The Influence of Instruments of Harmonisation of Private Law upon the Reform of Civil Law in Lithuania

Author:Valentinas Mikelenas
Position:Professor, Vilnius University

1. Possible approaches for the creation of the new system of private law - 2. The UNIDROIT Principles - the way to national law - 3. Experience of seven years of application of the Civil Code: A case study approach - 4. Conclusions


Valentinas Mikelenas

Professor, Vilnius University

The Influence of Instruments of Harmonisation of Private Law upon the Reform of Civil Law in Lithuania

The declaration of independence of Lithuania in 1990 was a natural consequence of the national movement that had started in 1988. This two-year concentration of change was a time of demonstrations, songs, and national euphoria. Thus it is no accident that this time is called a 'singing revolution'. It was also natural that the driving forces in those two years were feelings and emotions rather than rational thinking about the future after the main task - the declaration of independence - had been achieved. There is no surprise that nobody in those two years seriously discussed the model of the future legal system of Lithuania to be introduced in the aftermath of the declaration of independence. So Lithuanian society reached independence without a clear vision for the system of law, including private law, of the future independent Lithuania. The consequence of such inactivity was the temporary retention of the Soviet legal system.

1. Possible approaches for the creation of the new system of private law

As Lithuania restored its independence on 11 March 1990, a need arose to create a new system of law, including private law. A completely new political, economic, and social situation demanded the complete abolishment of, or at least significant changes to, the laws inherited from the Soviet era. In the area of civil law, the main source has remained the Civil Code of 1964. However, this civil code was a typical example of the Socialist civil law that did not recognise private ownership and private business, freedom of contract, or other main institutes of the Western legal tradition. Thus, the Civil Code of 1964 was not suitable for the new political and economic situation and could not serve as a basis for the new system of civil law. Naturally, the legal society was faced with an existential question similar to that of Hamlet, pondering what to do. There were at least two possible ways of introducing a new system of civil law in Lithuania. The first one was the reintroduction of the pre-war system of private law, which was applied between 1919 and 1940. The idea of restoration of the former pre-war legal system of Lithuania was even supported by some of the politicians who were defending the so-called doctrine of continuity of the state. According to the doctrine of continuity, Lithuania was not a newly established state but simply a continuation of the former Republic of Lithuania of 1918-1940. The idea of continuity of the state was quite strong in the area of constitutional law. For example, the newly elected parliament restored the validity of the Constitution of 1938. However, on the same day, the parliament suspended the validity of the Constitution of 1938 and adopted a new provisional constitution, which was later replaced by another document, the Constitution of 19921.

The reintroduction of the pre-war system of private law was even more complicated. The problem was that a purely Lithuanian system of private law had ceased to exist in 1840 because of the division of the Polish-Lithuanian state among other states. The laws of Prussia, Russia, and other states were introduced in the relevant parts of the territory of Lithuania. For these historical reasons, a reception of four different legal systems of private law took place in 1918 when Lithuania declared its independence. Between 1918 and 1940, the Russian Civil Laws of 1830 were applied in the largest part of Lithuania. In the Klaipeda region, the German B├╝rgerliches Gesetzbuch (BGB) was applied. In the territory on the east side of the river Nemunas, the French Civil Code was applied. In the regions of Palanga and Zarasai, the Third Part of the Digest of the Baltic Local Laws of 1864 was applied2. Such a decentralised system of private law in a small country was not acceptable, and the Commission for the Preparation of the Civil Code of Lithuania was established in 1937. Unfortunately, the activities of this commission were terminated in 1940 and the drafts of several parts of the Civil Code were lost during the war. Thus it was clear that this first option - reintroduction of the pre-war system of private law - was not possible, because of its complexity and the difficulties of adaptation to the present economic, political, and social situation.

The second possibility was to start the preparation of a completely new civil code. This was a more realistic path than a reintroduction of the pre-war system. Nevertheless, this way also presented some difficulties. The main problem was the time factor. Everybody understood that the preparation of a new civil code was a time-consuming job that could take many years. But the state and society needed a new civil code as soon as possible because the application of the Civil Code of 1964 was no longer acceptable from the political, economic, and social points of view. Therefore, the working group established for the preparation of the new Civil Code material had time for neither detailed research nor analyses3. The second problem was that pertaining to sources - which sources had to be used for the preparation of a new civil code? The working group was charged by the parliament and the Ministry of Justice with a singular task - to prepare a new civil code in the shortest possible time. No other tasks or instructions regarding the model, content, etc. were issued for the working group. Hence, the working group was given free rein to decide upon all questions related to the future new Civil Code of Lithuania. The lack of political instructions meant that on the one hand the working group was free to decide upon the model of the future civil code and the sources to be used for its preparation. On the other hand, such freedom imposed a great responsibility on the working group.

The working group had no intentions to prepare a 'pure Lithuanian' civil code (such a task was in 1937 prescribed by the Ministry of Justice for the working group4. On the other hand, for various reasons, the working group also decided not to use as its model the civil code of any particular country. It was clear that the new Lithuanian Civil Code had to be a modern legal act to regulate relationships in the 21st century. Thus, it was natural that the main sources that served as a model for the working group were the results of the new 20th-century national codifications of civil law (the new Civil Code of the Netherlands, the new Civil Code of Quebec, etc.) as well as the outcomes of the international harmonisation and unification of private law.

In 1995, Lithuania signed an agreement establishing an association between Lithuania and the European Communities and their Member States. The political decision of Lithuanian politicians at that time was very clear - integration into the European Union. In order to achieve this task, Lithuania needed to harmonise its laws with European Union law. It was also clear for the working group that the future civil code had to be in full compliance with European Union law. Consequently, the preparation of the new civil code at the same time meant incorporation of European Union laws into the national law. The majority of European Union directives valid until 2000 were incorporated into the Civil Code. Among those directives, the provisions that have become articles of the Civil Code are the following, among others:

- directive 93/13/EEC on unfair contract terms in consumer contracts (article 6.188 of the Civil Code);

- directive 85/557/EEC to protect the consumer in respect of contracts negotiated away from business premises (articles 6.356-6.357 of the Civil Code);

- directive 86/653/EEC on the harmonisation of legislation of the member states concerning independent commercial agents (articles 2.123-2.139 of the Civil Code);

- regulations 1983/83 and 1984/83 concerning distributorship (articles 6.782-6.792 of the Civil Code); and

- directive 84/450/EEC concerning civil liability for misleading advertising (articles 6.301-6.304 of the Civil Code)5.

The working group also decided to incorporate into the Civil Code other instruments of European Law; e.g., the Rome Convention on the Law Applicable to Contractual Obligations of 1980 was incorporated into articles 1.37 and 1.39 of the Civil Code.

Notwithstanding the efforts of the working group to incorporate the relevant provisions of European Union law into the Civil Code, the results of such implementation were not always satisfactory. The main problem was that the responsibility for the implementation of European law during the accession period was distributed among various ministries and departments. For example, the Ministry of Justice was responsible for the preparation of the Civil Code, while, at the same time, the Ministry of Economics was responsible for the modernisation of company law. A dispute between these two ministries arose regarding the content of the Civil Code - the Ministry of Justice insisted that the Civil Code had to establish general provisions on legal persons as well as special rules on specific types of legal persons (stock corporations, co-operatives, foundations, partnerships, etc.). On the other hand, the Ministry of Economics argued that specific types of legal persons had to be regulated by special laws outside the Civil Code. The government supported the position of the Ministry of Economics; thus, the regulation of specific types of legal persons and questions of bankruptcy was excluded from the scope of the Civil Code. Because of this, the majority of the European Union directives on company law were implemented...

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