It is without a doubt that, like the economy in general, the legal market was also affected in recent years. Though the economy has been turbulent for a longer period than during the crisis that started in 2008, this time, the number of large disputes has remained constant. Despite the growing legal costs, high-value disputes rarely dropped due to costs. Smaller law firms, however, seem to have more problems when navigating in this economy – there are cases of closing businesses or consolidating to survive.
The number of cases in Estonia remained largely unchanged in the last two years: in 2023, the Estonian courts of first instance received 35,107 civil cases (compared to 35,089 in 2022), 51,072 summary proceedings for payment orders (51,712 in 2022), 11,413 criminal proceedings (12,389 in 2022), including 3,369 criminal cases (3,877 in 2022), 4,875 misdemeanor proceedings (5,113 in 2022), and 3,088 administrative cases (2,770 in 2022). As a market trend, we are increasingly witnessing the emergence of more complex and intertwined disputes, where conflicts between parties go beyond the classic single-issue disputes and many different procedures are undertaken simultaneously to resolve a single substantive dispute. The growing role of the state in the economy is reflected in disputes as well. There has also been an increase in the number of cross-border disputes, where, in addition to proceedings in Estonia, disputes relating to the same matter are held in one or more foreign countries. We continue to see increasingly complex cluster cases across a variety of areas, requiring diverse expertise and large teams to comprehensively advise clients.
Below are some trends in terms of disputes in Estonia – hopefully they will represent a useful point of comparison for other law firms operating in Central and Eastern Europe.
Intellectual Property, IT, and Data Protection: Most cases are handled by the Industrial Property Board of Appeal, with copyright and trademark disputes leading in terms of the number of cases. Data protection issues are increasingly gaining attention.
Insurance Disputes: More disputes are being settled through conciliation, with a rise in applications (440 in 2023 compared to 379 in 2022). This approach provides quicker, cost-effective resolutions.
Competition Disputes: Competition disputes include civil law cases, supervisory proceedings, and misdemeanor proceedings conducted by the competition authority, as well as criminal proceedings led by the prosecutor’s office in cartel cases.
Media Disputes: An increasing number of lawsuits are being filed against both journalists and media outlets. Legal entities are becoming more involved in such cases.
Bankruptcy and Reorganization: Economic difficulties led to an 18% rise in bankruptcies, though the numbers remain below those of the previous crisis. The hardest-hit sectors include construction, industry, and commerce.
Family and Succession Disputes: Alimony disputes accounted for the largest share of family and succession disputes. Rising living costs and increasing wealth have led to higher claims, leading to the development of legal practices in this area.
Labor Disputes: The majority of employment disputes continue to revolve around the termination of employment contracts. The complex economic situation has led to an increase in these cases over the past year, as reflected by more inquiries to the Labor Inspectorate regarding terminations and layoffs.
Corporate Law Disputes: Shareholder disputes, particularly those involving management members, are on the rise. However, most of these cases tend to settle at one time or another.
Construction and Planning Disputes: Disputes between contractors and subcontractors, primarily concerning performance and payment, were prevalent last year. Issues often focused on deadlines and the quality of work.
White-Collar Crime: Money laundering allegations remain relevant, with more cases involving virtual currencies and sanctions expected. However, case law in these areas remains limited.
Administrative Disputes: A 10% rise in administrative cases shows that individuals are increasingly willing to challenge public authorities to defend their rights.
Public Procurement Disputes: Public procurement disputes are subject to mandatory pre-litigation procedures, with disputes initially settled by the Public Procurement Review Committee. In 2023, 209 requests for review were submitted (a 22.22% increase from 2022). Large-scale public procurement contracts are challenged more frequently. As for the basic tender documentation, technical specifications were the most contested.
Environmental Disputes: Environmental issues are increasingly affecting all areas of business, especially in global efforts to reduce climate impacts, thus also giving rise to environmental disputes.
Tax Disputes: Disputes over the tax liability of the legal representative of a company continue to be an issue in courts. In the second half of 2023, the Supreme Court essentially settled only three tax disputes, and no tax disputes have yet been decided in 2024.
By Jaanus Mody, Managing Partner, Cobalt Estonia
This article was originally published in Issue 11.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.