The Senate’s Department of Administrative Cases has terminated proceedings in the case concerning the application of the European commercial company Balcia Insurance SE for the recognition of the decision of the association Motor Insurers Bureau of Latvia (hereinafter – the Bureau) as unlawful and for compensation for losses.

The case materials show that, by a decision of the general meeting of the members of the Bureau, Balcia Insurance SE was admitted as a member of the Bureau and the applicant was obliged to pay a single-payment contribution to the compulsory civil liability insurance guarantee fund (hereinafter referred to as the guarantee fund) and an admission fee. By this decision, the board of the Bureau was authorized to decide on the applicant's expulsion from the Bureau if the applicant failed to pay the one-time contribution to the guarantee fund and the admission fee within a specified period of time. Since the applicant did not make the aforementioned payments, the board of the Bureau excluded the applicant from the Bureau.

Balcia Insurance SE filed an application with the court appealing the part of the admission decision concerning the obligation to pay the admission fee, as well as the decision on exclusion from the relevant organization, and requested compensation for damages.

The Ministry of Finance ruled that the part of the admission decision requiring the applicant to pay the admission fee was unlawful. In view of this, the District Administrative Court terminated the proceedings in this part of the case, as it was not necessary to continue examining the application for annulment of the admission decision in the relevant part.

Whereas, the Regional Administrative Court, in its judgment, rejected the application for the annulment of the exclusion decision in the part concerning the payment of the guarantee deposit and also upheld the decision of the District Administrative Court to leave the application without examination in the part concerning compensation for damages.

In its judgment, the Senate’s Department of Administrative Cases assessed whether the exclusion decision was an independent administrative act, examining what legal relations were established by the admission decision.

Accordingly, the Senate concluded that the payment of the guarantee deposit is a prerequisite for the insurer to become a member of the Bureau, i.e. it is not a task that must be performed by a member who has already acquired membership rights. Consequently, the condition contained in the admission decision essentially provides that an applicant becomes a member when the guarantee deposit is paid. The obligation laid down in the admission decision to pay the guarantee deposit by a certain date (to fulfil the prerequisite laid down in the legal provision) determines the moment at which the potential member of the Bureau acquires these rights, thus determining the moment at which the admission decision enters into force from a view point of substantive law.

From the point of view of administrative procedure, such a decision is considered an administrative act whose substantive entry into force does not coincide with its procedural entry into force (the moment of notification of the decision).

Whereas, at the meeting of the Bureau's board at which the exclusion decision was adopted, it was verified whether the admission decision had entered into force, i.e. whether the conditions set out in the admission decision had been fulfilled. Since the conditions set out in the admission decision had not been fulfilled, it must be concluded that the admission decision did not take effect and that the applicant had not, in essence, become a member of the Bureau.

Accordingly, the Senate concluded that the exclusion decision in this case cannot be regarded as an independent administrative act, but rather as a continuation of the previous process – a procedural decision clarifying the validity of the previously issued administrative act. The operative part of the exclusion decision is clearly worded to correspond to the wording of the admission decision to admit the applicant as a member of the Bureau, and therefore appears to give the impression that it withdraws certain previously granted rights.

However, in essence, such a decision merely establishes that the applicant did not fulfil the conditions for acquiring membership rights set out in the admission decision and that the admission decision therefore did not enter into force.

Given that the exclusion decision is not an administrative act, the part of the application concerning the recognition of the exclusion decision as unlawful cannot be examined in accordance with the procedure laid down in the Administrative Procedure Law. The Senate therefore ruled that the court judgment must be set aside and the proceedings in the case must be terminated.

Case No SKA-32/2025 (A420145622)

 

Kārlis Arājs
Communication adviser of the Supreme Court
Telephone: +371 67020302
E-mail: karlis.arajs@at.gov.lv