European Initiatives (PECL, DCFR) and Modernization of Latvian Civil Law

• Author: Kalvis Torgans
• Position: Professor, University of Latvia
• Pages: 137-142

Kalvis Torgans

Professor, University of Latvia

European Initiatives (PECL, DCFR) and Modernization of Latvian Civil Law

1. Introduction

Latvia has codified (to be more precise, partly codified) her civil law. The civil law as a codification act (the Civil Code) ¹ was adopted in 1937, shortly before the occupation, and re-enacted in the independent Latvia of 1992-1993. The Civil Code is based on the Local Law Collection of the Baltic Provinces of the Russian Empire (1864), the main drafter of which was Friedrich Georg von Bunge, well known in Estonia. As a result of his contribution, the Civil Code to a greater extent resembles the German Bürgerliches Gesetzbuch (BGB), rather than any of the Russian codes. Although the Civil Code contains 2400 articles, its coverage still does not include some important parts of the civil law, such as insurance. At the same time, the Civil Code comprises only symbolic general chapters in relation to such important areas as labour law and carriage of goods and passengers. Instead, employment relationships are regulated by the 2001 Labour Law ² , whereas the field of transportation is governed by the 2000 Railway Carriage Law ³ , the 1995 Motor Carriage Law ⁴ , the 2003 Maritime Code ⁵ , and other special laws. The Construction Law of 1995 supplements the rules of the Civil Code on work-performance contracts. Insolvency law, competition law, copyright law, commercial law, and consumer protection law exist as branches of special private law⁶. In 1997 Latvia ratified the Convention on International Sales of Goods (CISG).

In 2000, the Commercial Law was adopted. However, at that initial stage only three out of four parts were approved. It was only after a lengthy interruption until September 2007 that work on the code resumed and the draft of the missing final part D, "Commercial transactions", was submitted to the Latvian Parliament (Saeima) and passed at its first reading on 15 November 2007 and at its second reading on 28 February 2008. Part D contains provisions specific to commercial transactions.

The intensive development of private law that took place prior to Latvia's accession to the European Union can be considered very successful, as indeed for all three Baltic States. In connection with EU accession, it was not necessary to amend the Civil Code's chapters on contract law and property law, though some amendments were made to the chapter on family law. Necessary directives were implemented mainly through adoption of separate laws (lex specialis), such as the Consumer Rights Protection Law, the Law on Safety of Goods and Services, and the Law on Liability for Defects of Goods and Services. This is not to say that no amendments were made to the code as such. Indeed, some new rules, such as rules on delayed payments and interest (deriving from directive 2000/35/EC), were introduced into the code.

2. Relative stability and future plans

Currently, development of private law in Latvia is mainly proceeding through implementation of EU directives. This is perceived as a high priority by the domestic legislator. Official information on the Web page of the Ministry of Justice states that Latvia has already implemented 1694 directives, or 99.59% of all directives to be implemented⁷.

Some attempts to introduce directives into the Civil Code reveal problems that should also be taken into consideration by drafters of directives. The delay in implementing some directives shows that the problem does not lie in the unwillingness of Latvia to implement them but, rather, in the way the directive provides resolution to, for example, non-discrimination issues. No political groups in Latvia support discrimination. However, a number of Latvian sectoral ministries and the parliament have been unable for two years to decide how, and in which law, to implement the directive on equal treatment of persons, irrespective of racial or ethnic origin, and the directive on equal treatment of men and women in access to and supply of goods and services.

One draft provided that these issues would be addressed in the Civil Code's chapter on contract law. However, along the way, a number of problematic issues were identified, such as:

1. Whether other forms of discrimination, which are not listed, would be permissible in public supply of goods and services, for example, on the basis of religion, age, and political views.

2. Whether the prohibitions apply only to public supply in the goods and services sector, or whether they should be applied generally and therefore be included in the introductory chapter of the Civil Code.

3. While working on these issues, the drafters have realised that the directive also applies to commercial relationships. This led to elaboration of another draft law - Amendments to the Commercial Code - setting out a list of prohibitions, which ended by saying "[...] based on gender or other basis". No progress on any of these draft laws can be reported so far.

With regard to initiatives not derived from directives, it must be said that doctrine and academic proposals are developing more rapidly than their implementation in specific legislative drafts. The necessity for modernisation is currently recognised mostly by academics and their students, who in their research and studies are focusing much more on private law processes in Europe. Many papers were published in 2003-2007 ⁸ comparing the concepts of the Principles of European Contract Law, the UNIDROIT Principles, and available parts of the Draft Common Frame of Reference (DCFR). A doctoral thesis entitled "Main Modernization Directions of Latvian Contract Law" was defended by Janis Karklins. This suggests a firm theoretical foundation. But it is not sufficient for legislative activities.

As the situation stands now, state institutions, and in particular the Ministry of Justice and the parliament, find other drafting matters more pressing, such as criminal law, competition, insolvency, and reorganisation of the court system. Nevertheless, the Civil Code has not been forgotten, although research is scheduled for 2007-2009 - but only on possible modernisation. Work has started on elaborating an inventory of gaps and out-of-time rules in the Civil Code. More than 100 provisions contained in the Civil Code's chapter on contract law were found not to correspond to today's requirements from the standpoint of their wording, as well as for the precision of a proposed solution. However, most changes are technical, and no more than 15 fundamental conceptual amendments could be highlighted. This has fuelled discussion on whether introduction of amendments will be enough or whether a completely new version of the civil code should be prepared. However, creating a...