UAB „LATAKKO“ v. UAB „Auto moto NG“

At a glance

Parties

UAB „LATAKKO“ (applicant) v. UAB „Auto moto NG“ and N. G. (interested persons)

Case no.

Civil case No. e2T-9-823/2019 (Court of Appeal of Lithuania); underlying arbitration No. 47/04-2018

Court

Lietuvos apeliacinis teismas (Court of Appeal of Lithuania), Civil Division

Underlying award(s)

Award of the Riga Arbitration Court (Rygos trečiųjų teismas), Latvia, of 18 October 2018

Treaty

New York Convention 1958

Court

Judges Goda Ambrasaitė-Balynienė (presiding and rapporteur), Danguolė Martinavičienė, Aldona Tilindienė

Sector

Sale of goods

Outcome

Latvian award recognised and declared enforceable in Lithuania (9 January 2019).

Amount

Award: EUR 8,966.63 jointly and severally (EUR 6,623.84 debt, EUR 645.55 penalties, EUR 40 collection costs, EUR 1,000 legal fees, EUR 657.24 arbitration costs), plus 8% annual interest on unpaid principal. Court costs: EUR 133 from each interested person (EUR 266 translation costs).

The dispute

UAB „LATAKKO“ sold goods to UAB „Auto moto NG“ under a purchase contract No. 11022-2013/AK of 15 March 2013. N. G. guaranteed the buyer's obligations under clause 7.9. Clause 7.5 sent disputes, at the claimant's choice, to one of three arbitration courts in Riga under Latvian law. The Riga Arbitration Court found against the buyer and the guarantor, and LATAKKO asked the Court of Appeal of Lithuania to recognise and enforce the award. The debtors objected on two grounds. They argued that they had not been properly notified of the arbitration (Article V(1)(b)). They also argued that the 1% daily contractual penalty and the 8% interest breached Lithuanian public policy (Article V(2)(b)).

Key holdings

1. The applicant met Article IV(1). It filed a certified copy of the award with a certified Lithuanian translation, and a copy of the contract containing the arbitration agreement. ¶ 8
2. The enforcing court only checks whether an Article V ground exists and may not review the merits. The resisting party must prove the Article V(1) grounds. The court examines the Article V(2) grounds of its own motion. ¶¶ 9–10
3. The notice objection failed. The arbitration court sent notice on 20 April 2018, again through a bailiff on 7 August 2018, and sent the hearing summons on 28 September 2018. The bailiffs' certificates show that the debtors refused to accept the documents. Under Article 124(2) of the Code of Civil Procedure, refusing a document counts as service, so the arbitration lawfully went ahead in the respondents' absence. ¶¶ 11–12
4. No public policy breach. Public policy means international public policy: fundamental principles of fair procedure and of law, not every mandatory Lithuanian rule. The parties chose Latvian law, so it does not matter that the penalty and interest rates differ from Lithuanian law. Lithuanian case law also sets no fixed cap on penalties. ¶¶ 14–16
5. The dispute was arbitrable under Article V(2)(a). It was a commercial debt claim between private companies arising from a sale contract. ¶ 17
6. The award was recognised and declared enforceable. Each interested person must pay EUR 133 of the applicant's EUR 266 translation costs. ¶¶ 18–19 and operative part

Procedural history

1. 15 March 2013Purchase contract No. 11022-2013/AK concluded, with an arbitration clause (clause 7.5) and a guarantee by N. G. (clause 7.9).
2. 20 April 2018The Riga Arbitration Court sends notice of the claim to the respondents. Notice is repeated through a bailiff on 7 August 2018, and the hearing summons is sent on 28 September 2018.
3. 18 October 2018Award in case No. 47/04-2018 for LATAKKO, payable by 5 November 2018.
4. 9 January 2019The Court of Appeal of Lithuania recognises the award and declares it enforceable. A cassation appeal to the Supreme Court of Lithuania could be filed within 30 days.

Tribunal, counsel and experts

Decided by

• Goda Ambrasaitė-Balynienė Judge, Court of Appeal of Lithuania (presiding judge and rapporteur)
• Danguolė Martinavičienė Judge, Court of Appeal of Lithuania
• Aldona Tilindienė Judge, Court of Appeal of Lithuania

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Keywords

• New York Convention
• recognition and enforcement
• Lithuania
• Latvia
• Riga Arbitration Court
• Article V(1)(b)
• notice of arbitration
• refusal to accept service
• public policy
• international public policy
• contractual penalty
• interest rate
• arbitrability
• guarantor
• sale of goods
• default proceedings

Summary generated with AI from the published documents — refer to the award for the authoritative text.