LITHUANIA Law and Practice Contributed by: Kęstutis Švirinas, Ieva Rimavičienė, Domantė Lunytė and Luka Tamulionytė, Sorainen
Convention) or to ad hoc arbitration under UNCI- TRAL rules. Arbitral awards are final and binding, and both states must promptly enforce them. The host state cannot use the fact that compensation was paid under a guarantee or insurance policy as a defence against its obligations (Article 8 of the Lithuanian model BIT). 2.3 Free Trade Agreements Lithuania is a Member State, and therefore par- ticipates in the EU’s extensive network of free trade agreements (FTAs) with third countries. These agree- ments are negotiated and concluded by the European Commission on behalf of all Member States, includ- ing Lithuania, and cover a wide range of trade and investment-related matters. EU FTAs typically include provisions aimed at ensur- ing a stable, transparent and predictable investment environment. These provisions cover: • non-discriminatory treatment of investors; • FET; • protection against unlawful expropriation; and • free transfer of capital and returns. In terms of dispute settlement, the EU applies a struc- tured and evolving framework, as described below. Investment Dispute Settlement In recent agreements, the EU has introduced modern- ised investment dispute resolution mechanisms, mov- ing away from traditional investor–state arbitration. Notably, agreements such as CETA (with Canada), EU– Vietnam and EU–Singapore incorporate provisions for a permanent investment court system. For example, once fully in force, CETA will offer robust protection for investments through a modern and transparent dispute resolution mechanism. It replaces the older Investor State Dispute Settlement (ISDS) system with a permanent Investment Court System (ICS), designed to address past shortcomings and ensure the highest standards of legitimacy, neutrality and transparency. This system includes a first-tier tribunal and an appel- late tribunal, both composed of independent, highly qualified judges who are bound by strict ethical rules. The ICS also includes safeguards to prevent abuse of the process and ensure consistency in decisions, and
allows the EU and Canada to guide the interpretation of CETA’s provisions. Multilateral Reform Efforts The EU is actively promoting the establishment of a Multilateral Investment Court, which would replace ad hoc arbitration with a permanent judicial body. This initiative reflects the EU’s commitment to reforming global investment dispute settlement practices. In summary, Lithuania, through its EU membership, benefits from a comprehensive and modern legal framework for investor protection and dispute resolu- tion. This framework reflects the EU’s commitment to upholding high standards of legal certainty, transpar- ency and fairness in its trade and investment relations with third countries. 2.4 Interpretive Aids Lithuania does not publish official commentaries, exchanges of notes or other interpretive materials related to its investment treaties. Nevertheless, Lithu- anian legal scholars and practitioners active in the field of investment arbitration contribute to the inter- pretation and development of investment law through monographs, academic publications and other soft- law instruments. In addition, foreign legal doctrine – such as commentaries on the ICSID Convention – is considered relevant and may be relied upon in the interpretation and resolution of investment disputes involving Lithuania. 2.5 Investment Laws Lithuania’s principal domestic legal instrument gov- erning investment is the Law on Investment, originally adopted in 1999 and subsequently amended. This law establishes the legal framework for both domestic and foreign investments, outlining key substantive and procedural protections, dispute resolution mecha- nisms and strategic investment priorities. Key Substantive Provisions • Definition of investment: Article 2 (1) defines invest- ment broadly to include monetary funds, tangible and intangible assets, and financial instruments, provided they are directed towards generating profit, achieving social outcomes (eg, in education,
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