Claiming compensation for mistakes of public institutions
On July 1, 2005 the Law on Compensation for Damages Caused by Public Administration Institutions went into effect in Latvia. According to the law, a private entity (individual or company) will be able to claim compensation from state or local authorities for damages caused to the entity. State/local authorities, in turn, will have to compensate the losses incurred by their:
failure to act 's for example, failure to provide answers to the requests made by the private entity
unlawful and wrong decisions 's for example, unjustified calculation of fines, unlawful refusal to issue a construction permit, revocation of a construction permit annulment of a license
unlawful action 's for example, a car damaged by shovelling snow, towing a car away unlawfully, unjustified use of force by the police
Compensation for damages may take the form of monetary compensation, reinstatement of the previous situation or apologies by the state institution.
A private entity may claim compensation of financial losses, including lost profit, personal damage, for example, injuries to dignity and reputation, moral damage. The law defines restrictions on the amount of compensation and means for compensating specific damage. For example, the amount of compensation for financial losses may be influenced by the actions of the private entity, grounds of the actions taken by the institution and restrictions imposed on the compensation of losses in the law.
Also, it is possible that financial losses from 100,000 to 1 million lats will not be compensated in full, but only by about half. Moral damage may be compensated not in cash but with an apology from the institution. Restrictions on the compensation of losses are imposed to avoid a situation where private entities gain profit from the mistakes of the institution and to achieve that the compensation is proportional (fair) to the damage caused. The scope of restrictions will be evaluated by the court in each case.
For a private entity to receive compensation for damages from the state, it must submit an application to the institution that caused the damage. Compensation for damages may be claimed simultaneously, with the appeal of the administrative act issued by the institution to a higher body. If the institution refuses to compensate the damages, the private entity may appeal this refusal directly to the administrative court.
For example, if an employee of the Office of Citizenship and Migration Affairs has refused a visa without lawful reason, then upon appealing this decision to the head of the office, the individual may also seek compensation for damages.
However, if the case on the annulment of an unlawful administrative act is already being heard by a court and a claim for compensation of damages has not been made, such a claim may be made against the institution only after the proceedings have ended and the court has found that the administrative act of the institution was unlawful.
Claims for compensation of damages is not a novelty in Latvian court practice. Such claims have already been heard and state institutions have been required to compensate for damages caused by unlawful calculation of taxes or unlawful refusal to register the birth of a child.
Janis Neimanis is attorney at Law at Loze, Grunte & Cers