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Sunday 19.11.2017 | Name days: Liza, Līze, Elizabete, Betija
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Lawyers: court order Latvia to purchase CAF manufactured trains

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The government’s decision to divide the EU co-funding of 100 million LVL, which was intended to be used for the procurement of passenger trains, could bring Latvia close to losing the mediation process at the Stockholm Chamber of Commerce SCC Arbitration, according to interviewed lawyers.

This assessment is based on the argument that the state, hoping to divide this EU co-funding on other projects, attempts to create a condition that the April 2 signed contract with the Spanish CAF cannot be in force, because the EU funding is basically the founding stone of this contract. Meaning, the SCC could translate this as knowing actions – to avoid complying with the signed contract (there are different opinions regarding whether or not the contract is in force or not). Even though it is still not clear what the SCC could decide, there are only three possible options, Dienas Bizness.

First: Latvia proves it’s right, that the contract did not become in force and that an agreement could not be reached in regard to certain contract changes with CAF before a certain date. Second: CAF proves it’s right, that the contract did become in force (it can be proved with the CAF’s letter to PV, that the Spanish company believes: all preparations for the contract to become in force have been finished and all obstacles removed), and Latvia is ordered to fulfil the signed 610 million EUR worth passenger train procurement and the following 30 year maintenance contract.

Worst case scenario: if CAF proves it is right and the arbiter decides Latvia is to pay for CAF’s lost profits – tens of million EUR.

As previously reported, Latvia announced the massive procurement tender in the beginning of December 2009. The European Commission approved the EU Cohesion Fund’s transport industry project regarding the modernization of Riga’s railway transit system.

The procurement of 34 new trains and the overall costs of the project were planned at 144 million LVL, where the EU funding was planned to be 100 million LVL and the remaining 44 million LVL would be provided by PV. The second part of the contract stated the maintenance of the said trains for a 30 year period. The total value of the contract was 610.76 million EUR. The new trains were planned to be provided before August 2015.

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