The Dispute Resolution Review The Dispute Resolution Revie Dispute Resolution Review 7th.pdf · The...

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The Dispute Resolution Review Law Business Research Seventh Edition Editor Jonathan Cotton

Transcript of The Dispute Resolution Review The Dispute Resolution Revie Dispute Resolution Review 7th.pdf · The...

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The Dispute Resolution ReviewThe Dispute Resolution

Review

Law Business Research

Seventh Edition

Editor

Jonathan Cotton

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The Dispute Resolution Review

The Dispute Resolution ReviewReproduced with permission from Law Business Research Ltd.

This article was first published in The Dispute Resolution Review - Edition 7(published in February 2015 – editor Jonathan Cotton).

For further information please [email protected]

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The Dispute Resolution

Review

Seventh Edition

EditorJonathan Cotton

Law Business Research Ltd

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THE MERGERS AND ACQUISITIONS REVIEW

THE RESTRUCTURING REVIEW

THE PRIVATE COMPETITION ENFORCEMENT REVIEW

THE DISPUTE RESOLUTION REVIEW

THE EMPLOYMENT LAW REVIEW

THE PUBLIC COMPETITION ENFORCEMENT REVIEW

THE BANKING REGULATION REVIEW

THE INTERNATIONAL ARBITRATION REVIEW

THE MERGER CONTROL REVIEW

THE TECHNOLOGY, MEDIA AND TELECOMMUNICATIONS REVIEW

THE INWARD INVESTMENT AND INTERNATIONAL TAXATION REVIEW

THE CORPORATE GOVERNANCE REVIEW

THE CORPORATE IMMIGRATION REVIEW

THE INTERNATIONAL INVESTIGATIONS REVIEW

THE PROJECTS AND CONSTRUCTION REVIEW

THE INTERNATIONAL CAPITAL MARKETS REVIEW

THE REAL ESTATE LAW REVIEW

THE PRIVATE EQUITY REVIEW

THE ENERGY REGULATION AND MARKETS REVIEW

THE INTELLECTUAL PROPERTY REVIEW

THE ASSET MANAGEMENT REVIEW

THE LAW REVIEWS

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www.TheLawReviews.co.uk

THE PRIVATE WEALTH AND PRIVATE CLIENT REVIEW

THE MINING LAW REVIEW

THE EXECUTIVE REMUNERATION REVIEW

THE ANTI-BRIBERY AND ANTI-CORRUPTION REVIEW

THE CARTELS AND LENIENCY REVIEW

THE TAX DISPUTES AND LITIGATION REVIEW

THE LIFE SCIENCES LAW REVIEW

THE INSURANCE AND REINSURANCE LAW REVIEW

THE GOVERNMENT PROCUREMENT REVIEW

THE DOMINANCE AND MONOPOLIES REVIEW

THE AVIATION LAW REVIEW

THE FOREIGN INVESTMENT REGULATION REVIEW

THE ASSET TRACING AND RECOVERY REVIEW

THE INTERNATIONAL INSOLVENCY REVIEW

THE OIL AND GAS LAW REVIEW

THE FRANCHISE LAW REVIEW

THE PRODUCT REGULATION AND LIABILITY REVIEW

THE SHIPPING LAW REVIEW

THE ACQUISITION AND LEVERAGED FINANCE REVIEW

THE PRIVACY, DATA PROTECTION AND CYBERSECURITY LAW REVIEW

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PUBLISHER Gideon Roberton

BUSINESS DEVELOPMENT MANAGER Nick Barette

SENIOR ACCOUNT MANAGERS Katherine Jablonowska, Thomas Lee

ACCOUNT MANAGER Felicity Bown

PUBLISHING COORDINATOR Lucy Brewer

MARKETING ASSISTANT Dominique Destrée

EDITORIAL COORDINATOR Shani Bans

HEAD OF PRODUCTION Adam Myers

PRODUCTION EDITORS Matthew Hopkins, Robbie Kelly, Joanne Morley

SUBEDITOR Jonathan Allen

MANAGING DIRECTOR Richard Davey

Published in the United Kingdom by Law Business Research Ltd, London

87 Lancaster Road, London, W11 1QQ, UK© 2015 Law Business Research Ltd

www.TheLawReviews.co.uk No photocopying: copyright licences do not apply.

The information provided in this publication is general and may not apply in a specific situation, nor does it necessarily represent the views of authors’ firms or their clients.

Legal advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts or omissions contained herein. Although the information provided is accurate as of February 2015,

be advised that this is a developing area.Enquiries concerning reproduction should be sent to Law Business Research, at the

address above. Enquiries concerning editorial content should be directed to the Publisher – [email protected]

ISBN 978-1-909830-37-0

Printed in Great Britain by Encompass Print Solutions, Derbyshire

Tel: 0844 2480 112

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The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:

ARTHUR COX

ARZINGER LAW OFFICE

ATTIAS & LEVY

AZB & PARTNERS

BAKER & PARTNERS

BONELLI EREDE PAPPALARDO

BREDIN PRAT

BUFETE HERNÁNDEZ ROMO

CONSULEGIS ABOGADOS

CRAVATH, SWAINE & MOORE LLP

DITTMAR & INDRENIUS

HENGELER MUELLER

HERGÜNER BILGEN ÖZEKE ATTORNEY PARTNERSHIP

JUN HE LAW OFFICES

KBH KAANUUN

KYRIAKIDES GEORGOPOULOS LAW FIRM

LLOREDA CAMACHO & CO

LS HORIZON LIMITED

MANNHEIMER SWARTLING ADVOKATBYRÅ AB

MAPLES AND CALDER

ACKNOWLEDGEMENTS

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Acknowledgements

ii

MIYAKE & YAMAZAKI

MOHAMMED AL-GHAMDI LAW FIRM IN ASSOCIATION WITH NORTON ROSE FULBRIGHT US LLP

MOLITOR AVOCATS À LA COUR

MOTIEKA & AUDZEVIČIUS

NIEDERER KRAFT & FREY

OSLER, HOSKIN & HARCOURT LLP

PATRIKIOS PAVLOU & ASSOCIATES LLC

PINHEIRO NETO ADVOGADOS

PIPER ALDERMAN

PLESNER LAW FIRM

SCHRECK LAW OFFICES

SHALAKANY LAW OFFICE

SHIN & KIM

SLAUGHTER AND MAY

SOFUNDE, OSAKWE, OGUNDIPE & BELGORE

STRELIA

SZECSKAY ATTORNEYS AT LAW

TSMP LAW CORPORATION

ŢUCA ZBÂRCEA & ASOCIAŢII

URÍA MENÉNDEZ

UTEEM CHAMBERS

WOLFF GSTOEHL BRUCKSCHWEIGER ADVOKATURBÜRO

WOLF THEISS RECHTSANWÄLTE GMBH & CO KG

YOUNG CONAWAY STARGATT & TAYLOR, LLP

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Editor’s Preface ..................................................................................................viiJonathan Cotton

Chapter 1 AUSTRALIA ...............................................................................1Malcolm Quirey and Gordon Grieve

Chapter 2 AUSTRIA .................................................................................38Bettina Knötzl

Chapter 3 BAHRAIN ................................................................................51Haifa Khunji and Natalia Kumar

Chapter 4 BELGIUM ................................................................................63Jean-Pierre Fierens and Joanna Kolber

Chapter 5 BRAZIL ....................................................................................76Gilberto Giusti and Ricardo Dalmaso Marques

Chapter 6 BRITISH VIRGIN ISLANDS .................................................91Arabella di Iorio and Brian Lacy

Chapter 7 CANADA ...............................................................................112David Morritt and Eric Morgan

Chapter 8 CAYMAN ISLANDS ..............................................................126Aristos Galatopoulos and Luke Stockdale

Chapter 9 CHINA ...................................................................................139Xiao Wei, Zou Weining and Stanley Xing Wan

Chapter 10 COLOMBIA...........................................................................150Gustavo Tamayo and Natalia Caroprese

CONTENTS

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Contents

Chapter 11 CYPRUS .................................................................................162Eleana Christofi and Katerina Philippidou

Chapter 12 DENMARK ............................................................................174Peter Schradieck and Peter Fogh

Chapter 13 ECUADOR ............................................................................186Xavier Castro-Muñoz and Fabrizio Peralta-Díaz

Chapter 14 EGYPT ...................................................................................195Khaled El Shalakany

Chapter 15 ENGLAND & WALES ..........................................................200Jonathan Cotton and Damian Taylor

Chapter 16 FINLAND ..............................................................................224Jussi Lehtinen and Heidi Yildiz

Chapter 17 FRANCE ................................................................................237Tim Portwood

Chapter 18 GERMANY ............................................................................253Henning Bälz and Carsten van de Sande

Chapter 19 GIBRALTAR ...........................................................................271Stephen V Catania

Chapter 20 GREECE ................................................................................281John Kyriakides and Harry Karampelis

Chapter 21 HONG KONG ......................................................................293Mark Hughes

Chapter 22 HUNGARY ............................................................................317Dávid Kerpel

Chapter 23 INDIA ....................................................................................331Zia Mody and Aditya Vikram Bhat

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Contents

Chapter 24 IRELAND...............................................................................346Andy Lenny and Peter Woods

Chapter 25 ISRAEL ...................................................................................362Shraga Schreck

Chapter 26 ITALY .....................................................................................393Monica Iacoviello, Vittorio Allavena, Paolo Di Giovanni and Tommaso Faelli

Chapter 27 JAPAN ....................................................................................415Tatsuki Nakayama

Chapter 28 JERSEY ...................................................................................429William Redgrave and Charles Sorensen

Chapter 29 KOREA ...................................................................................443Hyun-Jeong Kang

Chapter 30 LIECHTENSTEIN ................................................................455Christoph Bruckschweiger

Chapter 31 LITHUANIA ..........................................................................465Ramūnas Audzevičius and Mantas Juozaitis

Chapter 32 LUXEMBOURG ....................................................................480Michel Molitor

Chapter 33 MAURITIUS ..........................................................................492Muhammad R C Uteem

Chapter 34 MEXICO ................................................................................508Miguel Angel Hernández-Romo Valencia

Chapter 35 NIGERIA ................................................................................524Babajide Ogundipe and Lateef Omoyemi Akangbe

Chapter 36 PORTUGAL ...........................................................................539Francisco Proença de Carvalho and Tatiana Lisboa Padrão

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Contents

Chapter 37 ROMANIA .............................................................................551Levana Zigmund

Chapter 38 SAUDI ARABIA .....................................................................564Mohammed Al-Ghamdi and Paul J Neufeld

Chapter 39 SINGAPORE .........................................................................584Thio Shen Yi, Freddie Lim and Hannah Tjoa

Chapter 40 SPAIN .....................................................................................599Ángel Pérez Pardo de Vera and Francisco Javier Rodríguez Ramos

Chapter 41 SWEDEN ...............................................................................619Jakob Ragnwaldh and Niklas Åstenius

Chapter 42 SWITZERLAND ...................................................................631Peter Honegger, Daniel Eisele, Tamir Livschitz

Chapter 43 THAILAND ...........................................................................649Lersak Kancvalskul, Prechaya Ebrahim, Wanchai Yiamsamatha and Oranat Chantara-opakorn

Chapter 44 TURKEY ................................................................................659H Tolga Danışman

Chapter 45 UKRAINE ..............................................................................678Sergiy Shklyar and Markian Malskyy

Chapter 46 UNITED ARAB EMIRATES .................................................690D K Singh

Chapter 47 UNITED STATES .................................................................701Nina M Dillon and Timothy G Cameron

Chapter 48 UNITED STATES: DELAWARE ..........................................719Elena C Norman and Lakshmi A Muthu

Appendix 1 ABOUT THE AUTHORS .....................................................739

Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS ...769

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EDITOR’S PREFACE

The Dispute Resolution Review covers 48 countries and territories. Disputes have never respected national boundaries and the continued globalisation of business in the 21st century means that it is more important than ever before that clients and lawyers look beyond the horizon of their home jurisdiction.

The Dispute Resolution Review is an excellent resource, written by leading practitioners across the globe. It provides an easily accessible guide to the key aspects of each jurisdiction’s dispute resolution rules and practice, and developments over the past 12 months. It is written with both in-house and private legal practitioners in mind, as well as the large number of other professionals and businesspeople whose working lives bring them into contact with disputes in jurisdictions around the world.

This Review is testament to the fact that jurisdictions face common problems. Whether the issue is how to control the costs of litigation, which documents litigants are entitled to demand from their opponents, or whether a court should enforce a judgment from another jurisdiction, it is fascinating to see the different ways in which different jurisdictions have grappled with these issues and, in some cases, worked together to produce a harmonised solution to international challenges. We can all learn something from the approaches taken by the 48 jurisdictions set out in this book.

A feature of some of the prefaces to previous editions has been the impact that the turbulent economic times were having in the world of dispute resolution. Although at the time of writing the worst of the global recession that gripped many of the world’s economies has largely passed, it is has left its mark. Old and new challenges and risks remain in many parts of the world such as renewed speculation on the future of the eurozone, the sanctions imposed on Russia, and falls in the price of oil. In some regions, the ‘green shoots’ of recovery have blossomed while in others they continue to need careful nurturing. Both situations bring their different challenges for those involved in disputes and, while the boom in insolvency-related disputes and frauds unearthed in the recession remain, the coming year could see an increase in investment and acquisitions with a  subsequent focus on disputes concerning the contracts governing those investments.

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I would like to express my gratitude to all of the contributors from all of the jurisdictions represented in The Dispute Resolution Review. Their biographies start at p. 739 and highlight the wealth of experience and learning from which we are fortunate enough to benefit. I would also like to thank the whole team at Law Business Research, in particular Nick Barette, Eve Ryle-Hodges and Shani Bans, who have impressed once again in managing a project of this size and scope, and in adding a professional look and finish to the contributions.

Jonathan CottonSlaughter and MayLondonFebruary 2015

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Chapter 31

LITHUANIA

Ramūnas Audzevičius and Mantas Juozaitis1

I INTRODUCTION TO 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, which 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 54 district courts, five regional courts, the Lithuanian Court of Appeal and the Supreme Court of Lithuania. 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

1 Ramūnas Audzevičius is a partner and Mantas Juozaitis is a senior associate at Motieka & Audzevičius.

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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. A settlement procedure is not provided in the administrative proceedings and there are no options to resolve a case using ADR.

II THE YEAR IN REVIEW

The Supreme Court of Lithuania has ruled on a question of the validity of arbitration clauses as well as the arbitrability of disputes related to the investigation of the activities of Lithuanian legal entities.2 The Court confirmed that annulment of the arbitration agreement is possible only upon finding an obvious breach of public order or imperative legal norms without a need for further investigation to make such findings. Another issue in that case was the extension of the application of the arbitration clause. The parties to the contract (shareholders of a Lithuanian company) agreed that all disputes between the company and its shareholders, or between shareholders in relation to their holdings in the company, shall be referred to arbitration. One shareholder initiated investigation of the activities of the company, which is possible action under Lithuanian legislation and aims to determine whether managing bodies of the company are performing their duties properly. Such investigation, once finished, may lead to removing management bodies, appointing new temporary bodies, annulling certain unlawful decisions, etc. The Supreme Court ruled that investigation itself doesn’t mean the imposition of any measures against any management body or the company itself, investigation is also designed to protect public interest. Therefore domestic courts have exclusive jurisdiction over such disputes.

The Supreme Court also ruled on the arbitrability of disputes related to competition law.3 The issue was whether a dispute related to a breach of a contractual non-competing clause is arbitrable or not. According to relevant legislation disputes related to competition law are subject to the exclusive jurisdiction of domestic courts. The Supreme Court ruled that a non-competing clause in itself is not related to competition law. Non-competing clauses are contractual provisions and their breach is governed by general civil law as opposed to competition (antitrust) law. Therefore such disputes can be referred to arbitration.

Recent rulings of the Supreme Court of Lithuania also stated that disputes arising from public procurement contracts were not arbitrable under Lithuanian law. But it remains to be seen how this issue will be dealt with in the future, considering there is a large number of public procurement contracts still in force that contain arbitration clauses.

2 26 June 2012 decision of the Supreme Court of Lithuania in case No. 3K-3-353/2012.3 7 November 2012 ruling of the Supreme Court of Lithuania in a civil case No. 3K-3-

470/2012.

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The Court of Appeal has resolved a case4 involving an issue whether Lithuanian or German courts should have jurisdiction over a dispute involving the Convention on the Contract for the International Carriage of Goods by Road (the CMR Convention) and a Lithuanian claimant and a German defendant. According to the general rule in the CMR Convention, the court of the place of residence of the defendant has jurisdiction over a dispute. The Court ruled that since the Lithuanian company (the claimant) is bankrupt EU Regulations No. 44/2001 and No. 1346/2000 should apply. According to them such disputes involving a bankrupt claimant are not civil disputes anymore and fall into an exception provided in Regulation No. 44/2001. Hence the exclusive jurisdiction of the domestic Lithuanian court is based only on Regulation No. 1346/2000.

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 in which 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. Both first instance and appellate court proceedings are usually verbal.

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

4 6 June 2012 ruling of the Court of appeals of Lithuanian in a civil case No. 2A-1027/2012.

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(SAC). It is 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 respective 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 its 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.

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. A settlement agreement is not provided for by the LAP, thus the only non-adversarial method for dispute resolution in administrative proceedings is the withdrawal of the claim by the plaintiff. 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,

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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 they were 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, however, come into force in 2015, and so consequently it remains to be seen how will they be applied by the courts.

Under the new legislation 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 lawyers, 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 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;5 therefore, documents are 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.

5 1965 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.

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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. Recognition and enforcement of foreign judgments in Lithuania follows a simplified procedure since 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, forming 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 they were 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. It is noteworthy that the court will fix such indemnity in

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accordance with a scale provided in the recommendations adopted by the Minister of Justice, which results in a far 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 these 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.

IV LEGAL PRACTICE

i Conflicts of interest and Chinese walls

Conflicts of interest are governed by the Code of Ethics of Attorneys 2005. 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, this requirement is often deviated from by law firms 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.

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; orb the attorney assists the client in planning or executing transactions on real

estate or share sale-purchase, bank or securities accounts, the 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 related transactions thereto.

Such a broad definition clearly aims at encompassing 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 as well as inform the Council (by e-mail, 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.

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However, if the suspicions arise while representing the client in the court, or rendering legal advice by evaluating the possibility of the client starting or avoiding the litigation process in the 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 representative is considered a secret and cannot be revealed by any means. This includes even 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 an agreement to representation is being signed by the client and professional legal adviser, both parties have to agree 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 doubt 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.6 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 such conversation was qualified as public and its content was allowed to be used as evidence in a criminal case.

V DOCUMENTS AND THE PROTECTION OF PRIVILEGE

i Privilege

The rules on privilege can be found in the codes of criminal as well as 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.

6 15 March 2011 decision of the Supreme Court of Lithuania in a criminal case No. 2K-144/2011.

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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.7

It should be noted that privilege extends only to attorneys and attorneys’ assistants; in-house lawyers are not protected. This seems to marry with the decision by the European Court of Justice in the famous Akzo case8 regarding competition, where both the court of first instance and the ECJ 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.

7 For example, the case of Wieser and Bicos Beteiligungen GmbH v. Austria.8 Case C-97/08.

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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; andc 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 back-up tapes or other electronic media, which is or was at that party’s disposal.

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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, although the number of cases is steadily increasing. The majority of cases handled by arbitration has an international element. In 2013 the Vilnius Court of Commercial Arbitration heard 50 cases while in 2012, it heard only 29.

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.

ii Arbitration

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.9

Arbitration is still quite unpopular in Lithuania, although the number of cases is steadily increasing. The majority of cases handled by arbitration has 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;

ord 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.

9 www.arbitrazas.lt.

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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; orb the arbitration award is contrary to public policy.

An application for setting aside an arbitration award must be submitted to the Court of Appeals 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 not so new but quite significant development was an approval of a new version of the Law on Arbitration by the Lithuanian government and its submission to Parliament for discussions and adoption in 2010; the new Law implements changes made in 2006 to the Model Law. The most significant changes in comparison to the current regulation are 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.

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, therefore they are considered to be of higher competence, and more suitable for creating and maintaining a uniform court practice.

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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 caused by 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 whom 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.

iii Mediation

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. Mediation is a ‘pilot’ project that was launched on 1 January 2008 in certain courts in Lithuania.

Court mediation procedure is governed by rules, adopted by the Council of Judges Decree No. 13P-15, dated 26 January 2007. The Council of Judges has also confirmed the list of court 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. Any party can quit the procedure at any time without specifying the reason. The general period for mediation is up to four hours in total. If a settlement cannot be reached during that period, and the period is not prolonged, the mediation procedure is terminated and the dispute goes back to the court.

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).

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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

An interesting tendency concerning the division of the legal system is that changes to labour law are adding many public law components to this traditionally private law branch.

An important trend in Lithuania is the growing importance of EU legislation and the doctrine of EU courts. According to the ruling of the Constitutional Court of the Republic of Lithuania in case No. 7/04-8/04 of 15 May 2007, the jurisprudence of the ECHR, the ECJ and the Court of the First Instance of the European Communities is also important to the application of Lithuanian law.

Current practice in Lithuanian courts regarding the recognition and enforcement of foreign arbitration awards was oriented towards the liberalisation of the interpretation and application of the New York Convention. Court of Appeal has been asked to recognise and enforce an SCC arbitration award issued in a dispute between Russian gas giant Gazprom and the Lithuanian government. The Lithuanian government argued that the award cannot be enforced in Lithuania since the award requires the Lithuanian government to withdraw part of its claims in civil litigation in a Lithuanian domestic court. Such requirement allegedly cannot be physically enforced by the court bailiff since no such procedure is foreseen in the CCP. Domestic litigation was initiated by the Lithuanian side in an attempt to start investigation of the activities of a Gazprom and Lithuanian jointly owned gas company AB Lietuvos dujos. The Court of Appeals declined to recognise and enforce Stockholm Arbitration Tribunal’s ruling.

Gazprom filed its cassation appeal against the Court of Appeal decision. The case is currently in the Supreme Court of Lithuania, which has applied to the Court of Justice of the European Union for a preliminary ruling asking whether Lithuanian courts have a right to decline recognition and enforcement of SCC arbitration award due to jurisdictional and competence issues.

The Supreme Court of Lithuania applied to the Court of Justice of the European Union for a preliminary ruling in yet another case where the client declined to pay her attorney’s fees because the attorney lost the case. The client thought that she would have to pay only if her claim was upheld. The main question in this case is whether the attorney client agreement on legal representation can be considered a contract between a professional and a consumer.

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If the Court of Justice of the European Union rules that the attorney’s client is a consumer, the client will be able to rely on legal provisions protecting consumers.

ii Significant current trends and likely future developments

The Lithuanian Court E-Services Portal e.teismas.lt has been running for more than a year now and has so far run very smoothly. Lithuanian citizens, legal entities and attorneys can submit and also receive any legal documents via the internet in all civil and administrative cases. Also, stamp duty 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. It seems highly likely that more and more cases will be initiated and conducted in this way.

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Appendix 1

ABOUT THE AUTHORS

RAMŪNAS AUDZEVIČIUSMotieka & AudzevičiusRamūnas Audzevičius has been a  partner and the co-head of the dispute resolution practice at Motieka & Audzevičius since 2003. He is highly experienced in business, commercial and regulatory disputes involving the application of EU, international and foreign law, as well as shareholder conflicts and corporate investigations.

His practice involves representation of the clients under UNCITRAL, ICC, SCC, LCIA, MKAS, GAFTA, FOSFA and Vilnius Court of Commercial Arbitration rules. He also handles matters before the Supreme Court, the Supreme Administrative Court, and the Court of Appeal in Lithuania. Mr Audzevičius has been involved in advising clients in litigious matters decided by courts of the highest instances in Russia, Ukraine, Belarus, Azerbaijan, Latvia, and Estonia.

A graduate of Harvard Business School (PLDA), he obtained a master of laws degree (LLM) from the Moscow School of Social and Economic Sciences. He also holds MA degrees from King’s College London and the Institute of Advanced Legal Studies, both attached to the University of London. Mr Audzevičius went to the Vilnius University Faculty of Law for his undergraduate law degree. He also graduated from the International Business School at Vilnius University with a diploma in business administration.

His working languages are English, Russian and Lithuanian.

MANTAS JUOZAITISMotieka & AudzevičiusMantas Juozaitis is a senior associate in the dispute resolution practice group of Motieka & Audzevičius.

His areas of expertise include general business disputes, arbitration, tax litigation and planning, international trade disputes, investment disputes, and EU and competition litigation. He has successfully represented clients in LCIA, GAFTA and

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FOSFA arbitration institutions as well as in Moscow and Vilnius Courts of Commercial Arbitration. He is also an arbiter of the Riga Permanent Court of Arbitrage (Latvia).

Mr Juozaitis has an MBA from the International Business School at Vilnius University, an LLM in taxation from Georgetown University Law Center, and an MA in taxation from the Institute of Advanced Legal Studies at the University of London. He also completed an MA in European Union law at King’s College London and an LLM from the international and EU law programme at the Riga Graduate School of Law. In addition, he also holds a postgraduate diploma in equity and trusts from the University of London, a postgraduate diploma in EU law from King’s College London, and a practice diploma in international arbitration law (College of Law of England and Wales). Mr Juozaitis also earned his LLB degree from the Mykolas Romeris University Faculty of Law.

His working languages are English, Russian and Lithuanian.

MOTIEKA & AUDZEVIČIUSGynėjų Street 401109 VilniusLithuaniaTel: +370 52 000 777Fax: +370 52 000 [email protected]@ma-law.ltwww.ma-law.lt