Latvia likely to file counterclaim against Tilts

Aug 24, 2000

TC has filed a claim against the Latvian state with the international court of arbitration over non-observance of Lattelekom umbrella agreement.

For that reason Aug. 18 a meeting was held at the LPA on Latvia's position in the court proceedings with TC. Participants of the meeting mostly were in favor of submission of a counterclaim against TC, but it should be still considered when this counterclaim could be filed, said Naglis.

The LPA in the meeting was represented by Naglis, Inta Abakuka, LPA, Viktorija Jakobsone, official responsible for Lattelekom privatization. The Transport Ministry was represented by communications department director Inara Rudaka, the Economics Ministry was represented by economics minister's adviser for IT issues, Edvins Karnitis, while the prime minister was represented by representative Juris Smits.

Naglis said the final decision on filing the counterclaim againt TC would be made following a careful consideration of the issue and taking into account the position adopted by the government concerning the court proceedings against TC.

He cited as grounds for the counterclaim against TC the unfulfilled provisions of Lattelekom umbrella agreement, for example, full transition of Latvia's telecommunications network to digital technologies.

Finland's company Sonera, which is the owner of a 90 percent stake in TC, also has failed to meet the provision stipulating the transition of capital shares it has acquired in Latvijas Mobilais Telefons mobile operator to Lattelekom.

Asked which of the parties would have to pay the compensation after the Latvian party makes full estimate of losses incurred due to unfulfilled provisions of Lattelekom umbrella agreement, Naglis said that according to expert estimates, after calculation of losses of both parties, the Latvian party would have to pay to TC.

But given the rapid development of the telecommunications industry and with the process of negotiations on amendments to Lattelekom umbrella agreement delaying a situation may develop that TC should pay a compensation to the Latvian state.

The Latvian government is expected to adopt its position in the court proceedings against TC Aug. 22. It will also be decided then who would represent Latvia in the process.

TC has filed a claim against the Latvian state with the International Court of Arbitration at the International Chamber of Commerce in Paris over non-observance of Lattelekom umbrella agreement signed in 1993.

The umbrella agreement provides for Lattelekom's monopoly over fixed telecommunications services in Latvia until 2013 but, on accession to WTO, the Latvian government committed to cut that period down to 2003, so negotiations were under way between TC and Latvia on the possible compensation over the monopoly reduction.

TC's management, believing TC and the Latvian state are too far away from each other concerning the possible compensation, with no hopes to reach the agreement soon, decided to turn to the court. TC holds 49 percent of Lattelekom's capital shares while the Latvian state holds 51 percent.

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