LITHUANIA Law and Practice Contributed by: Kęstutis Švirinas, Ieva Rimavičienė, Domantė Lunytė and Luka Tamulionytė, Sorainen
investors are affected by decisions linked to Lithu- ania’s foreign policy stance. Infrastructure and Public Services Although less frequent, disputes have also arisen in areas involving urban development, waste manage- ment and public procurement, where foreign investors allege discriminatory treatment or breach of contrac- tual obligations. These cases often stem from chang- es in local governance, regulatory reforms or shifts in political priorities, which can disrupt long-term invest- ment arrangements. Several factors contribute to the increased arbitration activity in these sectors: • Strategic and political sensitivity: Energy and transport are closely tied to national security and foreign policy, making them more prone to regula- tory intervention and political scrutiny. • High capital intensity and long-term contracts: Investments in these sectors often involve signifi- cant upfront costs and long-term commitments, increasing the stakes when disputes arise. • Geopolitical context: Lithuania’s position as an EU member bordering Belarus and Russia places it at the centre of regional tensions, which can affect foreign investments in critical infrastructure. • Public interest and regulatory volatility: These industries are subject to evolving regulatory frameworks, environmental standards and public accountability, which can lead to investor claims of unfair or arbitrary treatment. Such factors can elevate the risk of investor–state disputes, particularly when foreign investors perceive regulatory measures as discriminatory or politically motivated. 1.5 Major Arbitrations To date, Lithuania has participated in ten investor– state arbitration proceedings, with the majority of cas- es resolved in its favour. These disputes have arisen under various BITs and international arbitration rules, including those of ICSID, UNCITRAL, the PCA and the ICC. Lithuania has consistently demonstrated its commitment to international dispute resolution
mechanisms while successfully defending its regula- tory actions and public interest measures. The following proceedings can be considered the most significant. Veolia and Others v Republic of Lithuania (ICSID Case No. ARB/16/3) • Facts:This is the most recent and arguably one of the most important investor–state arbitration disputes involving Lithuania. French multinational Veolia and its Lithuanian subsidiaries (UAB Litesko and UAB Vilniaus energija) initiated proceedings under the France–Lithuania BIT, alleging that Lithu- ania had retroactively changed laws and regula- tions governing municipal heating services. These changes allegedly undermined Veolia’s long-term contracts and investments in the energy sector. • Disputed law:Veolia argued that Lithuania violated the fair and equitable treatment (FET) standard by creating an unpredictable and hostile regulatory environment. The claim centred on whether Veolia had a reasonable expectation that the legal frame- work would remain stable over the life of its invest - ment and whether changed regulations deprived it of the economic value of its investments. • Outcome: In July 2025, the parties reached a set- tlement agreement. Veolia agreed to pay EUR35 million to the Republic of Lithuania, ending the arbitration proceedings and related domestic litiga- tion. This case is notable for its complexity, for the Lithuanian Supreme Court’s involvement in inter- preting BIT counterclaims and for highlighting the never-ending tension between investor protections and public interest regulation in essential services. Luigiterzo Bosca v Republic of Lithuania (PCA Case No. 2011-05) • Facts:Italian investor Luigiterzo Bosca brought claims under the Italy–Lithuania BIT, based on his investment in the Lithuanian wine and hospitality sectors. The investment included the provision of know-how and services to a local wine-producing company, as well as contractual rights acquired through a successful public tender for the pur- chase of AB “Alita”, a sparkling wine manufactur- ing company.
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