Neste Latvija loses arbitration case

  • 2004-01-29
  • Baltic News Service
RIGA - The Riga International Court of Arbitration upheld a claim submitted by Riga Port for over 1 million lats (1.5 million euros) in uncollected revenues and legal expenses from the fuel terminal operated by Finnish-owned Neste Latvija.

Neste Latvija representatives failed to show up in court after requesting to postpone the final hearing. The verdict is not subject to appeal. If not carried out, the port may address the Riga City Court to decide on implementation by a court bailiff.
Neste Latvija, which operates the terminal in Riga Port together with Stateoil Latvijas, had requested to postpone the hearing by rejecting the standing arbitrary judge, Janis Ozolins, claiming he lacked objectivity and was preventing a settlement from being reached. The judge, however, refused the claim and was backed also by the court's presidium.
After the case closed on Jan. 26, Neste Latvija, a subsidiary of Finland's Fortum Shipping, distributed a statement exclaiming surprise and bitterness over the court verdict.
"Unfortunately, Latvia's laws regulate the work of Latvian arbitration courts differently from international standards. We are surprised and embittered by the order in which the case was looked into by the Riga International Court of Arbitration," said Fortum Shipping Vice President Markus Karjalainen.
Karjalainen said that such "senseless" court procedures did not promote business practice in Latvia, and the government should do something about protecting the interests of honest businesses according to EU standards.
Arta Jamsena, head of the Neste Latvija terminal, stated that the company was now deciding on further action since 65 percent of Fortum Shipping is owned by the state of Finland.
Jamsena said that the court had allowed procedural violations even in the final hearing of the case: She voiced hope that "everything will happen civilized" once Latvia joins the EU.
Modris Supe, a lawyer for Riga Port, stated that further action would be decided on at the port's next board meeting, suggesting that a postverdict settlement could decide on a lower amount of compensation.
Originally Riga Port sued Neste Latvija for not fulfilling its obligations, claiming that the amount of oil products handled at the fuel company's terminal in the port was less than 51 percent of the minimum amount stated in the pier lease contract, which caused losses for the port in uncollected revenues.
Under settlement offers made by Neste Latvija, it was proposed to raise the minimum annual fee for use of the port's pier at the terminal. The fuel company also offered to pay transit fees for railway cargo shipped in and out of the terminal, though such cargo shipped by the terminal is reportedly scarce. But Riga Port's administration refused this offer and proceeded with the lawsuit.
In September the port proposed its own version for a settlement, saying it would drop the claim for terminating the lease agreement if Neste Latvija reimbursed the damages for its failure to reload the expected amount of oil products through its terminal. The port also insisted on signing a new lease agreement, under which facilities built by the terminal operators on port territory should fall under ownership of the port once the lease agreement expires.
Two weeks ago Neste Latvija, which owns six oil-product reservoirs at the port, announced that it had handled 400,000 tons of oil products in 2003, up 60 percent year-on-year.