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Commerzbank successfully represented by bnt attorneys-at-law

Lithuania: bnt attorneys-at-law successfully defended Commerzbank, a leading German bank, before the Lithuanian Supreme Court.

The dispute concerned complex counter-guarantee and pledge relations between two commercial banks. The claimant, Lithuanian Ukio bankas, against which insolvency proceedings had been opened, requested the return of security deposits that had been pledged to the defendant Commerzbank. The Supreme Court had to decide whether the Lithuanian Courts had international jurisdiction to hear this case. More specifically, the court had to rule whether this dispute was to be regarded as a civil and commercial dispute falling under the Brussels I Regulation or if it was sufficiently closely related to insolvency proceedings as to fall outside the realm of the Brussels I Regulation, so that international jurisdiction had to be determined according to the Lithuanian rules of private international law. Only in the latter case would the Lithuanian courts be competent to hear this case, whereas in the former case international jurisdiction would be with the German court as agreed in the contracts between the parties.

The legal team representing Commerzbank, Frank Heemann, Karolina Gasparke and Mindaugas Navickas, successfully argued that Commerzbank was entitled to debit the pledged money of Ukio bank despite the fact that the latter was undergoing insolvency proceedings and that this entitlement existed irrespective of whether the provider of this security was in insolvency or not. Thus the dispute before the court was to be treated as a regular civil and commercial dispute in the meaning of the Brussels I Regulation. The claim stemmed directly from the pledge agreement which was signed in order to secure the commercial relations between the banks, therefore, jurisdiction had to follow the place of venue agreed between the parties, in this case a court in Germany.

This Supreme Court decision is another step towards ending the previous practice of Lithuanian insolvency administrators, i.e., to bring any civil dispute before the Lithuanian courts, irrespective of whether the dispute stemmed from or was closely linked to insolvency proceedings.

The decision increases legal certainty. Former business partners of insolvent Lithuanian counterparties may increasingly rely on not being unjustifiably drawn into lengthy and costly court battles in Lithuania.

Source: Decision of 23 December 2015 of the Supreme Court of Lithuania in civil case No. 3K-3-658-219/2015