Liquidated Damages as a Legal Remedy for Merchants in Latvia
Liquidated Damages as a Legal Remedy for Merchants in Latvia

Author(s): Annija Kārkliņa, Reinis Ivanovs
Subject(s): Law, Constitution, Jurisprudence, Law on Economics, Commercial Law, Court case
Published by: ADJURIS – International Academic Publisher
Keywords: contractual penalty; legal relations of merchants; liquidated damages; penalty clauses;
Summary/Abstract: Liquidated damages are a widely used legal remedy in several countries. Liquidated damages represent a legal institution that is praised for its practicality, certainty, and economic logic. In practice, this legal institution has also been applied in Latvia. In 2023, the Supreme Court of the Republic of Latvia adopted the most significant judgment in relation to liquidated damages. In this judgment, the court ruled on the prohibition of liquidated damages in Latvia. This judgment has raised a variety of opinions in Latvian legal science as to whether in Latvia there should be an absolute prohibition on liquidated damages. Considering the above, the authors analyse the legal concept of liquidated damages in Latvia and its compatibility with other Latvian civil law concepts. The paper evaluates the reasoning of the Supreme Court of the Republic of Latvia regarding this legal institution and offers the authors' assessment of liquidated damages in Latvia, comparing the practice of Latvia and other countries regarding this legal institution. Lastly, the paper concludes with an assessment of the possible admissibility of liquidated damages in commercial legal relations.

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