Month: October 2024

Car depreciation after an accident - a claim against the insurer that few people know about 

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Having your car damaged in a traffic accident is not a pleasant experience. Fortunately, if the damage is limited to property, compulsory motor third party liability insurance usually saves you from financial loss. However, according to lawyers, not everyone is aware that not only the cost of repairing the car, but also the loss of its market value, can be claimed from the insurance company.

According to Eimantas Čepas, an attorney at AVOCAD, the amount of damage to a car in a traffic accident is usually understood as the cost of repairs. "However, when buying or selling a car, a lot of attention is paid to whether or not the car has been involved in an accident in the past and whether or not it has been cleaned up, and if the accident is confirmed, the aim is to negotiate the price of the car," the lawyer points out.

Therefore, according to Eimantas Čeps, it should not be forgotten that there is another form of damage - the loss of the car's market value due to the damage sustained in the accident. "And this is not just the negotiating position of the seller or buyer of the car, but the amount clearly determined in accordance with the criteria laid down by law," the lawyer stresses.

According to the legislation in force in Lithuania, loss in marketable value is defined as the irreversible reduction in the value of a vehicle due to repairs, painting or unrepaired damage (when parts of the vehicle are technologically repaired to restore their functional characteristics, where the technological process of repair may affect the physical, chemical, aesthetic condition or service life of the item), including the change in the vehicle's history as a result of an event, compared to the vehicle's value before the damage.

As with ordinary damages, the loss of resale value must be covered by the perpetrator's liability insurance. "Unfortunately, there is no clear indication in the existing legal framework that the victim of a traffic accident has the right to claim from the insurer also for the loss of market value", notes AVOCAD's lawyer.

He says that, taking advantage of the lack of information, not all insurance companies offer to compensate the victim for the loss of the car's trade value due to the repair work, in addition to the usual compensation. "If they do offer compensation for loss of value, the amount offered is not always calculated objectively. Therefore, even if the insurer's offer is accepted, it would be worthwhile to have an independent appraiser's report, as the amount of compensation for the loss of marketable value can be quite significant and can be calculated in thousands of euros," notes Čepas.

However, according to the lawyer, it should be noted that loss of marketable value is calculated for vehicles up to 5 years after the first registration. "As this compensation is calculated for relatively new cars, which means that the value of the cars is correspondingly higher, the amount of compensation can often be quite significant", the lawyer notes.

According to the current legal framework, the amount of damage caused to property in a traffic accident is determined by the responsible insurer on the basis of reports by authorised persons and property valuation reports, documents proving the circumstances, the fact and the amount of the damage, photographs and video recordings.

The Supreme Court of Lithuania emphasises the insurer's duty to assess all documents submitted to it and to evaluate all circumstances, including the documents submitted by the injured third party to prove the amount of the damage, in order to determine the amount of the damage in such a way that the injured party is fully compensated for the damage, to the extent permitted by the rules governing compulsory civil liability insurance.

The principle of full compensation requires that, as far as is objectively possible, the damage caused to a person should be determined on an individual rather than standardised basis.In the event of a dispute as to the amount of the insurance benefit between the person claiming the insurance benefit and the insurer who has insured the civil liability of the driver of the vehicle by compulsory insurance, the amount of the insurance benefit must be proved in each individual case.

To sum up, in order to ensure fair compensation after an accident, it is important not only to rely on the insurance company's offer, but also to be vigilant and proactive in defending your rights - not forgetting the possibility of claiming compensation for the loss of the car's marketable value, and, if necessary, to seek the advice of independent experts who can help you to assess the damage in an objective way and make sure that you receive the full amount of compensation you are entitled to.

Important reminder from the Supreme Court of Lithuania to natural persons in bankruptcy

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Bankruptcy of natural persons has existed in Lithuania for more than a decade. It gives people in financial difficulties the chance to start their lives afresh. A lot of practice has been accumulated over this time, but according to lawyers, bankrupts often forget the basics, with very painful consequences.

Commenting on the recent case law of the Supreme Court of Lithuania, Egidijaus Langys, Managing Partner of AVOCAD, reminds that one of the essential duties of a natural person who intends to initiate bankruptcy proceedings is to inform creditors about the intention to initiate a bankruptcy proceeding of a natural person.

According to the lawyer, the fulfilment of this obligation is important in several respects:

Firstly, it should be in the natural person's own interest to inform creditors about his/her bankruptcy proceedings, as only the outstanding claims of creditors as set out in the natural person's solvency plan will be written off when the natural person's bankruptcy proceedings are closed.

Second, creditors have the right to submit to the insolvency administrator, within the time limit set by the court, their claims arising before the date of the opening of the natural person's insolvency proceedings. Creditors may exercise this right only if they have been informed of the natural person's bankruptcy proceedings.

"Therefore, a person seeking to restore his or her solvency has a duty to be proactive and to keep all creditors properly informed and to indicate the pending proceedings in respect of the claims brought by creditors," points out Egidijus Langys.

According to the lawyer, the write-off of creditors' claims upon the termination of the insolvency proceedings of a natural person is a specific statutory ground for the termination of an obligation. The obligation is extinguished when the insolvency proceedings of the natural person are closed.

"It is very important to understand that when a natural person's insolvency proceedings are closed, only the outstanding claims of creditors listed in the natural person's solvency plan are written off. In other words, only the claims of those creditors who have been informed of the bankruptcy proceedings are written off," notes Langys.

Consequently, other creditors' claims which arose before the opening of the insolvency proceedings against the natural person but were not included in the insolvency plan, or which arose after the opening of the insolvency proceedings against the natural person, do not automatically expire. It is therefore in the debtor's own interest to name all potential creditors. This is because, at a later stage, after the natural person's insolvency proceedings have been closed, creditors will be able to make claims in accordance with the law and can be enforced against the natural person after the natural person's insolvency has been closed.

The Supreme Court of Lithuania has clearly and unequivocally absolutized the debtor's duty in the context of the protection of the creditors' interests and has stated that the relevant circumstance is not whether the creditor knew or should have known of the debtor's bankruptcy proceedings, but whether the natural person seeking bankruptcy was active in such proceedings and duly fulfilled the statutory obligation of the bankruptcy court to inform the debtor of his/her property claims brought in other proceedings.

It is therefore very important to remind both natural persons themselves and their advisors that all possible creditors must be informed of the intention to initiate insolvency proceedings. If bankruptcy proceedings have already been opened, to the court, and to the court of the proceedings in other cases.

"Otherwise, the only person left to blame is himself, because not all debts that could have been written off were written off at the end of the insolvency process," stresses Egidijus Langys.

(Civil case No 3K-3-191-381/2024 of 24 October 2024)

 

Is it possible to choose Lithuanian law for an employment contract with a foreign company?

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Thanks to the Covid-19 pandemic, society has discovered the benefits of teleworking. Many employers and employees still choose teleworking, or at least a hybrid model, today. Many people living in Lithuania, taking advantage of teleworking opportunities, also conclude employment contracts with employers based and operating in foreign countries, but actually working remotely from Lithuania.

It is usual for an employer to draw up an employment contract in accordance with its national law. Usually, the employment contract is drafted in the national language of the employer, the employment contract refers to the labour law rules of the employer's country, and the working time, wages, holidays, termination and other conditions of employment are also set out in the contract in accordance with the national law of the country of the employer. However, since such employment contracts go beyond the borders of a single State, the question naturally arises: should the employment relationship arising from such contracts nevertheless be governed by the labour law of the Republic of Lithuania, from which the employee actually performs his/her work functions, since that is where the employee works and lives?

Sandra Mickienė, a lawyer at AVOCAD, comments on the cases in which the law of the Republic of Lithuania may apply and what it depends on.

To discuss the situation, let's take the United Kingdom as an example, i.e. let's imagine that an employment contract is concluded between an employee (a permanent resident of the Republic of Lithuania) who performs his/her work functions remotely from Lithuania and a company established in the United Kingdom and operating in the United Kingdom, which does not have a branch or any other structural unit in Lithuania, and which carries out its activities in the country of its own (the United Kingdom). This could be administrative work, which employees can do by accessing the employer's internal systems and communicating with management and employees by electronic means.

According to the lawyer, when concluding an employment contract, the parties have the option of specifying in the contract which country's law will apply to the employment relationship between them. However, in many cases the employment contract does not specify the applicable law (even the model form of employment contract approved by the Minister of Social Security and Labour does not contain such a provision). Although a contract with an employer established and operating in the United Kingdom is likely to be drafted in English and to refer to the national law of the United Kingdom, this does not mean that any employment relationship between the employee and the employer would automatically be governed by the law of the United Kingdom, as the employment relationship is a bi-national one.

The Labour Code provides that if the parties to an employment contract have not chosen the law applicable to the employment relationship, it is governed by the law of the country in which the employment contract is regularly performed. According to the commentary to the Labour Code, the key criterion here is the permanent place of work, which means the place where (from which) the employee actually performs his/her duties.

AVOCAD's lawyer points out that despite the fact that the employer is established and operates in the United Kingdom, Lithuanian law should apply to the relations between the parties in accordance with this provision of the Labour Code. However, the Labour Code also provides for exceptions to this rule: if the employee is not permanently employed in one State, the law of the State in which the employer or the employer's place of work is situated applies. Both the first and the second rules also do not apply if, by reason of the substance of the contract of employment and the circumstances in which it was concluded and performed, the employment relationship is more closely connected with another State.

The Labour Code does not clarify when an employment relationship is deemed to be more closely connected to one or another country, but, in the light of case law, the following may be considered as circumstances that may indicate a connection to one particular jurisdiction: nationality of the parties to the contract or their belonging to a particular jurisdiction, the language of the contract, the place of conclusion and performance of the contract, the currency of the contract, the place of settlement of the disputes, the terminology used, the reference to the applicable collective agreements, etc. In addition, the country in which the worker is taxed on his income, where he is covered by social security and the relevant pension, sickness and disability insurance schemes are also relevant considerations.

"Thus, if the parties have not defined the applicable law in the employment contract, the totality of the circumstances would lead to a decision as to which country the employment relationship is more closely connected with and the national law of that country should prevail," says S. Mickienė.

If the parties choose the law applicable to the employment relationship, the law chosen would prevail. However, even if the choice of applicable law is made (if the employer is based in the UK, UK law would most likely be chosen), such an employment contract could still be subject to the mandatory provisions of the LR's employment law.

According to Ms Mickienė, the Labour Code itself does not specify which mandatory provisions should be applied when the choice of applicable law is made in a contract. However, according to the general provisions of the Labour Code, mandatory provisions are considered to be laws, regulations or collective agreements and arbitration awards which have been declared generally applicable and which cannot be derogated from by agreement of the parties under the law of the applicable State.

"Such provisions would cover all the provisions of the legislation governing employment relations that govern the conclusion, performance and termination of the employment contract and cannot be derogated from by agreement between the parties, i.e. the legislation does not provide for the possibility of an agreement to the contrary," she says.

These include: maximum working hours and minimum rest periods; the duration of minimum paid annual leave; pay, including increased pay for overtime, night work, rest and public holidays; working conditions for temporary workers; occupational safety and health; safety at work for persons under 18, pregnant workers, workers who have recently given birth or are breastfeeding; prohibition of discrimination at work; conclusion and termination of employment contracts, etc.

It should be noted that the mandatory provisions of Lithuanian labour law would only apply if the provisions of the United Kingdom's labour law in the same areas (e.g. termination of employment rules, etc.) would give the employee less protection than the provisions of Lithuanian labour law.

Advice for employees and employers

"When concluding employment contracts that cross national borders, we would recommend making sure they specify which country's law will apply to the employment relationship between the parties. This reduces the likelihood of potential disputes and also provides a clear agreement that the law chosen by the parties will apply to at least the majority of situations," emphasises an AVOCAD lawyer.

If, at the time of conclusion of the employment contract, the totality of the circumstances and facts shows that the employment contract is more likely to be related to Lithuania, i.e. to the country from which the employee will actually perform his/her work functions (e.g., taxes on the employee's salary will be paid in Lithuania, the employee will be covered by a social security scheme in Lithuania, the employee's work functions will be related to Lithuania, etc. If the employee's functions are related to Lithuania, i.e. the employee will provide services to Lithuanian residents, or the employee will perform physical work in Lithuania and not just connect to the employer's internal systems, etc.), it is advisable to conduct an analysis of the mandatory provisions of the labour law of both countries and to ensure that the employee is subject to the mandatory provisions of the labour law of the country that provides for a greater protection of the employee's rights and interests.

"Although we have discussed the case of an employment contract with an employer in a non-EU country, very similar rules would apply in the case of an employment contract with an employer established and operating in an EU country," she points out.

How do I move a road easement on your land?

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A road easement has been established on your land to give your neighbour, who lives on the adjacent land, access to his land. What if you think that you would like to build a pantry, for example, on the site where the road easement is located, and you want to relocate the road easement, but your neighbour has already made improvements and invested a considerable amount of money to create them.

Viktorija Dubovskienė, a lawyer at AVOCAD, explains what your obligations are and what legal regulations apply to such a situation.

First of all, she said, it is important to know that the Constitution enshrines an important principle of the inviolability of property. "In interpreting this principle, the Constitutional Court has stated that the inviolability and protection of property means that the owner has the right to own, use and dispose of property belonging to him or her, as well as the right to demand that other persons do not violate these rights, and the state has the duty to defend and protect property against unlawful encroachment," Dubovsienė points out.

To address the situation described above, the remedies for the owner of the land on whose land the road easement is established are set out in the Civil Code. According to the legal framework laid down therein, the method to be applied in order to protect the rights of the owner depends on how the infringement of the rights of the owner of the object is manifested. "If the violation of the owner's rights does not involve loss of possession, which is what we have in the situation described here, and if it is not possible to reach an agreement with the neighbour, an action for the elimination of the violation of the right of ownership that does not involve loss of possession - a non-generative action - should be brought," she stresses.

The owner's right to bring a non-statutory action is also enshrined in the Civil Code. Under it, the owner can demand the removal of any violation of his or her right, even if it does not entail loss of possession.

The Supreme Court of Lithuania has stated that when bringing a non-statutory action, the claimant must prove two things:

  • that he is the owner of the property;
  • that his rights have been violated.

According to AVOCAD's lawyer, it will not be difficult to prove that the plaintiff is the owner of the property in the above situation. However, the burden of proof will shift to the second point - that the rights of the owner are violated by the established road easement. Let us assume that, in these factual circumstances, the landowner considers that the neighbour's landscaping, including but not limited to the neighbour's gates, fence, trees, tuyas, etc., are a nuisance and that the owner is prevented from using the part of the land occupied by these objects in the part of the road easement.

In such a case, the non-statutory action is brought to protect a subjective property right of a specific person. In the case of a non-statutory action, the subject-matter of the action (the claims asserted) may be:

  • put an end to the infringement of the applicant's subjective property rights;
  • to restore the situation prior to the infringement of the applicant's subjective property right;
  • prohibit any future infringement of the applicant's subjective property rights.

However, in this situation, the Supreme Court of Lithuania pointed out and clarified that the legislator does not directly link the violation of the rights of the owner of the land plot related to the infringement of the rights of the owner of the land plot related to the infringement of the requirements of the legislation by the violation of the rights of the owner of the land plot in relation to the infringement of the rights of the owner of the land plot by the infringement of the rights of the owner of the land plot by the infringement of the rights of the owner of the land plot by the infringement of the rights of the owner of the land plot by the infringement of the rights of the owner of the land plot by the infringement of the rights of the owner of the land plot by the infringement of the requirements of the legislation. Therefore, in order to be able to succeed in a non-compulsory action for the protection of a subjective property right, the infringement of which is attributable to trees, shrubs or other plants growing on the adjacent land close to the boundary of the parcel or on the boundary of the parcels of land, the claimant must, inter alia, prove that his subjective property right has been violated. The fact that it is established in a case that trees, shrubs or other plants are growing on the boundary of the parcels or on adjacent land at distances from the boundary of the parcel which do not comply with the legal provisions does not constitute a ground for declaring that the applicant's subjective right of ownership has been infringed.

Thus, according to the lawyer, it is not enough, when bringing a claim in a non-statutory action, to specify only the objects which, according to the claimant, prevent him from using the object for its intended purpose. It is then necessary to show how those objects infringe his rights.

Driving licences for 15-year-olds without practical driving lessons. A crack-up or blind trust?

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In autumn, the roads fill up quite quickly with citizens, students and schoolchildren returning from holidays. Fifteen-year-olds who have just obtained their driving licences are also in the busy urban traffic.

Young people entering adulthood can already drive vehicles of certain specifications (AM category). There is also a legal provision that allows them to drive without practical driving lessons or a practical driving test.

According to Karolína Laura Briliūtė, a lawyer at AVOCAD, this unique regulation, designed to give young people the opportunity to start driving at an early age, has recently raised a number of road safety concerns.

"We have a situation where we have a unique regulation among European countries, which emphasises the need to maintain a sensible balance between increasing mobility and ensuring sufficient driving skills. To better understand the Lithuanian legal framework, let's look at similar frameworks in other countries", says the lawyer.

In Lithuania, driving for persons aged 15 years to obtain an AM driving licence is regulated by a number of key pieces of legislation. The Law on Road Traffic Safety stipulates that the right to drive AM category vehicles (mopeds and light quadricycles) can be acquired by persons aged 15 or over. Basically, a light quadricycle is understood as a car with certain specifications - maximum weight 350 kg, maximum speed 45 km/h, maximum engine displacement 50 cc.

Under Lithuanian law, only a theory test is required to obtain the right to drive an AM category vehicle, and no practical driving lessons or test are required. This liberal approach, according to the lawyer, is very different from the stricter requirements in many other countries, where practical training and a driving test are required even for low-speed vehicles.

While the aim is to give young drivers more autonomy, allowing driving without practical training increases the risk of accidents, even in low-speed vehicles. Statistics show that young and inexperienced drivers are more likely to be involved in accidents. Practical training and supervised driving are considered to be key factors in reducing this risk in many countries.

"Although the Lithuanian legislative framework is focused on increasing mobility, some suggestions to improve road safety could be considered, such as introducing compulsory practical lessons, introducing a practical driving test, or creating a probation period for young drivers. These reforms would bring Lithuanian regulation more in line with international standards, where many countries require both theoretical and practical training for young drivers," said Briliūtė.

However, amendments to the draft law on road safety are currently being initiated, which would allow people aged 16 and over to acquire the right to drive these vehicles, and would require completion of not only theoretical but also practical driving courses and a practical driving test.

"But if we look at other countries, they have developed more comprehensive systems for young drivers, requiring theoretical tests, practical lessons and supervised driving to ensure road safety," she notes.

In Germany, drivers from the age of 15 must pass a theory test, attend compulsory practical driving lessons with a certified driving instructor, and pass a practical driving test, which tests driving skills in real traffic.

In France, the right to drive an AM category includes compulsory practical training. An 8-hour practical training course with a licensed instructor is mandatory. France does not require a practical test, but, unlike Lithuanian law, compulsory practical training provides such skills.

The UK has a Graduated Driver Licensing (GDL) system. This involves a provisional licence that allows you to drive only with supervision (usually for one year). You are also required to pass both a theory test and a practical driving test. The system includes restrictions on driving at night or with passengers to reduce the risk of accidents in the most dangerous driving conditions. "The GDL system could become a model for probation in Lithuania, allowing young drivers to gain experience under controlled conditions, for example by supervised driving or by limiting driving zones and times, until full driving licences are obtained," says an AVOCAD lawyer.

Finland has established requirements to pass a theory test and complete practical lessons before obtaining any category of driving licence. In addition, there is a strong focus on road safety throughout the education system to ensure that young drivers understand the risks and responsibilities involved in driving.

According to Karolina Briliūtė, if we analyse the regulations in countries such as Germany, France, the United Kingdom and Finland, we can certainly find ways to improve the Lithuanian system: Introduce a requirement for compulsory practical driving lessons, introduce a practical driving test tailored to AM vehicles, introduce a graduated licensing system where young drivers start with a probationary licence allowing them to drive with supervision or restrictions before being granted a full driving licence, improve road safety education programmes to teach young drivers about the risks and responsibilities associated with driving, especially in low-speed vehicles, limit driving zones and times for 15-year-olds to ensure that they do not drive in high-risk areas such as motorways or drive at night.

"These proposed reforms, adapted from international best practice, would improve road safety in Lithuania, while maintaining the law's original aim of giving young people more mobility," she notes.