Fax: +3 71 67 33 81 26
E-Mail: [email protected]