Latvia loses more than $3 million in international proceeding

RIGA (BNS) - Latvia has lost a legal proceeding in the international court of arbitration in Stockholm and may have to repay $3.1 million from the state budget to repay a Swedish firm.

The Latvian government was informed about the court ruling made some two weeks ago but did not make the information public and considered the issue confidential, according to BNS.

The case is over a vessel that was brought to Riga in 1993. The Swedish firm Swede Balt was planning to convert it into a floating business center and entered into a temporary agreement with Riga's municipality on the rent of a plot of land, hoping to anchor the vessel Zunda on the Daugava River near Riga.

The project fell through, though the ship remained. After a few years, the municipality decided to cut the vessel into scrap metal as it was in danger of sinking. The Swedish company first expressed objections to the move in 1996 when Latvia's Foreign Ministry received a note demanding payment of $5.5 million.

Swede Balt later sued Latvia and the international court of arbitration ruled in favor of the Swedish firm, ordering the Latvian party to pay more than $3 million.

Finance Minister Gundars Berzins voiced indignation over the outcome of the court ruling and believes the Foreign Ministry is responsible for it. He said that 14 letters regarding the case were sent to the Foreign Ministry but no response was received.

Berzins has ordered the prosecutor's office to find out who is to blame for the court case and why Latvia lost it.

"This is an outrageous case," said Berzins.

Foreign Minister Indulis Berzins, meanwhile, rebuked Finance Minister Berzins. The foreign minister said a response has been sent to each of the letters and lawyers are busy inquiring about the court decision.

"I am indeed surprised over the minister's statements," Indulis Berzins said. During his term in office no decisions in connection with the vessel have been made and all steps were been taken by the previous governments.

Indulis Berzins confirmed the government considered the issue as confidential but not in order to conceal it from the public but to try to find a remedy so the Latvian state does not have to pay.

The ruling of the international court of arbitration can not be appealed, but the Latvian lawyers have demanded explanations about it.

The foreign minister backs the proposal of the finance minister to conduct a probe concerning the incident.