LITHUANIA Law and Practice Contributed by: Kęstutis Švirinas, Ieva Rimavičienė, Domantė Lunytė and Luka Tamulionytė, Sorainen
investors and the Republic of Lithuania concerning the violation of their rights and legitimate interests may be resolved by mutual agreement, through the courts of the Republic of Lithuania, international arbitration tribunals or other competent institutions. Arbitration agreements contained in international treaties are duly recognised and implemented under Lithuanian law. Importantly, Lithuania generally prioritises the ami- cable resolution of investment disputes and seeks to resolve such matters through negotiations with relevant government authorities before formal legal proceedings are initiated, reflecting a pragmatic and investor-friendly approach. 1.2 Arbitration Conventions Lithuania became a contracting state to the Con- vention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) on 6 July 1992, with the Convention entering into force for Lithuania on 5 August 1992. This accession underscores Lithuania’s support for investor–state dispute resolution mechanisms. Furthermore, Lithuania ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) on 14 March 1995, which entered into force on 12 June 1995. These accessions reflect Lithuania’s support for the interna- tional legal framework governing the resolution and enforcement of investment and commercial disputes. 1.3 Prevalence of Investor–State Arbitration Investor–state arbitration is a recognised and increas- ingly preferred method of resolving investment dis- putes in Lithuania, particularly those involving foreign investors and the Lithuanian state. While investment disputes involving Lithuania are relatively rare, the country has been involved in several notable cases under international arbitration mechanisms, including ICSID and other treaty-based forums. Foreign investors in Lithuania have access to multiple avenues for resolving disputes, including: • Lithuanian national courts;
• international arbitration tribunals, particularly under BITs and the ICSID Convention; and • other competent institutions, such as the Vilnius Court of Commercial Arbitration (VCCA). In practice, foreign investors tend to avoid litigation before Lithuanian courts in disputes with the state. This is largely due to concerns about the challenges of establishing state liability and the perceived lack of neutrality in domestic proceedings. While claims for damages arising from the administrative actions or omissions of the state authorities are more commonly brought before Lithuanian courts, these are typically limited to straightforward legal or regulatory issues. By contrast, investor–state arbitration is the preferred method for resolving disputes that fall within the scope of investment protection – particularly those governed by BITs and the ICSID Convention. 1.4 Key Industries Lithuania does not exhibit a consistent pattern of investor–state arbitration. However, recent develop- ments suggest heightened activity in the energy and transport/logistics sectors. Energy Sector The energy industry has seen increased arbitration activity, particularly in relation to municipal heating services, regulatory changes and foreign investment in utilities. A notable example is the Veolia v Lithu- ania case, where the French energy company initiated ICSID arbitration over alleged unfair treatment and contract interference in its district heating operations. This case reflects broader tensions around state regu- lation, environmental policy shifts and public-private partnerships in essential services. Transport and Logistics Disputes in this sector often involve state-owned infrastructure, such as railways, ports and transit cor- ridors. For instance, a Belarusian state-owned com- pany filed a claim against Lithuania over the termina- tion of a fertiliser transport agreement, citing political motivations and seeking substantial damages. These cases underscore the sector’s exposure to geopoliti- cal developments, EU sanctions regimes and nation- al security considerations, especially when foreign
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