Baltic News Network | 3 September 2020
KVV Liepājas metalurgs vs. Latvia case put on hold
The case KVV Liepājas metalurgs owner Yevgenij Kazmin had against the state of Latvia has been put on hold, according to information from the State Chancellery.
The case itself was commenced following Kazmin’s request. It is related to the sale of assets of the insolvent Liepājas metalurgs to Ukrainian company KVV Group in 2014.
The State Chancellery reported that the International Centre for Settlement of Investment Disputes (ICSID) decided in a case of arbitration to satisfy Latvia’s plea and order Kazmin to submit a letter of guarantee for the reimbursement of Latvia’s legal expenses in the amount of EUR 3 million by 28 April 2020.
The tribunal of the court of arbitration outlined in the ruling that there are serious concerns if Kazmin were to pay back to Latvia its legal expenses in accordance with the ruling of the court of arbitration if such a decision was made.
The State Chancellery admits these concerns are mainly associated with the plaintiff’s chosen business methods, because of which criminal processes have been initiated against Kazmin’s owned legal persons. On top of that, Kazmin’s economic operations often involve use of shell companies and asset write-off to avoid paying back debts.
However, in spite of the term outlined in the ruling, Kazmin did not submit a letter of guarantee within the allotted time. Because of this, the tribunal of the court of arbitration decided on 6 May to put the case on hold for six months until Kazmins submits the requested guarantee of EUR 3 million. The State Chancellery adds that if the plaintiff fails to submit the guarantee within six months, Latvia will be provided the right to turn to the tribunal to terminate the process.
Kazmin still has not submitted the requested guarantee.
The State Chancellery reports that on 30 July Kazmin submitted a rejection to all three members of the tribunal of the court of arbitration. According to Kazmin, the ruling made by the court of arbitration on 13 May reflects the lack of independence and objectivity of the members of the tribunal. The State Chancellery stresses Latvia categorically disagrees with this claim. Kazmin’s request was reviewed by the chairman of ICSID Administrative Council.
Latvia is represented in the process by the State Chancellery and Lalive law firm.
As previously reported, the owner of the insolvent KVV Liepājas metalurgs and Ukrainian KVV Group co-owner Yevgenij Kazmin turned to the International Centre for Settlement of Investment Disputes with a plea against the state of Latvia, according to information from the centre’s website.
KVV Liepājas metalurgs was declared insolvent in September 2016.
In August the tax debt of KVV Liepājas metalurgs was EUR 2.071 million, according to information from Firmas.lv.