An honest comparison: arbitration court, state court, simplified procedure and what is more beneficial
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The debtor does not pay EUR 800 — calculate how much recovery will cost. Will the result surprise you?
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Do you know that Latvia has a special simplified court procedure for smaller amounts, and how it differs from an ordinary claim?
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When is an arbitration court more beneficial than a state court for a small debt — and when is it not?
A businesswoman sold a batch of goods for EUR 1,500. The buyer did not pay. She called a lawyer. The lawyer said that the court process would cost EUR 400 to 800 for the representative alone. Plus the court fee. Plus time.
“So recovery will cost me about half of the debt?” she asked. “Approximately,” the lawyer replied.
The real arithmetic of small-debt recovery
For a EUR 1,500 debt through the state court: court fee 15% = EUR 225 (recoverable from the defendant). Representative, if needed: EUR 300–600 (partially recoverable from the defendant, but only if you win). Translations, if needed: EUR 0–200. Your time: at least several hours. Process duration: 3–6 months.
For a EUR 1,500 debt through arbitration (independently, in written proceedings): arbitration fee according to the Riga Arbitration Court tariff — check the current amount. Your time: drafting the statement of claim — 2–3 hours. Time frame: 4–6 weeks.
Special simplified procedure in the state court
For claims up to EUR 2,150 (the amount is indexed), Latvia provides a simplified procedure under Section 30.3 of the Civil Procedure Law. This is an accelerated review based on documents, without a full court hearing.
State fee in the simplified procedure: a fixed EUR 70, regardless of the amount up to EUR 2,150. This is significantly cheaper than ordinary proceedings.
Disadvantages: it is still slower than arbitration. The defendant may challenge the decision and transfer the case to ordinary proceedings.
When arbitration is more beneficial even for small amounts
If you have many small debtors. One claim in arbitration is a good investment if it sets a precedent for the others. Debtors see that you act.
If speed matters. Six weeks versus six months — for a small business, this is a critical difference for cash flow.
If the debtor is in another EU country. An arbitration award is easier to enforce through the New York Convention.
If the contract contains an arbitration clause. In that case, the state court may refuse to accept the claim, and you will have to go to arbitration anyway.
When the state court or simplified procedure is better
If the contract does not contain an arbitration clause and this is a one-off small transaction, the simplified state procedure with a EUR 70 fee is more economically justified.
If you want to litigate independently, without a lawyer and without experience, the simplified state procedure is technically easier for a beginner.
A rule worth remembering
For debts up to EUR 500: assess realistically whether the game is worth the candle. Sometimes it is wiser to send a firm demand with a threat of court and stop there.
For debts of EUR 500–2,000: use the simplified state procedure with a EUR 70 fee or file an independent claim in arbitration if there is an arbitration clause.
For debts above EUR 2,000: arbitration, where there is an arbitration clause, is clearly preferable in terms of speed and predictability of the result.
A small debt is not a small problem. But the solution must be proportionate to the stakes.
This article is for informational purposes only and does not constitute legal advice