Business is more active in defending infringed competition rights and reputation

Lithuanian businessmen tend to settle their disputes in court – 97,000 commercial litigation proceedings in average are initiated in courts since 2012 annually. 2016 saw the biggest increase in the number of disputes concerning competition, defence of business reputation of legal entities, also there was more litigation about public procurement, construction contracting, trade marks, disputes with an international element. Such conclusions can be made on the basis of the overview “Dispute Resolution Index” prepared by law firm JUREX.

More attention to confidential information and intellectual property

In recent years, the number of unfair competition proceedings has doubled in courts. In 2014, courts examined 33 unfair competition cases, in 2015 – 87 cases, in 2016 – even 196 cases.

“If we take a look at study data, we can see that business is appreciating fair competition more and more – it seeks to defend its commercial secrets, business strategy from competitors or former employees, not to lose demand for its products or services, professionals who have worked for a company for a number of years. Such behaviour of business participants encourages to look for legal tools, which would eliminate unfair competition and would help to create value added”, attorney at law Jurgita Judickienė, Managing Partner of JUREX, says.

The study also revealed that companies pay more attention to protection of non-property rights: companies’ reputation, right to a certain name turn into ever more important and sensitive factors that help today’s business to be successful in the Lithuanian market, to attract customers or even talented employees. That is evident from the growth in the number of disputes in this category: there were 29 cases in 2014, 25 cases in 2015, 43 cases in 2016.

These tendencies allow thinking that the number of disputes over companies’ non-property rights and intellectual property will keep growing in the future. In spring 2018, the General Data Protection Regulation will become applicable; it provides for new duties of personal data processing companies and for particularly big fines for improper compliance.

More labour and public procurement disputes are expected

In 2013, when Labour Disputes Commissions started their activities, courts get only about two thirds of labour cases they used to get. Courts mostly examine disputes related to termination of or amendments to employment contracts and disputes over work pay. After the effective date of the new Labour Code, the number of labour disputes is expected to grow again due to expanded requirements for employers.

“The new Code provides for the employer’s duty to establish a proper work pay policy, to introduce mechanisms that enable employees to combine family commitments with working time, to ensure protection of employees’ honour and dignity at work. Companies’ commercial secrets and confidential information must be properly described, types of employment contracts that best suit the character of work must be selected, the principles of collective representation must be implemented. All these requirements will demand employers’ time and financial resources and if the requirements are not met – there will be more risks of disputes and disagreements with employees”, attorney at law J. Judickienė says.

Last year, Lithuanian courts examined 406 public procurement cases – lawsuits were initiated concerning 1 out of 21 public procurements (in 2015 – 1 out of 29, in 2014 – 1 out of 30 procurements). It is forecasted that the new Law on Public Procurement, which will probably come into effect on 1 June 2017, will increase the number of disputes between contracting authorities and tenderers even more. Though novelties introduced by the law should simplify public procurement procedures, on the other hand, new regulatory aspects that have not been put into practice yet can create conditions for uncertainties, controversial opinions to emerge.

According to J. Judickienė, the number of such disputes will depend on whether the new Law on Public Procurement will be accompanied by subordinate legal acts of sufficient scope, active involvement of the Public Procurement Office, the Ministry of Economy and other state authorities in providing methodological recommendations for practical application of the new regulation. One of the essential changes, which probably will cause many disputes, is the establishment of the economic benefit evaluation criterion and a requirement to apply it to evaluation of tender offers in almost all procurements.

Disputes rarely end in amicable settlement

In 2016, just 2.4 % of civil cases ended with an amicable settlement agreement. Thus, today, business is still unwilling to use a possibility to settle disputes amicably, though in order to settle disputes in such a way in Lithuania, the parties can use an amicable settlement agreement, which is a non-procedural measure, the institutions of judicial and private mediation.

“Both lawyers and business management experts are unanimous that in the future the parties will seek to negotiate more and disputes will end in amicable settlement much more often. Business will look for compromises and alternatives and will seek that neither party would lose and a possibility to restore former relationship or undertake new common projects would remain”, J. Judickienė, Managing Partner of JUREX, notes.

The overview of commercial disputes tendencies “Dispute Resolution Index” prepared by law firm JUREX analyses statistical data obtained from the National Courts Administration, UAB Creditinfo Lietuva, arbitration courts located in Lithuania, the State Labour Inspectorate, the Authority of Audit, Accounting, Property Valuation and Insolvency Management, the Public Procurement Office and other institutions. “Dispute Resolution Index” has been regularly prepared since 2012.

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