LITHUANIA Law and Practice Contributed by: Kęstutis Švirinas, Ieva Rimavičienė, Domantė Lunytė and Luka Tamulionytė, Sorainen
In making such a decision, the tribunal considers fac- tors such as: • the prima facie merits of the claims or defences; • the claimant’s ability to satisfy a potential adverse costs award; • the availability of assets for enforcement; • the proportionality and fairness of the measure; and • other relevant circumstances. If a party fails to comply, the tribunal may suspend or dismiss its claims. Such decisions may be issued as an order or an award. 6. Third-Party Funding 6.1 Prevalence of Third-Party Funding Third-party funding of investor–state arbitration claims is permitted in Lithuania. While national legislation does not expressly regulate such funding, the con- cept is recognised in the VCCA Rules, which define a funder as a non-party that finances arbitration costs and has an interest in the outcome. Despite its permissibility, third-party funding – whether in investment or commercial arbitration – is not yet prevalent in Lithuania. Its use remains relatively lim- ited, likely due to the still-developing market for arbi- tration funding and a general lack of awareness or familiarity with such mechanisms among local parties. However, Lithuania does have examples of third-party litigation financing in practice. A notable recent case involved a 2017 claim brought by the Vilnius City Municipality and Vilnius Heating Networks against Veolia, seeking EUR560 million in compensation for managing the city’s heating system from 2002 to 2017, which was ultimately considered by the SCC. In this case, the parties arranged for the primary costs of the dispute to be financed by the Luxembourg- based private equity fund “Profile Investment”. Under the terms of the agreement, the fund was to receive a success-based fee contingent on the amount award- ed and recovered, potentially up to EUR20 million, while assuming the risk of receiving nothing if the
claim was unsuccessful. The fund financed approxi- mately EUR5 million of the litigation costs, with the Vilnius City Municipality covering EUR1.4 million. 6.2 Third-Party Funding Case Law There is currently no publicly available case law in Lithuania addressing third-party funding in the con- text of arbitration, including investor–state disputes. The concept is recognised in institutional arbitration rules, but it has not yet been tested or interpreted by national courts. 6.3 Disclosure and Security for Costs The VCCA Rules establish a disclosure framework for funded cases. Under Article 51, a party must disclose the existence of a third-party funding arrangement and the identity of the funder within seven days of signing the agreement. This disclosure must be made to the Secretariat, the arbitral tribunal and the oppos- ing party. If the disclosure occurs before the tribunal is consti- tuted, the Secretariat informs the arbitrators and may request additional details. If the tribunal is already formed, each arbitrator must assess and declare any potential conflicts of interest within 15 days. Both the tribunal and the Secretariat may seek further informa- tion to evaluate impartiality concerns. As third-party funding remains uncommon in Lithua- nia, there is no relevant case law addressing its impact on applications for security for costs. 7. Other Procedural and Evidentiary Issues 7.1 Notice of Dispute and Consultation Period Lithuanian national law does not prescribe mandatory pre-arbitration procedural steps for arbitration pro- ceedings. However, such requirements may arise from BITs, multilateral treaties or conventions (eg, ICSID), contractual arrangements or institutional arbitration rules. Therefore, parties must assess the specific legal framework applicable to each dispute. For instance, the Lithuania–Moldova BIT requires that the investor notify the host state in writing and that
166 CHAMBERS.COM
Powered by FlippingBook