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Legal Newsletters - Archive

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Arbitration & ADR


A recent Supreme Court decision is the first in Lithuanian case law on the issue of the arbitrability of public procurement disputes. However, it has already sparked a debate among experts. Is it a Pandora's box, opening up the possibility of more disputes being deemed non-arbitrable, or is it a necessary weapon against bad-faith actions arising from public procurement relationships?

Disputes arising from contractual and other relations in the world of sport are normally settled by specialised sports arbitration bodies. A Court of Appeal decision recently raised the prospect that arbitration awards to settle disputes between professional sportspeople and their clubs might be ineligible for recognition and enforcement. However, the position of the courts now looks more reassuring.

Although the Supreme Court is essentially positive towards arbitration, its jurisprudence sometimes creates more surprise than stability. Although it seems clear that a court must refrain from assessing an arbitration clause if the question of the tribunal's jurisdiction is already a matter of contention in arbitration proceedings, it is less clear what approach a court may take if arbitral proceedings have not yet been initiated.

It is often said that litigation is more advantageous than arbitration due to the possibility of securing enforcement of the court's decision by applying for interim measures. This is only partially true. Although under the Law on Commercial Arbitration the arbitral tribunal has limited possibilities to decide on application of interim measures, this might easily be solved by applying to the court of general jurisdiction.

In Lithuania, Belarusian arbitral awards may be enforced only once they have been recognized and authorized for enforcement by the Lithuanian Court of Appeals. Belarusian arbitral awards cannot be reviewed on the merits; rather, they can be considered only on the basis of certain conditions that may constitute grounds for non-recognition.

Including: Arbitration Institutions; National and International Arbitration Regulations; Arbitration Agreements; Non-arbitrable Disputes; Arbitrators; Proceedings; Expenses; Interim Measures; Challenges; Recognition and Enforcement; Other Forms of Alternative Dispute Resolution.

More updates >

Capital Markets


Pursuant to the recommendations of the European Commission and following the example of stock exchanges in most European countries, the Riga Stock Exchange has issued Principles of Corporate Governance and Recommendations on Their Implementation. The recommendations aim to create a uniform and easy-to-implement system establishing effective corporate governance and resolution of conflicts principles.

Company & Commercial


Including: Corporate Entities; Legal Framework; Management Structure; Removal of Directors; Management Rules and Authority; Duties and Liabilities of Directors; Transactions with Directors and Conflicts; Disclosure; Company Meetings; Minority Shareholder Action; Internal Controls, Accounts and Audit; Corporate Social Responsibility; Role of General Counsel; Reform.

The government has given its support to amendments to the Commercial Law which aim to facilitate the registration of new limited liability companies, prevent unsubstantiated freezing of capital in cases of liquidation and alleviate the administrative burden for capital undergoing reorganization and internal audit by removing the requirement for formal approval of the appointed auditor by the Register of Enterprises.

The Saeima (Parliament) has amended the Commercial Law, adding a new chapter on commercial transactions. The new chapter will introduce to the legal system provisions regulating commercial transactions, with the aim of increasing the speed and simplicity of commercial relationships, providing them with greater stability and allowing for higher levels of trust and responsibility between parties.

The absence of regulation on commercial transactions had long been considered one of the most significant drawbacks of the Commercial Law. The Saeima recently supplemented the law with a chapter entitled "Commercial Transactions", containing general provisions on commercial transactions, as well as special provisions on specific types of commercial transaction.

Parliament has approved the draft Law on Amendments to the Law on the Register of Enterprises. Among other things, the draft law will provide that documents may be submitted to the Register of Enterprises electronically and will allow data and documents to be disclosed to the public in electronic format. The draft law must be approved at three readings before it comes into effect.

The Cabinet of Ministers has approved amendments to the Consumer Protection Law. The amendments will incorporate the requirements of the relevant EU directives on equal treatment of consumers and the protection of their rights and interests without distinction of gender, race or ethnic origin.

The Cabinet of Ministers reviewed two draft laws in the field of consumer rights. One of the draft laws is designed to secure the protection of consumers' economic interests by prohibiting sellers and service providers from using unfair and aggressive commercial practices.

More updates >

Competition & Antitrust


The most important aspect of the revised Competition Act for corporations is the obligation to obtain the approval of the Estonian Competition Board for certain actions, including some foreign-to-foreign mergers, acquisitions of securities or assets and joint ventures.

Including: New Competition Act; Scope of the Act; Competition Board; Penalties.


Including: Legislation and Jurisdiction; Notification and Clearance; Substantive Assessment; Remedies and Restraints; Involvement of Other Parties or Authorities; Judicial Review; Recent Enforcement Record.

Lithuania's substantive competition law is similar to EU competition law; the main differences stem from enforcement rules and priorities. In recent times the Competition Council has adopted guidelines regarding fines and announced its enforcement priorities, highlighting several main characteristics of its approach.

A Competition Council decision against 32 shipbroking and agency companies, together with their representative association, in connection with a price-fixing agreement has been appealed to the Administrative Court. It raises significant questions about the de facto termination of anti-competitive practices and the extent to which an undertaking in an association must distance itself from infringing practices by the association.

A recent judgment is likely to prove significant for companies facing competition enforcement in Lithuania. The court delineated the responsibilities of market regulatory authorities and the Competition Authority, clarified the standard of proof for the authority and confirmed that in-depth economic analysis is needed to determine the existence of abuse of dominant position by applying excessive prices.

Amendments to competition legislation allow chief executive officers (CEOs) to be held personally liable for infringements if they contribute to the organisation or implementation of an anti-competitive practice. The change is to be welcomed, but making CEOs liable for their employees' anti-competitive actions may prove too great a burden - not only for CEOs, but also for companies operating in small Lithuanian markets.

The Supreme Adminstrative Court has issued the first decision on damage claims against the Competition Authority. A claim for damages in respect of fines already paid will not be accepted if it is based solely on the annulment of the decision. However, the standard of proof required in demonstrating that the authority exceeded its legitimate powers is still ambiguous.

The Seimas has adopted amendments to the Competition Law which expand the powers of the Competition Council to allow it to seal the premises of an undertaking where documents are kept during an investigation and to impose liability for damaging such a seal. In addition, the council will be allowed to enter and inspect private premises for the purposes of competition investigations.

More updates >



In order to prevent abuses of the planning system by developers, illegal buildings must be demolished, regardless of whether such constructions are allowable in a particular area. However, proposed amendments to the Construction Law advocate a reasonable punishment of illegal developers and would allow for the regularization of buildings that meet planning, environmental and other criteria.

Corporate Finance/M&A


Including: Types of Merger; Consequences of Merger; Preconditions of Merger; Compensation of Dissenting Shareholders.

The Saeima (Parliament) has adopted amendments to several laws, including the Law on Reinsurance, the Law on the Market for Financial Instruments, the Law on Credit Institutions and the Law on Insurance Companies and Supervision Thereof, giving effect to the provisions of the EU Acquisitions Directive. The amendments apply to the operations of financial market participants.

In comparison to the period of economic boom, during the last year the number of M&A transactions in Latvia has dropped considerably. Foreign and local investors are still interested in certain sectors of the Latvian economy; however, the present economic downturn has had a considerable impact on M&A activities, which have now almost come to a halt.

The amendments to the Law on Completion of Privatization of the State and Municipal Property and Use of Privatization Certificates recently came into force. The new amendments lift the restrictions on the privatization of land in Jurmala and Riga, and prescribe that it will be possible to use privatization certificates instead of compensation certificates in these areas.

The Cabinet of Ministers has adopted several regulations amending the laws and regulations dealing with privatization. The amendments were adopted to deal with the high number of privatization applications received between July 1 2006 and August 31 2006. Municipalities have one year from the submission date to review applications for privatization.

The Latvian Parliament has amended the Financial Instruments Market Law in order to ensure compliance with the EU Directive on Takeover Bids. The amendments affect share redemption offers by providing new or updated definitions, more detailed procedures and additional powers, and clarifying the share redemption procedures.

In Latvia, due diligence is increasingly utilized as a tool for examining the target company's operations before the acquisition of shares. Prior to or after signing an agreement on the purchase of shares, the purchaser may itself or through its representatives perform a due diligence investigation into the company, usually comprising financial, legal and organizational enquiries.

More updates >


The Supreme Court has issued a decision which recognises the importance of representations and warranties when entering into share sale and purchase contracts. Its analysis helps to protect honest purchasers against fraudulent vendors or the unconscionable acts of their employees.

Employment & Benefits


New draft amendments to the Law on Insurance of Maternity and Sickness shorten the disbursement period during which employee sick pay is covered by the employer. As from January 1 2009, the employer must pay sick pay for the first 10 calendar days of illness. On the eleventh calendar day, this responsibility shifts to the State Social Security Agency.

Insolvency & Restructuring


The Saeima has adopted a new draft Insolvency Law in the first reading. If its adoption goes smoothly it will be the third law to have been introduced regulating the insolvency of companies and individuals within two years. The draft law aims to speed up insolvency proceedings in many ways and establishes rights and obligations of involved parties in more detail and more accurately.

Amendments are planned to a number of laws relating to insolvency proceedings in order to improve the efficiency of insolvency procedures and support the rehabilitation of companies that are experiencing financial difficulties. To this end, amendments are planned to the Insolvency Law, the Civil Procedure Law and the Credit Institutions Law.

The Cabinet of Ministers has approved the draft amendments to the Insolvency Law, which aim to improve the regulation of restructuring procedures for companies which have temporary financial difficulties and are expected to develop a programme to restore their solvency in full. The amendments also reduce the administrator's monthly fee from three monthly minimum salaries to one.

Intellectual Property


The government has commenced proceedings in Parliament to ratify the Singapore Treaty. It also submitted draft amendments to the Law on Trademarks that would, among other things, implement the provisions of the treaty, modernise registration procedures for trademarks and eliminate the requirement that trademark licensing agreements be registered before they can be used against third parties.

Intellectual property can be transferred by assignment or licence agreement, by inheritance and by other procedures prescribed by law. Transferors and transferees of IP assets should ensure that they understand the tax consequences of assigning or licensing intellectual property in Lithuania.

Parliament has finally adopted new legislation to reform Lithuania's private copying levy, covering blank analogue and digital media and personal reproduction devices with memory and recording functions. The law is expected to raise well over double the current annual revenue. However, it remains to be seen whether the new regime will meet the expectations of the creative industries.

A recent Court of Appeal decision on interim measures sought by pharmaceuticals company Bayer has important lessons for the protection of patents in Lithuania. When seeking interim measures, the effect of which would virtually coincide with the consequences of a successful claim, the patent holder must have a strong patent with no reasonable doubts surrounding its validity.

After Lithuania regained independence in 1990 and established its trademark protection system, companies rushed to register signs which had been used for goods in the Soviet Union. Over 20 years later, some of these marks may be at risk of invalidation if they include elements that are generic and non-distinctive.

According to Lithuanian copyright legislation, copyright and related rights holders whose rights have been infringed may seek recovery of material damages; alternatively, they may seek lump-sum (or statutory) damages up to twice the value of the licence fee or compensation. A recent Constitutional Court ruling casts new light on the criteria involved in calculating compensation.

More updates >

International Trade


Parliament has passed the draft Law on Turnover of Goods of Strategic Significance at the first reading. Its aim is to ensure the controlled turnover of goods with strategic significance in accordance with Latvia's national and international interests, and to prevent terrorism and the proliferation of weapons of mass destruction.

Real Estate


One of the most positive aspects of the 2011 budget legislation is the revision to the Law on Immovable Property Tax. It allows for an individual valuation based on the impairment of immovable property value, instead of a mass valuation of the property. This allows companies to respond to market fluctuations by reducing the taxable base value of their property - a significant factor in improving the business environment.

The commercial property sector has been hit hard in 2009 and many tenants are trying to terminate or modify their long-term lease agreements. Recent first instance decisions are worrying for landlords and much will depend on whether the economic downturn and its effect on real estate rental values can be said to constitute a significant change in circumstances.

Until recently the requirement to obtain an energy performance certificate applied only to newly built and certain renovated buildings. However, the requirement has since been extended to most commercial buildings with a useful floor space of over 1,000 square metres, regardless of their construction date.



The new Cable Distribution Act creates opportunities for healthy competition in the cable distribution market. It lays down detailed requirements for the provision of services and for customer agreements, providing better protection for customers and ensuring the quality of services.