LITHUANIA Trends and Developments Contributed by: Kęstutis Švirinas, Ieva Rimavičienė, Domantė Lunytė and Luka Tamulionytė, Sorainen
Most investment arbitration claims filed against Lithu- ania have originated from Russian or Belarusian inves- tors, while most claims initiated by Lithuanian inves- tors have targeted these same countries. This bilateral concentration underscores the strategic importance of maintaining robust and enforceable dispute settle- ment mechanisms in relations with Russia and Bela- rus. Notable cases under the Lithuania–Russia BIT include: • Kaliningrad v Lithuania (ICC Arbitration, 2007– 2009); • Gazprom v Lithuania (PCA Case No. 2011-16, 2012); • Gazprom v Lithuania (2015); and • Russian Fund v Lithuania (PCA Case No. 2019-48, 2019–2022). Notable cases under the Lithuania–Belarus BIT include: • Belaruskali v Republic of Lithuania (PCA Case No. 2024-03, 2023–ongoing); and • UAB Pavilnių saulės slėnis 14 and UAB Modus grupė v Republic of Belarus (ICSID Case No. ARB/21/2, 2021–2023). In this case, Lithuanian investors sought USD9 million in compensation for losses to a hotel construction project near Minsk National Airport. Despite the availability of arbitration, enforcement remains a critical obstacle. Lithuanian investors are often reluctant to initiate disputes against Russia and Belarus due to the low likelihood of actual enforce- ment, even when arbitral awards are likely to be favourable. Both Russia and Belarus have consistently failed to comply with investment arbitration awards, under- mining the effectiveness of treaty-based protections. Although such awards are final and binding, and their recognition and enforcement are governed by the New York Convention, both states have demonstrated a pattern of non-compliance with numerous awards, particularly in the field of investment disputes, not- withstanding their treaty commitments to do so.
In practice, investors who prevail against Russia or Belarus often attempt to enforce against state assets located abroad, typically in politically Western juris- dictions. However, enforcement is constrained by the principle of sovereign immunity, which protects assets used for public functions – such as embassies, con- sulates and central bank reserves – from execution. Enforcement is, therefore, typically limited to com- mercial assets held by these states in their capacity as a participant in civil transactions, such as shares in companies, bank accounts, or real estate not used for diplomatic purposes. In light of Russia’s and Belarus’s aggression against Ukraine, Western countries have frozen substantial state assets belonging to both regimes. This has sparked an international debate on whether such assets could be used to satisfy arbitral awards and other legal claims, including those brought by foreign investors. While legal and political hurdles remain, the potential to repurpose frozen assets for enforcement purposes could significantly alter the risk assessment for investors considering arbitration against Russia or Belarus. If realised, such measures could provide a new enforcement pathway for claims that would oth- erwise remain symbolic. With the termination of the Lithuania–Russia and Lith- uania–Belarus BITs taking effect on 15 October 2025, the presence of sunset clauses means that treaty pro- tections – and the possibility of arbitration – will con- tinue for ten years thereafter, until 15 October 2035. This transitional period is likely to see a rise in invest- ment disputes, as investors seek to preserve their rights before protections expire. Given the geopoliti- cal volatility and the increasing assertiveness of both Russia and Belarus in restricting foreign investment, the strategic importance of dispute settlement mecha- nisms will only intensify.
Sanctions, the Belaruskali case and the politicisation of investment disputes
One of the cases mentioned above requires special attention, namely, Belaruskali v Republic of Lithuania .
175 CHAMBERS.COM
Powered by FlippingBook