9 July, 2020
On July 9, the Department of Civil Cases of the Supreme Court (Senate) annulled the judgment of Latgale Regional Court on recovery of more than 66 million euros from the limited liability company LatRosTrans in favour of the claimant Novopolotsk Republican Unitary Oil Transportation Enterprise Druzhba. The Senate remitted the case to the appellate court. In the judgment, the Senate acknowledges that the Regional Court, by recognizing the property rights of the claimant and its predecessors to the technological oil located in the oil pipelines owned by LatRosTrans Ltd, has incorrectly applied and interpreted provisions of substantive law, as well as violated procedural requirements on evaluation of evidence and substantiation of judgment.
In the judgment, the Senate indicates that the Paragraph 1 of the Supreme Council decision of August 24, 1991 “On Ensuring the Economic Basis of the Statehood of the Republic of Latvia” stipulates that all former Union-wide enterprises and other civilian objects are under the jurisdiction of the Republic of Latvia as the state property of the Republic of Latvia, unless otherwise provided by international agreements.
Consequently, by Paragraph 1 of the above-mentioned Supreme Council decision of August 24, 1991, the Latvian State determined the ownership and exclusive jurisdiction of all civil (non-military) property objects to the Latvian State in accordance with the territorial principle. The Senate points out that consequently the Regional Court had no grounds to consider that the USSR company division act, a foreign company act or the laws of another country, regardless of their content, may affect the property rights to a civil property object, including technological oil, in the territory of Latvia. And it is irrelevant whether the technological oil was on a company's balance sheet.
The circumstances of the case are as follows:
The Novopolotsk Republican Unitary Oil Transportation Enterprise Druzhba brought an action before the court, considering that the technological oil contained in the oil pipelines owned by LatRosTrans Ltd was the property of the claimant. The claimant initially asked the court to recognize the claimant's property rights and possession, as well as to prohibit LatRosTrans Ltd from using and/or utilizing technological oil located in the main oil pipelines Polock-Ventspils and Polock-Biržai-Mažeikiai owned by LatRosTrans Ltd, as well as oil located in the internal pipelines of the oil transfer stations “Skrudaliena 1”,“Skrudaliena 2”,“Džūkste” and the oil acceptance-transfer point “Ventspils ”, without the claimant's consent. In the appellate court, by clarifying the claim, the claimant asked the court to recover the value of the oil to be recovered from LatRosTrans Ltd and to recover losses from LatRosTrans Ltd due to the pumped-out oil.
On June 7, 2018, having examined the case under appellate procedure, the Latgale Regional Court partially satisfied the claim and recovered losses of EUR 66,744,966.24, a state fee of EUR 66,883.47 and costs related to the conduct of the case for the payment of a lawyer's assistance EUR 49,800, a total of EUR 66,861,649.71 from the limited liability company LatRosTrans in favour of the public limited company Polocktransneft Druzhba.
Case SKC-62/2020; C12307410
Information prepared by Baiba Kataja, the Press Secretary of the Supreme Court
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