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Lithuania

Author: Vytautas Mizaras

III. General Collective Redress Mechanisms

The Lithuanian legal system provides two main collective redress mechanisms. Both are contained in the Lithuanian Civil Procedure Code (CPC): the mechanism linked to the protection of the public interest (Article 49 of the CPC) and the group action proceeding (the chapter 24/1 of the CPC). In addition to these, a joinder of claims mechanism is used.

1. Scope/ Type

The mechanism linked to the protection of the public interest and the group action proceeding are horizontal mechanisms. In practice, the protection of the public interest is used to gain injunctive relief whereas the group action proceeding is used for both injunctive and compensatory relief. As for joinder of claims, the CPC establishes two forms of joinder of claims: compulsory joinder and optional joinder. Compulsory joinder is used when claim is brought by several co-plaintiffs together or against several defendants if the subject of a claim is rights or liabilities assumed by them together in accordance with laws. Optional joinder is used when a claim is brought by several co-plaintiffs together or against several defendants if the subject of a claim is rights or liabilities of the same nature, based on the same matter on actual and legal issues, when each separate demand could be a subject of an independent claim (optional joinder).

2. Procedural Framework

a. Competent Court

The mechanism linked to the protection of the public interest is subjected to general rules of jurisdiction. Accordingly, district courts are the competent courts.

Due to the novelty and complexity of the group action proceeding, specific rules of jurisdiction are followed and regional courts are the competent courts.

Joinder of claims procedures are subjected to general rules of jurisdiction. District courts are competent.

b. Standing

Protection of public interest

Article 49 states that the claim to protect the public interest could be submitted only by a prosecutor, state, municipal authority or other persons appointed by law. Although the law does not make an exhaustive list of subjects, any other persons defending the public interest must establish that the law authorizes them todefend public interest. Therefore, only a limited number of subjects could bring this form of action. Additionally, the CPC does not indicate a set criteria that such person(s) must fulfil. As it concerns the conditions stipulated para. 4 of the Commission Recommendation, sector specific laws and cases provide the legal background for locus standi and practice. So, for example the Law on Consumer Protection indicates certain criteria for consumer organizations. The rule indicated in para 5 does not exist in Lithuania, however, if the person does not meet the criteria established in the laws, the claim will not be accepted by the court. Consumer protection is discussed below.

There are no national lists of entities authorised to defend the public interest, the court decides on locus standi of each subject in each case.

Group action

There are no specific provisions on locus standi, i.e. there are neither any explicit restrictions concerning persons able to file a group action, nor a list of subjects that arepermitted to bring a group action. The specific rules only existed concerning a group representative. It should be added that a representative action cannot be brought under the rules for group actions. However, the association or trade union is entitledto be a group representative, (i) if the claims provided in the form of a group action arose from the legal relationship directly related to its objectives provided in its articles of association, and (2) if no less than ten plaintiffs of the group actionare members of the association or trade union. In this case, the members of the group might not only be the members of the association or trade union. However, the association or trade union should represent the interests of all group action plaintiffs. This regulation of legal standing is considered a representative action, where a representative entity is certified to bring an action. However, what is important is that the persons who have been harmed in a mass harm situation be a party to the proceeding.

Joinder of Claims

There are no specific provisions on locus standi relevant to this mechanism.

c. Availability of Cross Border collective redress

No restrictions are indicated. As indicated below, specific provisions concerning the competence are indicated in the Law on Consumer Protection.

d. Opt In/ Opt Out

Protection of public interest

Concerning the mechanism linked to the protection of the public interest, in principle opt -in mechanism is available according to the CPC. However, it is recognized by the scholars that the consequences of the decision (res judicata) should apply to the persons who did not participated in the procedure. That conclusion is made due to the nature of the procedure -an injunction procedure.

Group action

Only an opt -in mechanism is available according to the CPC in the group action proceeding. The conditions are prescribed by law. The opt-in model signifies that the group of claimants is constituted on the basis of consent of all those claiming to have been injured or harmed. The justification for the model was based in principle on the fact that only a few European countries have started implementing an opt-out system in their national law. The opt-in principle is evident in several articles of the CPC. First, the CPC clearly states that an individual shall express in written form their consent to participate in a group action, and must submit it to the court (point 1 of Part 2 Article 441/3). Accordingly, the individual joining the group must submit a statement to the group representative (a statement should be provided in the form adopted by the Minister of Justice). The written statements of the group action plaintiffs, together with the list of participants in the group action, shall be submitted to the court. Secondly, the group representative should publish an announcement with information about the group action, as well as information for the individuals who wish to join the group. Thirdly, new plaintiffs may be added to the group. When accepting the claim, the court will establish a deadline for joining the group action. After amendments to the claim are made, the court shall finally decide whether all plaintiffs may be included in the group, and confirm the final composition of the group (Article441/7 and 441/8 of the CPC). A person is free to decide whether to join or withdraw from the group, and this right cannot be restricted. After the final confirmation of the group's composition, new plaintiffs may only be added if there exist serious grounds to do so, and only upon approval by the defendant and the group representative (Part 8 of the CPC, Art. 441/8). The application in such case is made to the court and not to the group representative. According to the Art 441/5 of the CPC each member of the group action is able to exercise his/her right to leave the group. However, he/she might realize this right before the adoption of the final decision on the composition of the group by the court (this decision must be adopted at the beginning of the procedure -admissibility and certification stage).

In case the number of plaintiffs in the group falls below the minimum requirement (see e. Main procedural rules below), it is at the discretion of the court to decide whether the action should go forward according to the rules of the collective group action, taking into account the effectiveness, suitableness, and expedience of the process (Article 441/11 of the CPC).

e. Main procedural rules

Protection of public interest

Locus standi is checked by the judge.

Group action

The main procedural peculiarities of the group action under Lithuanian law are related to (i) the rules concerning admissibility and certification of the group, (ii) the role of the court, (iii) the requirement to publish information, (iiii) rules on the allocation of the litigation expenses (discussed above) and (iv) rules relating to amendment of the group and the realization of the procedural rights and obligations of the group.

In case of group action proceeding the main requirements are indicated in the law:

- the group should be formed. The formation of the group depends on two factors: numerosity and commonality. The minimum number of the members of the group should be 20 plaintiffs. As it was mentioned if the number of the members falls below the mandatory threshold, it is at the discretion of the court to decide whether to pursue the claim. The list of the members of the group and the written consent to participate in a group action must be submitted to the court. The commonality factor requires the members of the group to share common questions of law or fact, including protection of rights and interests;

- the group should be represented by adequate representative. The arguments proving the legitimacy of the representative should be indicated in the statement of the group claim. Accordingly, the court, while considering the issue of admissibility of the case, should consider the legitimacy of the group representative, by evaluating the fairness of the representative, their reputation, whether the representative is competent to take on the role, their experience and behavior in similar cases, and whether a conflict of interest exists between the group representative and the group members. The principle of proper representation requires the court to suggest that the group change its representative if it finds that the representative does not act properly on behalf of the group;

- the group should be represented by a lawyer (mandatory group representation principle);

- the arguments justifying that the group action is more purposive, effective and proper way to solve the dispute than the individual process should be submitted;

- the evidence proving the fulfillment of an out-of court procedure should be submitted to the court. The group action is subject to mandatory out-of-court negotiations, and the court will only accept the group action if the parties have failed to resolve their dispute peacefully by prior mutual agreement.

The group action proceeding in principle is a multi-stage process. The acceptance of the claim is very important stage of the procedure, where admissibility and certification issues are solved. Before acceptance of the claim, court provides the claim for the defendant indicating seven days for submission of reply. The reply should reflect the opinion of the defendant concerning the acceptance of the claim. If the court accepts the claim, this acceptance should be appealed within seven days of acceptance. After acceptance of the claim court shall indicate the term for the final formation of the group. The term may vary from 60 to 90 days taking into account the essence of the case and the size of the group. The additional 30 days may be indicated according to the request of the group representative. The representative of the group should within 14 days submit to the court the renewed list of the group and, if necessary, renewed claim. The defendant has a right to submit the opinion concerning these documents. The court should decide on the acceptance of renewed claim and list of group and should adopt the final list of the group.

As the group is formed, the claim after preparation stage of the case could be examined in the court hearing. In principle, general procedural rules are applied for the preparation and examination of the case. Several specific rules of group action case management are indicated in the CPC. There are specific rules on litigation expenses (on the payment of the official fee and division of litigation expenses between members of the group). The procedural documents are delivered to the representative of the group or advocate. The court should be active if the proper representation principle is breached. In case of wrongly representation of the advocate or representative of the group the court may propose to the representative or the group or the members of the group (accordingly) to change the advocate or the representative of the group. The court may decide to invite the members of the group to the hearing if it is needed for the duly examination of the case. If the group is reduced, the court may decide on further examination of the case according to the rules of group action proceeding.

The publicity requirement is directed at both the group action's representative and to the court. The representative of the group action is obliged to publish an announcement inviting potential plaintiffs to join the group action proceedings. The court is obliged to publish on a specific website the information about any developments in the group action (after its acceptance), whether the group has been ordered to replace its representative, information concerning the group's disapproval of the candidate for representative of the group, or any other developments, such as when the group does not have a representative, if the plaintiffs propose to change the representative of the group upon the recommendation of the court who has determined that the representative acts improperly, or information concerning the replacement of the representative during the appeal process.

There are no specific rules on interim measures and discovery in case of group action proceeding.

Joinder of Claims

Joinder of claims mechanism has several specific rules in the CPC. The commonality requirement is applied (Article 43 of the CPC). Each and every participator acts on his/her own behalf, however participators may agree to have the case conducted by one of the participators. Each and every participator shall have the right to independently conduct a case. All participators, for whom the case is not closed, shall be summoned to a court session. The specific rule for delivery of court documents is indicated -in case of joinder of claims when no one single representative has been appointed by the participators, the court shall be entitled at the request of the opposing party or on its own initiative to recommend to the co-parties that they appoint one of their number or another entity as the authorised representative to receive the court documents connected with the case. If the participators fail to appoint the authorised representative, the court shall be entitled, at the request of the other party or on its own initiative, to appoint by a ruling an authorised representative at the expense and risk of the co-parties if in this way the course of the procedure will be expedited and streamlined. The ruling may be amended or annulled by the court if the participators state that they have a legal interest to not be represented by one person. In case of joinder of claims, copies of the court documents shall be submitted to the court for all the co-parties/participators.

Accordingly, the CPC establishes the consequences of the procedure of the mechanism of joinder of claims -in case of compulsory joinder, the outcome of all procedural actions performed by participators that participated in a hearing shall also be applied for those participators that failed to appear in the hearing without a sound reason. Agreement of all participators (co-plaintiffs or co-defendants) is mandatory to conclude a settlement, waive a claim or accept the same.

3. Available Remedies

As mentioned above, the protection of the public interest mechanism is, in practice, used for injunctive relief. Other types of collective redress mechanism might be applied for all types of damages. All types of mechanisms (with exception the mechanism linked to the protection of the public interest, which is designed for the injunction action) allow to seek an injunction and compensation within one single action. The enforcement of final injunctive orders is supported by the imposition of criminal liability where a party has failed to adhere to that order. Where a preliminary injunctive order is sought, the regular procedure is expedited.

The specific regulation existed in case of group action proceeding. If compensatory claim is submitted to the court according to the rules on group action proceeding, the claim concerning damages is examined as individual claim. Therefore, no specific rules existed concerning allocation of damages between claimants for compensatory claims.

Punitive or extra-compensatory damages are not allowed according to the Civil Code of the Republic of Lithuania. The skimming-off/ restitution of profits scheme is not available in Lithuania.

There are no specific rules concerning limitation periods in collective redress mechanisms.

4. Follow-on claims

There are no general rules on follow -on cases. Only specific rules exist in the competition area. There is the possibility to rely on an injunction in a separate follow-on individual or collective damages actions. However, there are no clear rules on this. The prejudicial of facts rule exist in Lithuania. Para. 2 of Article 182 of the CPC indicates that circumstances established in effective judgements in other civil or administrative proceedings where participants were the same persons except in cases when the judgement causes legal consequences for other persons not involved in the proceedings shall be considered indemonstrable. No specific general rule concerning prejudicial facts existin case the person was not involved in the proceeding is provided in the CPC. There is also no specific requirement that the subsequent private proceedings start only after the conclusion of the public authority action.There are no special limitation rules in follow-on cases.

5. Costs

Similar to many European Union Member States, the loser pays principle is the prevailing practice in the Lithuanian civil procedure. The regulation of the group action mechanism does not overrule this principle.

As it was mentioned, the CPC establishes special rules for the split of litigation costs between the group members. The dominating principle is equality; litigation expenses incurred by the party in whose favour the judgment was made shall be awarded by the court to the group action plaintiffs in equal parts.

6. Lawyers' Fees

The financing issues of the group action mechanism were not taken into account and regulated when the group action mechanism was introduced into the Lithuanian legal system. The success fee was enacted in 2004 through the adoption of a new Law on the Bar. The Article 50 of this law establishes that in civil cases a party is allowed to agree that the advocate's fee would depend on the outcome of the case, unless agreeing on a success fee would contradict the rules governing the practice of lawyers. Theoretically,this can lead to abusive and/or frivolous claims. However, there is no practical evidence to date. This rule was not changed or amended with the enactment of the group action in Lithuanian law. The Code of Professional Conduct for the Advocates of Lithuania does not address success fee matters, nor does it explain exceptions to the rule. In principle, the lawyer's fees system does not create an incentive to litigate. The general understanding is that it is rather exception when the rule that the court will award the whole amount of the expenses related to lawyers' fees. In the Lithuanian legal system, lawyer's fees are regulated by the courts.The courts are able to rely on the recommendation adopted by the Minister of Justice. The courts take into account the circumstances of the case (including the complexity of the case).

7. Funding

The CPC does not regulate either financing of the litigation, or contingency or success fees. It only provides that the expenses that are reasonable and necessary for the group representative shall be ascribed to the litigation expenses. The expenses pertaining to legal assistance are included in the litigation expenses, in accordance with the general rules of the CPC. The representative of the group is charged with the surveillance of the allocation of the litigation expenses between plaintiffs of the group. Furthermore, a claimant party is not required to declare the origin of any funding to the court at the outset of proceedings.However, there are no indications or restrictions in the CPC as to financing from third parties. Similarly, there are no specific rules on whether a court is allowed to stay proceedings if the instances outlined in para. 15 of the Recommendation exists.

8. Enforcement of collective actions/settlements

There are no specific rules on enforcement in case of collective redress mechanisms.Where a settlement has been reached, there is no particular rule on on whether the courts verify whether the rights and interests of all parties are protected. The general rules of the CPC are applied to settlements. According to the general rules and the court practice the court shall check the settlement agreement concerning capability, imperative norms and public interests.

9. Number and types of cases brought/pending

Several attempts were made to initiate the group action proceedings, however, they were not successful (4 cases were initiated including the old case concerning non-possibility to apply Article 49 for group actions). Therefore, there has not been adopted any decision within the framework of the group action proceeding yet. By the same time, it means that Lithuania has no court practice in the area of compensatory decisions. Taking into account that the cases pursuant group action proceedings rules were not examined, they are not involved in the Case examples below. The grounds for non -accepting the claims as group action claims were: (i) there is no commonality between requirements, therefore common decision is not possible; (ii) there was no proper out of court procedure.

10. Impact of the Recommendation/Problems and Critiques

It should be noted that the Recommendation was not specifically transposed into Lithuanian laws. There is no clear information whether the Recommendation was taken into account in the process of the adoption of the Amendments to the CPC by introducing the group action proceeding: neither the wording of these Amendments, nor their travaux praparatoire provide reference to it.

Even though no reference was made to the Recommendation when the group action mechanism was enacted in Lithuanian law, the Lithuanian group action model corresponds in essence to the concept indicated in the Recommendation because it reflects the main safeguards established in the Recommendation.

Certain instruments stated in the Recommendation are not transposed into the Lithuanian legal system.

First, Lithuanian law does not have rules regulating third party funding, a demand which may arise in the future. Further, the Lithuanian regulation allows a success fee and does not provide any particular restrictions on this for group actions. It should be considered whether the general restriction referring to the ethical principles will be an appropriate safeguard ensuring the party right to full compensation.

Secondly, Lithuanian regulation does not clarify the relationship between public enforcement and private enforcement. In order to correctly comply with the Recommendation concerning the consistency of public enforcement of the collective redress mechanism, the regulation of all administrative processes which are designed to protect individual rights consecrated in EU law should be reviewed, and the Lithuanian regulation on collective redress should establish clear rules regarding those mechanisms, whilst ensuring the mechanism's effectiveness.

Thirdly, the law does not indicate any criteria or method of the announcement provision relating to the information, which can be furnished by the group representative.

Finally, Lithuania has not created the registry for the collective redress actions, neither for claims realized through the protection of public interest, nor for group actions.

Additional practical issue might be noticed that the requirement to implement obligatory out of court procedure is not coordinated with the out of court procedure pursuant to the sectoral laws. The ADR procedure established in the sectoral laws does not allow group actions or collective redress actions.

As it was mentioned, there were only several attempts to initiate group actions proceedings and have not been any decisions adopted pursuant to the group action proceedings yet. By adopting the concept on Group action, the Government considered that there is a risk that group action mechanism might be used in practice for abuse purposes and might be dangerous for business. Current situation reveals that this mechanism actually does not work in practice. However, ex post evaluation on the implementation of the group action proceeding mechanism is not fulfilled and there is no clear reasons why the group actions proceeding does not attract of consumers organizations or other persons as a measure for the protection of their rights. The scholars are discussing that the group action proceeding mechanism is too complicated and too much discretion belongs to judges. By the same time, it is recognized that there are no expectations that the group action proceeding will be frequently used in practice.

Theoretically, there might be the situation where the members of a group action might be the members of association/trade union and non-members may be inadequately represented. Such a situation might create some difficulties. In case such difficulties would be asserted, the question of proper representation might be raised. As we do not have any actions initiated by these subjects it is very difficult to comment

1. The representative action described in the Recommendation, cannot be brought under Lithuanian law.

2. An example of the form of written statement is approved by the Minister of Justice (The Order of the Ministry of Justice No 1R-378, 2014-12-22).

3. An example of the form of the announcement is approved by the Minister of Justice(The Order of the Ministry of Justice No 1R-378, 2014-12-22).

4. It is not applied in case where the individual claim was provided before the final confirmation of the group. In that case the claimant shall withdraw the claim on the basis of the Article 139 of the CPC and become the member of the group.

5. The Republic of Lithuania Law on the Bar. Law No IX-2066 of 18 March 2004.

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