LIECHTENSTEIN: An Introduction to Dispute Resolution
Introduction
Liechtenstein is characterised by a stable legal and economic environment. Nevertheless, ongoing changes are also noticeable here, affecting both businesses and private individuals. The legal profession, particularly in relation to litigation, is subject to various developments that bring both opportunities and challenges.
The Liechtenstein legal system is a civil law system. The Liechtenstein courts are all located in Vaduz, the capital of the country. There are three levels of ordinary civil law courts: the Princely Court of First Instance, the Princely Court of Appeal and the Princely Supreme Court. The Constitutional Court acts as an extraordinary court of appeal for constitutional matters. There are also a few special courts.
Current Economic Conditions
Liechtenstein’s economic situation is defined by a stable financial sector, highly developed industrial sectors, and strong international integration. Liechtenstein’s AAA rating was recently reaffirmed with a stable outlook. The country benefits from its role as an international financial centre and as part of the European Economic Area (EEA), which facilitates trade and legal co-operation with other countries. Through a customs union with Switzerland, Liechtenstein serves as an ideal gateway for economic activities in both the EEA and Switzerland. Large companies often choose Liechtenstein as their headquarters for this reason.
However, the effects of global economic uncertainties are also felt in Liechtenstein. Rising energy costs and increasing legal requirements for business activities place financial burdens on companies and individuals. Businesses are increasingly facing legal disputes related to supply chains, contracts and corporate disputes.
Corporate disputes, especially concerning foundations, trusts and corporations, have historically played a central role in Liechtenstein and continue to do so today. Liechtenstein is internationally renowned for its foundations and trusts. Disputes arising in this context are typically litigated before Liechtenstein courts.
Scope of Litigation Activities and Developments
The number of court proceedings in Liechtenstein has increased in recent years, partly due to the continued growth of the economic environment and the associated disputes. The most notable increases have been in business law, banking and finance law and corporate disputes. This trend reflects the increasing complexity and internationalisation of economic activities.
In recent years, there has also been a growing emphasis on alternative dispute resolution methods, particularly arbitration. These methods offer parties the opportunity to resolve conflicts more efficiently and cost-effectively without resorting to formal litigation. The Liechtenstein government supports such methods through legal frameworks that strengthen them as viable alternatives to traditional court proceedings.
Another significant development is the digitalisation of the legal system. The introduction of digital platforms for filing lawsuits and the electronic exchange of documents has long been planned in Liechtenstein, but has not yet been implemented.
Liechtenstein’s courts are well connected internationally with other courts and institutions. In general, the Liechtenstein judiciary is considered efficient by international standards. Court proceedings are usually relatively short compared to other jurisdictions.
New Laws and Their Impact on Clients
In recent years, Liechtenstein has enacted various legal reforms that impact litigation. A key example is the 2020 reform of the Liechtenstein Code of Civil Procedure. This reform aims to enhance the efficiency of court proceedings while improving access to justice. The changes include adjustments to procedural deadlines and simplifications in litigation, which are particularly beneficial for businesses and individuals seeking to avoid lengthy and costly lawsuits. The Liechtenstein legislature pays special attention to the judiciary and strives to keep its legal system up to date. In the latest judicial reform, the Liechtenstein legislature has once again sought to increase efficiency in the judiciary. This reform will take effect in 2026. The specific impacts remain to be seen.
Potential Challenges and Difficulties for Clients
Despite the stable legal framework, litigants in Liechtenstein face several challenges. One major difficulty is the complexity of international legal relations, as many cases involve cross-border elements. This particularly affects businesses operating in multiple jurisdictions, where legal disputes must be handled in different countries. International aspects are also the norm in corporate disputes in Liechtenstein, adding complexity to litigation.
The costs of litigation, largely determined by the duration and complexity of the case, represent another challenge, especially for smaller businesses and individuals. However, court fees in Liechtenstein are relatively moderate by international standards. While alternative dispute resolution methods, such as arbitration, can provide a more cost-effective solution, they also require solid legal expertise and careful preparation.
Since international elements are common in Liechtenstein litigation, claimants are often required to provide a security deposit for court proceedings. This deposit serves as security for the opposing party’s legal costs and can be substantial. This factor should be considered in advance when planning a lawsuit.
Solutions for Clients
To address these challenges, litigants should take a proactive and well-prepared approach to legal proceedings. Close collaboration with specialised attorneys experienced in international legal matters is essential. Alternative dispute resolution methods should be considered, as they often provide a faster and more cost-effective solution.
Furthermore, businesses and individuals can benefit from early legal consultation to prevent potential disputes. Continuous education and adaptation to new legal regulations are also crucial to identifying and overcoming legal hurdles at an early stage.
Conclusion
Despite increasing international complexity and a rising number of court cases, Liechtenstein offers a stable and well-regulated legal environment. Businesses and individuals must remain aware of current trends and challenges to respond effectively to developments in the legal field. A combination of legal consultation, alternative dispute resolution methods, and adaptation to new legal frameworks is key to successfully navigating the challenges of litigation in Liechtenstein.