Victory in the Supreme Court on the recovery of funds granted by a city municipality

The dispute resolution team successfully represented a client (the creditor) in a recovery dispute against a Lithuanian basketball club. The bailiff seized and debited the debtor’s (basketball club’s) funds received from a city municipality under the financial support agreement. The debtor objected to the recovery of this money and demanded the bailiff return the money pursuant to Article 668(3) of the Code of Civil Procedure (CPC), which allegedly prohibits the recovery of funds received as targeted support for a project of a sports organisation.

The bailiff applied to the court for guidance as to whether Article 668(3) of the CPC prohibits the recovery from the financial support received from the municipality. The courts of first and appellate instances ruled that recovery from the funds of these debtors is prohibited. Still, the creditor (represented by our team) disagreed with this interpretation and filed a complaint to the Supreme Court of Lithuania.

The Supreme Court of Lithuania made it clear that projects funded exclusively by the Lithuanian state or municipal budgets, if they are not referred to in the European Union legislation or in the international treaties signed by the Republic of Lithuania, cannot be qualified as falling within the exception set out in Article 668(3) of the CPC, i.e., creditors may target recovery claims to the funds received during the execution of the latter projects.

The Supreme Court of Lithuania agreed with the position of the creditor in the present case, taking into account the fact that the municipality exclusively funded the project of the sports organisation and it was not established that the project was referred to in the legislation of the European Union or in the international agreements of Lithuania and that the European Union Structural Funds at least partially funded it, the limitation referred to in Article 668(3) of the CPC could not apply.

Thus, the Supreme Court of Lithuania has overturned the rulings against our client (the creditor).

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