New features and limitations you need to know before starting the process
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You know that a witness can change the outcome of a case—but did you know that until July 2024, witnesses did not exist in arbitration courts?
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Did you know that witness testimony in arbitration does not entail criminal liability for lying—and how does this affect the evidentiary value?
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What should I do if a key witness refuses to appear in arbitration? Are there any tools available?
Until July 4, 2024, arbitration courts in Latvia were unable to hear witnesses in oral proceedings. The only available means were written submissions from individuals with knowledge of the case. This significantly limited the parties’ options in situations where key facts were not documented.
With the entry into force of amendments to the Law on Arbitration Courts, the situation has changed fundamentally. Witness testimony is now a fully-fledged form of evidence in arbitration proceedings. However, this instrument has important features that must be understood before the proceedings begin.
What has changed: new Article 44.1 of the Law on Arbitration Courts
Effective July 4, 2024, Article 44.1 “Witness Testimony” was added to the Arbitration Courts Law. It provides the following.
A witness is a person who is aware of the facts relevant to the case and who has been invited to the hearing by the arbitral tribunal at the reasoned request of a party.
The party requesting the hearing of a witness is obliged to indicate which specific circumstances significant to the case the witness can confirm.
A witness may be questioned only on facts that need to be established in a specific case.
Key differences from the state court
There is no criminal liability for false testimony. In a state court, a witness is warned of criminal liability under Article 300 of the Criminal Code for knowingly giving false testimony. There is no such liability in arbitration courts—arbitration courts are not state bodies and cannot impose criminal penalties.
This is important to understand when assessing the evidentiary value of testimony: on the one hand, a witness can speak more freely, but on the other, he has less incentive to tell the truth under the threat of criminal prosecution.
There is no forced attendance. If a witness refuses to appear, the arbitral tribunal has no right to order their forced attendance. This is possible in a state court, but not in an arbitral tribunal.
What to do if a witness fails to appear: The arbitral tribunal may petition the district state court for assistance in obtaining evidence, including the witness’s examination. This is provided for in the new Article 41.1 of the Law on Arbitration Courts, introduced by the same July 2024 amendments.
Written explanations are still available.
The introduction of oral examination of witnesses has not eliminated the possibility of written explanations. Parties may still submit written testimony from persons familiar with the circumstances of the case.
In practice, written explanations are often more convenient: they can be prepared in advance, they do not require an appearance, and are convenient for witnesses located in another city or country.
An important detail: explanations are submitted in the language of the proceedings or with a certified translation if the witness does not speak the language of the proceedings.
When a witness really matters
Witness testimony is most valuable in the following situations: when verbal agreements were not recorded in writing but a witness was present during the conversation; when the fact of performance or non-performance of work must be confirmed through a person who directly observed it; when it is necessary to dispute or confirm the circumstances of the acceptance of goods or services; when correspondence has not been preserved but a third party can confirm the content of the negotiations.
It’s important to understand: witness testimony in arbitration is a supplement to documentary evidence, not a substitute for it. The arbitration tribunal evaluates all evidence cumulatively. A single witness without a documentary basis is a weak position.
A real case
The company provided consulting services. The contract was signed, and partial payment was made. The client refused to pay the remainder, citing incomplete services.
Documentary evidence of the full provision of services was insufficient—a significant portion of the work was conducted verbally during meetings. However, another employee of the client company, who had already left the company by the time of the dispute, was present at these meetings.
Before the July 2024 amendments, the most that could be done was obtain a written statement from the former employee. After the amendments, a motion was filed to have him examined as a witness at the arbitration hearing. The witness appeared and confirmed the full scope of services rendered. The claim was upheld.
Three practical conclusions
First: if you have witnesses, file a motion to question them promptly, before the trial begins. Specify the facts they can confirm.
Second: if the witness is unwilling to appear in person, consider submitting a written explanation. It’s less compelling, but better than nothing.
Third: if a key witness refuses to participate, a petition for assistance in obtaining testimony can be filed with the state court through arbitration. This is a new tool available since July 2024.
A witness in arbitration is now a real tool, not a theoretical one. But like any tool, it only works if its features and limitations are understood in advance.
This article is for informational purposes only and does not constitute legal advice.