Victory before the Supreme Administrative Court of Lithuania in the annulment of the Bank of Lithuania’s sanction

Our Dispute Resolution lawyers achieved victory before the Supreme Administrative Court of Lithuania in the annulment of the Bank of Lithuania’s decision to revoke the licence of a payment institution.

We represented a payment institution in a dispute against the Bank of Lithuania regarding the Bank of Lithuania’s decision to revoke the licence of a payment institution.

The essential argument for the decision to impose the most severe sanction was the supervisor’s assumption that the payment institution was issuing electronic money without a dedicated licence. In this case, the Bank of Lithuania took the position that accepting funds without a payment order and holding funds in payment accounts for more than 48 hours constituted the issuance of electronic money.

By representing the interests of the client, we argued that the position of the Bank of Lithuania was contrary to the provisions of Article 2(2) of Directive 2009/110/EC, according to which to establish the issuance of e-money, it is necessary to prove that the institution has issued a separate monetary asset from the funds transferred by the clients, which would be accepted by the clients, including the institution’s purpose of issuance of e-money. In cases where the payment institution only accepts funds without a payment order and such funds are held in payment accounts for more than 48 hours, they are funds related to future payment transactions but not e-money.

Following a victory at the Court of Justice of the European Union, the Court decided to annul the most severe sanction imposed by the Bank of Lithuania’s resolution to revoke the payment institution’s licence.

The Supreme Administrative Court of Lithuania agreed that the Bank of Lithuania’s conclusions on e-money issuance were unjustified. The Court also agreed that the sanction imposed based on those findings was disproportionate. The Court therefore decided to annul the measure and return the licence to the customer.