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New hope for foreign land investors in Latvia

According to a ruling of the ECJ the Latvian land privatization law is incompatible with European Law


Since a legislative reform in 2017, foreign investors who plan to acquire agricultural land in Latvia are faced with a hurdle that is difficult to overcome: they must demonstrate an advanced knowledge of the Latvian language at level B2 of the European Frame of Reference. This applies both if a single investor wants to acquire land, as well as for the sole or majority shareholder of a company. Without proof of the required language skills, the land cannot be acquired.

However, according to the Latvian Land Privatization Law, which is still in force, this regulation only applies to EU foreigners but not to Latvian citizens.

In view of this obvious discrimination, it is no surprise that the European Court of Justice in a decision dated 11 June 2020 established that the current Latvian regulation violates European law, in particular freedom of establishment.

Initially, this decision is relevant only for the specific legal dispute. However, the Latvian legislator will be forced to adjust the land privatization law so that it complies with European law. Otherwise, there is a threat of further infringement proceedings by the Commission against Latvia or similar disputes to the one already decided.

As long as no reform has still been carried out, it is recommended that investors in current approval procedures for the purchase of agricultural land should specifically draw the attention of those involved from public authorities to the new ruling. This is necessary in order to enforce any claims for damages later on.

 

Source: 1. „Par zemes privatizāciju lauku apvidos“ (Law on the privatization of land in rural areas).

               2. ECJ, ruling from 11 June 2020, C-206/19.