Yet another case initiated with regard to the provisions setting out the procedure for the confiscation of criminally acquired property


On 8 May 2021, the 2nd Panel of the Constitutional Court initiated the case “On the compliance of Section 7011(4) of the Criminal Law and Section 358(1) of the Criminal Procedure Law with the first sentence of Article 91 and the first, second, and third sentence of Article 105 of the Constitution of the Republic of Latvia”.

Contested Provisions

Section 7011(4) of the Criminal Law provides that the criminally acquired property, proceeds obtained by the person from the disposal of such property, as well as the yield received as a result of the use of the criminally acquired property, shall be confiscated, unless it must be returned to the owner or legal possessor.

Section 358(1) of the Criminal Procedure Law provides that criminally acquired property shall be confiscated, under a court ruling, for the benefit of the State if the further storage of such property is not necessary for achieving the objective of criminal proceedings and if such property does not need to be returned to the owner or lawful possessor, and the financial resources acquired shall be transferred to the State budget.

Provisions of Superior Legal Force

  • First sentence of Article 91 of the Constitution (Satversme) of the Republic of Latvia (hereinafter–the Constitution): “All human beings in Latvia shall be equal before the law and the courts.”
  • First three sentences of Article 105 of the Constitution: “Everyone has the right to own property. Property shall not be used contrary to the interests of the public. Property rights may be restricted only in accordance with law.”

Facts of the Case

The case has been initiated on the basis of an application filed by ERGO TEC LLP (hereinafter – the Applicant). The Applicant is a creditor of the stock company under liquidation “TRASTA KOMERCBANKA” (hereinafter – the bank). According to the decision of a judge of Riga City Vidzeme District Court, based on the contested provisions, the administrator of insolvency proceedings is under an obligation to transfer those funds placed with the bank which have been recognised as criminally acquired to the State budget without reference to the process of discharging the claims of creditors. The Applicant notes that the amount of the bank’s property has thus been substantially diminished, and the bank will no longer be able to discharge its liabilities to the Applicant in full. As a result of applying the respective provisions, the value of the Applicant’s claim as the bank’s creditor is reduced. What is more, the contested provisions allow a situation in which, as a result of the confiscation of property, a good-faith third party is required to replace the criminally acquired property with its own property.

In the Applicant’s opinion, the application of the contested provisions has resulted in a disproportionate restriction of its right to property and in an unjustified difference in treatment compared to the State as one of the bank’s creditors in the insolvency proceedings, as well as in unjustified uniform treatment of creditors regardless of whether insolvency proceedings have been initiated against the credit institution. Therefore, allegedly, the contested provisions violate the principle of legal equality, which is enshrined in the first sentence of Article 91 of the Constitution, and are incompatible with the first, second, and third sentence of Article 105 of the Constitution.

Court Procedure

The Constitutional Court has requested the Saeima to submit a written reply stating the facts of the case and the legal reasoning by 8 July 2021.

  • The case is to be prepared by 8 October 2021.

The Court will decide on the type of proceedings and the date of hearing once the case has been prepared.

The decision to initiate the case is available here.

Press release is available here.

Linked case: 2021-19-01