The main dispute resolution methods are court litigation, arbitration, and court mediation. In light of the judicial system that exists in Lithuania, the majority of disputes are resolved by the way of litigation.

Popularity of arbitration keeps growing over the last decades. The most prominent arbitration institution in Lithuania is the Vilnius Court of Commercial Arbitration (VCCA), which reviews its arbitration rules to satisfy the need for effective and modern arbitration proceedings.

In order to increase popularity of mediation, Lithuania adopted a new Law on Mediation in 2015. Article 80(8) of the Code of Civil Procedure encourage parties to mediate a dispute. It provides that that the parties had attempted to settle the dispute through a mediation process, the amount of stamp duty is reduced by 25 percent.

The main laws governing dispute resolution in Lithuania are the following:

• The Code of Civil Procedure;
• The Law on Commercial Arbitration;
• The Law on Mediation.

National court system for civil cases in Lithuania is organized as follows:

• Courts of the first instance: district and regional courts, depending on the subject-matter and the value of the dispute;
• Court of the appellate instance: if a case was heard by a district court in the first instance, the case will be heard by a regional court in the appellate instance. If the court of the first instance was a regional court, the dispute will be examined by the Court of Appeal of Lithuania;
• Cassation: the Supreme Court of Lithuania is the court of cassation, which reviews judgements and decisions of the courts of the appellate instance. The Supreme Court of Lithuania reviews cases only on legal issues and it does not admit every cassation appeal submitted: there is a board composed of the Supreme Court judges, which selects cassation appeals to be heard by the Supreme Court of Lithuania.

Once a claim is admitted to a court, the court allows the respondent to submit his statement of defence within 14 to 30 days (this term can be extended up to 60 days at the respondent’s request). After receiving the statement of defence, the court can set a date for the preliminary hearing or ask the parties to provide additional written submissions. Each party is given up to 14 days to submit their additional documents (upon a party’s request, courts extend this term). Once all the documents are prepared, court shall pass a ruling to hear the case in the main hearing. The main hearing is usually scheduled in around 1 month after the court decides that the case is ready to be heard in the hearing. Thus, the time to get to trial varies, but roughly it may take from 1 to 3 months to have a main hearing scheduled. This term may vary a lot if the case is more complex.

According Article 9 of the Code of Civil Procedure, the general rule is that all hearings are public. Nevertheless, a court may pass a motivated ruling that the hearing should be not public (i. e. closed) (e.g., in order to protect private or family life of a person, or when state’s or commercial secret might be disclosed).

Article 10 of the Code of Civil Procedure provides that all materials of a completed case are public and accessible unless the case was heard in camera. A person wishing to access materials of a completed case, has to submit an application to the chairman of a respective court and indicate the purpose of accessing the materials.

The general limitation period for bringing civil claims is 10 years (Article 1.125(1) of the Civil Code). Shorter limitation periods are defined for specific types of claims:

• one month for claims arising from the results of a tender;
• three months for challenging decisions of executive bodies of legal entities;
• six months for claims concerning contractual penalties and defects of goods sold;
• six months for claims arising out of relationships between communication enterprises and their clients regarding shipments sent within the territory of Lithuania, or limitation period of one-month when the shipments were sent abroad;
• one year for claims arising out of insurance relationships;
• three years for claims concerning compensation of damage;
• five years for claims concerning recovery of interest and any other periodical payments.

This list is not exhaustive and individual legal provisions may provide additional limitation periods.

There is no general legal requirement to initiate any pre-action procedures. However, the law may establish mandatory out-of-court settlement procedure for separate category of cases, for example in family disputes. If the law requires pre-action procedure, the consequences differ depending on whether that procedure could still be used: if it is still possible to use the procedure, the statement of claim is left unexamined (without prejudice), whereas if the pre-action procedure is no longer possible, the court terminates the case (with prejudice).

Litigation: Generally, proceedings are initiated by a statement of claim submitted directly to the court of the first instance. The claim shall be submitted in written form. Once the claim is admitted to the court, the respondent is served with the claim and the notice about further actions needed from the relevant court, but successful service of the documents is not a prerequisite for the case to be deemed as commenced. Documents are served by the court, unless a party informs that it will serve the documents (Article 117(2) of the Code of Civil Procedure).

Arbitration: Under Article 30 of the Law on Commercial Arbitration, unless otherwise agreed by the parties, arbitral proceedings shall be deemed to have been commenced on the day when the respondent receives a request for arbitration or a statement of claim.

The court determines whether it has jurisdiction over a claim upon receiving the claim in court. Under the Article 137(2)(2) of the Code of the Civil Procedure, the court shall refuse to admit a claim if the court does not have jurisdiction to examine it. If the court finds out that the admission of the claim infringed jurisdiction rules, the case is transferred to the competitive court.

Domestic jurisdiction of the courts is decided by territorial jurisdiction and subject matter of a claim. The parties are free to change territorial jurisdiction (Article 32(1) of the Code of the Civil Procedure).

If the case contains international element, jurisdiction is governed: (a) by international treaties; (b) by Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Recast Brussels Regulation”); (c) if the Recast Brussels Regulation is not applicable and there is no applicable international treaty, jurisdiction of a court is decided by the provisions set out in the Code of the Civil Procedure (Article 780 of the Code of the Civil Procedure).

Foreign law is applicable for civil matters if that is provided by an international agreement, an agreement of the parties or by the laws of the Republic of Lithuania (Article 1.10 of the Civil Code). Otherwise, Lithuanian law is applicable. Either way, parties are not entitled to change and deviate from imperative legal provisions provided in national legislation, meaning that imperative provisions of Lithuanian law would be applied even in cases when the parties agreed to apply foreign law (Article 1.11 of the Civil Code).

European Union regulations prevail over the national legislation in terms of choice of law rules. For example, the law applicable to contractual obligations is determined by Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 (“Rome 1 Regulation”), and the law applicable to non-contractual obligations is governed by Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 (“Rome 2 Regulation”).

In cases when there is no European Union regulation and / or international agreement, the applicable law has to be decided by national legislation. The choice of law is governed by Articles 1.15 – 1.62 of the Civil Code.

The claim may be disposed of without a full trial in three cases: (a) when the court refuses to admit the claim in the court; (b) when the case is terminated by the court; (c) when the court leaves the claim unexamined. Each of these cases has their own grounds.

Under Article 137(2) of the Code of the Civil Procedure, the court refuses to admit a claim in court, if:

1. the claim cannot be examined in the civil procedure;
2. the claim falls outside the jurisdiction of that court;
3. a person who submitted the claim, had failed to comply with preliminary out-of-court settlement procedure established by law for that category of cases;
4. there is an effective court or arbitral award adopted in the dispute between the same parties, on the same subject matter and on the same grounds, or the claimant had waived its claim, or the court had approved a settlement agreement on the same matter;
5. there is a pending court case between the same parties, on the same subject matter and on the same grounds;
6. parties had entered into an arbitration agreement;
7. the claim was submitted by a natural person who is incapacitated in a particular area;
8. the claim was submitted by a person who had no authorization to submit the claim on behalf of the claimant.

Under Article 293 of the Code of the Civil Procedure, the court terminates the case, if:

1. the case is not subject to examination by the court in the civil procedure, expect for the cases when administrative court has jurisdiction over the case;
2. a person who submitted a claim, had failed to comply with preliminary out-of-court settlement procedure established by law for that category of cases and it is no longer possible to use this procedure;
3. there is an effective court judgement adopted in the dispute between the same parties, on the same subject matter and on the same grounds, or an effective court judgment approving claimant’s waiver of the claim a settlement agreement;
4. the claimant had waived its claim and the court approved that;
5. the parties had entered into a settlement agreement and the court approved it;
6. there is an effective arbitration award adopted in the dispute between the same parties, on the same subject matter and on the same grounds;
7. upon death of a natural person who was one of the parties to the proceedings, legal succession is precluded;
8. upon liquidation of a legal person who was one of the parties to the proceedings, legal succession is precluded.

Under Article 296(1) of the Code of the Civil Procedure, the court leaves a claim unexamined, if:

1. a person who submitted the claim, had failed to comply with preliminary out-of-court settlement procedure established by law for that category of cases and it is still possible to use this procedure;
2. the claim was submitted by a natural person who is incapacitated in a particular area;
3. the claim was submitted by a person who had no authorization to submit the claim on behalf of the claimant;
4. there is a pending court case between the same parties, on the same subject matter and on the same grounds;
5. claimant, being properly informed, failed to appear in a court hearing and the respondent did not request to adopt a judgment in absentia;
6. both parties failed to appear in a court hearing and had not asked to examine the case in their absence;
7. the claimant did not pay applicable stamp duty;
8. several requests have been brought before the court, but the stamp duty was paid only for a part of them. In such a case, the court leaves unexamined those requests, for which the stamp duty has not been paid;
9. parties had entered into an arbitration agreement;
10. the claimant withdrew its claim;
11. if it is found that the claim does not meet the requirements set for the content of a claim, when the case is before the court of the first instance.

The main and most often used interim measures are:

• Seizure of property;
• Notice in the public register prohibiting the sale or transfer of property;
• Prohibition to perform certain transactions or take other particular actions;
• Prohibition for third persons to transfer property to the defendant or perform other obligations to him;
• Prohibition to leave the permanent residence.

Article 145 of the Code of Civil Procedure, which provides the abovementioned types of interim measures, also sets out that the list is non-exhaustive and enables courts to apply such interim remedies as the courts deems necessary.

When a claim is admitted in a court, the court sets a term of at least 14 days for a respondent to submit a statement of defence. This term may be extended up to 60 days (Article 142(1) of the Code of Civil Procedure).

When the statement of defence is submitted or the term for its submission expires, the court may: (a) proceed to the pre-trial stage; (b) set a date for a main hearing, if the court decides that the case is ready to be examined on its merits (Article 225(7) of the Code of Civil Procedure).

Pre-trial stage may be conducted (a) orally – in such a case the court appoints a preliminary hearing; (b) in writing. Usually, if both parties are represented by professional lawyers, the court decides that preparation for the trail will be conducted in writing (Article 227(1) of the Code of Civil Procedure). In such a case, the court sets a term of 14 days for the claimant to submit a response to the statement of defence, and 14 days for the respondent to submit its rejoinder (Article 227(2) of the Code of Civil Procedure).

Article 226 of the Code of Civil Procedure provides that during the pre-trial stage all parties have to submit all written evidence they have and to provide all explanations, which are relevant for the subject matter of the case. Article 227(2) of the Code of Civil Procedure sets out that the court may refuse to admit evidence, which could have been submitted in the pre-trial stage, if the court thinks that such an admission would postpone the examination of the case.

A party to a case may ask the court to order another person to produce certain evidence, provided that the party requesting for document production identifies what particular evidence is being asked for, proves that another person has the evidence, and indicates what circumstances could be proved with that evidence (Article 199(1) of the Code of Civil Procedure).

If the court satisfies such a request, a term to produce the evidence is set. A person may not produce evidence only due to justifiable reasons, otherwise failure to produce evidence may be fined by the court (Article 199(6) of the Code of Civil Procedure). The law does not provide a list of justifiable reasons, however usually in practice attorney-client privilege or commercial secrets are recognized as reasonable grounds not to produce evidence, and mere confidentiality may be insufficient.

Pursuant to Article 190 of the Code of Civil Procedure, a party to a case may request to summon a witness, and has to identify what relevant circumstances the witness could attest. A person summoned to testify must appear before a court and give fair evidence (Article 191(1) of the Code of Civil Procedure). No depositions are permitted or regulated by the Code of Civil Procedure.

A witness must be sworn by putting a hand on the Constitution of the Republic of Lithuania (Article 192(4) of the Code of Civil Procedure). Then the court invites the witness to tell everything he/she knows in relation to the case. A person who asked to summon the witness examines the witness the first and the witness may be cross-examined afterwards. The court may question the witness at any time and may eliminate leading and irrelevant questions (Article 192(6) of the Code of Civil Procedure).

Two types of expert evidence may be distinguished in practice:

• Party appointed expert report. This procedure is not regulated by the Code of Civil Procedure, but the law does not prevent the parties from using any evidence which is sufficiently related to the case. Therefore, it is not uncommon for a party to use a party appointed expert to prove certain aspects of the case. Nevertheless, a report prepared by a party appointed expert is considered as ordinary written evidence and is not mandatory for the court;
• Court appointed expert report. As per Article 212(1) of the Code of Civil procedure, the court may appoint an expert in order to clarify matters which require special scientific, medical, artistic, technical or craft knowledge. The expert must provide an independent written opinion. The expert can be examined in the hearing by the court and the parties. However, even the expert report of the court appointed expert is not mandatory for the court, and the report is evaluated at the judge’s discretion. If the court disagrees with the expert opinion, it may decide not follow it, but the court has to provide sufficient reasons of such a decision (Article 218 of the Code of Civil Procedure).

All final and some of interim decisions are subject to appeal.

Generally, a party may appeal against the final judgment of a court of the first instance within 30 days of its adoption (the term might be renewed due to serious circumstances). The decision of the court of the first instance becomes effective if it was not appealed. An appeal can only be submitted by a party of the dispute in the court of first instance. Depending on which court decided in the first place, the competent court of appeal is either a regional court or the Court of Appeal of Lithuania.

Decisions of court of appeal become effective on the day they are publicly announced.

Appeal instance decisions are subject to cassation that can be filed before the Supreme Court of Lithuania within 3 months from the day the challenged judgment or ruling became effective. The Supreme Court does not hear claims on their merits, as a cassation appeal shall be based on the application and interpretation of law. Not every cassation appeal is admitted before court, as a board composed of the Supreme Court judges selects cassation appeals to be admitted.

In terms of interim decisions, some of them may also be appealed by a separate appeal, if:

• the right to appeal the interim decision is provided directly by law (Article 334(1)(1) of the Code of Civil Procedure);
• it prevents possibility of continuing the case (Article 334(1)(2) of the Code of Civil Procedure).

All arguments against interim decisions, which are not subject to appeal, may be included in the appeal against the final decision in the same case (Article 334(3) of the Code of Civil Procedure).

If a foreign judgement was adopted by a national court of a Member State of the European Union, it would be recognized and enforced in accordance with Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Recast Brussels Regulation”).

Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters of 21 December 2007 (the “Lugano Convention”) is also applicable in Lithuania.

If a foreign judgement was adopted by a court outside the European Union and / or its enforcement is not subject to Lugano Convention, recognition and enforcement is governed by international treaties. If there is no international treaty, the procedure is regulated by the national legislation, namely, the Code of Civil Procedure.

Lithuania is also party to the Convention on the Recognition and Enforcement of Foreign Arbitral Award (the “New York Convention”).

Under Article 93(1) of the Code of Civil Procedure, the winning party is entitled to full reimbursement from the losing party for reasonable litigation costs incurred. The same is true in terms of legal expenses (Article 98(1) of the Code of Civil Procedure), and such expenses can be awarded if they were actually paid and relevant evidence submitted before the end of the main hearing. Nonetheless, legal expenses are rarely fully reimbursed, as the law provides that the compensation for legal costs cannot exceed amounts indicated in the recommendations approved by the Minister of Justice (Article 98(2) of the Code of Civil Procedure).

Mechanism of a class action was introduced in Lithuania in 2014 (effective since 1 January 2015). A claim may be examined as a class action if it is based on the same or similar factual circumstances and it is aimed to protect same or similar rights or legal interests of a group of legal and natural persons by the same legal remedy (Article 4411(2) of the Code of Civil Procedure).

A group must consist of at least 20 persons and formation of the group is based on opt-in principle – a person who wants to join the group has to express their will by filling a written form approved by the ministry of justice (Article 4413(2)(1) of the Code of Civil Procedure).

Third parties may be involved in the court proceedings as:

• A third party who has independent demands regarding the subject matter of the case. Such a party may join the case before the beginning of final speeches (Article 46(1) of the Code of Civil Procedure);
• A third party who has no independent demands. Such a party may get involved in the case either upon a request of any of the parties or upon the court’s initiative. A person may join the case as a third party if outcome of the the case may have influence on their rights or liabilities (Articles 47(1) of the Code of Civil Procedure).

Third party funding is not regulated in Lithuania, hence there is no regulation prohibiting third parties to fund litigation.

No substantial delays occurred due to COVID-19 pandemic as majority of civil cases are handled and managed in electronic format only. Unless any of the parties objected, oral hearings now may be organized remotely.

Lithuanian civil courts are among the most efficient courts in Europe. In terms of estimated time needed to resolve litigious civil and commercial cases, Lithuanian courts are the fastest in Europe, according to the 2020 EU Justice Scoreboard.

Lithuanian courts as courts of a Member State of the European Union, are part of the European Union’s judicial system, therefore their decisions may be easily enforced anywhere across the European Union. The courts also have access to relevant European Union procedural regulations and to the Court of Justice, if necessary.

Lithuania is a party to the New York Convention, therefore arbitration awards rendered in Lithuania may be recognized and enforced in other countries participating in the Convention. In terms of arbitration, Law on Commercial Arbitration of the Republic of Lithuania is a modern piece of legislation, prepared in accordance to UNCITRAL Model law, what also makes Lithuania an attractive jurisdiction to choose for the seat of arbitration.

It is likely that the number of cases caused by and related to COVID-19 will increase in the foreseeable future, such as bankruptcy and / or insolvency and / or restructuring cases, as well as cases concerning force majeure and / or hardship impact on contractual relationships.

Almost 8 years ago a national electronic case management system was introduced, therefore nowadays vast majority of civil cases are handled in electronic format only. It is difficult to predict that technologies could have much more impact, as due to the electronic case management system hard copies of procedural documents are almost extinct and technology has already changed the way civil cases are managed in Lithuania.

Nevertheless, until COVID-19 crisis oral hearings in civil cases were always conducted in person. Recently, due to obvious reasons courts began to organize hearings via electronic means of communication. At the time being, use of Zoom, Microsoft Teams or similar software is not regulated by law, but successful introduction of these tools in practice is likely to end up in regulating and using them after COVID-19 pandemic.

We believe that even when COVID-19 pandemic is over, the common practice will be to organize oral hearings via electronic means of communications.