The big shopping malls defeat the Latvian state in the Constitutional Court
The case was initiated upon the applications of the owners of shopping malls SIA Eften Domina (shopping mall Domina in Riga) and SIA VRPB (shopping mall Valleta in Valmiera). The applicants had applied to the Constitutional Court separately, however, the Constitutional Court decided to combine and examine the applications in one case, together with the application of the specialized retailer SIA Jysk Linnen’n Furniture having similar claim.
Both applicants requested the Constitutional Court to examine the constitutional compliance of Paragraph 24.18 (in the wording being in force from 7 April to 1 June 2021) of the Cabinet of Ministers (CM) Regulations “Epidemiological Safety Measures for Limiting the Spread of Covid-19 Infection” with the first sentence of Article 91 of the Constitution of the Republic of Latvia (the Constitution), as well as the first and third sentences of Article 105. The first sentence of Article 91 of the Constitution stipulates that all people in Latvia are equal before the law and the court, while the first and third sentences of Article 105 state that everyone has the right to property and property rights may be restricted only in accordance with the law.
The contested regulations of the CM imposed significant trade restrictions in shopping malls with a total sales area of more than 7,000 sqm. Namely, all types of shops were prohibited in large shopping malls, except only certain shops mentioned in the regulations, which provided the opportunity to purchase basic necessities (shops selling food or hygiene products in the amount of at least 70% of the product range, pharmacies, opticians’ shops, pet food stores, flower shops, bookstores, press outlets, and later also stores for computers, their peripherals and software, and telecommunications equipment).
At the same time, the contested regulations of the CM did not prohibit the operation of other, similar or larger stores outside shopping malls. Thus, the regulatory framework provided for a different treatment of merchants who operated in the same and comparable conditions according to certain criteria. The Constitutional Court found that a violation of the principle of equality enshrined in Article 91 of the Constitution had been committed and declared the contested norm of the CM regulations invalid.
The case is unique in that out of almost 100 applications submitted to the Constitutional Court in connection with regulatory restrictions on the spread of Covid-19 infection, this is the first and only case reviewed so far in which the Constitutional Court has declared restrictions on physical commercial activities unconstitutional. This enables applicants to claim compensation from the state for the harm (business loss) caused to them. There have been no such precedents in Latvia so far, therefore the specific case and subsequent related processes will form a unique practice in the history of Latvia.
The shopping malls Domina and Valleta were successfully advised and represented by Raivis Leimanis, a senior counsel at Ellex in Latvia.