When is the State liable for mistakes made by judges?

In Lithuania, mistrust in courts and judges is still a very painful and topical issue. The efficiency of the legal system is one of the fundamental guarantees of a democratic state, but mistakes and abuses by judges or other court officials can have serious consequences for society and individuals. Judicial decisions not only shape the perception of justice, but also directly affect people's lives.

When judges or other court officials do not act in accordance with the principles of law or make manifest errors, civil liability for the damage caused is at stake. Should the State be liable for wrong decisions and errors in the administration of justice and what are the limits of such liability? How should judges and other court officials be held accountable for their actions, answers Domantas Velykis, Junior Associate at the law firm AVOCAD .

The Civil Code provides that the State shall fully compensate for damage caused by unlawful acts of a judge or court in civil proceedings, if the damage was caused by the fault of the judge or other court official.

This rule establishes the State's liability for errors made by judges in the exercise of their judicial function in civil proceedings. It also establishes a very broad and, it should be stressed, non-exhaustive list of possible judicial errors, since the civil liability of the State may arise from the court's error in the procedural steps to be taken, the content of the judgment, the court's interpretation of the law, the assessment of evidence, the unlawful acts of the court's other officials carrying out the internal administration of the court, and so on.

The principle of the independence of the judiciary, derived from the Constitution, leads to a legal framework whereby the liability of the State for errors committed by the judiciary is more limited than in comparison with the State's civil liability for errors committed by other public authorities: where it is sufficient for the injured party to prove the unlawful acts of the public authorities, the officials, and the court (in criminal cases), the causal link, and the damage, i.e., in this case, strict liability is imposed without fault.

State liability for errors by a judge in the exercise of his or her judicial functions has been established as a kind of compromise between the principles of the right to a fair trial and judicial independence. It is this way of establishing the State's liability which ensures that victims are compensated for their loss, but at the same time protects judges from claims brought against them personally, since it is the State, and not the judges themselves, which is responsible for judicial errors.

The legality and reasonableness of procedural decisions of courts is subject to review by the instance system of review of judicial decisions, i.e. appeal and cassation (and proceedings may be reopened in cases where a procedural decision has been delivered and has become final). It is understood that the instance system cannot objectively eliminate all errors committed by the courts.

Causes of errors by judges and conditions for liability

Case law identifies the following reasons for judicial error: the limits of judicial knowledge, imperfections in the law, incompatibilities, gaps in the law or in the law, the realistic capacity of human beings to know everything, the judge's subjective characteristics, and many other factors.

However, while there are many possible reasons why judges may make mistakes, this does not justify the court making gross and obvious errors. Otherwise, a person's right to a fair trial and to the administration of justice would be denied. Therefore, errors made by judges are first of all corrected by way of an instance procedure and, if they cannot be corrected in this way, in order to ensure that the fundamental rights of the individual are not denied, the individual may bring an action to hold the State liable for the errors made by judges in civil proceedings.

As in the case of standard civil liability, in order to recover damages from the State for the court's unlawful actions, the claimant must prove the four conditions for civil liability in tort: damage (loss), unlawful acts, causation and fault.

Fault is an essential condition for the civil liability of judges

According to case law, fault is an essential condition for the civil liability of judges. According to the Supreme Court of Lithuania, the fault of a judge can only be established if he or she has committed an obvious and gross error in the interpretation and application of law.

In assessing whether a judge has committed a serious and manifest error, the court normally first determines what the judge did wrong and which rules of law were applied. Secondly, it determines and assesses the legal framework and the purpose of the application of the rules of law and the conduct in which the judge erred. Thirdly, it shall assess whether the error committed by the judges meets the criteria of gravity and manifest error.

Importantly, gross and manifest error of judgment is an evaluative concept, which means that the legislation does not specify what constitutes a gross and manifest error of judgment, and the interpretation and assessment of this feature is therefore entirely at the court's discretion.

In the case-law, there is an exemplary list of the assessment of the obviousness and seriousness of a judicial error, according to which the court may take into account various circumstances that are most relevant to the situation at hand, such as the intelligibility of the terms used in the applicable legal provision, the accuracy of the provision, the clarity of the evidence, the complexity of the case, whether the court was required to apply the provision only in the light of the clear circumstances of the case and of the applicable provision of law, and other circumstances.

The form of fault of the judge who committed the unlawful act is irrelevant for the purposes of the State's civil liability, i.e. a court may commit a grave and manifest error either intentionally or negligently. The fault of a judge is understood and interpreted objectively, i.e. it is assessed whether another judge in the same situation would have acted differently in the knowledge of identical circumstances, while the subjective element of the fault of a particular judge is not examined, i.e. it is not examined how the judge, who may have committed a serious and manifest error, understands the acts he himself has committed.

In this case, only the circumstances known at the time the judgment was delivered, when a serious and manifest error may have been committed by the court, should be considered for the purposes of reaching a correct decision. However, circumstances which subsequently came to light, changed or were unknown to the court as a whole, and which resulted in the damage suffered, must not give rise to liability.

Here are some practical examples of the application of state liability for unlawful actions of a judge or court in civil proceedings, as found in the practice of the Supreme Court of Lithuania:

  • In the first civil case, the Court of Appeal ruled on a public procurement case. The defendant (the contracting authority) complied with the decision (rejected the supplier's tender), but after the decision was implemented, a cassation appeal was lodged and the Supreme Court of Lithuania annulled the part of the Court of Appeal's decision that had already been implemented by the defendant. The supplier initiated a second civil proceeding seeking annulment of the contracting authority's decision to reject the supplier's tender. In the second civil case, the court upheld the action on the basis of the judgment of the Supreme Court of Lithuania in the first civil case and ordered the supplier to pay the costs. The contracting authority brought an action for civil liability of the State on the basis of the unlawful action of the court of first instance - the judgment of the Court of Appeal in the first civil case - claiming reimbursement of the costs awarded in the second civil case. The Court of First Instance refused to uphold that action, on the ground that, at the time of the adoption of that judgment, it was not clear which by-law was to be applied and that there was evidence in the case-file to justify such a decision, and that, therefore, it should not be considered that the judges of the Court of Appeal committed a manifest error of interpretation and application of the law;
  • In the civil case, the court did not grant the application for interim measures for the attachment of immovable property. The defendant sold the property and kept the proceeds in cash instead of in a bank account. The court granted the application and granted interim measures in the form of a deposit in the court's escrow account of the amount securing the claimant's claim. The defendant failed to comply with the interim measures imposed by the court. The court, having heard the case, decided to uphold the action. However, the funds recovered from the defendant were insufficient to cover the claim. The applicant brought an action for civil liability of the State on account of the court's unlawful conduct. In assessing whether the judge had committed a serious and manifest error, the Court of First Instance stated that the decisions of the court were based on the relevant rules of law and on the practice on the application of interim measures which had been established at the time and which had not changed, that the issues essential for the imposition of those measures had been assessed, that the procedural decisions had been duly reasoned, and that, therefore, it was not to be regarded as a case where the judge had committed a serious and manifest error and that, accordingly, the action was rejected;
  • The civil action was brought for a declaration that the dismissal was unlawful and for the payment of compulsory redundancy payments from the date of dismissal until the date on which the judgment enters into force. The court assigned the decision on the admission of the action to a judge who was on annual leave at the time, so that the decision on the admission of the action was carried out within approximately one month of the time-limit prescribed. If the court subsequently upheld the action, the defendant was liable to pay the compensation for the enforced absence, including the time during which the time-limit for the admission of the action had been exceeded as a result of the court's action. The employer brought an action for damages for the loss suffered as a result of the court's unlawful action in the form of compulsory redundancy payments in respect of the period of delay. The Court found that the delay in the adoption of the action could have been avoided by not assigning the case to the judge during his leave, which constituted a serious and manifest error.

In conclusion, the liability of judges in civil proceedings is a crucial legal institution that contributes to the credibility of the justice system and public confidence in the courts. The complexity of this institution stems from the need to strike a balance between the independence and responsibility of judges, in order to protect them from unfounded accusations, while at the same time ensuring that abuse or manifest errors are appropriately dealt with. However, this remains a very sensitive subject, as judicial decisions often involve multiple interests that are not always properly understood or appreciated by the public. Only consistent legal education and discussion with the public can contribute to a clear understanding of the nature and importance of the responsibility of judges for the rule of law.

Are you entitled to a credit reduction when you buy a car?  

To buy a car, we often use a variety of financing instruments. Some of the most popular are car rental or leasing contracts. Eimantas Čepas, Senior Associate at AVOCAD, comments on what you need to know about these contracts and what misunderstandings often arise when you want to buy a financed car early in the hope of saving money .

According to the lawyer, when concluding a car rental or leasing contract, the buyer of a car can usually choose between paying only monthly instalments during the contract period and not buying the car at the end of the contract, or paying the residual value of the car and taking personal ownership of the used car.

It is important to note here that this refers to rental or leasing contracts between a consumer and a trader. In a consumer contract, the trader undertakes to transfer the ownership of the goods or services to the consumer and the consumer undertakes to accept the goods or services and pay the price. A consumer is a natural person who enters into transactions for purposes other than his business, trade, craft or profession. The consumer is considered to be the weaker party to the transaction when concluding a contract with a trader, which is why the law provides for additional safeguards to protect the rights of the consumer.

The Consumer Credit Act is one of the tools designed to protect the interests of consumers who are considering taking on financial obligations. The Consumer Credit Act enshrines the consumer's right to discharge all or part of his obligations under a consumer credit agreement at any time. If he does so, he is entitled to a reduction in the total cost of the consumer credit, consisting of interest and costs for the remaining period of the consumer credit agreement, calculated from the date of repayment of the consumer credit or part thereof.

Thus, if a contract is concluded and the owner decides to take ownership of the financed car before the final contractual maturity date, it is common practice to expect to save on the interest part of the lease or hire purchase agreement. However, there are occasions when, after expressing such a wish, the car financier asks to pay not only the residual value of the car, but also the interest for the entire pre-agreed period of the contract.

"Such situations have been created by the provisions of the Consumer Credit Act, according to which this Act applies to consumer credit agreements, but not to lease or hire-purchase agreements, where these agreements or a separate agreement do not stipulate an obligation to purchase the object of the agreement, in this case a car," says Čepas.

Financing agreements are usually drawn up in advance by the lender. The condition that at the end of the contract it will not be necessary to buy the car for the remaining value and that it will be up to the buyer's wish to do so, may seem attractive to many consumers. However, a financier who takes advantage of this, by formally stipulating in a standard rental or leasing contract that the consumer is not obliged to acquire the car, or only acquires the right to acquire the car by expressing his/her will in a separate notice, may seek to avoid the application of the provisions of the Consumer Credit Act, which enable the consumer to save money by early repayment of the contract, without having to pay a portion of the interest. Such a provision is undoubtedly advantageous for the creditor, as it ensures that the consumer, even if he decides to repay the credit early, will have to pay the full amount of the pre-agreed interest for the entire term of the contract.

The Supreme Court of Lithuania, which has established uniform case law in Lithuania, has pointed out that when assessing whether the financier in such contracts, by not imposing an obligation on the buyer to purchase a car, does not intend to evade the application of the Consumer Credit Law and to make a potentially unjustified profit from the consumer, the purpose for which the buyer enters into the contract should be taken into account. In this case, the consumer's purpose is usually clear, namely to purchase a car by spreading the payments over a period of time.

In the Court's view, where the contract in question does not contain a clause requiring the consumer to acquire ownership of the car and these circumstances have not been individually discussed with the consumer, or where other circumstances suggest that the terms of the lease or hire-purchase agreement were intended to avoid the application of the Consumer Credit Act, the provisions of the Consumer Credit Act must apply to such contracts and the consumer's rights to discharge all or part of his obligations under the consumer credit agreement and to reduce the total cost of the consumer credit at any time must be protected.

Nor should the consumer's right to discharge all or part of his obligations under a consumer credit agreement at any time be confused with a modification of the credit agreement. This means that the consumer may decide on his own to prematurely discharge all his credit obligations, in which case he may not be required to renegotiate the terms of the financing provided.

According to Eimantas Čepas, attorney at law at AVOCAD, notwithstanding the possible unfair behaviour of creditors in not stipulating the obligation to purchase a car in rental or lease agreements, in order to formally avoid the application of the Consumer Credit provisions, a consumer who decides to redeem the car subject to the agreement before the due date is entitled to a reduction of the total price of the consumer credit, i.e. to the conversion of the interest rate at the time of the redemption of the car, thus lowering the overall price of the interest payable.

 

 

Underage work in summer: what do businesses and parents need to know?

 

Summer holidays are a time when many pupils and students are looking for temporary work to gain experience, earn money and spend their time productively. Summer jobs for minors are becoming increasingly popular. Laurynas Staniulis, partner at AVOCAD, reminds businesses and parents who employ minors about what they need to know.

According to the lawyer, Lithuanian legislation strictly defines the working conditions of minors and seeks to ensure that their working environment is safe and their working hours are reasonably limited. This is necessary to protect the health and development of young people. Employers offering temporary jobs to minors must comply with strict rules and requirements to ensure that the work experience is not only rewarding but also harmless.

 

What must be included in the employment contract?

Fixed-term contracts are a popular way of employing minors during the summer. These contracts are usually for a limited period of time and stipulate specific working conditions and duration. Lithuanian law stipulates that minors can work from the age of 14, but the hours and nature of their work are strictly regulated. Outside the school year, minors under 16 can work up to 6 hours a day, 30 hours a week. During the school year, up to 12 hours per week. Meanwhile, adolescents aged 16 and over may work up to a maximum of 8 hours per day and 40 hours per week. The nature of the work must be light and without risk to health.

The employment contract must clearly state the duration of the work, the pay, the duties and the conditions of work. It is also important that the employer provides a safe working environment and all the necessary information and training on workplace safety.

The lawyer also points out that minors aged between 14 and 16 need the written consent of a parent or other representative of the child. The employer must provide the child with a medical certificate issued by a health authority stating that the child is fit for the job in question. During the school year, minors aged between 14 and 16 need written consent not only from their parents but also from the school where the child is studying. From the age of 16, neither consent is required.

Regulation and protection

Minors' work is regulated by the Labour Code and other legislation, which details working conditions, working hours and ensuring that working conditions comply with safety and health requirements. Employers who fail to comply with these requirements can face serious consequences, including fines and other legal action. The State Labour Inspectorate carries out regular inspections to ensure that employers comply with all legal provisions and that minors work in appropriate conditions. In addition, minors and their parents have the right to contact the labour inspectorate or other responsible authorities if they consider that working conditions are inadequate or that their rights are being violated.

 

What minors cannot do?

Lawyer Laurynas Staniulis points out that the general rule is that children are not allowed to work, except in light work that is compatible with their physical abilities and that does not adversely affect the child's safety, health, physical, mental, moral or social development. For example, they are not allowed to work in jobs involving alcohol.

When employing minors and providing them with safe and healthy working conditions, the employer must be aware that minors are prohibited from working in work that is harmful to their health or dangerous.

It is also important to remember the working hours of children in light work. During the school year, minors under 16 can work up to 6 hours a day, 30 hours a week. During the school year, up to 12 hours per week. Meanwhile, adolescents aged 16 and over may work up to a maximum of 8 hours per day and 40 hours per week.

Summer work for minors can be a great opportunity to gain valuable work experience, but it must be regulated and safe. This is the only way to ensure that young people can fulfil their potential and prepare for their future careers without harming their health or their education.

 

If you have bought a faulty item, don't forget your right to compensation for the costs of rectifying the fault

Today, consumerism is an integral part of everyday life. We are constantly exposed to new products, services and advertisements. Along with this abundance comes new challenges that force consumers to be vigilant.

According to Dainius Antanaitis, an attorney at AVOCAD, knowing one's rights as a consumer allows you to use the market more effectively, avoid scams and seek justice in unfair situations.

Commenting on recent case law, the lawyer recalls the main rules of the legal relationship between a trader and a consumer, which relate to the quality of the goods sold to the consumer.

First, the object sold must be of good quality, i.e. the characteristics of the object must be in conformity with the consumer contract. The fitness for the intended use of the object must not be understood as meaning that it is possible to use the object, even if this entails considerable inconvenience, disturbance of various kinds or additional costs.

Second, if a defect in the quality of the goods becomes apparent, the Buyer only needs to prove the defect itself. However, the existing presumption of the seller's liability for the quality of the goods to be sold obliges the trader (the seller) to prove that the defects in the goods occurred after the delivery of the goods to the buyer, due to the fault of the buyer.

Third, the seller, having information about the condition or characteristics of the thing to be sold which is relevant to the conclusion of the contract and in the exercise of his duty to ensure the quality of the thing, is under a duty of good faith to disclose that information to the buyer, whether or not the buyer requests such information. Failure to disclose that information to the buyer shall be regarded as bad faith on the part of the seller and, if the undisclosed condition or features of the object subsequently come to light, which make the use of the object inconvenient or impair the usefulness of the object, such condition or features shall be regarded as latent defects in the object.

Thus, if the consumer, having purchased the object, discovers defects in the object which, although they allow the object to be used for its intended purpose, cause inconvenience, disturbance or additional costs, it is sufficient for the consumer to provide evidence of the existence of the defects and not to have to prove the reasons for their occurrence, and even if the trader starts to defend that the consumer should have been aware of the fact that the object is being sold with such features, if the consumer was not previously aware of such features, they are considered to be latent defects.

How can the consumer resolve the problem of quality defects in this situation?

If the goods do not meet the quality requirements, the Civil Code gives the consumer the right to demand that:

  • the product is repaired or replaced;
  • a proportional reduction in the price of the product;
  • unilaterally terminate the contract, return the goods and collect the price paid.

Each of these remedies has its own conditions of application. However, the consumer will choose one of these remedies not only on the basis of these conditions, but also on the basis of his needs and wishes.

For example, a consumer decides to buy a specific home because of its location and architectural choices, and then furnishes, integrates appliances and furnishes it according to his needs.

However, the consumer's joy in their new home was overshadowed by the various shortcomings in the quality of the house (e.g. unusually high heat energy losses during the cold season, resulting in higher heating costs, leaking windows, the façade not only not maintaining its aesthetic appearance, but also the possibility of the house's protective function due to the normal forces of nature, etc.).

If the trader refuses or fails to remedy these deficiencies, the alternatives are to reduce the price or terminate the contract and refund the price. Thus, in the event that the consumer does not want to leave his new home and does not want to terminate the contract, he can opt for a price reduction.

In the case-law of the Court of Cassation, this remedy means that if the value of the defective item actually delivered is lower than the value of the quality item, this difference in value constitutes the amount of the price reduction available for the claim. In such a case, the seller should pay the buyer this difference in value.

However, in this context, another remedy is also available, which is provided for in the general provisions of the Civil Code on sale and purchase contracts, which provide that the buyer has the right to claim reimbursement of the buyer's costs incurred by the buyer for the rectification of the defects, if the defects were decided by the buyer to be rectified by the buyer.

It is therefore worth remembering that if a consumer receives a faulty item, he can either ask for a reduction in the price of the item, or for reimbursement of the costs incurred by the consumer in rectifying the faulty quality of the item.

 

Cancellation of a trip due to force majeure: are you sure you don't have to pay cancellation fees?

Summer is the time for travelling. The fast pace of life is stressful and requires the extra cost of making your own travel arrangements. To simplify the whole process, we often opt for the services of a travel agency, which makes it easier to organise and saves time.

Once you have planned your trip with a tour operator, you sign a travel contract in which the tour operator undertakes to provide you with a holiday. And then life happens - you can't go.

Viktorija Dubovskienė, a lawyer at AVOCAD, points out that under the Civil Code, a traveller has the right to terminate an organised tourist travel contract without paying a termination fee:

  • if the tour operator changes the terms of the package travel contract before the start of the package tour;
  • if, because of the defects pointed out by the traveller, the package travel contract cannot be continued and the tour operator fails to remedy the defects within a reasonable period of time set by the traveller;
  • if force majeure events occur at or very close to the place of destination of the package tour, which may make it impossible to carry out the package tour or to take the travellers to the place of destination of the package tour.

Let's look more closely at the third case, where the contract with the tour operator is terminated due to force majeure circumstances at or very close to the destination, which make it impossible to carry out the trip and to take the tourists to their destination.

According to the lawyer, the case law of the Supreme Court of Lithuania states that the following features qualify the circumstances of force majeure (unavoidable and extraordinary):

  • First, these circumstances must exist on the date of termination. These circumstances did not exist at the time of the conclusion of the package travel contract, were not known to the traveller at the time of the conclusion of the contract and could not have been foreseen by the traveller.
  • Second, the force majeure circumstances must have a substantial effect on the execution of the package tour or on the transport of the tourists to the destination of the package tour. Substantial effect on the performance of the organised tourist trip or on the taking of tourists to the place of the organised tourist trip. This includes not only circumstances which render the performance of the contract impossible in general, but also circumstances which, without precluding such performance, make it impossible to perform the contract without endangering the health and safety of the travellers concerned, taking into account, where appropriate, personal factors relating to the individual situation of those travellers. This assessment shall be made on the basis of a prediction that, at the date of termination, the performance of the package travel contract in question is likely to be significantly affected from the consumer's point of view.

The assessment in question is necessarily prospective in nature, as the impact will only be fully realised through the implementation of the package travel contract. Moreover, the assessment must be objective and not be based solely on the consumer's fears, anxieties or feelings of apprehension.

  • Thirdly, force majeure circumstances can only justify the decision of the traveller concerned to cancel the contract without financial loss if they occur at the place of destination or in the immediate vicinity of the destination.
  • Fourthly, the tourist who relies on force majeure could not have controlled those circumstances and avoided their consequences, even if he had taken all reasonable measures within his power. This qualifying factor is to be decided in the light of the nature of the circumstance relied upon for the withdrawal (e.g. security disturbances - military, political, terrorist acts), a problem involving a serious risk to human health (outbreak of a serious disease) or a natural disaster (flood, earthquake or meteorological conditions).

The occurrence of force majeure does not require an official recommendation by the competent authorities to refrain travellers from entering the area concerned or an official decision classifying the area as a risk zone. However, if the competent authorities have issued such a recommendation, this shall constitute proof of force majeure.

If the establishment of the existence of the circumstances in question were to be linked only to the publication of official recommendations and decisions, i.e. if it were to be assumed that the right of the tourist to terminate the package travel contract is only triggered by the publication of such official recommendations (e.g. not to go to certain countries) and decisions (e.g, The right of a tourist to cancel a tourist travel contract when the circumstances of force majeure may make it impossible to carry out the trip (making it impossible to travel safely as agreed in the contract) would be unduly narrow and generally meaningless, which would be contrary to the principle of efficiency as well as to the principle of consumer protection.

Therefore, despite the fact that you are no longer able to go on the trip you want to go on due to what you consider to be force majeure circumstances which have a material impact on the performance of the package tour, you will have to weigh the above-mentioned indications in order for the termination of the contract with the travel agency to be considered justified and for you to have the right to claim a refund of the money paid for the package tour.

Joint and several liability for competition infringements. What do businesses need to know?

In today's economy, the observance and enforcement of fair competition is not only essential to guarantee the protection of consumers' interests, but it is also a crucial process for market operators and national economic indicators," says Domantas Velykis, Junior Associate at AVOCAD.

According to him, unfair competition law infringements must be subject to proportionate and dissuasive penalties. And when is joint and several liability applicable for competition infringements?

In practice, it is not uncommon for a company that owns all the shares of another company to exercise decisive influence over such a subsidiary, which may result in the parent company taking decisions that determine the subsidiary's actions on the market, which may meet the criteria for an infringement of competition law. In order to ensure that a parent company exercising decisive influence and taking decisions for a subsidiary does not escape liability, the Court of Justice of the European Union (" CJEU") has established the rule that, once the circumstances of decisive influence have been established and proven, such companies are considered to be a single economic entity and, therefore, the parent company and the subsidiary are held jointly and severally liable for infringements of competition law.

In the EU, competition law is characterised by strict levels of fines and the application of joint and several fines. The scope for joint and several liability has been particularly extended by the CJEU in the 2021 case The Goldman Sachs Group Inc. v Commission. The parent company owned only 33% of the shares in the subsidiary, but these shares conferred 100% of the voting rights. This subsidiary owned the shares of two other companies which committed competition law infringements by participating in the electricity cable cartel. The European Commission's investigation of the infringement revealed that the parent company was able to exercise a decisive influence over the two infringing subsidiaries, resulting in a joint and several fine of as much as €37,303,000 being imposed on the three legal entities. Following an appeal against the imposition of such a penalty, both the General Court of the European Union and the Court of Justice of the European Union upheld the lawfulness of the imposition of such a joint penalty.

In Lithuania, the legal regulation establishing the right of the Competition Council to impose joint and several liability has entered into force only at the end of 2020. The Competition Law provides that where two or more natural or legal persons carrying out economic activities act as a single economic entity, the parent company and the subsidiary shall be jointly and severally liable for infringements of this Law, as well as the other persons carrying out economic activities forming the economic entity. This aligned the national legal framework with the application of joint and several liability inherent in European Union competition law and the case law of the CJEU interpreting it.

Until this period, the possibility of joint and several liability for competition law infringements had been established exclusively in case law, first by the CJEU and later, with exceptions, by the Lithuanian administrative courts.

The CJEU has established the rule that the concept of an economic entity covers all entities engaged in an economic activity, irrespective of that entity's legal status and the way it is financed, and must be understood as meaning an economic unit, even if that unit is legally composed of several natural or legal persons, so that, if a legal person constituting an economic unit commits an infringement of competition law, the other legal persons constituting the economic unit may also be jointly and severally liable for the infringement.

Of particular importance for the application of joint and several liability is the development of the presumption of decisive influence in the case law of the CJEU - where a parent company owns all or almost all of the shares of a subsidiary that has committed an infringement of the competition rules, the parent company is able to exercise a decisive influence over the market behaviour of the subsidiary, and therefore there is a rebuttable presumption that the parent company in question does in fact exercise a decisive influence over the behaviour of its subsidiary.

In order to impose joint and several liability for competition law infringements, it is sufficient to establish and prove that the parent company owns the entire capital of the subsidiary, and the burden of proving that the presumption of decisive influence is rebuttable rests with the infringing parties. In order to rebut this presumption, the person liable must rebut the actual exercise of decisive influence not only by reference to the relationships within the scope of company law, but also by assessing all relevant economic, organisational, legal and even personal relationships. The grounds for rebuttal of such a presumption are problematic, but are recognised as proportionate to the objectives of joint and several liability for competition law infringements.

Having examined the case law of the administrative courts, the most important conclusions for businesses when joint and several liability for competition law infringements is excluded, which are not directly related to the rebuttal of the presumption of decisive influence, are as follows:

  • when considering the application of joint and several liability for infringements committed before the amendment to the Competition Law entered into force on 1 November 2020, the administrative courts have systematically stated that at the time the infringements were committed, the Lithuanian legislation did not provide for the possibility of applying joint and several liability, and that therefore, joint and several liability is not applicable, in accordance with the principle provision of the Constitution that punishment may be imposed or applied only on the basis of the law;
  • if the competition law infringement committed before 1 November 2020 does not fall within the scope of Article 101 TFEU, i.e. The courts may not rely on the case law of the CJEU, which in such a case has only the value of an additional, non-binding source of interpretation of the law, and therefore, the courts of the Republic of Lithuania may interpret the application of joint and several liability in competition law in the national context, in accordance with the court's prerogative to individually develop the practice of application of joint and several liability in the Republic of Lithuania for infringements of the law on competition;
  • in the case of an infringement of competition law committed before 1 November 2020, i.e. when this type of liability is not provided for by the law, the application of joint and several liability to an undertaking, for example, a parent company and a subsidiary, violates the principle of individualisation of the fine, as the provisions of Articles 35 and 36 of the Law on Competition in force at the time of the commission of the infringement could not be interpreted in such a way that the legal entities constituting the undertaking could be subject to a joint (joint) fine rather than an individual fine.

In view of the above amendment to the Competition Act, which will enter into force at the end of 2020, administrative courts will not be able to apply the above reasons for not imposing joint and several liability on competition law infringements committed after 1 November 2020. Therefore, it should be appreciated that parent companies seeking to avoid joint and several liability for infringements of competition law committed by their subsidiaries later than 1 November 2020 will, in principle, only have the possibility to seek to rebut the presumption of decisive influence by proving that the subsidiary was not subject to decisive influence. However, the case-law of the administrative courts on the application of joint and several liability for competition law infringements committed after 1 November 2020 has not yet been established, and it is therefore left to await such case-law.

Persecution. Do we have effective tools to protect ourselves from it?

There is a common perception that only public, famous and popular figures are most likely to face persecution. However, this latent illegality is quite widespread in society and almost anyone can be a victim of stalking.

Persecutors can not only be those who have experienced an unhappy love or marriage, but also, for example, parents towards their children. According to the Lithuanian Centre for Human Rights, almost one in ten people will be persecuted in 2021. Persecution has long been beyond social status or gender. Social space and various media platforms are a particularly favourable and comfortable environment for persecution.

What should we do when such intense attention may prove to be not only unwanted, but also cause negative experiences, discomfort, and ultimately the risk of a real threat, and do we have effective legal means to protect ourselves from such actions?", says Karolina Laura Briliūtė, lawyer at AVOCAD .

Stalking is generally understood as repeated, unwanted behaviour directed at a specific person. The Criminal Code elaborates on the elements of this offence in more detail: stalking is understood as an act of systematically carrying out, against a person's express will and without lawful justification, a series of acts which have the effect of forcing the victim to change his or her place of residence or work or educational institution or have any other negative impact on his or her social life or emotional state.

Although the Criminal Code used to criminalize acts of stalking (systematic intimidation), the criminalisation of stalking as such is relatively recent, dating back to 2021. In 2024, a draft amendment to this article was registered, with a view to strengthening the liability and introducing imprisonment of up to three years as an alternative punishment. However, a glance at the explanatory memorandum of the amending law shows that the assumptions behind the need to increase liability are exclusively related to maintaining the consistency of the Penal Code, the norms, the sanctions for the commission of offences, but not to taking into account the widespread extent of persecution in society, the investigation and trial of such acts in the courts, and the corresponding assessment of the need to increase liability.

How is persecution treated in case law?

Since the amendment of the Criminal Code, the Court of First Instance has heard 5 cases in which people have been found guilty of persecution. In a number of cases, other offences have been committed in connection with persecution. In the light of these court decisions, it is clear that, in order to be found guilty, the person experiencing the unlawful acts should, at the time of their occurrence, keep a record of the acts in the following ways: 1) keep correspondence, calls, record calls if possible, take screenshots; 2) film and photograph unwanted visits; and 3) tell the people around them and their relatives as much as possible about the acts of persecution, in order to be able to confirm them in the pretrial investigation and in the courts if needed.

However, although there are court decisions finding individuals guilty of persecution, there are several important points to bear in mind: on the one hand, the court decisions reviewed do not reflect the reality that a significant number of individuals are victims of persecution and are afraid or avoid going to the pre-trial investigation authorities; on the other hand, criminal measures should only be seen as a last resort. It is therefore certain that there are a number of cases where pre-trial investigators refuse to open pre-trial investigations because of the possibility of prosecution. Thus, persons subjected to acts of persecution continue to be immune from such acts being used against them.

As a conditional alternative, the Protection from Domestic Violence Act provides for the possibility of obtaining a domestic violence protection order, which is designed to protect people at risk of violence if there is a sufficient risk that domestic violence may be used.

Under the scope of the law, acts of harassment could fall within the definition of violence (intentional mental exposure resulting in non-pecuniary damage). Such a warrant could, inter alia, order the person carrying out the stalking to stay away from a specified distance, to refrain from communication and to refrain from seeking contact. However, this option also has several drawbacks: firstly, such a warrant, even if issued, would only be issued for a period of 15 days; secondly, the warrant could only be issued to persons living in close proximity, which excludes persons who are not known to the applicant, or who are not well-known, and who are carrying out such unlawful acts.

Thus, an assessment of the legal framework for protection against persecution shows that it is not sufficient to fully protect those suffering from such acts. This is all the more so when the acts of victimisation are not only physical but also extend to social media and, moreover, go beyond the immediate environment. Often, such unlawful acts are not always sufficient to trigger a prosecution or criminal measures.

Given the prevalence of this act and in order to protect individuals, amendments to the Law on Protection against Domestic Violence could be initiated. Namely, by providing for additional cases in which a protection order against domestic violence could be issued, broadening the range of persons against whom it could be issued. Accordingly, it is likely that, once a warrant of this kind has been issued in respect of a particular person, and if the indications of persecution persist and a pre-trial investigation is requested and the case is brought before a court, the fact that a warrant has been issued would be seen as an additional circumstance in support of the persecutor's guilt.

 

 

Household consumers and small businesses can terminate their energy supply contract without any termination fee

According to recent case law, it is clearly established that household consumers, micro-enterprises and small enterprises have the right to unilaterally terminate their electricity sales contract and switch to an independent supplier free of charge from 15 July 2021, without paying any termination fees.

According to Mantas Baigis, Senior Associate at AVOCAD, the Lithuanian Court of Appeals has recently issued a very important decision rejecting a claim of more than EUR 1 million for the payment of termination fees.

"Until now, both household consumers and small businesses have been afraid to initiate the termination of uneconomic electricity contracts and change electricity supplier, because electricity suppliers demand huge termination fees for terminating contracts," Mantas Baigys notes.

Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 concerning common rules for the internal market in electricity and amending Directive 2012/27/EU (Directive 2019/944) provided for an obligation for Member States to ensure that unreasonable switching charges are not levied, and for the Member States to ensure, by their proactive action, that relevant unreasonable charges (i.e., switching-only charges that are unrelated to a specific loss of the supplier) are not levied against household consumers and small businesses.

Legislator 01 June 2023 The Energy Law of the Republic of Lithuania established that household consumers, micro-enterprises and small enterprises as defined in the Law on Small and Medium Business Development of the Republic of Lithuania shall have the right to unilaterally terminate the contract for the sale and purchase of electricity or the contract for the sale and purchase of electricity and provision of the transmission service to an independent supplier, and shall have the right to change the independent supplier.

According to the legislator, it is prohibited to provide for termination fees, switching fees and penalties to be charged to the consumers referred to in this paragraph for the unilateral termination of a contract for the sale and purchase of electricity or a contract for the sale and purchase of electricity and the provision of a transmission service.

Recent case law has clarified that the provisions of Directive (EU) 2019/944 have been properly transposed into the Lithuanian legal system since the adoption of Law No XIV-483 of 30 June 2021, which meant that as of 15 July 2021, it was ensured that household consumers and small businesses would not pay any switching fees when unilaterally terminating their contracts.

In other words, even if the termination fee was provided for in the contract between the parties in the electricity sales contracts concluded after 15 July 2021, it cannot be applied to the termination of the contract in accordance with the legal framework. Even if a termination fee has been paid (on or after 15 July 2021), you have the right to claim its reimbursement.

According to the lawyer, both ordinary consumers and businesses (micro and small enterprises) have the right to review their electricity contracts and assess whether there are any objective criteria for choosing another electricity supplier, and not to pay any termination fee. Even if termination fees are fixed in the contract.

"This does not in itself mean that it is possible to initiate the termination of contracts in haste. It is necessary to responsibly assess whether all the necessary conditions for such action exist. It is therefore advisable to seek legal advice," points out the AVOCAD lawyer.

 

 

 

 

 

 

 

 

 

 

 

 

 

Lawyer's tips for e-business: how to sell not only profitably but also legally

Often, businesses only become interested in the legal requirements of their business when they encounter problems, but law is not just about solving disputes, it helps prevent them from happening in the first place. "Those who know this rule are much less likely to face legal challenges, which cost much more to resolve than to prevent," says Egidijus Kieras, an attorney at AVOCAD. He highlighted the most important international legal aspects of e-commerce for the participants of the GlobalShop "Innovation Agency" Academy, which are essential for e-business developers.

According to the lawyer, anyone starting and running an e-business should be aware that non-compliance with the law is punishable by a fine of up to 4% of annual turnover. "If fines don't scare you, be aware that if the infringements are repeated, your e-marketplace could simply be blocked," warns Egidijus Kieras.

What is important for an entrepreneur to do with e-commerce?

According to Kier, almost every action has a legal expression, so the rules of trade are set out in law. Acts come in two flavours: national law and international law.

Each country makes laws that apply only to itself, regulating the activities of individuals, their requirements, etc. For example, there may be differences in terms of return periods, delivery, etc.

The rules and requirements for e-commerce are, in most cases, laid down in directives issued by the EU, but they are not directly applicable in the country and each country has to incorporate the provisions of the directives into its national legislation, i.e. issue laws, e.g.: after the adoption of a directive, the Civil Code or other laws in Lithuania are revised.

"Trade rules need to be harmonised according to the rules of the specific country where the goods are sold to consumers. A website is tailored to the consumers of that particular country if it is available in their language, the presentation of the website is automatically adapted to the consumer's country (with appropriate extensions), and there are other clear indications that the offer of the goods is a targeted act in that particular territory," says the lawyer.

Distance Purchase Agreement - what must be included in it?

The legal relationship between the consumer and the trader is established by the sales contract. What must it contain?

  • Key product features. Although, according to the lawyer, it seems to be very clear to everyone, there are a number of fines for this. Last year, the State Office for Consumer Rights Protection fined €45,624 to a company" that operates an online shop. The Office found that the information published by the portal was incomplete and that the goods presented to consumers differed from their description, for example, they were scratched, there were certain irregularities, etc. Thus, the bottom line is that the description of the product must be specific and not mislead the consumer.
  • Trader's identity: name, address, telephone, email;
  • The total price of the goods or services, including taxes and other costs. If the total cost cannot reasonably be calculated in advance, the method used to calculate the price must be indicated. "The important thing to understand here is that if you don't specify the total price including all taxes, you won't be able to collect them from the buyer later," notes Kieras.
  • If you apply personalisation of the price, this must be stated. The buyer must understand that you have personalised the price he sees according to certain automated criteria. What problem does this rule solve? Businesses can use algorithms based on a consumer's purchase history or the websites they visit to determine whether a consumer is interested in a particular product, and if the answer is yes, they increase the price of the product or service. So, if you have personalised the price, you need to make that clear to the buyer.
  • Payment, delivery, the procedure for performance of the contract and the period by which the trader undertakes to deliver the goods.
  • If a right of withdrawal applies, the conditions, time limit and procedure for exercising this right, as well as a model withdrawal form. If there is no possibility to withdraw, this must also be stated. If applicable, it shall state that the consumer must bear the costs of returning the goods after withdrawal. If you do not specify this beforehand, you will not be able to claim later.
  • A reminder that there is a legal guarantee on the goods (2 years).
  • Commercial warranties (warranties provided by the manufacturer or seller).
  • Illegitimate dispute procedures.

And these are just some of the conditions required for a contract.

What is unfair trading?

Egidijus Kieras also points out which actions are considered unfair in all EU countries and which should be avoided. A commercial practice is unfair if it prevents the consumer from making an informed decision or influences his free economic behaviour:

  1. Illegal indication of the reliability and quality mark.
  2. Fraudulent claiming of a licence (authorisation), or product approval.
  3. You make an offer with a price, but you know that you won't actually sell the goods on those terms.
  4. Misleading claims that the product will only be available for an extremely short period of time.
  5. Specifying the consumer's statutory rights as an exclusive condition of the offer.
  6. Fraudulent closures by announcing sales.
  7. Deceptive claims that the product cures.
  8. Offering to enter a competition or receive a prize, but not giving the prizes or their equivalents specified.
  9. Including an invoice or similar payment document in marketing materials.
  10. Creating a pyramid distribution system.
  11. Inappropriate labelling of advertising.
  12. Rating.

What is important to know about ranking on an e-marketplace?

E-Commerce operators that allow consumers to search for products offered by different sellers must inform consumers of the main criteria that determine the ranking of the products provided to the consumer as a result of his search query. For example, it may indicate that products are ranked on the basis of price, the ratings of the customers who have purchased the product, popularity, or a combination of different criteria. If the ranking of a product in the search results is based on paid advertising or other payments received from the relevant merchants, this information should also be clearly indicated to users.

Genuineness of feedback, who guarantees it?

Where a trader makes product reviews available to the consumer, information on whether and how the trader ensures that the reviews published are from consumers who have actually used or purchased the product shall be considered essential. The aim is to better inform the online shopper so that he is not misled and makes a correct, informed decision.

It is up to the entrepreneur to ensure that the review is genuine. "Usually the authorities ask for clarification and then you have to provide evidence that the reviews are written by your real customers, as well as how the reviews were obtained, whether the users have the possibility to make negative comments as well, and whether they are visible to the public," notes Kieras.

In his view, these questions must be answered, as failure to do so could result in sanctions.

The delivery deadline must be taken seriously

Delivery must be made within 30 days. If the consumer does not receive the goods within this period, he has the right to terminate the distance contract and the seller must immediately refund any money paid by the consumer. "In practice, the deadline depends more on the consumer's wishes. However, this time limit should be taken seriously, as many of the fines imposed are because of this", says Kieras.

The lawyer advises that, in any case, businesses must cooperate with both the consumer and the authorities. "The fines are then much lower, even if infringements are found. Remember that the most common sanctions are those for failure to refund funds on time and failure to respond to consumer complaints on time," notes Egidijus Kieras.

 

Egidijus Langys: "Our colleagues don't have night shifts and don't work weekends"

Egidijus Langys has become the managing partner of AVOCAD . He replaces the previous incumbent, Laurynas Staniulis, who remains a partner of AVOCAD.

"Change is good and the organisation is no exception. It has come a long way in these twelve years, but now I feel it's time to innovate. Egidijus is an integral part of AVOCAD's history and success. He is a personality who has made a major contribution to strengthening the professional community. His professionalism as a lawyer and his personal qualities make him very suitable for the position of managing partner. I have no doubt that he will not only deliver excellent results for the law firm, but also bring new winds that will help AVOCAD to achieve its goals," said Laurynas Staniulis, who will be taking over the position.

"We are very unique in the Lithuanian legal market in terms of our approach to legal work. Although we constantly strive for the highest professional results and maximum client satisfaction, one of the most important goals of our organisation is to have motivated people, a strong internal culture, mutual support and an inspiring atmosphere," notes E. Langys. According to the newly elected Managing Partner, the work of lawyers is often associated with unbearable workloads, ruthless competition and exploitation of lawyers. "AVOCAD has been consistently breaking these stereotypes for more than a decade and more and more young colleagues are listening to us. Although, admittedly, some of them still find it hard to believe that we don't have a night shift and don't have to work at weekends," says the lawyer.

Egidijus Langys has been working at AVOCAD since 2012. He is an arbitrator and mediator at Vilnius Commercial Arbitration Court. The new Managing Partner specialises in corporate and commercial law, insolvency of legal and natural persons, medical, competition and other areas of law.