Clarification of the Supreme Court of Lithuania on parking in courtyards of apartment buildings: residents can determine the procedure for using a parking lot that does not belong to them 

 

Owners of multi-apartment buildings exercising their right of shared ownership and having a legitimate need to use a parking space in the yard, even if it belongs to another owner, can claim the use of the parking space and the compensation to be paid. This was stated by the Supreme Court of Lithuania in a ruling issued on 6 May 2025.

Often, when developers are developing apartment or townhouse projects on their own land, there are cases where the spaces used to serve the main facilities, such as parking lots or access roads, are not allocated proportionally to the residents when the apartments or houses are sold. According to Eimantas Čepas, an attorney at law at AVOCAD, this decision of the Court of Cassation is an important signal for both residents and property developers. "This case becomes a precedent for a clearer definition of the legitimate grounds for the use of infrastructure belonging to another entity, especially when it comes to long-term use and public interest," the lawyer notes.

Who has the right to use the yard?

The circumstances of the case before the Supreme Court revealed that the parking lot adjacent to the apartment building is owned by a private legal entity, UAB, but has been used for many years by the residents of the apartment building, as the detailed planning documents, in implementing the requirement to provide a certain number of parking spaces, envisaged that it would serve the main building, an apartment building. The UAB claimed that the residents had illegally occupied their territory and demanded that they stop using it.

However, the Supreme Court noted that in such situations it is important to assess the reasons for the residents' use of the parking lot, whether it is necessary for the proper operation of the apartment building, and whether there is a legal basis for declaring the parking lot to be an appurtenance of the apartment building.

Proportionality and fairness are key

The Court clarified that the mere fact that a parking lot is not a common facility does not automatically mean that the residents are not entitled to its use.

"The use by residents of a parking lot belonging to another legal person may be justified on the basis of the principles of justice, reasonableness and fairness, where such use is necessary for the functioning of the apartment building and the owner is compensated for the damage," the ruling states on .

The Court stressed that it is necessary to assess all the circumstances - whether the site is actually needed for the residents' needs, whether the residents were willing to agree on the compensation, and whether the compensation is reasonable.

According to lawyer Eimantas Čeps, in situations where the owner of the land or building agrees to the use and the parties agree on reasonable compensation, the use arrangement is considered legal and reasonable.

In his view, this ruling of the Supreme Court of Lithuania may have significant consequences for the residents of cities throughout Lithuania, especially in densely urbanised areas where infrastructure development, ownership and actual use of land or buildings often intersect. Despite the fact that the land or structures serving the main buildings sometimes remain outside the common ownership of the residents after the real estate projects are realised, the actual use or purpose of such land or structures may provide a legal basis for declaring them to be subordinate and for deciding their legal status and fate accordingly.

"The Supreme Court of Lithuania recognises in this decision the legal significance of such a factual practice if it complies with the principles of reasonableness, fairness and proportionality, and promotes constructive solutions between communities and owners of private land or buildings," says the lawyer.

This decision sends a clear message: urban infrastructure and land use must be addressed through dialogue, consensus and fair compensation. Residents, developers and municipalities alike are encouraged to strike a balance between property rights and the public interest, and the Supreme Court's jurisprudence provides a valuable basis for finding lasting solutions in an urbanised environment.

"The principle of justice should not be limited to cadastral maps, but should also reflect the reality of people's lives," notes AVOCAD's lawyer.

Lawyers and algorithms: the Court of Cassation introduces a disclosure obligation for artificial intelligence 

Artificial Intelligence (AI) is one of the hottest topics in the world today when it comes to tools that help people perform a wide range of tasks in a variety of careers - including law, where AI is already being used to analyse documents or generate text, but is still buggy and inaccurate enough to work without human supervision.

The Supreme Court of Lithuania (SCL) has recently announced an important innovation: in cassation appeals in criminal cases, it is mandatory to disclose if generative artificial intelligence was used to prepare the document.

The Court's guidelines state that where a cassation appeal or a part of a cassation appeal submitted to the Court of Cassation has been prepared by means of generative artificial intelligence tools, such fact should be disclosed at the beginning or at the end of the document by stating that the cassation appeal or part of a cassation appeal submitted to the Court of Cassation has been prepared by means of generative artificial intelligence and that its content has been carefully checked by the person who prepared or submitted the cassation appeal.

This suggests that lawyers are striving to keep pace with technological progress by recognising the value of IoT for drafting documents, but that the tool has not yet lived up to expectations due to the errors it makes. Lawyers will therefore have to wait for the flawless assistance of the IoT in their work, especially as mistakes in law can be very costly.

Will legal professionals even be needed once the 'infallible' DI is in place?

Here I would like to mention one idea from case law: the modern concept of law is based on a clear distinction between law and a statute or other legal act, recognising law as more fundamental than a statute or other legal act. The mere formal application of the provisions of laws and regulations can lead to a legal decision, which may not always be correct, and therefore it is not just any legality that must be recognised, but only the legality of justice. In a case where it is clear from the facts of the case and from generally accepted principles of law that the solution to a particular social conflict will be formal but unjust, it is necessary to give priority to the general concept of law.

Law and justice is therefore not just a formal process of applying the law, but a pursuit of justice, for which formal and dry legal arguments are not enough if they conflict with a sense of justice.

Dainius Antanaitis, Attorney at Law of the Law Firm AVOCAD

Future costs due to construction defects: how to justify and recover?

Imagine hiring a contractor with the expectation of a quality result, but ending up with defective work, extra costs and an unresolved problem. The contractor does not remove the defects and you have no choice but to save yourself. Is it possible to get your money back in such a situation - even if the extra costs are yet to come?

Viktorija Dubovskienė, an attorney at AVOCAD, explains when a court can award future damages and what is the most important thing you need to prove in order to ensure that your interests are not unprotected.

In such a situation, the Court of Cassation has pointed out that civil liability usually applies when the injured party has already suffered actual damage, for example, when it has already incurred relevant costs.

However, there may be cases where the fact of damage is obvious or easy to prove, and it may take a long time to calculate the exact amount of damage. In such cases, your interests may be affected if your financial situation is not good and you need the money immediately.

Lawyer Viktorija Dubovskienė explains that in such cases, the court can assess not only the damage already suffered, but also the future damage. If there is a reasonable likelihood that the damage will occur, the court may award a specific amount of money, periodic payments or oblige the debtor to otherwise provide compensation for the damage. Both the Civil Code and the case law apply the realistic probability test to future damages, which means that the occurrence of the damage must be highly probable.

"The most important thing is that the future costs are necessary to repair the damage (e.g. defects in the work)," she stresses. Estimating future damages is used when the loss has not yet occurred but can be expected, or when estimating the amount of damage may take time. In such cases, it is important to prove that the damage will actually occur. This is often done on the basis of specialist calculations or models that allow the potential size of the loss to be predicted.

In contrast, where compensation is claimed for damage that has already been suffered, it must be clearly demonstrated that the damage has already occurred and can be accurately calculated. However, this is not enough: both for future and for existing damages, the amount of the damages must also be substantiated: it must be shown that all the costs claimed were (or will be) necessary and reasonable.

"This interpretation is based on the fact that civil liability is not meant to punish - it is meant to compensate. Therefore, damages are awarded to the extent necessary to restore the person to the position he or she would have been in if the damage had not been caused," explains Ms Dubovskienė, referring to case law. The case law of the Supreme Court of Lithuania stresses that the most important thing is fair compensation for damages. This means that the actual amount of the damage must be established when settling disputes. If less than the actual damage is awarded, the victim's rights remain partially unprotected. If the award is higher, the injured party is unjustly enriched at the expense of the debtor. In both cases, the principle of justice is violated.

If you haven't yet actually incurred all the costs needed to remedy the defects in the contractor's work, it doesn't mean you have no right to claim for these future costs. It is important that these costs are necessary, unavoidable, realistically foreseeable and easily justified, for example on the basis of professional valuations or market prices.

However, as lawyer V. Dubovskienė points out, it's not enough to have signed a contract or to have made certain payments. In order for the court to award future damages, it is necessary to prove both the reality of the damage itself (that it is unavoidable) and the necessity and market value of the costs of repairing the defects.

For example, if the amount of future costs quoted is more than three times the value of the repairs estimated by the experts, the court may consider that the amount quoted is not in line with the true market situation. Similarly, if the projected costs relate to solutions or implementations that are completely different from the original ones, they may be disallowed as they do not relate to material defects in the works.

It is therefore important to assess whether the costs claimed are really necessary and reasonable, and whether they relate directly to defects in the work and not to additional or substantially new work, before going to court.

Golf season kicked off with a thrilling AVOCAD tournament and festive mood

The new golf season was officially opened at TheV Golf Clubin Vilnius on Saturday. On this occasion, the season opening tournament on behalf of AVOCAD Law Firm attracted golfers from all over Lithuania.

"Golf and law have a lot in common - both are about strategy, precision and patience. We are happy to be part of this community and to contribute to the creation of traditions of active, quality leisure in Lithuania," said Egidijus Langys, Managing Partner of AVOCAD, at the tournament opening.

"The season opener is always special for us as we celebrate the return of golf to the fields and courses together with the community. We are happy to see the growing culture of golf in Lithuania and the increasing activity of players," added Egidijus Baleišis, the CEO of The V Golf Club. According to him, this course is one of the largest and most challenging golf courses in Lithuania, appreciated by both beginners and professionals. "Golf is becoming more and more popular in our country every year, and players are looking forward to the start of the season with great anticipation," said the manager.

The tournament consisted of five categories:

Stableford" category (hcp 24.1-36.0): 3rd place - Antanas Šimelis; 2nd place - Aras Labeckas; 1st place - Nerijus Kanapka

Women's "Stroke net" category (hcp +8.0-24.0): 3rd place - Jurga Savikevičienė, 2nd place - Jūratė Želnienė, 1st place - Skaistė Vasiliauskienė

"Men's "Stroke net" category (hcp 15.1-24.0):3rd place - Mantas Aperavičius, 2nd place - Lukas Jeronimas Kuliešius,1st place - Laurynas Valančius

Men's "Stroke net" category (hcp +8.0-15.0): 3rd place - Darius Momkus, 2nd place - Edgaras Butrimas, 1st place - Valdas Želnys

Donatas Puodžiukynas won the main Gross category with 77 strokes.

Special additional nominations were also handed out. The winner of the Women's Longest Kick category was Skaistė Vasiliauskienė. The winner of the longest stroke in the men's category is Danielius Kojis. The winner of the closest to the pin on the 11th hole is Valdas Želnys.

The festive and sunny day was accompanied by a great atmosphere and sporting excitement, and the participants were awarded with valuable prizes and a delicious dessert, which was a sweet culmination of victories and good emotions.

Golf in Lithuania is a relatively recent development compared to other countries. Officially, the first steps of golf in Lithuania were recorded at the end of the 20th century, after the restoration of independence - around 1990-1991. The Lithuanian Golf Federation was founded in 1991. In 1992, the first 3-hole golf course was opened in Vilnius District.

Stop sign for gambling advertising: what will change and why does it matter?

At the end of last year, the Seimas took a decisive step by approving significant amendments to the Law on Gambling, which will fundamentally change the rules on gambling advertising in Lithuania as of 1 July 2025. A strict ban on advertising will be introduced. Why is this? Gambling has grown in popularity among young people in particular and has led to a number of extremely strong addictions and severe consequences. According to Karolína Briliūtė, a lawyer at AVOCAD, these changes are not only a legal innovation, but also an important signal to society as a whole.

According to statistics, the number of gambling participants in Lithuania is growing rapidly, especially among 18-24 year olds. Gambling addiction is often the result of constant exposure to advertising that creates a false impression of easy winnings and enrichment, or just a harmless pastime.

"The changes to the law not only prevent manipulative advertising, but also send a clear message to the public: gambling is a risky activity that must be strictly controlled. The stricter regulation in Lithuania is also in line with the trend in European Union countries: more and more countries are introducing restrictions or bans on gambling advertising, especially to protect minors and other vulnerable consumers," she stressed.

Current regulation

Currently, gambling advertising is regulated under the Gambling Law, which prohibits gambling advertising except for the names of companies organising gambling, trademarks and the types of gambling organised. Any additional written, visual or auditory information is prohibited. Advertising may not be directed at minors or vulnerable groups.

"In practice, however, gambling organisers find ways to circumvent these prohibitions by using other forms of advertising, such as opinion leaders, social networks, sponsorship agreements or promotional games where participation indirectly encouraged gambling," says Karolina Briliūtė.

New rules on 1 July 2025

AVOCAD's lawyer points out that new, much stricter rules on gambling advertising will come into force from 1 July 2025. Not only will the location of advertising be restricted, but also its content, duration and form. "This is just a first step: there is a transitional period to adapt, but from 1 January 2028 there will be even tighter restrictions. There are only a few exceptions - for example, advertising will only be allowed to appear on the websites of gambling operators or in gambling venues themselves, and only under strict conditions. There will also be a complete ban on any public events, activities or even sponsorship of legal or natural persons on behalf of gambling companies. The changes are significant - it is worth preparing in advance," warns K. Briliūtė.

How much will ignoring the rules cost?

Currently, illegal gambling advertising can result in a fine of between 0.1% and 1% of the company's previous year's revenue (calculated on the amount staked minus the winnings paid out). However, the amount may not be less than EUR 6 000 or more than EUR 25 000. If the infringement is repeated within a year, the fine doubles from €12,000 to €50,000.

From 1 July 2025, the penalties will be even stricter, with fines rising to 3-5% of annual income. This will make the risk of advertising gambling outside the rules even more costly.

Lithuania in the context of the European Union

There is no single piece of legislation governing gambling advertising in the EU, so each country imposes its own restrictions, based on EU rules on public health and consumer protection.

Here are some examples:

  • Italy has completely banned all gambling advertising since 2019 under the Dignity Decree;
  • In Spain, advertising is only allowed at night - between 1am and 5am;
  • Belgium will almost completely ban gambling advertising from 2023, and from 2025 it will also be banned in stadiums and sports events.

The new amendments to the Lithuanian law put the country among the EU countries with the strictest restrictions on gambling advertising. "This is not only an attempt to match the best practices, but also a strong step towards social responsibility. Lithuania stands out not only in terms of the scope of the restrictions, but also in terms of the strict liability measures provided for," says the lawyer.

How to prepare for business?

AVOCAD lawyer Karolina Briliūtė advises gambling organisers and related businesses to take proactive steps to adapt to the new legislation in time:

  • Review all contracts with advertising agencies, opinion leaders, sponsorship partners and other content creators. Make sure they don't contain terms that would be illegal after 1 July 2025.
  • Discontinue or modify campaigns that could be considered gambling advertising, even if they are presented as "informative".
  • Consult legal advice on risk assessment and compliance, especially if indirect advertising channels (brands, partnerships, etc.) are used.
  • Communicate clearly with staff and partners about the new legal framework and the possible consequences for non-compliance.
  • Invest in responsible gambling tools, which could be presented as educational content on addiction prevention rather than as advertising, provided this is in line with the new regulation.

According to Karolina Briliūtė, these actions will not only help avoid legal consequences, but will also strengthen the company's reputation as a socially responsible market player.

From 1 July 2025. A transitional period will apply in Lithuania until 1 January 2028, when even stricter restrictions will start to apply. This is a significant step towards strengthening public health protection and reducing the risk of gambling addiction. While these changes may present additional challenges for business, they are necessary for the long-term well-being of society. Society, especially the younger generation, should be protected from forming risky consumption habits and gambling should not be presented as a consequence-free pastime.

Everything you need to know when buying a used car with hidden defects

Buying a used car is a daily routine for many Lithuanians, but not always a pleasant one. It is not uncommon for a vehicle to start breaking down after just a few weeks, even though it appeared to be in good working order at the time of purchase. What if it turns out that the car was sold with hidden defects and the seller kept it quiet?

The law is on the buyer's side

According to the Civil Code of the Republic of Lithuania, the seller is obliged to guarantee that the second-hand car meets the quality requirements and to provide accurate information about its technical condition. Even if the seller claims not to have known about the fault, this does not exempt him from liability.

"Information about the condition of a used car must be disclosed regardless of whether the buyer asks for it. Withholding it is treated as dishonest behaviour on the part of the seller," says Mantas Baigys, a lawyer at AVOCAD .

If, after the purchase of the car, it turns out to have hidden defects, this gives rise to a claim for a reduction in the price, for the defects to be repaired at the seller's expense, for the cost of repairs, or even for cancellation of the transaction and the money paid to recover the money paid. Importantly, neither the low price of the car, nor its high mileage or age, in itself exempts the seller from liability for defects that have not been disclosed.

However, the seller can also defend himself. The law says it is not liable for defects of which the buyer was aware, or if the defects occurred after the car was handed over - due to misuse or the fault of third parties.

What should the buyer do?

The lawyer points out that it is advisable to include all known defects in the contract before signing the contract of sale and to keep all documents relating to the maintenance and repair of the car after the purchase. If the car breaks down, it is important not to delay: inform the seller immediately in writing, contact an authorised repairer, record the defects and obtain an official diagnosis.

"The sooner the buyer reacts and has evidence of hidden defects, the easier it will be for him to defend his rights. That's why it's important not to delay, and if necessary, to contact a lawyer," says M. Baigys.

The right to a quality product is not limited to new items. Even if you buy a second-hand car, you can reasonably expect to have a suitable and quality car. But it is a good idea to be careful before signing a contract - and if there are problems, to know your rights and not be afraid to exercise them.

Buying a car is not just the purchase of a motor vehicle, it is a legally significant transaction that is subject to clear rules. Fairness and disclosure play a key role. Knowing your rights and obligations can help you avoid unpleasant surprises and ensure the smooth operation of your vehicle.

 

Opened the packaging - can't return it?

When planning a bathroom renovation, you buy a shower enclosure online. You picked up the product yourself, paid on the spot, but did not inspect it. As the renovation work was still in progress, the shower enclosure remained unpacked. On the day of installation, you unpacked the product and found that it did not meet your expectations - for example, the door opens in the wrong direction. You look for the receipt - more than two weeks have passed. You read the seller's return policy - it says that only goods in their original, undamaged packaging can be returned. You contact the seller - the reply is stern: "You have damaged the packaging - we can't accept the goods." It looks like all is lost. But is it really?

Sandra Mickienė, Senior Associate at AVOCAD, points out that the conditions for returning quality goods bought online are not as straightforward as some sellers often try to make out. She points out that the law does not impose an obligation to return the goods in their original, undamaged packaging, unless the goods are unpacked and rendered unusable for hygiene or health reasons. "The requirement to return goods in undamaged packaging is, in most cases, a superfluous requirement imposed by entrepreneurs," stresses Ms Mickienė.

In a physical shop, the consumer has the opportunity to inspect and evaluate the product on the spot. Therefore, if the packaging is damaged after purchase, this may be seen as an excessive action by the consumer. However, the situation is different in the case of distance purchasing. When buying online, it is not possible to assess the product until it is unpacked. For this reason, the lawyer considers that the requirement to return quality goods purchased online only in their original, undamaged packaging is not only unreasonable but also potentially unlawful.

"Of course, each case needs to be assessed individually. If the goods, although ordered online, were handed over to the consumer at a collection point, the consumer was given the opportunity to inspect them at the time of collection and the consumer took advantage of this opportunity, then the seller's position may be stronger," the lawyer notes. In such a case, she said, there are questions as to whether the consumer really did not use the product or damage it when he opened the packaging. However, if the consumer has not been given the opportunity to do so, he or she has the right to unpack the product at home and evaluate it. The mere fact that the packaging has been damaged should not exclude the consumer's right to return a good quality product and to recover the money paid for the product.

It is also important to know the other conditions on which the right of repayment depends. The Civil Code provides that a quality product may be returned if it is unused, undamaged, has retained its usable characteristics and its original appearance, and if the consumer has a document confirming that he bought it from the seller in question. If these conditions are met, the consumer may consider returning the product. However, it is also important to take into account the withdrawal period for distance contracts: the consumer has the right to withdraw from a distance contract within 14 days of receiving the goods. " This is the minimum time limit provided for in the legislation. Some companies are extending this period to 30, 90 or even more days, which is becoming increasingly common in order to increase customer satisfaction. It is therefore always worth checking the seller's return policy - especially if you have bought with a loyalty card or other special offer, as longer return periods are often applicable in such cases," says S. Mickienė.

It is also worth knowing that if the seller has not properly informed the consumer of the right to withdraw from the distance contract, the deadline for withdrawing from the distance contract extends to 12 months. Only if the trader provides information on how to withdraw from distance contracts within this period will the 14-day period start to run from the date on which the information was provided to the consumer.

It's important to remember that not all quality goods bought online can be returned. The Civil Code provides for a number of exceptions where the consumer does not have the right to withdraw from a distance contract. This right does not apply to goods that have been custom-made, clearly personalised, goods that have been unpacked after delivery and are unsuitable for return for health or hygiene reasons (e.g. underwear or swimwear), newspapers, magazines etc. A shower enclosure is not included in this list, so a shower enclosure should be returnable if it has not been made to order.

In conclusion, the lawyer points out that if the consumer was not given the opportunity to inspect the goods at the time of collection, he had the right to do so by unpacking them at home. If the goods are unused, undamaged, the purchase documents have been retained and the consumer has not missed the cancellation period for the distance contract, the consumer is entitled to claim a refund. The seller could only reasonably refuse if it is clear that the consumer had a realistic opportunity to assess the goods on the spot and took it.

For consumers, AVOCAD's lawyer recommends that the first step is to familiarise yourself with the seller's return policy, check whether there are any exceptions to the consumer's right to withdraw from the distance contract and whether the time limit has expired, and then contact the seller - in writing, clearly stating that you are withdrawing from the distance contract. Only then can the return of the goods be organised. If in doubt, it is worth consulting the National Consumer Protection Service or lawyers.

"Even if the situation doesn't seem clear and the deadline has been missed, but the product is still unused and of good quality, it's still worth contacting the seller - to seek a compromise for a replacement or partial refund. Honest businesspeople are often ready to find mutually acceptable solutions," says lawyer Sandra Mickienė.

Mickienė notes that there are still many online shops whose return policy stipulates that in all cases goods must be returned in their original, undamaged packaging. However, as already pointed out, such a requirement may be excessive and unlawful, especially in the case of low-quality goods.

"We would therefore urge businesses to review and update their sale and purchase rules to comply with the law. In this particular respect, we would recommend at least clarifying that, in the case of returns of quality goods purchased at a distance, the opening of the packaging, other than the packaging of hygiene products, if it is not possible to inspect the goods without opening the packaging, is not considered a breach of the packaging, or to make it clear that the requirement to preserve the intact packaging does not apply to distance contracts, including in cases where low-quality goods are being returned," said S. Mickienė.

 

Legal representation: what do you need to know about powers of attorney?

Imagine: you're on holiday in another country and you have an important contract to sign in Lithuania. Or your grandmother can't go to the bank or do the paperwork herself because of health problems. A friend asks you to help him sell his flat because he lives abroad. According to lawyers, there is only one solution to these situations - power of attorney. A power of attorney is a written document that gives someone the right to carry out legal acts on behalf of another person. Rokas Puodžiūnas, a lawyer at AVOCAD, points out that although it is a convenient and frequently used tool, it is important to know the basic rules of the power of attorney in order for it to work smoothly and avoid mistakes.

First of all, the will of one person (the principal) is sufficient to constitute a power of attorney. "The consent of the representative is not required for the power of attorney to be issued and take effect. The chosen representative is not obliged to fulfil the obligations entrusted to him or her, and the law gives the representative the right to refuse the power of attorney issued to him or her," the lawyer points out.

The principal who issues the power of attorney is called the attorney-in-fact and the agent who receives the power of attorney is called the agent. The power of attorney specifies the specific acts to be performed by the principal on behalf of the agent with respect to a third party.

The rights conferred on a representative can only be confirmed by a power of attorney issued by the representative, so the representative must produce the power of attorney to third parties when performing any act on behalf of the principal.

The lawyer also points out that powers of attorney must specify the precise rights conferred on the authorised person. "The law does not allow the abstract content of rights to be specified. For example, it is not possible to state that the power of attorney covers all possible legal acts. The power of attorney must contain an exhaustive and detailed list of the rights to be granted," says Puodžiūnas. Similarly, a power of attorney cannot be granted for rights that can only be exercised personally (e.g. marriage, making a will, establishing usufruct over an object).

Powers of attorney vary from one-off to more powerful. For ease of understanding, they are classified according to the extent of the rights they confer:

  • A single (ordinary) mandate is one that is intended for one specific act. For example, if you need to sign a contract for the sale of a car and you can't do it, you issue a power of attorney to someone else to do it for you.
  • General Power of Attorney - when you want someone to help you take care of your property, protect it or manage its day-to-day affairs. This is a slightly broader power of attorney, but still limited.
  • Special mandate - for action in a specific field. For example, if you want someone to represent you in court or handle your affairs at the bank.

Powers of attorney can also be issued to one person or several. If you appoint one specific person, this is called a separate power of attorney. If you authorise several people and they have to act together, this is a general (quantitative) authorisation.

Another important point, according to an AVOCAD lawyer, is the duration of the mandate. It can be either fixed-term (where it clearly states how long it is valid for) or open-ended. "However, if there is no time limit, the law still limits its validity - such a power of attorney is automatically valid only for one year from the date of issue," says R. Puodžiūnas.

To be valid, a power of attorney must be in a separate written document and signed by the attorney-in-fact - the one who authorises another to act on his/her behalf. In some cases, the law also requires notarisation. This is necessary when authorising transactions requiring a notarial form, when acting on behalf of a natural person in dealing with legal persons or when dealing with actions relating to the management, use or disposal of immovable property.

Mandates are not perpetual. They expire in various ways - when they expire, when the attorney-in-fact decides to revoke it, or when the attorney-in-fact refuses to execute it. A power of attorney also ceases to have effect when one of the parties disappears - for example, if a legal person is wound up or is declared bankrupt, or if one of the natural parties dies, or is declared incapacitated in a particular field, or is simply declared missing.

The lawyer reminds you that when the power of attorney ends, both the principal and the attorney-in-fact have their duties. The principal must reimburse the necessary expenses incurred by the agent in the performance of his or her mandate - unless it was agreed in advance that this would be done without remuneration. If both parties are natural persons, the agreement is presumed to be gratuitous unless otherwise stated.

The principal also has a duty to inform of the end of the mandate, in particular if he or she revokes it, or if the mandate ends because of death or a change in legal status. In such a case, the heirs should be notified. In the meantime, the attorney-in-fact must return the original document - if he or she is unable to do so, his or her successors must do so. In addition, the attorney-in-fact must be accountable to the principal: he or she must give full details of how he or she carried out the assignment, the acts he or she performed, the documents he or she signed and the benefits he or she received on behalf of the principal. Anything received during the execution of the assignment must be returned to the principal.

 

Dividends: when are they illegal?  

The end of the financial year is a good time to learn more about dividends. This is an important aspect of a company's financial planning, but according to lawyers, businesses often forget a fundamental rule: dividends should only be paid when the company is stable and the interests of creditors are not affected. If a company has outstanding debts that should have been paid, the payment of dividends may be considered unlawful.

According to Domantas Velykis, Associate at AVOCAD, the Law on Joint Stock Companies provides that dividends are a share of profit allocated to a shareholder in proportion to the value of the shares owned by the shareholder. Simply put, dividends are a share of profit distributed to shareholders according to the number of shares they hold. Normally, companies allocate only a portion of their profits to dividends and invest the rest in business development, innovation or other needs.

The distribution of profits takes place after the end of the financial year, when the company's annual accounts are approved. The General Meeting of Shareholders decides on the payment of dividends and their amount. Although dividends are usually paid once a year, the law allows companies to distribute dividends more frequently - for example, every six months.

Only those persons who are shareholders of the company at the close of business on the day of the General Meeting of Shareholders or who are otherwise legally entitled to dividends are entitled to receive dividends. In the event of a subsequent acquisition of shares, the new shareholder is not entitled to past dividends but may be entitled to future payments.

Dividends must be decided in accordance with the legal framework. "If dividends are distributed in violation of the law, the shareholder may be obliged to repay the amount received to the company," notes Domantas Velykis. The Companies Act provides that if a shareholder knew or should have known that dividends were unlawfully distributed, the company is entitled to recover the amounts paid.

According to AVOCAD's lawyer, there are three cases where a company cannot decide to pay dividends:

  1. If the company has outstanding liabilities that have already fallen due.
  2. If the company's distributable profit is negative, a loss has been incurred.
  3. If the company's equity is too low or would fall to a critical threshold after the payment of dividends.

The Supreme Court of Lithuania has stated that dividends should only be paid when the company is stable and such payments do not harm the interests of creditors. One of the indicators of the stability of an undertaking is its ability to pay its creditors. Therefore, if a company has outstanding debts which should have been paid, the payment of dividends may be considered unlawful.

However, case law recognises that if a company, after having declared a dividend, pays the outstanding debt before actually paying the dividend to the shareholders, the infringement is deemed to be eliminated. In such a case, the dividends paid to the shareholders would not be considered unlawful.

Another relevant situation, according to the lawyer, is if the company agrees with the creditor to postpone the payment of the debt by adopting new payment terms. Case law shows that in such cases the obligation is not considered to be in arrears and therefore the granting of dividends can be considered legitimate if the company complies with the new payment terms. In this way, the company can safeguard the interests of its shareholders without infringing the rights of its creditors.

Thus, the distribution of dividends is a delicate process that requires careful legal assessment. It is important for companies not only to comply with the law, but also to take a responsible view of their financial position and liabilities in order to avoid potential legal consequences.

Ocean rescue operation. How much will it cost?

The rescue of Lithuanian Aurimas Mockus off the coast of Australia, which has attracted public attention, has revealed an important aspect - how such rescues are legally regulated and who has to pay for them.

According to Mantas Baigis, an attorney at AVOCAD, such rescue operations are very clearly regulated by international law. According to the lawyer, rescue at sea is regulated by the International Convention on Maritime Search and Rescue, to which Australia is a party. Under the Convention, States are obliged to provide assistance to anyone in danger at sea, regardless of their nationality or the circumstances of the disaster, i.e. rescue operations at sea do not normally involve the reimbursement of rescue costs.

"However, if it is established that a person intentionally or through extreme negligence (e.g. disregarding warnings) caused a situation that required a rescue operation, proceedings may be initiated to recover the costs of such an operation," notes Baigys.

As regards the salvage operation of Aurimas Mockus' rowing boat and the property it contained, the International Convention on Salvage of Property in Waters applies, which entitles salvage operations to remuneration. The Convention details the conditions for indemnity. In other words, salvors are entitled to remuneration. This remuneration is usually paid out of the pocket of the property owner or insurer.

The lawyer also points out that rescue operations are two different categories. "In any case, whether Aurimas Mockus will be required to pay any costs (if a boat rescue is carried out) will depend on how the situation will be qualified by the Australian organisations responsible for the rescue operations," notes the AVOCAD lawyer.

What are the regulations for rescuing people and property in the Baltic Sea?

Lithuania is also a signatory to the International Convention on Maritime Search and Rescue and is not required to reimburse a person for the cost of his or her rescue (unless the person is found to have acted with extreme carelessness and intent). In addition, Lithuania has adopted the Law on Safe Navigation, which strictly stipulates that ships in the territorial sea and ports of the Republic of Lithuania are obliged to provide assistance to people in distress at sea using the technical means at their disposal. Our country has also acceded to the International Convention for the Salvage of Property in Waters, the provisions of which are applicable to salvage operations, which are normally the responsibility of the owner of the property or its insurer.