LITHUANIA Trends and Developments Contributed by: Kęstutis Švirinas, Ieva Rimavičienė, Domantė Lunytė and Luka Tamulionytė, Sorainen
Sorainen 44A Gedimino Ave, LT-01110 Vilnius Lithuania Tel: +370 52 685 040 Email: lithuania@sorainen.com Web: www.sorainen.com
The Future of Investment Disputes for Lithuania: How EU Policy and Geopolitical Dynamics Shape the Settlement of Investment Disputes In recent decades, Lithuania has undergone a pro- found transformation in its approach to foreign invest- ment and dispute resolution. From its early post- independence efforts to attract international capital through bilateral investment treaties (BITs) to its inte- gration into the EU’s legal and political framework, its investment protection regime has evolved in response to both domestic priorities and external pressures. Today, that landscape is shifting once again – driven by geopolitical tensions and the termination of key treaties with Russia and Belarus. These developments raise pressing questions about the future of invest- ment disputes: How will Lithuanian investors protect their interests in hostile jurisdictions? What dispute resolution mechanisms will remain viable? And how will Lithuania reconcile its international legal obliga- tions with the imperatives of national and EU-level security? This article provides an overview of existing dis- pute resolution mechanisms and past practice, and insights into pending cases and emerging challenges. It offers a forward-looking analysis of of how legal, political and economic forces are reshaping the future of investment arbitration in Lithuania and beyond. The genesis of investment protection: conventions and the rise of BITs Following the restoration of independence in 1990, Lithuania’s integration into the international invest- ment protection framework became a matter of strate- gic importance. For a newly sovereign state, attracting
foreign investment was indispensable to accelerate economic growth and modernisation, and integrate into the global economy. Lithuania’s ratification of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) in 1992 and its accession to the Energy Charter Treaty (ECT) in 1998 marked foundational steps in this journey. In parallel, Lithuania actively pursued BITs to attract foreign capital and build investor confidence. These treaties provide legal guarantees to foreign inves- tors, including protection against expropriation, fair and equitable treatment, and access to international dispute resolution. Lithuania signed BITs with a wide range of countries, including Western European states (Germany, Sweden, France, etc), regional neighbours (Poland, Latvia) and post-Soviet republics (Ukraine, Kazakhstan, Russia, Belarus), reflecting both its geo- political position and economic priorities. In total, Lithuania has concluded 56 BITs, of which some have since been terminated or amended, leaving 30 currently in force. These treaties continue to serve as a key legal foundation for investment protection, especially in cases where EU-level agreements do not apply. EU membership: a new legal and political paradigm Lithuania’s accession to the EU in 2004 fundamen- tally reshaped its investment protection landscape. EU law now governs key aspects of Lithuania’s invest- ment regime, with implications in three main areas. First, Lithuania is bound by EU trade and investment agreements with third states, many of which contain provisions on investment protection and dispute set-
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