Shopping Centres in Latvia apply to Constitutional Court to Contest the Prohibition of Operation of Stores established in the Country due to COVID-19

The major shopping centres in Latvia have prepared an application to the Constitutional Court (Satversmes tiesa) challenging the discriminatory provision of the Cabinet of Ministers Regulation which prohibits operation of stores in the big shopping centres. The first one to lodge the application on 26th of May was the biggest regional shopping centre in Latvia operating in Valmiera – “Valleta” – and others are expected to follow the suit soon.

In the application the shopping centres contest provisions of the Cabinet of Ministers Regulation which create an unequal situation among participants of the retail industry from the 7th of April because the big shopping centres (where the total retail area is higher than 7000 m2) are prohibited from trading activity in most stores. Trading is allowed only in individual stores which are listed as exemptions (pharmacies, bookstores, groceries, hygiene, optics, pet food, flower, printed media, IT and telecommunication stores, as well as stores which have a separate external access). While, in turn, the trading outside the big shopping centres is allowed in all stores.

The applicants consider this different treatment (and prohibition related thereto) to be anti-constitutional, because it infringes the rights of a person to a property and equality before the law guaranteed by the Constitution (Satversme) without a justified reason. It creates an unfair and unequal competition and adversely affects not only particular retailers and lessors of premises in the major shopping centres but also the overall national economy in the country and certain groups of society.

Raivis Leimanis, senior counsel of Ellex in Latvia, provided clients with legal assistance with regard to preparation of the application and submission thereof to the Constitutional Court. In the course of the assignment, in collaboration with the Ellex offices in Estonia and Lithuania, and the world’s leading network of independent law firms Lex Mundi, a legal due research was carried out in the interests of the client about the legal framework in other European countries. The findings of the research highlighted that in other countries there are no such discriminatory restrictions for the big shopping centres. Furthermore, the process of development of the contested legal provision was analysed arriving at a conclusion that the prohibition of trading established by the Government does not have objective and reasonable grounds, and it does not conform to the principle of good legislature.

In order to remedy the unfair situation in the retail industry in Latvia, in their applications lodged the shopping centres ask the Constitutional Court to recognize the provisions of the Cabinet of Ministers Regulation to be nonconformant to the Constitution of the Republic of Latvia. Irrespective of the subsequent outcome of adjudication of the matter, the mere fact of such application being lodged is a serious signal for the Government to improve the quality of the legislative process in order to ensure fair competition in the retail industry and just legal framework governing the business.

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Raivis Leimanis

Senior Counsel / Latvia