Vessel case far from over

RIGA - The battle between the Latvian government and the Swedish company SwemBalt AB over the scrapped vessel Feederchif has taken yet another turn with two Latvian officials charged with negligence and acting beyond the bounds of their duties.

Arnis Reinis, a spokesman for the prosecutor generals' office, confirmed that former first deputy administrator of Riga port, Andris Dumpenieks, and former deputy director of the Transport Ministry's seafaring department, Laila Medina, have both been charged with negligence.

"The investigation started half a year ago. It's been a very long and complicated investigation with a lot of people and material involved," he said.

Dumpenieks is accused of acting outside his powers in 1996 when he set up an auction to sell the boat for scrap metal. The prosecutor, Edvins Piliksers, believes that by doing so he caused significant damage to the state's interests, because it enabled SwemBalt AB to file claims over damages.

Medina, meanwhile, is charged with negligence. In 1996 and 1997, while a member of the auction committee, Medina failed to issue appropriate legal statements regarding the violation of Latvian laws when the boat was sold.

Latvian authorities wanted to get rid of the vessel because a promise by SwemBalt AB's representatives to set up a business center or conference center on the boat never happened. In fact, nothing happened with the vessel after it was towed to Riga in 1993.

The Feederchif was left anchored in the Zunda channel in Kipsala. The authorities decided it should be cut up and sold for scrap because of the danger of it sinking due to its deterioration. An inspection of the ship also concluded that the vessel's documents had expired in 1988 and that the engine, along with other mechanical equipment, had been removed before it was towed to Riga. The Swedish company was given a deadline for taking care of the ship but did not meet it. SwemBalt AB was notified twice by the Riga Free Port Authority to no avail.

Meanwhile, the case has been appealed to the Danish Maritime and Commercial Court in Copenhagen since the Latvian state didn't agree with an ad hoc arbitration tribunal's decision to fine Latvia more than $3 million for destroying the ship.

Some $109,000 from this year's state budget has been set aside to cover court costs and attorneys' fees.

To turn to a Danish court was only one of three options presented to the government by the Ministry of Justice. Another was trying to reach a settlement with the Swedish company. This however was ruled out. The third option was to pay the fine, which was also decided against.

Latvia has already fruitlessly tried to draw the European Union's attention to this case.

But discussions with the EU were abandoned because neither the European Commission or other EU institutions can interfere in matters of other countries. The Latvian EU delegation requested that the EU committee examining the case should not recognize the verdict of the international court of arbitration.

Latvian lawyer Ziedonis Udris, who represents the Latvian government, now sees hope of nullifying the arbitration tribunal's decision.

"According to Latvian law, the ship should have been written over on the Swedish company's subsidiary here, SIA Swede Balt, but this document has never been produced," Udris said. Also, he said, documents show that SwemBalt AB was not even the owner of the ship by the time it was auctioned in Latvia.

The ship's registration papers tell a story of how the ownership of the vessel has been tossed back and forth between SwemBalt AB and companies in Belgium and Holland.

On Dec. 29, 1995, the Feederchif changed ownership to Valinveet S.A., a company registered in Brussels, and less than three months later the vessel was sold to the Dutch company Intercruise-Diana Dieren located in Goudswaard, Holland. The vessel was auctioned and subsequently scrapped on May 7 1996, when the Dutch company was registered as the owner.

Udris has also been in contact with U.S. law professor Hans Smit at Colombia University in New York City. He concluded after reading the ad hoc arbitration tribunal's decision that: "The most persuasive argument can be advanced for the view that the arbitration tribunal that rendered SwemBalt AB an arbitration award on Oct. 23, 2000 lacked jurisdiction and that the Latvian government is free to oppose recognition and enforcement of the award on the grounds that the arbitration tribunal lacked jurisdiction."

With these arguments at hand, Udris believes he will have a chance to declare the arbitration tribunal's decision void. At the Danish Maritime and Commercial Court, Latvia will be represented by Danish Lawyer Mats Marstran-Jorgensen from the firm Norsker & Jacoby.