Lithuanian business litigates less, but more than other European countries

The number of instances when Lithuanian businesses settle their disputes in court decreases yearly, but, compared to other European countries, we can call ourselves litigations leaders that visit courtrooms more often than others. 

In 2018, a record low number of business disputes, i.e. 0.45 cases per company, were filed with courts (in 2017, the number of business disputes per operating Lithuanian company was 0.72). This was the lowest business dispute index (which is calculated yearly) since 2012.

Attorney-at-law Jurgita Judickienė, managing partner at the Business Dispute Law Firm JUREX, explains that this drastic change is associated with changes in the litigation culture, i.e. an increased degree of conscientiousness of businesses, a more thorough evaluation of litigation costs and duration, a more objective analysis of dispute prospects and even concern for corporate reputation. For instance, in many cases, when considering how a dispute should be settled – by going to court or by the method of negotiations, companies choose to avoid going to court and not be associated with litigation.

Affordable, quick and simple

According to Ms. Judickienė, the higher the business dispute index is, the more businesses are prone to settle their disagreements in court. A very low index means that alternative methods of dispute settlement such as mediation, arbitration, and amicable settlement are preferred.

“We have been observing the trend of going to court immediately in case of disagreements for many years in Lithuania. This was partially due to the insufficient knowledge about alternative methods of dispute settlement and also due to the fact that going to court is fairly affordable, quick and simple,” said Ms. Judickienė.

She says that the court proceedings in Lithuania are fairly simple compared to other countries: the litigation costs are quite low and there are no stringent requirements or restrictions, meaning that it is easy to draft a claim and lodge it for examination.

“Litigation in court in other European countries will require considerably higher costs both for attorneys-at-law and experts or specialists. We are also European leaders in terms of case examination duration. For instance, the examination of cases in Italy, Spain, and France may sometimes require decades,” said Ms. Judickienė.

Statistical information about litigation in other European countries:

Country Business dispute index
Spain 0.02
Italy 0.03
France 0.04
Hungary 0.08
Estonia 0.09
Lithuania 0.45

It is for these reasons that companies abroad choose simpler methods to have their disputes settled. According to Ms Judickienė, the current Lithuanian legal system essentially does not encourage businesses to opt for mediation, arbitration or look for other alternatives simply because going to court is a readily available option.

Alternative methods of dispute settlement must find their “clients” by using new technology

Despite the fact that the trust in courts has not been improving for many years, if we consider what businesses opt for when they need to settle a dispute (the court or other institutions), courts become the first choice. It is likely due to both the simplicity and convenience of going to court.

“With the development of technology and the available opportunities to integrate artificial intelligence into court systems, we must look for ways to make alternative methods of dispute settlement (arbitration, mediation, amicable settlement) more accessible. The advocates of the alternative methods must seek for technological progress in order to not lose to the convenient and technologically more advanced court system,” said Ms. Judickienė.

The Lithuanian business dispute index was calculated based on the statistical information provided by the National Courts Administration, Creditinfo Lithuania, arbitration courts operating in Lithuania, the State Labour Inspectorate, the Authority of Audit, Accounting, Property Valuation, and Insolvency Management, the Public Procurement Office and other institutions.

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