assessment summary 2008 - latvia [ebrd - legal transition] · checklist latvia ws0101.4421600.1...

WS0101.4421600.1

LATVIA Core Area Summary of PFI Guide recommendations1 / Best Practice Rating Assessment

1-General Policy and Concession Legal

Framework

Existence of a policy framework for public private partnerships ("PPPs").and existence of specific concession law or of a comprehensive

set of laws regulating concessions and allowing easy access to a clear and stable legal environment for PPPs.

18/24

High compliance

2-Definitions and Scope of the Concession Law

Existence of a clear definition of the boundaries and scope of application of the concession legal framework (definition of "concession", sectors concerned, competent authorities, eligible concessionaires) limiting the risk of a challenge to the validity of concession contracts irrespective of

the name given to the act.

11/36 Low compliance

3-Selection of the Concessionaire

Mandatory application of a fair and transparent selection process. Limited exceptions allowing direct negotiations, competitive rules for unsolicited proposals and the possibility to challenge illegal awards.

28/45 Medium compliance

4-Project Agreement Flexibility with respect to the content of the provisions of the concession agreements which should allow a proper allocation of risks without

unnecessary or unrealistic/not bankable/compulsory requirements/interferences from the contracting authority (obligations,

tariff, termination, compensation).

6/27 Very low compliance

5-Security and Support Issues Availability of reliable security instruments on the assets and cash-flow of the concessionaire in favour of lenders including "step in" rights and

possibility of government financial support or guarantee of the contracting authority’s proper fulfilment of its obligations.

8/18 Low compliance

6-Settlement of Disputes and Applicable Laws

Possibility to obtain proper sanction for breach under the applicable law through international arbitration and enforcement of arbitral awards.

13/15 High compliance

OVERALL RATING 56% Medium Compliance 1 UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects, 2001 (hereinafter the "PFI Guide") Checklist Latvia Local Expert: Inese Lazdupe-Law Offices of Klavins & Slaidins LAWIN

2.

Checklist Latvia WS0101.4421600.1

OVERALL ASSESSMENT OF THE QUALITY OF CONCESSION LEGISLATION: A general policy framework for improving the legal environment and promoting PPP has been identified in Latvia (Concession Division, "Conception on facilitation of the Concessions", approved by the Cabinet of Ministers in 2002). The Latvian Investment and Development Agency cooperates with the Latvian Ministry of Finance, and assists with the implementation of PPP projects, proposals for promotion of PPP developments, provision of informative and legal services and the elaboration of standard documentation. Latvia adopted their PPP Policy Framework Document in 2005 and a PPP Action Plan, due to be finalized in 2009. The tasks in the Action Plan include establishing adequate institutional set-up for PPP’s and promotion framework, legal framework, PPP’s interaction with national planning instruments and disseminating knowledge effectively on PPP. The Action Plan further provides for the drafting a new and more detailed Concessions Law, which has already been done. This law has already been adopted in the second level of the legislation procedure (there are three levels in total). The Action Plan also provides for drafting of government regulations on PPP in accordance with the EU directives. The Latvian Concession Law was adopted in 2000. The Law is too general as far as the majority of Core Areas are concerned. Its scope of application needs to be improved (the Law seems to apply to agreements entitled "concession" only, vague identification of the sectors/types of infrastructure/services - reference to "concession resources" only). The selection procedure also needs to be specified (no reference to the possibility of a pre-selection procedure; unsolicited proposals and direct negotiations not regulated). However, we note the reference to the "non-discrimination" principle, the publication of concession award and the possibility to review procedures Many issues in the project agreement are to be included in "conditions for granting concessions" (e.g. termination, tariffs), and it is unclear whether such conditions can be negotiated or not. The Law is rather restrictive as far as financial securities are concerned (e.g. prohibition of pledge of concession resources). On the contrary, regarding government support, the Law refers to the "guarantees of a conceder to a concessionaire regarding financial and commercial risks" (to be provided in "conditions for granting concession"), and to the Law on the Control of State and Local Government Aid Provided for Commercial Activity which provides for different types of government support.

3.


Thus, the Law would require improvements in order to constitute a sufficiently solid legal basis for the development of PPP in the infrastructure and utility services in Latvia. The Latvian Parliament is working on the new regulation concerning concessions, i.e., the new Concession Law. Amendments to the Law on the Control of State and Local Government Aid Provided for Commercial Activity are currently also under preparation. Pursuant to the publicly available information, both documents have been adopted in the first level of the legislative procedure (there are three levels in total). Considering the draft Concession Law available in the Parliament, this statutory instrument seems to be more detailed and substantive than the existing regulation. The deadline for submission of proposals for the draft laws for the second level of legislation is already over. However the term of the adoption of the final drafts of the above laws is not certain yet.

4.


Key for assessment of Each Question

Yes 3 points Yes, with reservations 2 points No, with limited compliance / redeeming

features 1 point

No 0 point N/A Not applicable 0 point

Key for Assessment of Each Core Area and for Overall Assessment

> 90% Very High Compliance 3+1 points ≥ 70%-89% High Compliance 3 points 50%-69% Medium Compliance 2 points 30%-49% Low Compliance 1 point

< 30% Very low Compliance 0 point

5.


1.

GENERAL POLICY AND CONCESSION FRAMEWORK

QUESTION

ANSWER

ARTICLE

COMMENTARY

1. Is there a general/national policy framework (explicit or implicit) for PPPs in infrastructure or public services?

PPPs are understood in this context as different forms of cooperation between public authorities and the world of business which aim to ensure the funding, construction, renovation, management or maintenance of infrastructure or the provision of a public service.

On 16 April 2002, the Cabinet of Ministers approved the "Conception on facilitation of Concessions (attraction of private capital for realisation of public functions)"

2. If the answer to 1 is yes, is PPPs policy framework distinct from that for privatisation?

6.


3. If the answer to 1. is yes, is such policy framework supported by:

3.1. certain policy framework documents? 3.2. certain institutions (a "task force" or other institution specialised in the promotion and development of PPPs)? For information, are there:

• reference to PPPs in the Constitution?

• sector-specific policy frameworks dealing with

PPPs?

• municipal policy frameworks dealing with

PPPs?

If the Country's legal or institutional framework contains undesirable restrictions on PPPs in infrastructure or public services, please mention these.

No

Yes, reserve.

No, reserve.

See commentary for 1. Concession Division at the Ministry of Economics and the Latvian Investment and Development Agency (the Latvian Privatisation Agency.) No officially approved sector-specific policy frameworks, but reports are available in the form of PowerPoint presentations. No officially approved policy frameworks, possibly separate policy frameworks exist at separate municipalities.

7.


QUESTION

ANSWER

ARTICLE

COMMENTARY

4. Does the country have a concessions or a PPPs law (the "Law") or if the answer is no, do the Constitution or other general laws (e.g.: the Civil Code, sectorial law ) recognise the basic principles of concessions and regulate the granting of concessions in such a way that concessions are legally possible in the country?

[.For the purpose of this questionnaire, the set of rules applicable to concessions in the absence of a specific concession law will also be referred to as the Law] .For information, is a new concessions/PPP law or amendments to the existing Law being prepared?

N/A

Concession Law, adopted by the Saeima on 20 January 2000, amended on 19 December 2002 and 16 April 2003. Public Procurement Law (06.04.2006.) and the Law on Procurement for Needs of Public Service Providers (21.10.2004.) New Concession Law and amendments to the Law on the Control of Aid for Commercial Activity are currently being discussed in the Latvian Parliament.

5. If the country has a Public Procurement Law, is it clear to what extent the Public Procurement Law applies or not to the granting of concessions?

For information:

• is the application of the Public Procurement

Law specifically excluded?

1.3 b) The procurement legislation applies to the concessionaire that falls under the definition of the "contracting authority" provided by the public procurement legislation. The Procurement Law provides for an exception in applying procurement legislation. The Public Procurement Law shall not apply if the contracting authority enters into the contract on concessions for services of constructions in accordance with the law regulating the concessions.

8.


• does it apply for certain types of concessions

only?

• is it applicable to the selection of the

concessionaire?

• is it applicable to all or some sub-contracts to

be entered into by the concessionaire?

6. If the country has sector-specific laws

regulating the granting of concessions in specific sectors, is it clear which law is applicable to a particular sector and/or infrastructure and/or services?

N/A No sector-specific laws regulating concessions.

7. If the country has a "local public services" law (i.e. law regulating basic legal framework for municipalities using PPPs for the construction of "local infrastructure" and/or the provision of "local utility" services) is it clear which law is applicable to a particular infrastructure and/or services?

N/A No “local public services” law, as defined.

9.


2.

DEFINITIONS AND SCOPE OF THE CONCESSION LAW

2.1 Concession definition 2

QUESTION

ANSWER

ARTICLE

COMMENTARY

8. Does the Law define one or several term(s) (ie: "PPP", "concession", "BOT", others) for the arrangements to be regulated by the Law which specify the limits of application of the Law?

For information, please provide the given definition, if any. (Irrespective of the name given in the Law the word

1

Concession: “the transferring of rights to provide services or exclusive rights to utilise concession resources, which are transferred for a specified time period pursuant to the entering into of a concession agreement between a conceder and concessionaire in regard thereto”. No reference to other PPP arrangements.

2 For further information on concession definition please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 3 and Commission Interpretative Communication on Concessions Under Community Law dated 12 April 2000;together with additional EU major documents/decision /recommendation on concessions including Directives 2004/18/EC and 2004/17 EC of 31 March 2004; Green Paper on Public Private Partnerships and Community Law on Public Contracts and Concessions dated 30 April 2004; Report on the public consultation on the Green Paper (SEC(2005) 629- Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Public-Private Partnerships and Community Law on Public Procurement and Concessions (Brussels, 15.11.2005. COM(2005) 569) European Parliament resolution on public-private partnerships and Community law on public procurement and concessions (2006/2043(INI))

10.


concession will be used for all types of defined agreements for purposes of this questionnaire)

Definition of a concession is broad and could include different PPP arrangements.

9. Does the Law provide that it applies to all contracts entering into the definition of concession irrespective of the name given to such contract (concession, licence, usufruct right, lease, etc.)?

10. Does the Law make a clear distinction between concessions and public procurement contracts (i.e.: public works, supply or services) whereby the distinguishing criterion is the transfer of risks inherent to the exploitation?

11. Does the Law make a clear distinction between concession/PPPs and licence (i.e an authorisation to operate granted automatically by a public authority when certain criteria are met)?

2.2 Application of the Law

QUESTION

ANSWER

ARTICLE

COMMENTARY

12. Does the Law provide that it prevails over any

sector-specific law or other laws dealing with concession?

N/A No sector-specific laws on concessions.

11.


2.3 Entities involved 3

2.3.1 Public Authorities

QUESTION

ANSWER

ARTICLE

COMMENTARY

13. Does the Law identify (or allow identification by reference to other laws or regulations) the public authorities that are empowered to award concessions and enter into project agreements ("Contracting Authority")?

If yes, for information, which of the following

authorities are identified?

• national authorities (e.g.: the government, ministries, independent agencies)?

• provincial authorities?

• local or municipal authorities?

• public enterprises?

4

• if concession resources are State property, the Cabinet of Ministers, pursuant to a proposal of "the interested Ministry" takes a decision regarding the transfer of concession and approves the conditions for granting a concession;

• if concession resources are local government property, the "relevant local self-government" shall take the decision regarding the transfer of the concession. Not clear who approves the conditions for granting a concession in this case.

Thus, clear identification subject to the clear definition of State v.s. local government property.

3 For further information on the entities involved, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 2, 6 and 42.

12.


14. Is there a specialised agency established to take

care of concessions (which consent or recommendation is necessary for the granting of a concession, e.g.: Concession / PPPs Agency)?

No Concession Agency established. However, the Concession Division, within the Ministry of Economics and the Latvian Investment and Development Agency are responsible for concession policy framework and the further development of concessions in Latvia in general.

15. Is the division of power between different public authorities involved in the concessions granting process simple and coordinated (e.g.: one stop shop)?

See commentary for 13 and 14.

2.3.2 Concessionaire and Project Company

QUESTION

ANSWER

ARTICLE

COMMENTARY

16. Can concession be granted to a domestic and/or foreign person or to a domestic person with a foreign shareholders? Can the shareholders of the concessionaire be domestic and/or foreign persons (without discrimination)?

1 11

A concession may be granted to an undertaking (company) registered in Latvia or a foreign state, which in accordance with the procedures prescribed in this law has expressed a wish to acquire the rights to a concession. But: “If an acquirer of a concession is not a Latvian undertaking (company), it has a duty , within a period of one month after the determination of the auction or competition results, to register an undertaking (company) for engaging in entrepreneurial activities in the territory of Latvia.”

13.


If this is not fulfilled, “an institution which has taken a decision regarding entering into a concession agreement, shall take a decision regarding refusal to enter into the agreement and the conducting of a new competition or auction”. See also commentary below.

For information only, can concession be granted to public entities or to entities jointly owned by private and public entities?

Not specifically provided. No restrictions in respect of the ownership of legal persons to whom the concession is granted.

2.4 Concerned sectors4

QUESTION

ANSWER

ARTICLE

COMMENTARY

17. Does the Law identify (or allow identification by reference to other law or regulations) the sectors and/or types of infrastructure and/or services in respect of which concessions may or may not be granted?

3

1

Very general provision:

“a concession may be granted in regard to concession resources if the relevant concession resources have not been excluded from general civil law circulation.” Concession resources are defined as State or local government property, assets or sets of assets, which may be transferred or have been transferred to a concessionaire in accordance with a concession agreement.

4 For further information on the concerned sectors please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendation 3 and 4.

14.


18. Do the sectors eligible for concessions

correspond to a large extent to those listed below, or if not, is the list of eligible sectors an open-ended one (as opposed to being exhaustive) allowing (or at least not preventing) concessions to be granted in numerous sectors”?

For information:

a) does it include the transportation sector?

• is the railway system included? • are rail transport services included? • are ports included? • are airports included? • are public roads included?

b) does it include the electricity sector?

• is the generation of electricity included? • is the transmission of electricity included? • is the distribution of electricity included?

c) does it include the water and wastewater sector?

• is water production included? • is water treatment included? • is wastewater treatment included? • is water distribution included? • is wastewater collection (sewerage) included?

N/A

15.


d) does it include solid waste collection, transfer or

disposal?

e) does it include the oil, gas and mineral sector?

f) does it include other public services such as

education, health care and prisons?

g) Does it include any other sectors or infrastructure

(please specify)?

16.


3.

SELECTION OF THE CONCESSIONAIRE5

3.1 General Considerations

QUESTION

ANSWER

ARTICLE

COMMENTARY

19. Does the Law require in principle the Contracting Authority to select a concessionaire through competitive procedures?

6(1) "Tender" or "competition tender" (the Law does not contain differences between the two procedures, so both terms could be used).

20. Is there reference in the Law to the principles of transparency, equal treatment and proportionality?

For information, please specify if a reference is made to the principle of mutual recognition.

8. (2) Reference to equal treatment only.

21. Is there a provision in the Law concerning the publication of information related to the competitive procedures in the Country media and in the international media (for large projects)?

7

5 For further information on the selection of the concessionaire, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 14 to 39 included.

17.


22. Are there provisions of the Law, regulations or special manual, recommendation governing in detail the selection of the concessionaire ("Regulations") (i.e.: the pre-selection of bidders, the procedure for requesting proposals, other procedure such as competitive dialogue/two stage procedure) ?

There is a procedure for requesting proposals.

23. Does the Law / Regulations provide that, if the Contracting Authority rejects an applicant at the time of pre-selection or disqualified a bidder , it must make public the reasons for the decision (or inform the rejected bidder thereof explaining the reasons for rejection)?

9(1) The organiser of a tender/competition shall publish results, “informing all the applicants thereof”. No particular reference to the rejection of an applicant, before the concession award.

3.2 Award of concession

QUESTION

ANSWER

ARTICLE

COMMENTARY

24. Does the Law / Regulations provide that all proposals are ranked solely on the basis of the evaluation criteria set forth in the pre-selection documents/ request for proposals?

8(1) 8(3)

The Law provides that evaluation is performed only in accordance with the criteria specified in the conditions for granting concessions and basic conditions for granting concessions are to be included in the notification regarding auction or competition. Also, “the amount of payment that is intended to be received from consumers” and the “conditions pursuant to which the subject-matter of the concession will be returned to the conceder” are taken into account in the evaluation of a tender.

18.


25. Does the Law / Regulations provide that a notice of the award of the project, identifying the concessionaire and including a summary of the essential terms of the project agreement is to be published?

9(1) The organiser of a tender/competition shall publish results, “informing all the applicants thereof”.

26. Does the Law / Regulations provide that the Contracting Authority or any other public authority maintain records of key information pertaining to the selection and award proceedings?

9(5) The Cabinet of Ministers determines “the procedures for registration, recording and control of the concession agreement”.

27. If the answer to 26 is yes, does the Law provide that such record is accessible for public or at least to interested parties?

The rights to access the concession records are determined by Cabinet of Ministers Regulations No. 700 “Procedure on Registration and Control of the Concession Agreements” dated August 10, 2004.

3.3 Final negotiations

QUESTION

ANSWER

ARTICLE

COMMENTARY

28. Does the Law /Regulations contain provisions regulating final negotiations (i.e. post contract award) so that transparency, equal treatment and competition are preserved?

9(1) The decision on execution of concession agreement shall be adopted by the organiser of the tender or auction in accordance the Administrative Procedure Law pursuant to which, the decision should be taken within one month time. In special cases, the term could be extended for up to four months or one year. No other limitations are provided.

19.


29. Does the Law / Regulations provide that the

Contracting Authority has the authority to terminate negotiations with the invited bidder when it becomes apparent that the bid will not result in an agreement and start negotiations with the second ranked candidate?

9(6) If the organiser of the tender or auction fails to reach agreement with the acquirer of concession on the concession agreement then he shall have the right to organise the repeated tender or auction. Provision is not made for the Contracting Authority to start negotiations with the second ranked candidate.

3.4 Concession Award without competitive procedure

QUESTION

ANSWER

ARTICLE

COMMENTARY

30. According to the Law / Regulations, does the Contracting Authority have the authority to award a concession without competitive procedures only in limited exceptional circumstances such as the ones listed below?

For information, which of the following conditions

allowing direct negotiations are provided for?

• when there is an urgent need for ensuring continuity of the provision of service and engaging in a competitive selection procedure would be impractical?

• for projects of short duration and with an anticipated initial investment value not

No reference to concession award without competitive procedure.

20.


exceeding a specified minimal amount (or with an anticipated turnover not exceeding a specified minimal amount)?

• reasons of national defence or national security?

• cases when there is only one source capable of providing the required service (e.g.: in the case of patented technology or unique know-how)?

• when an invitation to the pre-selection proceedings or a request for proposals has been issued but no applications or proposals were submitted or all proposals failed to meet the evaluation criteria?

• others (please specify)?

31. According to the Law / Regulations, is there a procedure (rules) to be respected for the award of a concession without competitive procedures?

N/A

3.5 Special case of unsolicited proposals

QUESTION

ANSWER

ARTICLE

COMMENTARY

32. Does the Law / Regulations provide for the adequate framework for the Contracting Authority to handle unsolicited proposals/private initiative concessions (proposal relating to the implementation of a

21.


concession that is not submitted in response to a request or solicitation by the Contracting Authority) that ensure transparency and equal treatment and do not distort competition?

3.6 Review procedures

QUESTION

ANSWER

ARTICLE

COMMENTARY

33. Does the Law allow the bidders who claim to have suffered or that may suffer loss or injury, to seek review of the Contracting Authority’s acts or failures to act?

9(3) Decision on execution of concession agreement can be appealed at court in accordance with the Administrative Procedure Law. In addition the bidder can claim damages from the contracting authority under the Law on Compensation of Damages Caused by Public Authorities (01.07.2005.).

22.


4.

PROJECT AGREEMENT6

QUESTION

ANSWER

ARTICLE

COMMENTARY

34. Does the Law contain (or refer to) a model concession/PPP agreement which use is optional (for guidance only as opposed to being mandatory) or a mandatory list of provisions to be included in the agreement (the content of such provisions being left for negotiation)?

12 Very general provision providing that the concession agreement contains provisions on concession resources and their location, the procedures for the settlement of disputes, the right of the parties to withdraw from the agreement and their liability in cases of non-compliance.

4.1 Duration and extension of the project agreement

QUESTION

ANSWER

ARTICLE

COMMENTARY

35. Does the Law provide that the concession duration should depend on the length of time taken for the amortization of the private investment and an appropriate return on the capital?

For information, please provide the given duration (if

10

30 years.

6 For further information on the project agreement definition, please refer to: PFI Guide, Consolidated Legislative Recommendations, Recommendations 12 and 40 to 68 included.

23.


any) and relevant information in the Law with respect to the conditions for extension.

4.2 Termination of the project agreement

QUESTION

ANSWER

ARTICLE

COMMENTARY

36. Does the Law provide for a restrictive list of termination events (such as those listed below)?

• material breach by the other party;

• if performance is made impossible by the

occurrence of circumstances beyond either

party’s control;

• mutual consent .

5 3) Conditions for granting of concession contain information on cases when termination of the agreement is permissible.

24.


37. Does the Law provide for (or does not prevent ) compensation of the concessionaire:

37.1. in case of termination for public interest?

37.2. for losses incurred as a result of public authorities acts? 37.3. in all cases of early termination (including in case of serious breach or failure by the concessionaire), for the non-depreciated value of assets financed by the concessionaire-?

N/A

N/A

N/A

Not specified. Not prevented. The concessionaire can claim damages and loss from the Contracting Authority under the Law on Compensation of Damages Caused by Public Authorities (01.07.2005.). As the concession agreement shall be considered as a civil contract, the issue o#f claiming the damages and losses shall be reviewed in the light of Latvian Civil Law.

4.3 Tariff setting, service standards

QUESTION

ANSWER

ARTICLE

COMMENTARY

38. Does the Law provide for clear guidance for all aspects of interaction between the bodies that have the power to award concessions and the bodies that regulate tariffs and service standards?

4.4 Financial responsibilities of concessionaire and Contracting Authority

QUESTION

ANSWER

ARTICLE

COMMENTARY

25.


39. Does the Law provide that the concessionaire can collect tariffs or fees for the use of the facility or its services?

5 4) Conditions for granting of concession contains information on “the receipt of payment from consumers”.

40. Does the Law provide the possibility for fixed and/or consumption-based payments to the concessionaire by the public authorities?

Not specified.

5. SECURITY AND SUPPORT ISSUES7

5.1 Security Interests

QUESTION

ANSWER

ARTICLE

COMMENTARY

41. Does the Law provide for the possibility for (or not specifically prevent) a concessionaire to create security interests on the project assets and proceeds or other valuable guarantees related to the project?

13(1) 13(2)

Very restrictive provision concerning security interests: “Concession resources shall not, in full or in part, be alienated, given as a gift, transferred to the ownership or usage in any other way to third parties, pledged or encumbered in some way, as well as invested in the

7 For further information on support and financial securities, please refer to:

PFI Guide, Consolidated Legislative Recommendations, Recommendations 13, 49, 57 and 60.

26.


capital of other undertakings (companies) during the time period of operation of the concession agreement.”

42. If the answer to 41 is yes, does the Law clearly state which types of security can be provided and includes some of the most common type of guarantees in project financing (such as those listed below)?

For information, can a concessionaire pledge or assign:

• the proceeds and receivables arising out of the

concession?

• the assets for which it has rights of use under a

project agreement;?

• its property?

• shares of the Project Company?

• the project agreement?

• or obtain other valuable guarantees (please

specify)?

N/A

27.


5.2 Government support

QUESTION

ANSWER

ARTICLE

COMMENTARY

43. Does the Law provide for the possibility (or not specifically prevent) the public authorities to provide support to the Contracting Authority and guarantee for the proper implementation of concessions by the Contracting Authority?

Not prevented.

44. Does the Law provide for the possibility (or not specifically prevent) the public authorities to provide financial or economic support for the implementation of concessions?

5(1)10) 5(2)

Conditions for granting of concession contain information on “guarantees of a conceder to a concessionaire regarding financial and commercial risks (if such guarantees have been provided for)”.

45. If the answer to 44 is yes, does the Law clearly state which public authorities may provide such support and which types of support can be provided?

For information, are the following types of support

provided for:

• interest-free or low interest public loans?

• loan guarantees?

• direct or indirect equity participation by the

government in the project?

• subsidies for operations in non-profitable

5(2)

Reference to the Law On the Control of State and Local Government Aid Provided for Commercial Activity. The monitoring of aid is performed by the State Aid Surveillance Commission. The Commission is a collegial authority of authorised officials. According to this Law, the Aid can be provided for: - the promotion of regional development; - the promotion of specific activities (research,

training, promotion of employment and export aid);

- environmental protection and energy conservation;

- small and medium-sized commercial companies;

28.


sectors?

• direct subsidies?

• pro-poor subsidies?

• tax and customs benefits?

• foreign exchange protection (convertibility and

transfer guarantees)?

• protection from competition?

Law On the Control of State and

Local Government

Aid Provided

for Commercial

Activity, Art 7

- provision of aid to a commercial company in a crisis situation;

- commercial companies in particular sectors (steel industry, Manufacture of Synthetic Fibres, Manufacture of Motor Vehicles and Transport Sector).

"Aid may take the form of direct payments from State or local government budgets (subsidies), measures taken in the field of taxes or mandatory social insurance payments, State or local government guarantees, subsidising of loan interest rates, complete or partial forgoing of dividends by the State or local governments in commercial companies controlled by them, State or local government investment in a commercial company, writing-off of debts, setting of preferential rates for the utilisation of services provided by State commercial companies, sale of immovable property at less than the market value or purchase above the market value, as well as other financial assistance granted or provided from State, local government or European Community funds."

5.3 Lenders’ rights

QUESTION

ANSWER

ARTICLE

COMMENTARY

29.


46. Does the Law provide for the possibility for the lenders to “step-in” or substitute a qualified new concessionaire in case of concessionaire defaults without a new tender?

13(1) The transfer of the rights and obligations of the concessionaire to other persons is permitted, but only with conceder’s consent.

6. SETTLEMENT OF DISPUTES AND APPLICABLE LAWS8

6.1 Settlement of disputes

QUESTION

ANSWER

ARTICLE

COMMENTARY

47. Does the Law permit the Contracting Authority to enter into concession agreement that is subject to international arbitration?

12

15 (2)

A dispute in which a party, albeit even one, is a State or local government institution may not be referred for resolution to an arbitration court. In practice, there have been cases when the agreements where one of the parties is the State were subject to international arbitration, based on various international agreements. However, there is no unified practice in such cases, so each case should be examined separately.

48. Has the government of the country ratified the following international conventions? 48.1. the Washington Convention on the

8 For further information on the settlement of disputes, please refer to: PFI Guide, Consolidated legislative Recommendations, Recommendations 57, 69 and 71.

30.


Settlement of Investment Disputes (ICSID) (1965)? 48.2. the New York Convention on recognition and enforcement of foreign arbitral awards (1958)?

6.2 Applicable laws

QUESTION

ANSWER

ARTICLE

COMMENTARY

49. Does the Law permit the Contracting Authority to enter into concession agreement that is governed in whole or in part by foreign law or at least allow the concessionaire to enter into financing and construction agreements governed by foreign law?

12 The Law does not restrict the choice of the applicable law and according to the Civil Law, agreements entered into between the state or municipal authorities shall be adjudicated in respect of their substance and consequences, according to the Latvian law, if not otherwise provided in the agreement.

50. Has the country ratified any international convention for the protection of foreign investments?

Since 4 May 1990 Latvia has concluded bilateral agreement son Investment Protection with about 40 countries all over the world. After EU accession, as an EU Member State, Latvia has obtained rights and liabilities according to the International Agreements concluded by EU.

EFECTIVENESS ASSESSMENT: HOW THE LAW WORKS IN PRACTICE: (please comment based on the previous 2006 effectiveness general assessment)

31.


assessment summary 2008 - latvia [ebrd - legal transition] · checklist latvia ws0101.4421600.1...

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