LITHUANIA Trends and Developments Contributed by: Kęstutis Švirinas, Ieva Rimavičienė, Domantė Lunytė and Luka Tamulionytė, Sorainen
the effectiveness of the mechanism and accelerates the transition to arbitration. If the dispute remains unresolved after six months, the investor may initiate arbitration. The BITs grant the investor discretion to choose among several forums: • a competent court or arbitral tribunal of the host state; • the Arbitration Institute of the Stockholm Chamber of Commerce (SCC); • the International Chamber of Commerce (ICC); or • an ad hoc tribunal under the UNCITRAL Arbitration Rules. This flexibility allows investors to select a forum that best suits the nature of the dispute, the legal envi- ronment and strategic considerations. Once initiated, arbitration proceeds in accordance with the proce- dural rules of the chosen forum. Dispute settlement under the Energy Charter Treaty The Energy Charter Treaty (ECT) has long served as a cornerstone of international legal protection for energy investments. However, recent geopolitical shifts and evolving EU policy have significantly altered its rel- evance and application in the region. Russia signed the ECT in 1991 but withdrew in 2009. Belarus signed the ECT in 1991 but has never ratified it, and in June 2022 suspended its provisional appli- cation. Lithuania ratified the Treaty but has decided to withdraw with effect from 7 August 2026. Under Article 47 (3) of the ECT, however, obligations continue to apply for 20 years post-withdrawal. Accordingly, ECT provisions remain applicable to Russia until 2029. The ECT affords Lithuanian investors protection in Russia exclusively in the energy sector (trade and transit of energy resources). Investors are safeguarded against risks including discrimination, expropriation, nationalisation, breaches of contractual undertakings, war-related damages and arbitrary transfer restric- tions.
These protections are enforceable through interna- tional arbitration, at forums including ICSID, UNCI- TRAL and other designated forums under the Treaty. Despite the ECT’s broad protections, recent EU-level decisions have significantly curtailed its applicability to Russian and Belarusian entities. In particular, Coun- cil Decision (EU) 2024/1852 invoked Article 17 (2)(b) of the ECT, which permits denial of benefits to investors controlled by nationals of states subject to sanctions or prohibitions. This decision effectively excludes Russian and Bela- rusian investors from invoking ECT protections within the EU, including Lithuania. The rationale is to prevent entities from these states from exploiting treaty pro- tections while their governments engage in conduct contrary to international law and EU values. Dispute settlement under the ICSID Convention Russia signed the ICSID Convention but never rati- fied it. As a result, the Convention does not apply to Russia, and Lithuanian investors cannot initiate ICSID arbitration against Russia under this framework. This limits the available legal avenues for dispute resolution with Russia to other mechanisms, such as UNCITRAL or institutional arbitration under BITs or the ECT, where applicable. Belarus, by contrast, is a full party to the ICSID Con- vention. It signed the Convention on 10 July 1992, and it entered into force for Belarus on 9 August 1992. Accordingly, Lithuanian investors may invoke ICSID arbitration against Belarus, provided that the underly- ing investment treaty or agreement includes an ICSID arbitration clause or consent to ICSID jurisdiction. The strategic importance of dispute settlement with Russia and Belarus Although Lithuania is not frequently involved in invest- ment arbitration, disputes with Russia and Belarus have played a disproportionately significant role in its investment arbitration landscape. This reflects both historical economic ties and geographic proximity, which have fostered substantial cross-border invest- ment activity over the past three decades.
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