Lithuania: A Dispute Resolution Overview
2025 in the Context of Business Disputes
Economic conditions and their impact on business disputes
In 2025, the development of the Lithuanian economy was characterised by differing growth dynamics across individual sectors, which had a direct impact on the structure and nature of business disputes. During the first half of the year, economic growth slowed in manufacturing, information and communications, services, construction and the public sector. This environment required businesses to pay increased attention to financial planning, liquidity management and settlement control, while contractual relationships more frequently gave rise to disagreements regarding payment deadlines, the scope of contractual obligations and performance arrangements.
In the second half of the year, economic activity was supported by strengthening domestic demand and rising household purchasing power. Sectoral development, however, remained uneven: retail trade and the real estate market demonstrated higher levels of activity, while growth in the industrial sector remained more moderate. These conditions resulted in differing financial capacities and bargaining positions among contractual parties, which in turn increased the likelihood of disputes arising from contractual performance.
Short-term fluctuations in gross domestic product recorded during the third quarter did not alter the overall economic trajectory. Over the medium term, economic growth continued to be driven primarily by domestic consumption. In this context, business disputes in 2025 most frequently concerned the performance of contractual obligations and the practical implications of economic change for existing contractual arrangements.
The dispute resolution market and judicial practice
In 2025, the total number of cases adjudicated by Lithuanian courts was slightly lower than in 2024. Administrative cases accounted for the smallest share, while civil cases constituted the largest category. A significant proportion of civil cases involved disputes between business entities, most commonly relating to the performance of monetary obligations, contract termination, enforcement of security measures, penalties, and claims for damages. This distribution reflected both sustained legal activity among businesses and an increased reliance on formal dispute resolution mechanisms.
Structural strengthening of the judicial system continued throughout 2025. The number of judges increased steadily, and newly appointed judges frequently possessed high academic qualifications, including doctoral degrees in social sciences. This contributed to greater consistency in judicial practice and more uniform application of legal standards. The quality of judicial decisions remained stable, with higher-instance courts amending or overturning first-instance decisions only in a limited number of cases, indicating a well-established and predictable body of case law.
Organisational and procedural measures aimed at improving court efficiency were further implemented. The centralised case allocation system enabled a more balanced distribution of judicial workload and more consistent working conditions across courts. At the same time, initiatives linked to the national disability reform improved access to justice through updated court websites, standardised document templates and enhanced physical accessibility.
Despite these measures, the duration and cost of litigation remained a material consideration. Together with the Lithuanian cost-allocation principle – under which the unsuccessful party must reimburse the litigation costs of the successful party – these factors encouraged businesses to assess potential costs, procedural timelines and alternative dispute resolution mechanisms before initiating court proceedings.
Arbitration as a structural alternative for resolving business disputes
In 2025, commercial arbitration in Lithuania continued to function as a widely applied alternative to litigation before courts of general jurisdiction. The Lithuanian legal framework provides for both institutional and ad hoc arbitration, with arbitral awards being binding and enforceable. Arbitration procedures comply with international standards and are aligned with established international practice.
Both domestic and foreign business entities selected arbitration due to its clear procedural framework, confidentiality and the finality of arbitral awards. In cross-border disputes, recognition and enforcement under the 1958 New York Convention played a particularly important role, enabling effective protection of rights where a disputing party or its assets were located in another jurisdiction.
Arbitration clauses were increasingly included at the contract formation stage, particularly in construction, infrastructure, technology, services and long-term supply relationships. In such contracts, the duration of dispute resolution has a direct impact on project implementation, contractual deadlines and financial planning. In practice, arbitration was applied in both high-value and mid-value disputes, with procedural efficiency, finality and limited opportunities for delay being decisive considerations.
The regulatory environment and its impact on disputes
In 2025, Lithuania adopted and prepared a number of significant regulatory changes that directly affected business planning and dispute risk. One of the most important areas was tax reform. Amendments to corporate income tax rates, effective from 2026, increase the standard rate to 17% and the reduced rate to 7%. As these changes were known in advance, businesses began reassessing investment decisions, transaction structures and dividend policies already in 2025.
In the context of tax reform, an increase in tax-related disputes is anticipated from 2026 onward. Business organisations publicly raised concerns regarding potential risks related to investment levels, skilled labour retention and foreign direct investment. Nevertheless, the reform was adopted, making its impact relevant both for businesses and for the legal services market.
Significant developments also occurred in company law. Amendments to the Law on Companies, entering into force on 1 July 2026, affect corporate governance models, capital structures and the exercise of shareholders’ rights. Preparatory adjustments undertaken in 2025 increased the risk of disputes between shareholders, including minority shareholders and company management.
In the area of crypto-asset regulation, 2025 served as a transitional period in preparation for the full application of the EU Markets in Crypto-Assets Regulation (MiCA). From 1 January 2026, crypto-asset services in Lithuania may be provided only by licensed entities. This regulatory shift required financial and technology companies to revise business models, contractual arrangements and compliance processes, creating additional sources of disputes with partners and investors.
Labour law developments were shaped by preparations for the transposition of the Pay Transparency Directive and by stricter regulation of foreign employment. Employers are required to justify pay differentials using objective, gender-neutral criteria, and non-compliance may result in corrective obligations and joint pay assessments with employee representatives. These changes increased the potential for disputes with employees and supervisory authorities.
Practical challenges and dispute prevention
In 2025, Lithuanian businesses increasingly viewed disputes as a foreseeable risk requiring proactive management. This was reflected in greater emphasis on legal audits, contract reviews and internal compliance procedures. Decisions regarding whether to resolve disputes through litigation, arbitration or alternative mechanisms were approached strategically, taking into account costs, duration, publicity and reputational considerations. While this approach enabled some disputes to be resolved before formal proceedings commenced, the overall level of business disputes remained significant.