Category: Lithuania

Cobalt has advised Aquila Clean Energy-managed project company Windfarm Akmene Two on securing a EUR 125 million green loan from SEB Bank.

According to Cobalt, “the loan will be used for the construction of an onshore wind energy farm in the Akmene district, which will have a capacity of 99.2 megawatts with 16 turbines, each generating 6.2 megawatts. It is expected to be operational by 2026.”

The Cobalt team included Partners Simona Oliskeviciute-Ciceniene and Akvile Bosaite and Senior Associate Vytautas Vosylius.

TGS Baltic has advised Unmanned Defense Systems on a EUR 3.2 million investment from Coinvest Capital, business angel syndicate 2NGLS, and other accredited investors.

Founded in 2022, Unmanned Defense Systems is an advanced swarm technology solutions company, focusing on the AI-based integration of swarm drones with contemporary battlefield management systems. According to TGS Baltic, “the company has already won multiple defense procurement tenders and supplies its solutions to the Lithuanian and Ukrainian armed forces, other EU members, and NATO allies.”

According to the firm, “the investment will go a long way in further demonstrating Lithuania’s capability to develop high-tech military UAVs and strengthen national security.”

The TGS Baltic team included Senior Associate Paulius Dabulskis, Associate Domantas Vilys, and Legal Assistants Domantas Mazrimas and Meda Stankute.

TGS Baltic did not respond to our inquiry about the matter.

Walless has advised Scandi Standard on entering the Lithuanian market via the acquisition of a poultry processing facility and poultry production farms.

Scandi Standard is a producer of chicken-based food products in the Nordic region and Ireland.

The Walless team included Managing Partner Dovile Burgiene, Associate Partner Domas Sileika, and Senior Associate Simona Miliauskaite-Gintute.

Walless did not respond to our inquiry on the matter.

Deloitte Legal has advised Medicinos Linija founder Gintaras Dapkus on the sale of i-Dental to Ultradent Products.

i-Dental, founded in 1992 in Siauliai, Lithuania, is a manufacturer of medical devices, dental materials, and cosmetics.

Ultradent Products is a leading developer and manufacturer of high-tech dental materials, devices, and instruments.

According to Deloitte Legal, “the transaction will allow Medicinos Linija to become part of Ultradent Products and leverage its extensive experience to further improve the production of dental materials and provide even more reliable and high-quality products to customers worldwide. […] With i-dental as the company’s most recent acquisition, Ultradent now has offices and subsidiaries in 12 countries.”

The Deloitte Legal team included Partner Tomas Davidonis, Managing Associates Tomas Mieliauskas and Ruta Zukaite Centeno Passos, and Assistant Lawyer Beatrice Zubyte.

Deloitte Legal could not provide additional information on the deal.

Although Lithuania no longer has a national airline, charter companies are popular in the market, especially during holiday periods. Although the Lithuanian aviation industry was heavily affected by the COVID-19 pandemic, no charter company has gone bankrupt. In fact, just recently in spring 2024, one charter company undergoing restructuring finished restructuring procedures earlier than planned and successfully continues its operations from Lithuania.

Lithuanian Airports, a company operating three airports in Lithuania, has just recently presented a long-term master plan for the development of the entire network until 2052, aiming to develop a competitive model for Lithuanian airports, improve efficiency and clearly map out the infrastructure development steps for Vilnius, Kaunas, and Palanga airports in order to be able to seamlessly handle 17 million passengers a year in the future. It is noteworthy that approx €180 million in investments is planned for Vilnius airport (Lithuania’s main capital airport), an additional €50
million for Kaunas airport (in Lithuania’s second largest city), and €50 million for Palanga airport (in a busy Baltic Sea coast summer resort).

From the legal perspective, there have not been any remarkable updates or developments in aviation finance and leasing in recent years, save that Lithuania has just recently ratified the Cape Town Convention on International Interests in Mobile Equipment (2001).

Lithuanian Legal Framework for Aviation Finance and Leasing – General Overview

General Legal Framework

In Lithuania, there is no single regulation covering all aspects of aviation finance and leasing. The primary regulation governing the aviation industry in general is the Aviation Law, establishing the main rules regarding administration of aviation, use of airspace, aircraft and other facilities in aviation, airport operations, carriage, search and rescue, and pecuniary liability and insurance of entities related to aviation. A number of secondary laws implementing the Aviation Law, such as orders, decrees, etc., have been adopted by the Lithuanian Government, the Lithuanian Ministry of Transport and Communications, the Lithuanian Transport Competence Agency, the Lithuanian Transport Safety Administration, State Enterprise Oro navigacija (Air Navigation), and others.

As to financing transactions, the general rules are established by the Civil Code (governing the creation and perfection of pledges/mortgages under local law) and the Code of Civil Procedure (governing enforcement of pledges/mortgages). If financing is provided by Lithuanian lenders, other local laws may also be relevant (e.g. the Law on Financial Institutions, the Law on Banks, and other laws and secondary legislation of the Republic of Lithuania and of the European Union).

Aviation Authorities

Pursuant to the Aviation Law, the Government, the Ministry of National Defence, the Ministry of Transport and Communications, the Chief of Defence of the Republic of Lithuania, the Lithuanian Transport Safety Administration, and the Lithuanian Transport Competence Agency implement national management of the aviation sector in the country within the scope of their competence. As regards civil aviation, the core functions are vested in the Lithuanian Transport Safety Administration and the Lithuanian Transport Competence Agency, which took over the functions of the Lithuanian Civil Aviation Administration after its restructuring in 2019.

Registration of Aircraft in Lithuania

Requirements for aircraft registration in Lithuania are established in the Aviation Law, the Regulations of the Register of Civil Aircraft, the Rules for Registration of the Objects of the Register of Civil Aircraft, and the Rules for Issuing of Registration Marks and Marking of Civil Aircraft.

An aircraft is eligible for registration with the Register of Civil Aircraft if: (a) it has a certificate of airworthiness; (b) it is not registered in a foreign aircraft register; (c) the aircraft owner is: (i) a citizen of the Republic of Lithuania or another member state of the European Union; or (ii) another natural person who makes use of the right of free movement in the member states of the European Union provided to him by the legislation of the European Union; or (iii) a legal entity registered in the Republic of Lithuania; or (iv) the State of Lithuania or a municipality; or (v) the owner of the aircraft is not a person specified in items (i), (ii) and (iii) above, but the aircraft performs more than half of the flights from an airport of the Republic of Lithuania; or (vi) the operator of the aircraft is a person specified in items (i), (ii) or (iii) above; (d) the aircraft is not registered in the Register of Military Aircraft of the Republic of Lithuania.

The requirement specified in item (a) above does not apply in the case of test flights to obtain a certificate of airworthiness.

The minimum set of documents required for aircraft registration with the Register of Civil Aircraft is the following: (a) application to the Transport Competence Agency; (b) documents evidencing the owner’s legal title to the aircraft; (c) document evidencing the transfer and acceptance of the aircraft (for example, a transfer and acceptance deed); (d) if the aircraft was registered in a foreign aircraft register – the original certificate issued by that register, evidencing deregistration of the aircraft; if the aircraft was not registered in a foreign aircraft register, then the original certificate issued by the aircraft register of the country from which the aircraft is imported, evidencing that the aircraft was not registered there (if the original certificate cannot be provided, an exemption may be requested, with reasons why the original certificate cannot be provided); (e) registration (if legal entity) or personal identity (if natural person) documents of the owner and/ or operator of the aircraft; (f) documents evidencing the right to manage and/or operate the aircraft (for example, lease agreement) if not the owner of the aircraft (if the document is in a foreign language, the Transport Competence Agency may request its translation into Lithuanian); (g) power of attorney issued by the aircraft owner to the person submitting the documents to the Transport Competence Agency; (h) documents evidencing payment of the registration fee (which depends on the aircraft specifications and whether registration is regular or expedited).

When copies of documents are provided, these have to be certified by a public notary and, where applicable, certified with an Apostille or legalised and translated into the Lithuanian language (unless otherwise agreed with the aviation authority).

Title Transfers

Lithuanian laws provide that title and other rights in rem to real estate are governed by the laws of the country in which the real estate is located (lex rei sitae). Under Lithuanian laws, aircraft registered in Lithuania are considered real estate; therefore, title and other rights in rem in registered aircraft are governed by the laws of the country of aircraft registration (lex registri).

The agreement for the sale and purchase of an aircraft registered with the Lithuanian Civil Aircraft Register is governed by Lithuanian law and requires certification by a notary in Lithuania. Aircraft sale and purchase agreements concluded in breach of the notarisation requirements are null and void. Therefore, if the agreement for the sale and purchase of a Lithuania-registered aircraft is governed by foreign law, the Transport Competence Agency may refuse to register the change of the owner with the Lithuanian Civil Aircraft Register, and in case of a dispute Lithuanian courts may refuse to apply foreign law in respect of the transaction.

Nonetheless, in respect of aircraft registered in a foreign Civil Aircraft Register, the rules of Lithuanian law would not apply. Thus, application of foreign law would be recognised in Lithuania, unless doing so conflicts with the public order and Lithuanian mandatory statutory provisions.

Registration of Lease Interests in Lithuania

There is a requirement when applying for aircraft registration with the Lithuanian Civil Aircraft Register to provide the aircraft lease agreement to the Transport Competence Agency to substantiate the nexus with Lithuania (i.e. that the requirements for aircraft registration listed above are met). The respective aircraft is indicated in the aircraft registration certificate issued by the Transport Competence Agency and usually also in the operations specifications of the aircraft operator.

Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 entitles an air carrier (lessee) to take on lease aircraft registered in both EU and non EU countries. A Lithuanian air carrier may be required to obtain prior approval of the Transport Competence Agency subject to the requirements contained in the Regulation.

Aircraft Mortgage

In Lithuania, security for obligations can be established over aircraft. This is usually done by creating a mortgage over the aircraft. Security can also be established over other types of collateral (e.g. over movable items or rights, such as funds in bank accounts). The security interest is effective upon creation, but may be invoked against third parties, with certain exceptions, only if registered in the Register of Contracts and Liens (for aircraft mortgages and pledges of movables and rights) or in the Real Estate Register (for real estate mortgages). Aircraft mortgage (even though legally treated as real estate) is subject to registration with the Register of Contracts and Liens.

The pledge/mortgage agreement can be signed in a free form and may be structured in a way acceptable to the parties (however, it must contain certain mandatory prerequisites (requirement as to substance), as established by the Lithuanian Civil Code).

The aircraft mortgage agreement must be certified by a notary in Lithuania. The notary certifying the transaction will require the mortgage agreement to be drafted in the Lithuanian language. A bilingual version of the mortgage agreement can be used, but the Lithuanian version would have to prevail. In certain cases, for instance, the English language can be chosen as the prevailing language, but notaries will then require that, along with the other parties, the agreement is signed by the translator confirming that the translation is correct. The notary notifies details of the notarised mortgage agreement to the Register of Contracts and Liens for registration. Registration normally takes 1 to 2 business days from the date of receipt of such notification from the notary.

To discharge or cancel a mortgage and/or pledge, a relevant request has to be submitted to the notary by the creditor, or by the collateral owner, in the latter case together with evidence showing the proper fulfilment of the secured obligation. Upon receipt of such request, the notary notifies the Real Estate Register and/or the Register of Contracts and Liens that the mortgage and/or pledge should be deregistered. The mortgage and/or pledge is removed from the respective register usually within one business day after receipt of such notification from the notary.

Status of Cape Town Convention: Ratification and Case Law

The Cape Town Convention on International Interests in Mobile Equipment (2001) has been ratified in Lithuania just recently (on 14 June 2024). The law on ratification of the Cape Town Convention will enter into force and the implementing acts should be adopted by mid next year.

It is noteworthy that there are already some case law developments concerning the Cape Town Convention (although it has been ratified by Lithuania recently). In particular, in 2022 the Lithuanian Supreme Court ruled that the provisions of the Cape Town Convention concerning enforcement actions (protecting the rights of the holder of the collateral or international interest) would not be applicable without Lithuania’s independent accession to this international treaty.

Repossession of Aircraft and Enforcement of Security

Repossession Following Lease Termination or Bankruptcy of the Lessee

Under Lithuanian law, the use of self-help remedies is essentially prohibited or very strictly limited to the cases clearly prescribed under applicable laws. This means that the aircraft should be repossessed in a normal business-like manner, under the terms of the lease agreement. In case of a dispute, the parties should bring the matter to court. Once the court issues a judgment, the same is submitted to the bailiff for enforcement.

If the lessee is undergoing bankruptcy, unless stated otherwise in the lease agreement, the lease is valid and enforceable until terminated by the decision of the bankruptcy administrator, i.e. the lessee undergoing bankruptcy is eligible to carry on its business activities. Upon termination of the lease, the aircraft may be repossessed in a normal business-like manner, i.e. the bankruptcy administrator cannot exercise and assume more rights than the entity undergoing bankruptcy had.

Enforcement of Security

Mortgage and pledge enforcement procedures are practically the same. Enforcement is carried out through a notary and a bailiff. If the enforcement grounds established under the secured obligation and/or the applicable law exist, a creditor may apply to a notary for an enforcement record, based on which a bailiff starts the forced enforcement procedure. When a creditor (pledgee) applies for an enforcement record, the notary, having received the pledgee’s request for an enforcement record, must firstly verify whether: (i) the person submitting the request is the pledgee; (ii) the data provided in the pledgee’s request (pledge/mortgage identification code, claim amount, details of the debtor, pledgor/mortgagor and their addresses) conforms to the data provided in the relevant public register; (iii) whether the maturity date of the secured obligation has expired or, if the pledgee wishes to enforce the pledge before the maturity date, whether other grounds for enforcement exist. Having verified such data, the notary sends a notice to the debtor, proposing that the debtor repay the debt within 20 days from the date of the notice or submit evidence that the creditor’s claim is invalid.

The notary will make or refuse to make an enforcement record based on the information provided by the creditor and the debtor. If the notary makes an enforcement record, the notary promptly notifies the relevant public register accordingly. From the date of registration of the enforcement record, the debtor has no right to dispose of the collateral without the creditor’s consent.

An enforcement record issued by a notary must be submitted to a bailiff for enforcement. Usually, a creditor may choose from the following enforcement options: (a) to sell the collateral in a forced auction; or (b) to request transferring the collateral to the creditor for administration (in such case the creditor is entitled to cover its claim from the proceeds received during the administration). If the proceeds of sale of the collateral do not entirely cover the creditor’s claim, the creditor is entitled to initiate general debt recovery proceedings.

By Eva Suduiko, Partner, and Aurelija Balciune, Specialist Counsel, Cobalt

Walless has advised Eika Asset Management on the establishment of the Eika Co-Living fund.

According to the firm, the Bank of Lithuania approved the rules of the closed-end investment fund for informed investors. The fund focuses on community living projects in Europe and aims to provide an affordable alternative to quality housing in city centers.

The Walless team included Partner Laurynas Narvydas and Junior Associate Ugne Grigaityte.

TGS Baltic has advised Civinity on a private placement of an issue of bonds with a nominal value of EUR 5.7 million.

Civinity is a building maintenance and engineering solutions company group in the Baltics. According to TGS Baltic, “all the bonds of this issue have been acquired by the investment fund INVL Bridge Finance controlled by Mundus. This transaction enables Civinity to take part in SIA Mobilly share purchase along with the managers of SIA Mobilly, with the aim to acquire 9.99% of the shares in the company.”

In 2018, TGS Baltic advised Credit Value Investments on a bond investment in Civinity (as reported by CEE Legal Matters on January 18, 2018).

The TGS Baltic team included Partner Dalia Augaite and Associates Kotryna Visockyte, Nortautas Zenevicius, Karina Narnicka-Cumakova, and Martins Galzons.

TGS Baltic did not respond to our inquiry on the matter.

Editor’s Note: After this article was published, CEE Legal Matters learned that Vilgerts advised Civinity as well. The firm’s team included Partners Gints Vilgerts and Reinis Sokolovs and Associate Elizabete Bartansone.

Dentons has advised the Republic of Lithuania on its EUR 1 billion bond issuance. Reportedly, TGS Baltic advised the Republic of Lithuania as well while Freshfields Bruckhaus Deringer and Sorainen advised the underwriters.

According to Dentons, “the Republic of Lithuania updated its Euro Medium Term Note Program in February and has now successfully completed a second issuance of EUR 1 billion 3.5% notes, maturing in 2031. The notes have ratings of A2, A, and A by Moody’s, S&P, and Fitch, respectively, and are listed on the Luxembourg Stock Exchange.”

Earlier in 2024, Dentons advised the Republic of Lithuania on EUR 1.5 billion bond issuance (as reported by CEE Legal Matters on February 20, 2024). In 2023, Dentons also advised the Republic of Lithuania on a EUR 1.25 billion bond issuance (as reported by CEE Legal Matters on June 20, 2023) and, in 2022, the firm advised the Republic of Lithuania on its EUR 1.2 billion bond issuance (as reported by CEE Legal Matters on November 8, 2022).

The Dentons team included London-based Partners Nick Hayday and Victoria Wyer and Trainee Miriam Babrinde.

Articles 13 and 14, along with other provisions of the EU General Data Protection Regulation (the GDPR), require businesses to provide individuals with comprehensive information about the processing of their personal data.

One of the most important instruments for informing individuals about the handling of their personal data is privacy notices, often referred to as privacy policies. Since the GDPR came into effect six years ago, privacy policies have become a standard feature on nearly every website. Initially, compliance with transparency requirements was poor because many privacy policies used vague language. For instance, they described data processing purposes merely as “internal administration” or “business purposes” and stated that data would be stored “no longer than is necessary to achieve the specified purposes,” without clear definitions.

Although such issues still occur, they are now much less prevalent. There is a clear trend towards crafting privacy policies that are more detailed and precise. However, it would be too early to assert that individuals are properly informed about the processing of their data. Only a small fraction of website visitors actually read these privacy notices, let alone understand them. The privacy notice link is clicked by a small percentage of visitors, and those who do visit the page spend so little time there that it is challenging to claim genuine access to and understanding of the information provided.

The reason behind this may be that, in practice, the focus is more on achieving formal compliance rather than genuinely informing individuals. It appears that privacy policies are crafted more to satisfy the requirements of supervisory authorities rather than to inform individuals whose personal data is being processed.

Organizations are creating long, precise, and detailed privacy policies but pay less attention to how such a large amount of information is presented to individuals and whether they are capable of understanding it. Such practices are hardly compatible with the GDPR’s concept of transparency, which the European Data Protection Board emphasizes as “user-centric rather than legalistic” in its guidelines on transparency. Therefore, when deciding between absolute legal accuracy and completeness of information versus enhanced readability with minor compromises in precision, the latter is advisable.

The main purpose of privacy notices is to help individuals understand how their personal data is processed rather than just to avoid fines from supervisory authorities. Moreover, penalties can be imposed not only for missing some kind of information in the privacy policy but also for presenting information in a way that is too complex and fails to consider the understanding capabilities of the intended audience. Balancing the comprehensiveness of information with its understandability may not be an easy task. However, there are effective methods to make privacy notices more “human” while ensuring they meet the requirements of the GDPR. This balance can be achieved through the application of legal design principles in the creation of privacy notices.

What is legal design?

Legal design is an approach that applies design thinking principles to the field of law, placing the user at the center of the process. The main goal of legal design is to make the law more understandable and engaging to everyone, not just legal professionals. Legal design goes far beyond document or information design. It is also used to enhance the effectiveness of legal systems, processes, or services.

Legal design emphasizes the necessity to:

• Understand the characteristics and needs of the recipients of the legal information (to empathize with the users of the legal system).
• Prepare tailored information that meets these needs using clear, simple language, structured formats, and visual elements beyond mere text.
• Engage in continuous iteration by testing and refining the effectiveness of documents or solutions based on feedback.

How can legal design make privacy notices more effective?

Legal design principles can be effectively applied to privacy policies using the following strategies:

Audience analysis. To ensure that a privacy notice is comprehensible, it is essential to understand the target audience and who will be reading the document. While there are instances where the notice might target professionals with specialized knowledge, these cases are relatively uncommon. Typically, the language should be clear and straightforward, accessible to individuals with a basic education. For more vulnerable groups, such as children, the language should be further simplified and can include visual elements or even comics to aid understanding and make privacy notices more fun. Of course, this should be done carefully without distorting the meaning of the message.

Focus on structure. A lengthy, 20-page PDF document that even lacks keyword searchability is likely to be read only by supervisory authorities, competitors, and curious lawyers. The information architecture must be more user-friendly to ensure the privacy notice effectively reaches and engages its intended audience. Right from the outset, it should be immediately apparent where specific information can be found. For larger documents, it’s beneficial to break down the content into separate sections that address distinct issues, incorporate techniques like jump links to facilitate navigation, and present information in clearly defined layers. Utilizing tools to identify the information most commonly sought by readers and prominently displaying this information at the beginning of the policy can be highly effective. Additionally, creating a Frequently Asked Questions (FAQ) section that addresses these common queries can further enhance the policy. On the other hand, it is crucial to maintain a balanced structure to ensure that important information is not obscured. For instance, it is advisable to avoid configurations where only positive details are highlighted in the initial layers while critical information about risks, data transfers to third countries, etc., is relegated to subsequent layers. Such practices can mislead the reader and diminish the transparency of the policy.

Text isn’t the only communication method. It’s important to remember that information can be presented in a variety of ways, including illustrations, icons, videos, and even interactive game elements. While these visual and interactive formats cannot completely replace written text, they serve as excellent complements, significantly enhancing the understandability of information.

“Testing” privacy policies. To make privacy policies more effective, it’s beneficial to “test” them before they go live. This doesn’t necessarily require extensive user research. A simpler approach involves colleagues who are less familiar with data protection laws reviewing the draft policy. They can provide feedback on its clarity and suggest enhancements to make it more user-friendly or engaging. AI tools can also provide valuable insights and enhance the privacy policy. After publication, it is beneficial to regularly review the metrics such as how often the policy is read, the time spent on it, which sections are most engaging and so on. This data can then be used to further improve the privacy notice.

Effective management changes. Privacy policies usually contain a fictitious provision that the controller can change the privacy policy at any time, so the visitor should re-read it from time to time. Given that only a small proportion of visitors to a website even turn to the privacy policy page, the chances that they will go to see if and what has changed are close to zero. To help data subjects navigate through the changes, changes to the privacy policy could be accompanied by a notice in the website’s news section that summarizes the changes, or by other measures to draw the attention of data subjects to the substantive changes.

Conclusion

These strategies are just examples of how legal design can make privacy notices more reader-friendly. However, there is no universal or one-size-fits-all practice for what a good privacy notice should look like, and it probably cannot be. The choice of specific measures to make privacy notices more effective will depend on the nature of the data subjects (the audience), the scope of the privacy notice (how many issues the notice is intended to cover), the culture of the organization and nature of its activities, the functionality of the website, and other relevant factors.

By Viktorija Stancike, Senior Associate, WIDEN Law Firm

Walless has successfully represented Elektrum Lietuva before the Supreme Court of Lithuania.

According to Walless, the case concerned defending Elektrum Lietuva against a “EUR 3 million lawsuit from a sanctioned entity for alleged breach of a supply contract.”

The Walless team included Partner Gediminas Dominas and Senior Associate Danielius Matonis.