Recognition and enforcement proceedings

Motieka & Audzevičius successfully represented one of the largest Serbian energy companies in the recognition and enforcement proceedings of two ICC Awards: a Partial Award on Jurisdiction and the Final Award. According to the Award, the respondent (a non-signatory to the Arbitration Agreement) was found liable for over half a million euro.  The case was deeply infused with contentious issues of the binding effect of the Arbitration Agreement on Non-Signatories on which there was no settled Lithuanian case-law on at that point.

The Court of Appeal of Lithuania had struck down the Respondent’s attempts to re-litigate the issues already decided by the Arbitral Tribunal and made paramount findings on several salient issues. Firstly, the Appellate Court had refused to hold oral hearings relating to the pertaining enforcement issues. The Court reiterated that the Respondent had been given ample opportunity to comment on all the issues in writing and had failed to demonstrate the exceptional nature of the proceedings at hand, which could have justified setting an oral hearing.

Secondly, the Court confirmed that the latest version of the Code of Civil Procedure of Lithuania does not preclude the assignees of benefits under the Arbitral Awards from applying for recognition and enforcement of the latter in Lithuania.

Thirdly, and most importantly, the Court had created a landmark precedent by upholding the doctrine of piercing the corporate veil. The court had conceded that Lithuanian case law recognizes the possibility to extend the Arbitration Agreement to non-signatories and enforced the Award that found the non-signatory Respondent liable.

Finally, the Court found that the mere fact of initiation of set-aside proceedings initiated at the place of the seat of arbitration was insufficient to justify the adjournment of the enforcement proceedings until the aforesaid set-aside proceedings are finished. Since the respondent had failed to demonstrate that the awards in question have become unenforceable, the Court enforced the Awards.

As noted, this Ruling of the Court of Appeal of Lithuania is very important for the purpose of further development of pro-Arbitration jurisprudence. It is yet to be seen whether these findings shall be upheld by the Supreme Court.