An attempt to challenge the legality of an arbitration award has been prevented

The Supreme Court of Lithuania has prevented an attempt to challenge an arbitration award rendered in favor of our client. The court of cassation upheld the ruling of the Lithuanian Court of Appeal, which had rejected a complaint seeking the annulment of the arbitration award filed by a person who had not participated in the arbitration proceedings at all. The Supreme Court’s ruling confirms that merely being mentioned in an arbitration award does not create any legal consequences or grounds to challenge the decision.

In the arbitration case, a claim was brought against our client seeking to enforce an option agreement – either to transfer company shares to the claimant or pay financial compensation. Our client justifiably refused to comply, citing the fact that the claimant and related parties had breached their mutual obligations. The arbitral tribunal dismissed the claim.

One of the individuals whose actions were discussed in the arbitration award filed a complaint with the Lithuanian Court of Appeal, even though he had not participated in the arbitration proceedings. They argued that the arbitration award affected their rights and obligations. However, the Supreme Court made it clear: the fact that certain actions of an individual were evaluated in the award does not mean that the decision affects their rights or obligations and certainly does not grant them the right to challenge the award.

We welcome this ruling, which clarifies who may file a complaint for the annulment of an arbitral award under the grounds outlined in the Law on Commercial Arbitration and helps prevent the annulment of arbitration awards without serious justification.

This Supreme Court ruling is particularly significant as the same ground for annulment is being invoked by the claimant whose claim in the arbitration case was dismissed, and whose complaint for annulment of the arbitration award is still under review by the Lithuanian Court of Appeal.