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Investor's Legal Brief, July 2019

  • Lithuania
  • Other


1.    The government has adopted significant amendments on the Law on the Legal status of Aliens

In the middle of the July the government has adopted significant amendments on the Law on the Legal Status of Aliens (LLSA) regulating the migration procedure of aliens.
Among the most important changes, by this amendment the Government seeks to facilitate the migration procedures for the citizens of economically strong countries, to whom the visa-free regime applies (e.g. USA, Japan, Canada, South Chorea, New Zealand, and Australia). For the citizens of these countries an individual case for a temporary residence permit is established when these citizens arrive to be employed or to pursue other legal activities (including self-employment). The foreigners from mentioned countries, who arrive to for employment or any other legal activity, will be exempt from duty to obtain a work permit.
The other important change concerns foreigners intending to engage in lawful activities related to the introduction of new technologies or other innovations that are significant for the economic and social development of the Republic of Lithuania (the so-called Startup Visa application). Under the previously adopted amendments, Startup Visa could be issued for one year period and extended not once but twice. Hence, the maximum duration for receiving Startup Visa is three years. This change came into force on the 27th of July.
It is important to mention that one additional goal of this amendment is to establish quotas for the foreigners’ arrival. The quota will be applied to foreigners coming to the Republic of Lithuania to work in the occupation included in the list of occupations for which there is a shortage in the Republic of Lithuania by economic activity and who are either exempted from the duty to obtain a work permit or the Employment Service shall not adapt a decision. Currently, those occupations are slaughterer, butcher, tailor, concreter and other manual professions as defined in the Employment Service Order. When the quote is exceeded, persons will have to apply for the permits in the usual manner i.e. apply to the Employment Service for a decision on the eligibility of a job or work permit and for a national visa or temporary residence permit.
Even thou the amendment for Startup Visa already came into force, the other changes will come into force on 1st of September 2019 or even on 2020.

2.    The National Centre for Cybersecurity has conducted a security investigation of the FaceApp

The National Centre for Cybersecurity under the Ministry of National Defence of the Republic of Lithuania (hereinafter – NCC, Centre), conducted a FaceApp cyber security assessment to ensure the secure use of mobile software domestically.
As stated in the Centre’s report, FaceApp is a photo editing app created by the Russian software manufacturer „ООО Вайрелез Лаб“ (internationally known as „OOO  Wireless  Lab“)that allows you to graphically modify the features of faces in photos, such as aging, rejuvenating, adding a smile or changing facial expression with the help of specialized filters.
Once the App is installed on the device, the user is informed that the selected photo will be processed remotely i.e. at the app developer servers. If the users do not agree with the terms of data processing, app does not function properly and user is encouraged to consent. During the investigation, the NCC found that most of the servers to which users' pictures are transmitted are registered in the United States, and a few others are based in Ireland. The servers send the modified part of the photo (or filters needed for the modification), which are used to compose and output a photo to the user on a mobile device.
The terms of use of the app state, inter alia, that the user must consent to give access FaceApp to use the data available in the application environment free of charge – to allow FaceApp to use, reproduce, modify, adapt, publish, translate, create derivative works, publicly use material (or material created in the future) in any known format or channel as well as the user also agrees to allow FaceApp to commercialize data got in the application. The NCC states, that this is the major concern: “Considering that the app is developed by the Russian software manufacturer „ООО Вайрелез Лаб“, these requirements reinforce the impression of disproportionality in the profile of services provided by the app and the personal cost to the user.

3.    Wind energy prospects in the Baltic Sea

The National Energy independence Strategy foresees the development of wind energy in the Baltic Sea in order to promote local electricity production from renewable energy sources.
Scientists from Klaipėda University, commissioned by the Ministry of Energy, analyzed territory of the territorial sea of the Republic of Lithuania and the exclusive economy zone of the Republic of Lithuania in the Baltic Sea and made proposals for optimal locations for the development and operation of wind power plants in accordance with part entitled “Marine Territories” of the General Plan of the Republic of Lithuania.
Experts provided the Ministry of Energy with a few alternative locations of the marine territory with potential for development of 200, 300, 400 or 500 megawatts (MW) of wind farms.  In total, the experts evaluated the possibility to develop wind farms up to 3350 MW. The study showed that the best locations for the offshore wind development - 30 km from the shore at Šventoji, where the wind speed is 9-10 m / s and the sea depth is 25-40 m. Infrastructure corridors are located nearby.
In the near future, the Lithuanian Energy Agency (LEA) will initiate the preparation of the site specific plan and the strategic environmental impact assessment. Research carried out by scientists will also assist LEA in carrying out an assessment of the feasibility of connecting to land-based electricity transmission networks and an economic cost-benefit analysis of offshore wind development.
Following this preparatory work, it is planned to prepare proposals for parts of the marine territory and description of the power capacities proposed for development in these areas, permits for the use of the maritime area for the development of wind farms and tendering procedures. These documents have yet to be approved by the Government.
According to preliminary estimates, wind farms in the Baltic Sea could start producing electricity by 2030.

4.    The new proposed amendments to the Gambling law

The Government approved the Gambling law amendment project which proposes to ensure the transparency of the lotteries and protection of minors from the engaging in lotteries.
The draft Law offers to limit the age of the players by introducing the restriction on the lottery payout - winnings would not be paid out to persons under the age of 16. Currently some European Union countries have stricter age limits for lottery players compared to Lithuania, for example in Estonia and Great Britain age of the players is 16, in Poland, the Netherlands or Sweden it is 18.
The amendment also offers to determine requirements for the lottery facilities, tickets and their printing, licensing (the issuance, suspension and termination of the license) and the terms on the licensed activity. The restrictions on the settlement and control over the procedure for granting and using the 8% value of the lottery tickets distributed by the lottery organizer have been proposed too.
The proposed changes would also affect lottery advertising, for example the promotion of the lotteries at events, press, radio, television programmes and websites for minors would be prohibited in order to protect them from the potential negative effects of participating in lotteries.

5.    The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters was adopted

On the 2nd of July 2019 in Hague (The Netherlands) the Hague convention on the recognition and enforcement of foreign judgments in civil and commercial matters was signed. This convention is the 40th convention of the Hague conference. This one will be applied for civil and commercial matters, but will not apply to maintenance, bankruptcy, succession, intellectual property or privacy disputes.
This convention is the first convention with such wide scope on the civil and commercial matters. The Convention aims to reduce litigation costs in cross-border cases, to facilitate the recognition and enforcement of judgments worldwide and to shorten the time limits for recognition and enforcement of foreign judgments.
Uruguay the very same day was the first country to sign this convention. European Union participated in negotiations of the text of the Convention as a single organization, however, the European Union has not signed the Convention yet.

6.    Lithuanian Supreme Court: the parties' right to freely settle disputes under arbitration includes the right to rescind such an agreement both before and after the dispute has arisen

Lithuanian Supreme Court (LSC), after considering the termination of the license agreement and the settlement of the debt, on the 17th of June 2019 in its decision stated that the fact of the arbitration agreement has no absolute force, therefore, the court must assess the existence of circumstances that preclude the parties from referring the dispute to arbitration before withdrawing. The license agreement in dispute stated that if the parties fail to resolve their disputes amicably, they should be referred and finally settled by the Vilnius Court of Commercial Arbitration.
The present case raises a question of law concerning the relationship between the obligation of a court to refer parties to arbitration after the existence of an arbitration agreement, the right of the parties to withdraw from the arbitration agreement and / or to conclude jurisdiction over the State through conclusive action by suing one of the parties to the arbitration agreement before a national court and the other party actively participating in the proceeding, without contesting jurisdiction. Contrary to the other party's claim, where such claim for debt arises from a contract containing an arbitration agreement.
It is recognized by the law of the Republic of Lithuania, and in accordance with generally accepted standards of international commercial arbitration, that an arbitration agreement is a contract. The arbitration agreement reflects the principle of the parties' autonomy of will, which in turn is at the heart of arbitration as an alternative means of resolving disputes, so that the initiation of arbitration proceedings is possible only with the agreement of the parties. The right of the parties to agree freely on the attributability of a dispute to arbitration includes the right to terminate such an agreement both before and after the dispute has arisen. The out-of-court settlement of a dispute is the expression of a concerted will between the parties and may be modified. The waiver of an arbitration agreement may be express (e.g. in writing) or implied by the parties in their conduct (procedural conduct)

7.    As of July it is possible to borrow money for buying an item at the auction by pledging it to the lender

As of 1st of July 2019 it is now possible to borrow money for an intention to buy an item at the auction by pledging it to the lender.
From July, the amendments to the Code of Civil Procedure make it much easier to buy real estate. The competition becomes open to anyone who wants to buy such assets, not just those who have the necessary amount of money in their account. This will expand the circle of potential participants and allow one to sell the auctioned property at the highest possible price. At the same time, the interests to the proceedings of both parties will be served better: the creditors will have more opportunities to recover their debts, and for debtors it will be easier to cover the debt and possibly even get some money.
The improved rules of an auction entered into force and affect three groups of individuals. The first group is the individuals who are bidding to buy property sold at the auction. The second group is the collectors who take over unsold assets and are obliged to pay the difference if the value of the assets exceeds the amount of the debt to be repaid. The third group is the purchasers offered by debtors who acquire the property before the announcement of the auction. All the above mentioned groups will be able to apply in writing to the organizing bailiff for the issue once of a certificate in the form specified in the Enforcement Order confirming the right to purchase certain liens. Upon presentation of such a certificate to the bank or other creditor, the required amount of funds will be transferred directly to the bailiff's deposit account for the purchase of the property.