Commercial Arbitration

Last verified on Thursday 20th May 2021

Commercial Arbitration: Lithuania

Ramūnas Audzevičius and Rimantas Daujotas

Motieka & Audzevičius

Infrastructure

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Lithuania

Lithuania is a contracting state to the New York Convention, which entered into force in Lithuania on 12 June 1995. Lithuania has made use of the reciprocity reservation of article 1(3) of the New York Convention; the Lithuanian courts will enforce awards made in a state that is also party to the New York Convention.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Lithuania

Lithuania is a party to the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), which came into force in Lithuania on 5 August 1992.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Lithuania

The Law on Commercial Arbitration, which came into force on 2 May 1996 and was amended in June 2012, is based on the UNCITRAL Model Law. Article 4(5) states that the Law on Commercial Arbitration and definitions contained therein should be interpreted in the light of the 1985 UNCITRAL Model Law (the Model Law), with subsequent amendments and supplements.

The Law on Commercial Arbitration applies to all arbitral proceedings (local and international) with their seat in Lithuania.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Lithuania

The most prominent arbitral institution in Lithuania is the Vilnius Court of Commercial Arbitration (the VCCA). It may act as an appointing authority. 

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

5. Can foreign arbitral providers operate in your jurisdiction?

Lithuania

Foreign arbitral institutions may freely operate in Lithuania.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Lithuania

There are no specialist arbitration courts in Lithuania. Applications in respect of arbitrations, depending on their nature, will be heard by municipal courts, the Vilnius Regional Court, the Court of Appeals (with a right of appeal to the Supreme Court on a point of law). The judiciary is generally familiar with and supportive of the law and practice of international arbitration. In recent years, the Supreme Court of Lithuania has been very supportive of international arbitration by its practice on enforcing arbitration agreements and foreign arbitral awards. However, recently, Lithuanian courts are more cautious in respect of arbitration agreements or arbitration awards, which are used for illegal or fraud purposes. In addition, recently there were quite a few controversial rulings of the Supreme Court of Lithuania in respect of application of public policy exception to enforcement of foreign arbitral awards.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Lithuania

Pursuant to article 10(2) of the Law on Commercial Arbitration the arbitration agreement shall be concluded in writing and shall be considered to be concluded if executed as a joint document signed by the parties; or concluded in an exchange of letters (which can be sent electronically, provided that integrity and authenticity and availability of information is secured) or other documents which provide a record of the agreement; or concluded in an exchange of statements of claim and defence in which the existence of an arbitration agreement is alleged by one party and not denied by another; or there is other written evidence confirming that the parties have concluded an arbitration agreement or recognise it. The reference in a contract concluded by the parties to a document containing an arbitral clause shall constitute an arbitration agreement provided that the contract is in writing and reference is such as to make that clause part of the contract. The Law on Commercial Arbitration does not prohibit concluding arbitration agreements to disputes that have not yet arisen, except for disputes arising from employment and consumer contracts.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

8. Are any types of dispute non-arbitrable? If so, which?

Lithuania

The Law on Commercial Arbitration sets out a list of non-arbitrable disputes. Therefore, pursuant to article 12 of the Law on Commercial Arbitration disputes arising from administrative legal relations, constitutional, family, as well as disputes regarding patents, trademarks and service marks may not be submitted to arbitration. Disputes arising from employment or consumer contracts are not arbitrable, except in cases where the arbitration agreement was concluded after the dispute had arisen. It is noteworthy that there are also limitations to the arbitrability of disputes where one of the parties is a state or municipal company (except the Bank of Lithuania). The prior consent of the state or the body that established such party is required.

In addition, the government of Lithuania or any other state entity acting on behalf of the government may conclude an arbitration agreement regarding disputes arising from commercial contracts concluded by the government of Lithuania or entity acting on behalf of the government.

Moreover, it is generally accepted that “core” bankruptcy claims are not arbitrable, whereas “non-core” bankruptcy claims are arbitrable. 

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Lithuania

The Law on Commercial Arbitration is silent on the questions of the participation of a third party through joinder or a third-party notice.

However, it was established in several cases that an arbitration agreement may be extended to third parties or non-signatories in specific cases. Therefore, an arbitration agreement shall be mandatory for: a party that has entered into a legal relationship to which the arbitration agreement is applicable by virtue of assignment of claim or transfer of debt; the principal in the case of an arbitration agreement concluded by the principal’s agent; and for legal successors to a company reorganised by a merger or acquisition.

The Court of Appeals had recently ruled in favour of the doctrine of piercing the corporate veil while extending the arbitration agreement to non-signatory. The opinion of the Supreme Court of Lithuania on this point of law is still awaited.

In contrast, VCCA rules (article 12(1)) contain a provision that, a person having an independent demand to one of the parties pertaining to the case under consideration shall have the right to request the Arbitral Tribunal to allow it (him or her) to join the case as a third party, provided such person is bound by the arbitration agreement. The third party shall join the case in accordance with the same procedure as that established for the claimant. A party shall have the right to involve in the proceedings a person in support of it as a third party having no independent demands, provided such person is bound by the arbitration agreement. However, if such third party is not bound by an arbitration agreement, the arbitration court would usually not allow a third party to join the arbitration proceedings.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Lithuania

The Law on Commercial Arbitration does not contain any consolidation provisions. It appears that consolidation of the related disputes between the same parties being based on different arbitration agreements may occur if all parties involved agree to it.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

11. Is the "group of companies doctrine" recognised in your jurisdiction?

Lithuania

There are only few reported cases of the Court of Appeal and the Supreme Court of Lithuania on the groups of companies and piercing of corporate veil in cases of extension of arbitration agreement to a non-signatory. However, it is expected that the Supreme Court of Lithuania shall provide a more thorough explanation of these doctrines this year as an appeal on this matter is currently lodged with the Court.   

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

12. Are arbitration clauses considered separable from the main contract?

Lithuania

The separability of the arbitration clause is acknowledged in article 19(1) of the Law on Commercial Arbitration, which states that invalidity of the underlying contract is not in itself sufficient for invalidity of the arbitration agreement. There are also plenty of case law of the Court of Appeal and the Supreme Court of Lithuania recognising the doctrine of separability of the arbitration agreement. 

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunals jurisdiction and competence?

Lithuania

Article 19(1) of the Law on Commercial Arbitration affirms the competence-competence principle by providing as a rule that the arbitral tribunal may rule on its own jurisdiction. Article 6 of the Law on Commercial Arbitration provides that if a party being aware that its rights are violated still participates in the arbitral proceedings without objecting in a reasonable term, it is considered that the party has waived the right to make such objection. Pursuant to article 19 of the Law on Commercial Arbitration an objection to the jurisdiction of the tribunal must be raised no later than the statement of defence. A party participating in the appointment procedure of an arbitrator does not waive its right to raise such objection. The tribunal then decides on its jurisdiction in one of the two ways – it either decides on it in the final award, or it decides on it in a partial award.

Moreover, if the tribunal exceeds its competence in the arbitration proceedings, the respective objection shall be brought by the parties immediately when the issue falling outside the tribunal’s competence is raised. If such objection is presented later, the tribunal has discretion to allow it if the reasons for such delay are reasonable.

It is noteworthy that pursuant to article 11 of the Law on Commercial Arbitration if the court receives a claim of the party regarding an issue that is covered by an arbitration agreement, it will refuse to accept the claim. Furthermore, arbitration agreement may be recognised null and void at the request of a party, on the general grounds for recognising transactions null and void, as well as upon the violation of articles 10 (definition and form of an arbitration agreement) and 12 (disputes that may not be submitted to arbitration) of the Law on Commercial Arbitration.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Lithuania

There are no specific requirements when it comes to drafting an arbitration clause. The clause should provide for consent to arbitration and a clearly worded arbitration clause is obviously preferable. It is recommended to provide the seat, the applicable law, the language of the arbitration and the number of arbitrators.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Lithuania

There is no statistics available as to whether institutional or ad hoc arbitration is more commonly practised in Lithuania. Both institutional and ad hoc arbitrations are common in Lithuania (the latter under the UNCITRAL Rules).

The most prominent institution – the Vilnius Court of Commercial Arbitration also conducts arbitrations both under VCCA rules and UNCITRAL Rules. 

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Lithuania

The Law on Commercial Arbitration defines the arbitration agreement as an agreement of two or more than two parties to refer their disputes to arbitration. Although there are no other provisions regarding a multiparty arbitration agreement, it should nevertheless meet general requirements for arbitration agreements (ie, concluded in writing; the dispute is arbitrable; the agreement meets to the requirements of validity and performance; and all parties are identified).

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Lithuania

Pursuant to article 30 of the Law on Commercial Arbitration unless otherwise agreed by the parties, the arbitration proceedings shall commence on the date on which a request for arbitration is received by the respondent. The request for arbitration must indicate names of the parties, substance of the dispute, reference to the arbitration agreement and an arbitrator chosen. There is no specific limitation period under Lithuanian law for the filing of the request for arbitration. The applicable statute of limitations is that of the law governing the merits of the case.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Lithuania

The parties are free to choose the applicable law. Reference to the state’s law applicable shall mean a reference to the material law and not the private international law of the state. Article 39 of the Law on Commercial Law on Commercial Arbitration provides that in the absence of the agreement of the parties on the applicable law, the tribunal shall have discretion to determine the law applicable, including the trade practices (lex mercatoria).

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a partys choice of arbitrator?

Lithuania

In accordance with article 14 of the Law on Commercial Arbitration there are no restrictions on acting as an arbitrator. Any legally capable natural person may serve as an arbitrator in Lithuania. However, there is a mandatory requirement for a written consent of a person to act as an arbitrator. Moreover, there is a general requirement that an arbitrator shall be impartial, independent and competent.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Lithuania

There are no limitations to the rights of foreign nationals in serving as arbitrators, and no specific immigration requirements apply to arbitrators (other than general visa and work permit rules, when applicable).

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Lithuania

Pursuant to article 14 of the Law on Commercial Arbitration if there is no prior agreement and if the arbitration consists of three arbitrators, each party selects one arbitrator, and the two of them appoint the third one. If the arbitration has a sole arbitrator, and if the parties cannot agree on the appointment, an arbitrator is appointed by the head of the permanent arbitral institution upon the request of any of the parties; this also applies if one party does not appoint an arbitrator (or two arbitrators do not appoint the third one) within 20 days from the date the respective party had to appoint an arbitrator.

In the case of ad hoc proceedings, where a party fails to appoint an arbitrator or in case two arbitrators appointed by the parties fail to appoint the chairman of the tribunal, an arbitrator/chairman of the tribunal is appointed by Vilnius regional court within 20 days from the date the respective party had to appoint an arbitrator.

A similar procedure and terms apply if there are two or more claimants or respondents in arbitration.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Lithuania

Generally, an arbitrator is immune from actions in negligence if he or she is acting independently. According to article 6.252 of the Civil Code (the CC), the arbitrator could be liable for his or her deliberate actions or gross negligence if such actions cause harm to any of the parties to the arbitration.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Lithuania

According to article 5(3) of the Law on Arbitration, permanent arbitral institutions may refuse to execute their functions if the parties to the dispute have not paid the fees required.

Pursuant to Annex No. 2 of VCCA rules when submitting a claim or a request for arbitration (counterclaim) the claimant (respondent) shall pay the registration fee of €5,400 plus VAT, which shall be non-refundable. The amount of the arbitrating fee shall be set based on the amounts of the demands of the claim (request for arbitration), counterclaim (dispute). In non-property disputes the arbitrating fee shall comprise the administrative fee for the institution and the amount for the arbitrators’ fees calculated according to the hourly rate of the arbitrator and the number of arbitrators. In each instance of a non-property dispute, the final amount of the arbitrating fee shall be set by the Chair of the Vilnius Court of Commercial Arbitration taking into consideration the complexity of the dispute, the language (languages) of the arbitral proceedings, the number of arbitrators and the time spent by the Arbitral Tribunal considering the case.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Lithuania

According to article 15 of the Law on Commercial Arbitration a party may challenge an arbitrator only in case of justifiable doubts as to arbitrator’s impartiality or independence or due to lack of qualifications required by the arbitration agreement.

Moreover, pursuant to article 17 of the Law on Commercial Arbitration an arbitrator must resign in case he or she cannot de jure and de facto perform his or her duties as an arbitrator or in the case of parties' agreement. If the arbitrator refuses to resign or the parties cannot agree on the replacement of an arbitrator, parties may refer to the chairman of the permanent arbitral institution or, in case of ad hoc proceedings, to the Vilnius regional court.

While the IBA Guidelines are non-binding, the tribunal may refer to them.

It is noteworthy that if the parties do not agree otherwise, upon the replacement of an arbitrator the arbitration procedure shall be restarted. 

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Lithuania

In case the parties had not agreed otherwise, the arbitration court, having informed other parties, may apply the following interim measures (article 20(2) of the Law on Commercial Arbitration):

  • order the party to refrain from the conclusion of certain contracts or to refrain from certain actions;
  • to oblige the party to ensure the protection of certain assets, to provide a deposit, bank or insurance guarantee; or
  • to oblige the party to produce evidence, which may be material to the arbitration case.

Furthermore, if parties had not agreed otherwise, the arbitration court may apply interim measures without informing other party upon issuance of a preliminary ruling. Such a preliminary ruling is valid for the period of 20 days. The respective period is also purposed to hear the other party’s arguments regarding the interim measures applied.

Requests of the parties regarding the application of interim measures may be filled to Vilnius regional court before the commencement of the arbitration proceedings or before the constitution of the arbitral tribunal.

Under article 34 of the VCCA rules, unless the parties have agreed otherwise, upon request of the interested party, the Arbitral Tribunal considering the case may resolve the issue of ordering interim measures by making an appropriate order. The Arbitral Tribunal may obligate the party applying for interim measures to provide a security for compensation of the other party’s losses that might possibly be incurred through the ordering of interim measures.

A party may apply on its own to a competent court of any country requesting to order interim measures if failure to take these measures may render enforcement of the arbitral award more difficult or impossible. Such application of the party to the state court before the start of or during the arbitral proceedings. An order of the state court on ordering interim measures shall not be incompatible with the arbitration agreement. Such application by the party and any interim measures ordered by the state court shall be immediately communicated to the Secretariat which shall inform the Arbitral Tribunal to that effect without delay.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Lithuania

As it was mentioned above, unless the parties have agreed otherwise, the arbitral tribunal, upon request of any party, can order another party to pay security for costs, as well as apply for assistance from the courts in enforcing such order.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Lithuania

Mandatory provisions usually mirror relevant provisions of the Model Law with some minor differences. The following provisions on procedure are considered mandatory: equality of the parties (article 28 of the Law on Commercial Arbitration); requirements for submission of statements of claim and defence (article 32 of the Law on Commercial Arbitration); basic requirements for the hearings and written procedure (article 34 of the Law on Commercial Arbitration); content of the award (article 46 of the Law on Commercial Arbitration).

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Lithuania

According to article 35 of the Law on Commercial Arbitration unless otherwise agreed by the parties, if, without showing sufficient cause parties fail to communicate mandatory procedural documents or any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.

This is in line with the prevailing practice.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Lithuania

The arbitral tribunal has a right to determine the admissibility, relevance, materiality and weight of any evidence (article 33(7) of the Law on Commercial Arbitration). The arbitral tribunal may order the parties to produce any evidence material to the case as well as to refuse to accept certain evidence. If the parties had not agreed otherwise, any evidence is not mandatory to the tribunal.

The arbitration court or the party with the consent of the tribunal may refer to Vilnius regional court for assistance in taking evidence.

According to the VCCA rules, in the absence of the parties’ agreement on the admissibility of evidence and other issues related to evidence and burden of proof, all issues related to relevance, admissibility of evidence and burden of proof shall be decided by the Arbitral Tribunal. Unless otherwise agreed by the parties, no evidence shall be binding on the Arbitral Tribunal.

The tribunal may seek guidance from the IBA Rules on the Taking of Evidence in International Commercial Arbitration but only as a soft law.  As for the Prague Rules, these Rules are new and yet to find their place in international arbitration proceedings. Therefore, it is yet too early to consider that the Prague Rules may govern the taking of evidence.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Lithuania

The arbitral tribunal or a party with the approval of the arbitral tribunal may request from Vilnius regional court assistance in taking evidence. The court must execute the request according to the rules of the CCP.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Lithuania

The arbitral tribunal only has a right to seek assistance of Vilnius regional court in obtaining certain documents relevant to the dispute. A party with the approval of the arbitral tribunal may request from Vilnius regional court assistance in taking evidence. The court must execute the request according to the rules of the CCP.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

32. Is it mandatory to have a final hearing on the merits?

Lithuania

It is not mandatory to have a final hearing on the merits. Subject to any agreement by the parties, the arbitral tribunal shall decide on any form of the hearings. In case the parties agree that no hearings shall be held, the arbitral tribunal shall conduct oral hearings during the written proceedings if so requested by a party to the dispute.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Lithuania

Subject to any agreement by the parties, the arbitral tribunal shall decide where the hearings and procedural meetings shall be conducted.

Hearings and procedural meetings may be conducted at any place, according to the suitability for the parties, place of witnesses, experts, documents, etc (article 29(2) of the Law on Commercial Arbitration).

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Award

34. Can the tribunal decide by majority?

Lithuania

Decisions by the arbitral tribunal are made by a majority of all of its members if three or more arbitrators were appointed and the parties have not agreed otherwise. The award must be signed by the majority of arbitrators.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Lithuania

Unless the parties have agreed otherwise, the arbitral tribunal, upon the request of any party, can order another party to pay security for costs, as well as apply for assistance from Vilnius regional court in enforcing such order. Other interim measures can also be obtained through Vilnius regional court.

There is no specific list of available remedies. Under the Law on Commercial Arbitration the arbitral tribunal can make the following awards and orders:

  • final awards;
  • partial awards;
  • orders on procedural issues;
  • additional awards (for claims presented in the proceedings but omitted from the award).

Punitive damages are not allowed under Lithuanian law.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Lithuania

Dissenting opinions must be attached to the award but they have no consequences on the validity of the award, if the above requirements are met (question 34) (article 46 of the Law on Commercial Arbitration, article 42 of the VCCA rules). Dissenting opinions are not very common in practice.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Lithuania

The award must contain the grounds of the award, unless the parties have agreed that grounds should not be provided (article 46 of the Law on Commercial Arbitration). It shall also contain the place where it was rendered and the date of the award.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Lithuania

According the VCCA rules a dispute shall be resolved on the merits by rendering an arbitral award not later than within six months following the transmission of the case file to the Arbitral Tribunal. A final award shall be made (written down) as soon as possible after the main hearing, but not later than within 30 days following the last main hearing (or the deadline for presentation of the closing statements) and shall be immediately transmitted to the Secretariat which shall send the award to the parties, if all arbitration fees determined for the parties to the dispute have been paid. In exceptional cases the Chair of the VCCA may extend at his or her own discretion the term for making (writing down) an award for another period of up to 30 days or longer provided the parties consent thereto. A part of the dispute may be resolved by the Arbitral Tribunal by making a partial award which shall be final in that part.

The date of the delivery of the award is decisive for requests for correction of the award, or requests for an additional award, which are allowed within 30 days after receipt of the award (article 45 of the Law on Commercial Arbitration).

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Lithuania

The Law on Commercial Arbitration stipulates that in case there is no agreement of the parties, the tribunal would allocate costs incurred at its discretion, taking into account all the circumstances of the case and conduct of the parties.

According to the VCAA rules, the costs shall be credited to the party that prevails in the arbitral decision at the expense of the party against which the arbitral decision is made, unless otherwise agreed by the parties.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Lithuania

The Civil Code (article 6.210) provides for a general fixed annual interest rate of 5 per cent in disputes where at least one party is not a businessman or private legal person and 6 per cent where both parties are such.

The Law on the Prevention of Late Payment in Commercial Transactions and the Law on the Payments for the Agricultural Production provide another interest rate for specific cases. The rate is adjusted semi-annually.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Lithuania

Article 50 of the Law on Commercial Arbitration provides that an award, in whole or in part, can be challenged if any of the following grounds exist:

  • a party to the arbitration agreement was under some incapacity or the said agreement is not valid under the applicable laws;
  • 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; 
  • the award deals with the disputes falling outside the arbitration agreement; or 
  • 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 Law on Commercial Arbitration if no such agreement was concluded.

The arbitration award will be set aside if the subject matter of the dispute could not have been resolved by arbitration or the arbitration award is contrary to public policy.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

42. Are there any other bases on which an award may be challenged, and if so what?

Lithuania

The Supreme Court of Lithuania has stated that the challenge of the arbitration award is possible only on the grounds defined in article 50 of the Law on Commercial Arbitration and public policy.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Lithuania

The parties are not allowed to exclude any basis of appeal that is provided in law.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Lithuania

There is no specific provision in the Law on Commercial Arbitration, which would provide that set-aside awards could not be enforced in the Republic of Lithuania. However, Article 51 of the Law on Commercial Arbitration establishes that recognition and enforcement of foreign arbitral awards must be executed in accordance with provisions of the New York Convention. According to the Supreme Court, domestic courts should ensure uniform application of the stated Convention.

Because there is not enough case law dealing with enforcement of set-aside awards, Lithuanian courts must take into consideration the application of the above-mentioned Convention in foreign case law. This presupposes that the enforcement of foreign awards set aside by the courts at the place of arbitration should follow general international practice.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Lithuania

For the past 10 years, Lithuania was considered liberal and pro-arbitration jurisdiction. However, the recent decisions of the Supreme Court while applying the Convention echo a rather changing approach to recognition and enforcement of foreign arbitral awards. The Supreme Court of Lithuania more often uses idiosyncratic local rules to interpret the Convention, which can undermine the broad enforcement goals of the Convention. It seems that Lithuanian practice of the Convention goes against the global trend toward a more international and even transnational understanding of the proper application of the Convention, including the public policy exception.

In June 2019, the Supreme Court of Lithuania refused to recognise and enforce a Serbian arbitral award against Lithuanian companies based on the public policy ground. The Court established that the high penalties awarded, even if validly agreed upon by professional business entities, were intended to punish rather than compensate the claimant. Therefore, the Supreme Court declared that the Serbian award rendered in Serbia contradicted the Lithuanian Constitution and was ‘“unfair’” to the losing parties. This ruling follows the recent and rather unwelcome Lithuanian Supreme Court’s practice of de novo review and "domestication" of the New York Convention. It remains to be seen if the Supreme Court will follow this practice in the future. 

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Lithuania

The Supreme Court has stated that the defence of state immunity should be allowed only in disputes governed by public law, while in disputes governed by the private law such defence should not be allowed.

The Supreme Court has relied on the case-law of the ECHR specifically finding that state immunity is not extended to employment relations with the embassy staff.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Lithuania

The Law on Commercial Arbitration emphasises confidentiality as one of the main characteristics of arbitration. Indeed, article 8(3) of the Law explicitly states that arbitration proceedings are confidential, meaning that nothing that happens during the arbitral process can be revealed to anyone. On the contrary, civil procedure in the Lithuanian national courts, as in most countries, is based on the opposite principle – court proceedings are public except where public or private interest requires differently (for example, cases concerning child adoption are strictly confidential). Therefore, in order to resolve this divergence and to create legal certainty for the parties, the amendments to the Law on Commercial Arbitration foresee that cases concerning court assistance to arbitration, such as default arbitrator appointments, removal of arbitrators or applications for interim measures, are also confidential. However, it should be noted that the new confidentiality provisions do not cover court proceedings for the annulment or recognition of arbitral awards. These cases continue to be heard in public.

Similarly, article 6 of the VCCA rules provides that the Arbitral Tribunal, the Chair of the VCCA and the Secretariat shall examine and resolve the issues attributed to their competence in accordance with the principle of confidentiality.     

Any other proceedings in domestic courts are generally public with certain exceptions therefore all information communicated to the domestic courts might be exposed to the public.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Lithuania

As it was mentioned above, the Law on Commercial Arbitration just stipulates a general principle of confidentiality of arbitration procedure. However, there are no provisions forbidding the party to rely on information disclosed in previous arbitral proceedings.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Lithuania

As previously mentioned, any neutral and competent person can act as an arbitrator and any person can be chosen to represent the parties in the arbitration proceedings, therefore, no common professional or ethical rules are applicable. However, attorneys-at-law and their assistants representing the parties must be admitted to the Lithuanian Bar Association and follow its professional ethics rules.

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Lithuania

Arbitration is still rather a new means of dispute resolution in Lithuania. Disputes related to sale of goods, shares, services, construction, as well as shareholders’ disputes are among the most arbitrated ones in Lithuania.

Lithuania has always been and still is a pathway between the east and the west for its geographical place. Thus arbitration in Lithuania is attractive for CIS businesses dealing with the western companies and vice versa. Another particularly attractive characteristic in Lithuania is the price of arbitration and arbitration proceedings, including lower arbitration costs, lower arbitration fees and cheaper venues, hotels and administration.

Furthermore, Lithuanian court practice is highly in favour of international and domestic arbitration which means easer enforcement proceedings, assistance of the courts and favorable approach to arbitration agreements. 

Generally, there is no need for the counsel or the arbitrator to obtain a work permit if they stay in Lithuania no longer than three months in one year. Visas to enter Lithuania are not required for citizens of 65 countries – all EEA and EU member states, the US, Canada, Japan, Australia, Singapore, New Zealand and others (a full list is available at www.migracija.lt).

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Lithuania

Currently, there is no law in Lithuania that would allow or prohibit third-party funding. Generally, arbitration costs are initially funded by the parties themselves or their sponsors. There is no specific regulation concerning the funding of arbitration by a non-interested third party. However, the court can award litigation costs to a non-interested third party in civil proceedings, according to Supreme Court rulings that confirm such right. 

There are also no rules governing the use of third-party funding (such as requirement to disclose the existence and identity of funders to the other parties and tribunal).

Answer contributed by Ramūnas Audzevičius and Rimantas Daujotas

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