I INTRODUCTION TO THE DISPUTE RESOLUTION FRAMEWORK
The Republic of Lithuania is a unitary state and its legal system is based on the continental civil law tradition. Therefore, the main legal sources are statutes passed by the parliament. The system of legal acts is hierarchical, with the Constitution of the Republic of Lithuania at its peak, while secondary legislation, passed by authorised state agencies (officials), is the most common form of legislation, and has the least authority. There is a clear division between public and private law branches, as is prominent in all continental legal systems. A distinguishing feature of Lithuanian private law is that branches of civil and commercial law are not separated.
The system of courts in Lithuania comprises a three-level civil and criminal court system, the Constitutional Court of Lithuania and the specialised administrative court system. The Constitutional Court carries out constitutional control regarding legislation passed by the parliament, the President and the Cabinet. The legitimacy of all other normative and individual legal acts is enforced by the administrative court system. Lithuania has a two-tier administrative court system, with no cassation instance. There is no code of administrative procedure and, therefore, the procedural norms are set in statutes.
The civil and criminal judiciary comprises 49 district courts, five regional courts, the Court of Appeals and the Supreme Court. The fundamental statute governing litigation of civil cases is the Code of Civil Procedure (CCP).
In civil proceedings, preliminary hearings are held and parties to the dispute are encouraged to settle either by court mediation, negotiation or other means of settlement. If a voluntary mediation procedure ends in a settlement agreement, such agreement is confirmed by the court and has the power of a court decision (res judicata). It is noteworthy that arbitration provides binding and enforceable decisions and there is no need for validation of such settlement agreement in court. There are no options to resolve an administrative case using alternative dispute resolution (ADR), but the parties to the dispute may also enter into a settlement agreement, which, once approved by the court, becomes binding and enforceable in the same way as in a civil case.
II THE YEAR IN REVIEW
In June 2016, the Stockholm Chamber of Commerce Arbitration award issued in Lithuania v. Gazprom indicated the end of the biggest Lithuanian commercial dispute, which lasted about four years. Lithuania claimed that Gazprom has been applying unfair pricing for natural gas, supplied to Lithuania during a period of 10 years, and Lithuania allegedly suffered a loss of about €1.5 billion. However, the arbitral tribunal disagreed and stated that the supply agreement was not sufficiently precise as to the pricing arrangements, and cannot be considered breached.
Vilnius regional court, as a court of first instance, issued a judgment in a very long-lasting dispute between two national air carriers of Lithuania and Latvia. A now-insolvent Lithuanian airline company, FlyLAL, was awarded damages from the Latvian counterparty AirBaltic for the predatory pricing that it used in Vilnius International Airport and that significantly contributed to the bankruptcy of FlyLAL.
A 13-year lasting dispute between a group of private individuals and the biggest company in Lithuania, Orlen oil refinery, also ended in 2016. Private individuals, as co-authors of a patent, were awarded compensation by the Supreme Court for the unpaid royalties, which they earned for the period 1996–2000.
III COURT PROCEDURE
i Overview of court procedure
Civil cases are heard in accordance with the CCP. The courts of first instance are district courts unless the law specifically provides (depending on the subject matter and value of the dispute) that a case is to be heard in the first instance by a regional court. The first instance court hears and tries the case based on its merits, acquiring and assessing evidence. Only in special circumstances when defending the public interest may the court examine the case more widely than the scope of the plaintiff’s claim and the evidence provided. Insolvency and restructuring cases also fall into the category of cases where the court is not limited to the scope of the claim, especially regarding the rights of employees.
The appellate courts also hear cases based on their merits. However, no new evidence is collected, except when it was not admitted by the court of first instance and the appeal decides to do so. The appellate courts reassess the evidence to the extent specified by the appeal. The first instance court proceedings are usually verbal, while the hearings at the appeal instance are usually written unless the court decides otherwise.
The Supreme Court is the third and final instance in civil proceedings. It does not hear claims on their merits and only examines matters of law in cases where there is reasonable doubt about whether lower instance courts applied substantive and procedural law correctly. The investigation of the Supreme Court is also limited by the scope of the cassation appeal. Cassation proceedings are usually written, except in cases when the court decides to open a verbal hearing. The Supreme Court’s decisions are final. However, the hearing of the court case may be reopened based on specific grounds established in the CCP (e.g., new evidence crucial to the case appears or one of the parties to the case was incapable and ill-represented).
Administrative cases are heard in accordance with the Law on Administrative Proceedings (LAP). The administrative proceedings have a two-instance court system. The regional administrative courts are courts of first instance, which hear cases on their merits and gather and assess evidence. The court procedure is similar to that of first instance civil courts. The second and final instance is the Supreme Administrative Court (SAC) – the appellate instance for all cases heard in regional administrative courts. However, the SAC acts not only as a court of appeal; in specific cases provided in the LAP, it is the first and only instance to the proceedings.
A distinguishing feature of administrative proceedings is their wide pre-court jurisdiction. The LAP states that before applying to an administrative court, parties to a case may – and on some occasions must – first apply to special pre-court dispute-hearing institutions ranging from centralised quasi-court commissions to local administrative entities.
ii Procedures and time frames
The most common civil procedure is to file a lawsuit to the district or regional court entitled to hear the case in the first instance. The average duration of civil proceedings before the Lithuanian courts varies greatly, and it may take from six months to two years for the court of first instance to reach a decision. The court’s decision may be appealed in a 30-day period to the relevant court of second instance (either a regional court or the court of appeal). If a party is domiciled in another jurisdiction, the appeal period is 40 days. During appeal the decision is not executed, but the court may permit urgent execution of the decision if a delay would cause serious damage to the successful party.
Courts of appellate instance reach a decision in roughly one year. The appeal procedure is shorter, mainly because no new evidence is allowed. However, the court may accept new evidence if the providing party proves that the court of first instance unreasonably refused the evidence or that the necessity of providing the evidence arose only after the first instance hearing. The appeal court decision may be appealed to the Supreme Court in a three-month period.
The Supreme Court deals only with matters of law. If the Court deems that the cassation appeal is not based on matters of law but on matters of fact, the appeal will not be admissible for the cassation proceedings. If the Supreme Court’s selection board accepts a case, the decision is usually rendered by the Supreme Court within a period of six months. This is due to the fact that the proceedings in the Supreme Court are mostly written.
In administrative disputes, the decisions of pre-court dispute-hearing institutions may be appealed to the corresponding regional administrative court within 20 days. Once the proceedings start, it usually takes a year for the court to award a decision. The appeal to the SAC must be filed within 14 days, with the exception that decisions awarded in administrative offence cases may be appealed to the SAC within 10 days. During the appellate procedure, the SAC also hears the case based on its merits; thus, the time it usually takes to award a decision in the appeal proceedings is the same. The SAC only admits new evidence if there is a valid reason for not presenting it to the court of first instance.
In the event of a conflict over jurisdiction between civil and administrative courts, a special board comprising the Supreme Court and SAC judges hears the dispute.
The courts may apply interim measures upon the request of an interested party if non-application could hinder or make the execution of a satisfactory decision impossible, or at their own discretion when defending the public interest. These applications must be decided no later than three working days after receipt.
In administrative proceedings, interim measures may be applied upon a claim from the complainant or by the court ex officio. The claim for application must be decided in one day upon the request.
In both proceedings, court resolutions on application of interim measures are executed urgently and may be appealed by filing a separate complaint. Interim measures stay valid until the final decision in the case comes into force, unless terminated by a court of higher instance.
iii Class actions
Lithuania has joined the ranks of EU Member States amending their national legislation to allow class actions. Rules allowing class action only came into force in 2015. In 2015, only two class actions were submitted to Lithuanian courts. However, both of those actions were not accepted for hearing due to the procedural issues. It remains to be seen whether procedural rules need to be changed or the claimants need to take greater care in showing their legal standing.
Class actions can be launched by natural persons and legal entities. It is worth mentioning that, when launching a class action, participation of an attorney is mandatory.
iv Representation in proceedings
A natural person who is of the required age may represent himself or herself in court without an attorney in a civil or administrative case, unless the law specifically prohibits it.
Legal entities are represented by members of their executive bodies or their legal representatives (attorneys, in-house counsel, etc.). There is a restriction on the representation of legal entities in the appellate instance in civil cases – only employees holding a master’s degree in law and professional advocates may be the representatives. There is no such restriction in administrative proceedings. Representation in the cassation instance is exclusively limited to attorneys, meaning that representation by an attorney is mandatory when taking a case to the Supreme Court.
Notably, representation on the basis of the power of attorney to persons who are not attorneys or attorneys’ assistants or even lawyers is permissible in all administrative proceedings, whereas in civil proceedings the representation right is reserved only for attorneys.
v Service out of the jurisdiction
Lithuania is a member of the Hague Service Convention;2 documents are therefore served in accordance with the Convention. If the recipient is in a state that is not a party to the Convention, all services are carried out through the Ministry of Foreign Affairs.
The service of documents inside the EU is done in accordance with Regulation No. 1393/2007 of the European Parliament and the Council on the service in Member States of judicial and extrajudicial documents in civil or commercial matters. There is no difference in the procedure relating to such service to natural or legal persons.
vi Enforcement of foreign judgments
The court of appeal has jurisdiction over the recognition of foreign judgments. To be recognised, the judgment must meet the conditions satisfying the right to fair process and not infringe public order or international private law. The procedure for enforcing judgments of EU Member States is regulated by Council Regulation No. 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. There is also an option to utilise the European Enforcement Order mechanism.
Recognition and enforcement of foreign judgments in Lithuania follows a simplified procedure because the cases are not examined on their merits.
No provisions on the recognition and enforcement of foreign judgments have been provided in administrative proceedings.
vii Assistance to foreign courts
The Hague Conventions, EU and civil procedure law and other international treaties regulate the matter. Lithuania has entered into many bilateral agreements regarding the assistance between courts of signatory states. Under the 1970 Hague Convention on Taking Evidence Abroad in Civil or Commercial Matters, Lithuanian courts are obliged to share specific information with the courts of other Member States.
Requests from the courts of EU Member States are regulated by Regulation No. 1393/2007 of the European Parliament and the Council, and Council Regulation No. 1206/2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters. The communication of court assistance is managed through the Ministry of Justice when not specifically provided otherwise by a treaty or EU legislation.
viii Access to court files
Until the decision of a court comes into force, no other persons, except for the parties to the case and their representatives, may access the information gathered in the case. The information concerning the date of the court hearing is public, unless the proceedings are closed.
Court hearings are open to the public, unless closed by the court (for example, in cases of divorce, at the request of one of the spouses).
Once the ruling of the court comes into force, it is made publicly available with all personal data redacted, including through the courts’ databases, which are accessible via the internet.
ix Litigation funding
The costs of civil proceedings before Lithuanian courts consist of the state fee and other costs incurred in relation to a court hearing. The CCP establishes the amount of the state fees depending on the claim amount and the type of dispute and sets forth what can be regarded as the costs related to the court proceedings.
The losing party has to indemnify the other party for its costs. If only part of the claim was satisfied, the fees and expenses will be attributed proportionally.
As a general rule, the court will order the losing party to indemnify the other party for its lawyer’s costs. The court will fix such indemnity in accordance with a scale provided in the recommendations adopted by the Minister of Justice, which usually results in a smaller amount than the amount actually spent.
Moreover, natural persons who have insufficient financial resources to fund litigation are entitled to state-guaranteed legal aid. Such persons may also be exempt from payment of the state fees.
In addition, according to the Law on the Bar, contingency fee and conditional fee arrangements are allowed in Lithuania provided that they do not contradict the professional principles of attorneys.
Furthermore, when the claimant is a foreigner, the CCP establishes that the defendant is entitled to request the claimant to provide security for costs in certain cases.
Third-party funding is not a common event. It can be done by means of contractual arrangements between the party seeking funding and the funder.
IV LEGAL PRACTICE
i Conflicts of interest and Chinese walls
Conflicts of interest are governed by the new Code of Ethics of Attorneys, which entered into force in September 2016. It generally precludes the attorney (or the attorney’s assistant) from acting on behalf of two or more clients in the same case or on the same matter if their interests are contradictory, or where there is a conflict between the attorney’s interests and those of his or her client.
These provisions are mandatory in nature and cannot be deviated from. However, given that Lithuania is a small country, making a conflict of interest particularly likely, especially within larger law firms, law firms often deviate from this requirement by obtaining specific permission from clients.
There are no statutory provisions regarding Chinese walls; therefore, every conflict of interest will be viewed in the light of the aforementioned mandatory rule prohibiting conflicts of interest. However, such measures as Chinese walls and written permissions by clients to proceed regardless of the conflict of interest will definitely have a bearing if disciplinary proceedings are initiated. However, the Bar Association has already prepared a draft regulation on the avoidance of conflicts of interest and it is likely that the regulations will be adopted in the near future.
ii Money laundering, proceeds of crime and funds related to terrorism
Rules on prevention of money laundering and terrorism financing were confirmed by the Lithuanian Bar Association Council (the Council) in a decision dated 2 July 2009. These rules apply to lawyers in cases when:
- a the attorney (or assistant attorney) acts on behalf of the client; or
- b the attorney assists the client in planning or executing transactions on real estate or share sales or purchases, bank or securities accounts, clients’ money, securities or other asset management; organising contributions necessary for establishment, management and activities of legal persons; or establishing trusts and administrative service providers and all transactions related thereto.
Such a broad definition clearly aims to encompass all possible areas related to movement of capital. If the attorney suspects that the transaction may be related to money laundering or terrorism financing, he or she is obliged to check the identity of the client and inform the Council (by email, fax or post) about the transaction immediately afterwards, irrespective of the amount of money paid or received by the client. However, suspicions regarding transactions are at the full discretion of the attorney.
However, if the suspicions arise while representing the client in court, or rendering legal advice by evaluating the possibility of the client starting or avoiding the litigation process in court (irrespective of whether the relevant information was received before, during or after the litigation), attorneys are not bound by these obligations to provide information.
iii Data protection
Every professional legal adviser is bound by a duty of confidentiality. Therefore, everything that a client communicates to his or her representative is considered a secret and cannot be revealed by any means. This includes the fact that a person (individual or legal entity) sought legal help, and the terms of the contract signed between the legal representative and the client. Duty of non-disclosure of the client’s secret is clearly stated in Article 5 of the Law on the Bar of Lithuania.
When a representation agreement is being signed by the client and professional legal adviser, both parties have to agree on which information can be accessed and what actions can be taken on behalf of the client. Usually, a legal representative can access any information needed, otherwise a legal representative would not be able to carry out his or her duties.
The only exception to when a client’s information can be revealed to any other person is when the client itself agrees to it. The agreement of information-sharing itself has to be crystal clear and there cannot be any doubts as to whether the client has agreed to share such information.
iv Other areas of interest
The issue of attorney–client privilege has been analysed by the Supreme Court of Lithuania.3 The defendant argued that his conversation with his attorney in the premises of the police department was privileged. The Court ruled that privilege is extended only to the private conversation between the defendant and his attorney. In a current case, the conversation took place in the office of the investigator with two other persons present who overheard the conversation. Therefore, the conversation was qualified as public and its content allowed to be used as evidence in a criminal case.
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
The rules on privilege can be found in the codes of criminal and civil procedure. However, the most comprehensive regulation is enshrined in Article 46 of the Law on the Bar, which
provides the following guarantees for attorneys:
- a An attorney cannot be examined as a witness with regard to circumstances that became known to the attorney while acting in his or her professional capacity.
- b It is forbidden to examine, monitor or take any documents relating to an attorney’s professional activity, as well as any media with such documents, attorneys’ postal shipments, telephone calls, other information disseminated via telecommunications and any other communication or activities, except when the attorney is suspected or accused of criminal charges. That exception is only applicable with respect to the documents or other information related to such suspicions or criminal charges.
- c Search or seizure at the premises of the attorney’s office, domicile or means of transport is only permissible in the presence of a member of the Council of the Lithuanian Bar Association or an attorney mandated by such member, who must ensure that no documents or information not related to the suspicions or criminal charges are seized or searched.
- d It is forbidden to publicly or privately acquaint oneself with the information that constitutes an attorney’s professional secrecy and to use it as evidence. ‘Professional secrecy’ encompasses communications addressing the attorney, conditions of the legal assistance agreement, information and documents provided by the client (including, but not limited to, any information about the contents of the meeting of client and attorney), the nature of the consultation or advice and documents gathered by the attorney while acting on behalf of the client.
- e Professional secrecy requirements are extended to all workers at an attorney’s firm. The client may permit the attorney to disclose certain information constituting professional secrecy.
As is evident from the guarantees laid down in (d) above, privilege extends to all communications by the attorney that are carried out on a client’s behalf with third parties and to the information provided by such parties. There is no division of privilege into litigation and legal advice privilege; if the information falls under the umbrella of professional secrecy, it is equally observed in both cases. However, there is no national court practice related to how to identify whether an attorney is rendering professional advice and acting on behalf of the client when gathering certain information or performing certain actions. Therefore, the practice of the European Court of Human Rights (ECHR) is used by practitioners.4
Privilege extends only to attorneys and attorneys’ assistants; in-house lawyers are not protected. This seems to be in line with the decision by the Court of Justice of the European Union (CJEU) in the famous Akzo case5 regarding competition, where both the court of first instance and the CJEU denied in-house counsel privilege in Commission competition investigations.
Although there are no specific statutory provisions, by virtue of the provisions of the ECHR and abolition of restrictions to provide services in the EU, legal advice from foreign attorneys should enjoy the same amount of privilege.
ii Production of documents
The general principle of burden of proof (onus probandi), established in Article 178 of the CCP, requires the party to prove every submission the party makes. However, there are certain requirements for such submissions, because if the parties were permitted to constantly submit new documents, the goals of effective and economic litigation would not be achieved. The documents submitted by each party must have relevance to the case; documents must either confirm or deny the facts at issue in the case. Such circumstances depend on the nature of the claim and on the method of protection of rights requested by the claimant.
Therefore, there is no obligation for the parties to submit the documents that show facts or circumstances contrary to the submission of that party – each party usually submits the documents that tell the submitting party’s story.
However, if one party does not have or cannot obtain relevant documents that are in the possession of another party or an entity that is not a party to the case, that party may request the court to oblige the other party or entity to submit those documents. In that case, the requesting party must specify:
- a the name and nature of the documents requested;
- b why the requested documents can be possessed by the other party or entity; and
- c circumstances that will be confirmed or denied by the document.
The requesting party should also produce evidence that it cannot obtain those documents by itself (e.g., the addressee refuses to submit documents to the requesting party). The court may then order that the documents requested be submitted. However, general rules against self-incrimination apply in this case; therefore, the person who was requested to submit the documents may refuse to submit such documents if their submission would mean producing evidence against him or her, or his or her family members or close relatives. It is arguable whether the rule against self-incrimination applies to entities (i.e., legal persons). Consequently, if the documents are held by a third party (separate legal entity) under the control of a litigant (e.g., a subsidiary), the litigant is not required to submit those documents unless the relevant request is addressed to the subsidiary.
As previously mentioned, the general rule on burden of proof required is for each party to submit the documents that prove the submissions and arguments of that party. This means that if the court considers that there is not enough evidence to confirm the validity of a party’s claim, the claim is dismissed. Therefore, it is in the party’s own interest to provide the court with the documents most proving the submissions made by the party. Consequently, a party is not limited to submitting only documents present in its country; it is encouraged to also submit documents stored overseas, electronically or otherwise. As regards documents held by an entity domiciled abroad, there are special conventions and agreements facilitating the gathering of such documents that regulate the legal assistance in the gathering of documents abroad, as well as bilateral agreements between countries.
The same rules apply to all electronically stored data. If the party is ordered by the court to submit the documents stored electronically, it must do so in accordance with the court’s order. This extends to all evidence, including backup tapes or other electronic media, which is or was at that party’s disposal.
Although there are no formal rules dealing with cases of oppressive or disproportionate obligations to present certain documents (electronically stored or otherwise), the courts usually tend to encourage parties to enter into dialogue regarding possible filtering of documents and the parameters for doing so.
VI ALTERNATIVES TO LITIGATION
i Overview of alternatives to litigation
There are two main ADR procedures in Lithuania: arbitration and court mediation. The Law on Commercial Arbitration defines the arbitration procedure, while the Rules of Court Mediation govern court mediation.
Arbitration is still quite rare in Lithuania – the number of cases increased until 2013 and diminished in 2014 and 2015. The majority of cases handled by arbitration have an international element. In 2015, the Vilnius Court of Commercial Arbitration heard only 21 cases. The statistics for 2016 were not available at the time of writing.
Mediation is even less common. There are no positive indications that there will be any rise in its popularity and there are no official statistics so far. It appears that some serious legislative changes would be needed to make this type of dispute resolution attractive to litigants.
The primary domestic sources of law governing arbitration procedure are the CCP and the Law on Arbitration (the Arbitration Law), which came into force on 2 May 1996. The CCP deals with the recognition and enforcement of arbitral awards, whereas the Arbitration Law contains provisions relating to the commencement of procedure, constitution of the tribunal, hearing procedure and other material issues. Both of these sources apply to domestic as well as foreign arbitration proceedings if carried out in Lithuania.
The most prominent arbitral institution in Lithuania is the Vilnius Court of Commercial Arbitration.6
Arbitration is still quite unpopular in Lithuania. As mentioned above, the majority of cases handled by arbitration have an international element. Article 37 of the Arbitration Law provides that an award, whole or in part, can be challenged if any of the following grounds exist:
- a a party to the arbitration agreement was under some incapacity, or the said agreement is not valid under the applicable laws;
- b the party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was unable to present its case for other valid reasons;
- c the award deals with disputes falling outside the scope of arbitration agreement; or
- d the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the valid agreement between the parties or imperative requirements of arbitration law in the event that no such agreement was concluded.
The arbitration award will also be set aside if either of the following two grounds exist:
- a the subject matter of the dispute could not have been resolved by an arbitration procedure; or
- b the arbitration award is contrary to public policy.
An application for setting aside an arbitration award must be submitted to the court of appeal by the party to the arbitration proceedings in a period of three months after the arbitral award was made. Appeals can be made irrespective of whether the arbitration procedure was conducted as an ad hoc arbitration or as an institutional arbitration. Further appeal is available to the Supreme Court, but is limited to the issues of application of law only.
The request for recognition of an arbitral award should be submitted to the court of appeal according to rules defined in the CCP. Arbitral awards delivered in any jurisdiction can be denied recognition in Lithuania on grounds defined in Article 5 of the New York Convention. Unless those grounds are applicable, the Lithuanian courts tend to look favourably upon enforcing arbitration awards.
Lithuania is a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which entered into force in Lithuania on 12 June 1995. Lithuania has made a declaration on the basis of Article 1 of the New York Convention that, with regard to awards made in the territory of non-contracting states, it will apply the Convention only to the extent to which those states grant reciprocal treatment.
In its decision of 5 October 2009 in case No. 3K-3-368/2009, the Supreme Court held that in the event of any discrepancies in the arbitral award that may preclude its execution, the court that has the competence to issue the executory order on the basis of such arbitral award may not refuse the issuance of such order. It must instead facilitate its clarification, since the refusal to issue the executory order amounts to revocation of the arbitration award.
A new version of the Law on Arbitration (2010) implemented changes made in 2006 to the Model Law. The most significant changes were the extension of the scope of arbitration disputes and the addition of questions of fact to the issues that can be decided by the arbitral tribunal. Most differences between the treatment of local and international arbitration procedures have been eliminated to avoid different treatment of proceedings with a foreign element. Further amendments to the Law on Arbitration are being enacted in 2017.
The Law includes express reference to the Model Law for the purposes of interpretation of provisions of this Law on Arbitration. The possibility of including regional courts in the arbitration process has also been introduced; for example, if the parties have failed to agree (or the arbitral tribunal has not decided) which district court has jurisdiction to hear disputes related to interim measures, witness and expert testimonies or collection of evidence, then the regional court of the seat of the arbitral tribunal shall have jurisdiction over those issues. Regional courts in Lithuania usually hear appeals from district courts, or hear higher-value disputes as first instance courts. They are therefore considered to be of higher competence, and more suitable for creating and maintaining a uniform court practice.
Arbitration agreements concluded by electronic means have been explicitly named as being valid, but only if such agreements are recorded and available for future reference.
The list of disputes available for arbitration has been extended to include disputes related to damages arising from breach of competition (antitrust) law. The proposed law states that any disputes can be decided by arbitration, except those that must be decided exclusively by administrative procedures or those that fall under the jurisdiction of the Constitutional Court. Disputes related to family, labour and intellectual property (patent, trademark and design registration) law are generally not subject to arbitration proceedings; however, labour and consumer law-related disputes could be resolved by arbitration if they arose after the adoption of the new Law on Arbitration. The requirement to obtain permission from the founder of state or municipality-owned entities in order to resolve disputes by arbitration (where one party to the dispute is such an entity) has been abolished in the proposed Law. Rights of formation of arbitral tribunal have been extended to include a rule that, in the case of ad hoc arbitration, if the parties cannot agree on who to appoint as arbitrator, a court of the Vilnius region will decide the issue for them. Implementation of interim measures by the arbitral tribunal has been extended to include a right to order interim measures without notifying the defendant in certain cases. The failure of the party to provide evidence without a justified reason may, in exceptional cases, be considered as a failure to cooperate in the arbitration proceedings. As a general rule, the initiation of an insolvency case against one party in court will not influence the arbitration process.
Foreign arbitration awards issued in any foreign countries will be recognised in Lithuania according to the 1958 New York Convention if the new Law is enacted.
Mediation is a procedure conducted in the court by special mediators, who are judges or assistant judges, or persons having the necessary qualifications. The Code of Conduct of European Mediators applies to mediators.
Court mediation is a voluntary procedure that may be commenced upon the agreement of the parties. It is free of charge and is conducted in the court premises or any other location acceptable to all parties to the dispute. Any party can quit the procedure at any time without specifying the reason.
The person who has acted as a mediator cannot act as a judge or assistant judge in the same case. All information that became known to the parties during the mediation procedure, including any suggestions for settlement or any recognition of facts, cannot be used as evidence in the litigation procedure, unless both parties agree otherwise or where the public interest determines the need (e.g., in cases concerning the protection of children’s rights).
If the mediation procedure ends in a settlement agreement, such agreement is confirmed by the court and has the power of a court decision (res judicata).
Mediation is still unpopular among parties to litigation, and as yet there are no positive indications that there will be any rise in its popularity.
iv Other forms of alternative dispute resolution
Private dispute resolution can take any form that the parties wish, without prejudice to the parties’ right to address the court or arbitration proceedings.
VII OUTLOOK AND CONCLUSIONS
i Pending cases
The Supreme Administrative Court should issue a ruling in the dispute between a major world energy supplier and the Competition Council of Lithuania. The dispute concerns a penalty imposed by the Competition watchdog on a foreign entity that did not have a permanent establishment in Lithuania. The penalty was imposed for alleged violation of competition law because one Lithuanian electricity producer asked the defendant to ensure that its affiliated company conclude a natural gas supply agreement. The defendant declined the request as it did not have such an obligation under any contract or law. The dispute has attracted significant attention from the media and political leaders. The significance of the case is demonstrated by the fact that the Supreme Administrative Court has already postponed the issuance of the ruling four times.
In October 2016, the Supreme Court of Lithuania made a reference to the CJEU regarding the application of EU law in a public procurement case. The uncertainty arose because two affiliated companies participated in the same public procurement process. Lithuanian legislation does not impose an obligation for affiliated companies to inform the purchasing organisation about their affiliations, and does not require the purchasing organisation to investigate such relations. The Supreme Court is asking the CJEU whether EU law requires such participants to give notice of their affiliation and whether a failure to notify can be a valid reason to annul the purchasing process. The answer of the CJEU will have a great impact on the direct application of EU law in Lithuania and future disputes in the public procurement field.
ii Significant current trends and likely future developments
The Lithuanian Court E-Services Portal, e.teismas.lt, has been running for a couple of years now and has so far run very smoothly. Lithuanian citizens, legal entities and attorneys can submit and receive any legal documents via the internet in all civil and administrative cases. Stamp duties and fines can be paid using this portal, and audio records of court hearings can be accessed online at any given time.
It is worth noting that stamp duty is reduced by 15 per cent for claims or complaints submitted via the e-services portal. The system is still being upgraded, and is becoming more user-friendly.
The head of the Supreme Court of Lithuania has recently provided data showing that the Supreme Court accepts only around one-quarter of cassation appeals for a hearing in civil cases. He also noted that the research data shows that most EU supreme courts tend to issue very short rulings regarding accepting or declining to accept appeals for a hearing. It therefore can be expected that the Supreme Court of Lithuania will follow the above-mentioned trend of the EU Member States.
1 Ramūnas Audzevičius is a partner and Mantas Juozaitis is a senior associate at Motieka & Audzevičius.
2 1965 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.
3 15 March 2011 decision of the Supreme Court of Lithuania in criminal case No. 2K-144/2011.
4 For example, the case of Wieser and Bicos Beteiligungen GmbH v. Austria.
5 Case C-97/08.