Arbitration in Lithuania – Practitioner’s Report

International arbitration practitioner Rimantas Daujotas from “Motieka & Audzevicius” PLP in Vilnius has published the first comprehensive report on arbitration in Lithuania in English. Here, the author comments on the new publication and trends in the Lithuanian arbitration market.

Lithuania’s arbitration potential 

The Lithuanian economy is on the rise and Vilnius has the potential of becoming one of the centres of dispute resolution in the Baltic region. The rise in the economy also attracts international investors who tend to resolve disputes in neutral arbitrations, as compared to national courts. Thus, the regulation of arbitration in Lithuania is becoming an important legal matter for international businesses.

In light of the established and independent judicial system that exists in Lithuania, the majority of commercial disputes are still resolved by way of litigation as opposed to arbitration, be it international or domestic. That said, there is a growing awareness among corporate counsel and those advising them in Lithuania of the benefits of international commercial arbitration in resolving disputes of a cross-border nature and the frequency of the use of international arbitration by Lithuanian corporations is on the rise.

It is notable that when asked to recommend five states as the seat of an international arbitration, 85.00% of Lithuanian respondents recommended Lithuania, making it, alongside Sweden and England, the most preferred seat among Lithuanian respondents. The indications are that Lithuanian respondents have reason to be optimistic, and Lithuania has a promising future as an arbitral jurisdiction (see the report to the European Parliament).

According to the available statistics, from 2008 to 2013, 136 cases were registered at the Vilnius Court of Commercial Arbitration (VCCA), and 28 cases were received by the VCCA in 2014, which is generally considered to be the most popular arbitral institution in Lithuania. According to the VCCA statistics, from 2010 to 2014, the most common type of arbitrated disputes arose from trading, construction and engineering, finance, insurance contracts and contracts for services. There are no statistics available as to whether institutional or ad hoc arbitration is more commonly practised in Lithuania.

Therefore, despite the obvious advantages accruing from its bridge location between the west of Europe and the CIS countries and the presence of the advantages of European Union law, Lithuania is yet to fully fulfil its potential to emerge as an attractive jurisdiction for international arbitration. With adoption of the new version of the Law on Commercial Arbitration in June 2012 and implementation of changes made in 2006 to the UNCITRAL Model Law, Lithuania is poised to progress rapidly towards the top rank of Eastern European seats of arbitration.

Report on Arbitration for awareness 

The author adds that foreign lawyers often request explanations of Lithuanian arbitration laws, in particular, the regulation of arbitration agreements, the competence-competence doctrine and the enforcement of international arbitration awards.

Therefore, this report is a necessary tool for both international users and Lithuanian users with information on Lithuanian arbitration law and practice. This report is the first comprehensive publication in English to provide practical guidance to arbitration practitioners and in-house counsel on how to conduct arbitrations and arbitration-related proceedings in Lithuania.

It provides guidance on how to navigate all the practical aspects of any kind of arbitration in Lithuania. Whether a dispute involves shareholder disputes, trade, sports, investment, or any of the other problem areas where arbitration promises the best resolution, arbitrators and the parties they represent will find all the information and guidance they need in this report. The report also draws on Lithuania’s body of case law on arbitration, which substantially enhances reliability and predictability for foreign parties.

This report also aims to widen international practitioners’ knowledge of Lithuanian arbitration law and practice, thereby providing an opportunity to gain insights into key concepts, such as arbitral proceedings, arbitral institutions, recognition and enforcement, arbitral awards, choice of law etc.

The information provided is of great value to all practitioners – helping them to confidently handle cases which entail the application of Lithuanian arbitration and other procedural laws and to counsel for companies registered in Lithuania by foreign investors.

Way forward

According to the World Bank’s ease of doing business index, Lithuania is 20th out of 189 countries. International business relations strengthen Lithuania’s global positions and also stress the necessity to have access to a just and open way of resolving disputes.

The increasing the number of such disputes shows that trade relations are expanding. Although no statistical data exists for international commercial contracts, whether they were successful or not, or the percentage of disputes resolved via mediation, arbitration, or in court, arbitration is nevertheless the main factor of attraction when developing agricultural, industrial or commercial activities in a foreign country.

The report is now freely available in electronic format on the author’s website.

Rimantas Daujotas LL.M.
Senior Associate, MOTIEKA & AUDZEVICIUS