Deviation of one party from the contract doesn’t release the other party, that hasn’t fulfilled the terms of the contract, from the fulfilment of obligations upon the contract and doesn’t interrupt legal relationship of parties, in relation with which the contract of the Court of Arbitration has been signed, think judges of the Supreme Court.

Such decision was made in a general meeting off judges of the Department of Civil Cases of the Senate and Chamber of Civil Cases on July 2. It is possible to get acquainted with this ruling in the home page of the Supreme Court www.at.gov.lv in chapter „Court information”.

During last period of time the question about power of the contract of Court of Arbitration became more topical, because in contracts of credit of banks and other institutions that offer financial services, with borrowers  it has been often included term on rights of the creditor to deviate from the contract in unilateral way, it is, to break the contract in cases, when borrowers break their obligations on the return of the loan in terms, established by parties. While reviewing applications from creditors about issue of writing of execution for execution of verdicts of Courts of Arbitration, in which claims about levy of all amount of the debt have been discharged, in cases, when creditor deviates from the contract in unilateral way, there are situations that judges decline issue of the writing of execution, on the basis of conclusion, that at the same time with unilateral deviation of creditor from the contract of credit, operation of contract of Court of Arbitration also comes to an end.   

In order to create uniform understanding about power of contract of Court of Arbitration, that would conform to the law, and, thus, competency of Courts of Arbitration to solve the dispute in cases, when creditor in unilateral way deviates from the contract, in relation with which the contract of the court of Arbitration had been signed, there was made a decision to give explanation upon this problem in a general meeting of judges of the Department of Civil Cases of the Senate and Chamber of Civil Cases.

According to part two of Paragraph 493 of Civil Procedure Law, the contract of Court of Arbitration stays in force, until legal relation is not finished, in relation with which it has been signed. The general meeting of judges thinks that legal relation as body of rights and obligations exists until complete fulfilment of rights and obligations established in the obligation, also until payments of percents and, if it has been agreed, of penalty.  Unilateral deviation of the creditor from the contract that he has alreay fulfilled and claim to pay back all sum of the credit is annulment of terms of payback of the credit according to the contract, that are favourable for the borrower. Deviation of one party from the contract doesn’t release the party, which hasn’t fulfilled terms of the contract, from fulfilment of obligations upon the contract and doesn’t interrupt legal relation of parties, in relation with which the contract of Court of Arbitration has been signed.

According to Paragraph 491 of the Law  „On Judicial Power”, the general meeting of judges of the Chamber and department of the Senate, in order to discuss topical questions in field of law, has been summoned by the Chief Justice of the Supreme Court. The general meeting discusses questions of interpretation of topical law standarts in order to provide uniformity in application of law standarts. The general meeting of judges formulates its opinion as ruling that has been published.

 

 

Information prepared by

Head of the Division of Communications of the Supreme Court Rasma Zvejniece

E-mail: rasma.zvejniece@at.gov.lv, telephone: 7020396, 28652211