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Cobalt Successful for PNB Banka Before Latvia's Constitutional Court

Cobalt Successful for PNB Banka Before Latvia's Constitutional Court

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Cobalt has successfully represented AS PNB Banka before Latvia’s Constitutional Court in a case involving the fee calculation for credit institutions for financing the Financial and Capital Market Commission’s operations.

According to Cobalt, “on 20 February 2020 the Constitutional Court handed down a judgment ... holding that Article 2.11. of the Regulation of 2 December 2018 of the Financial and Capital Market (FCMC) No. 198 ‘Regulation on Determining the Amount of Payments by the Financial and Capital Market Participants for Financing the Financial and Capital Market Commission in 2019 and for Submitting Reports’ does not comply with the principle of equal treatment as enshrined in Article 91 of the Constitution of the Republic of Latvia."

According to Cobalt, "AS PNB Banka applied to the Constitutional Court due to its doubts that the fee level payable by the credit institutions for financing the FCMC’s operations complies with the principle of equal treatment. In determining the amount of the fee level for year 2019, the FCMC increased the fee level for the credit institutions only but not the fee levels for other financial and market participants. This approach was based on the argument by the FCMC that other market participants are unable to cover supervision costs. In the opinion of AS PNB Banka such different treatment lacked a legitimate aim and was not proportionate to the potential legitimate aim."

"The Constitutional Court held that all the financial and capital market participants subject to an obligation to finance the FCMC’s operations are in equal circumstances and that the contested legal norm prescribes [sic] unequal treatment," Cobalt reported. "In verifying whether the FCMC’s Board was entitled to issue the contested legal norm, the Constitutional Court found that the FCMC’s Board was not empowered in a democratic and legitimate way to issue the contested legal norm. Therefore, unequal treatment provided for by the contested legal norm had not been prescribed by law.”

The Cobalt team included Managing Partner Lauris Liepa and Associate Toms Krumins.