International Recognition - Transport and Shipping
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17 Feb 2022
The attorneys of our law firm represent a Dutch citizen and a Dutch company in a unique to the Lithuanian case law dispute with a local businessman regarding the performance of an Option Agreement.
Back in 2018, the parties have signed a short agreement on the right of a Dutch citizen to redeem 90% of the shares of a Lithuanian company for an agreed amount in the future (Call Option), which was sold on the same day by a Dutch company to the same person holding also the position of the Director in the company. Subsequently, a dispute arose between the parties following the defendant's refusal to transfer the shares to the plaintiff at his request.
The defendant challenged his obligation to transfer the company's shares to the plaintiff under the Option Agreement, arguing, inter alia, that he had not received any consideration for concluding that agreement and that satisfying the claim would constitute non-compliance with the notarial form for the transfer of shares. His spouse, meanwhile, filed a counterclaim in the case challenging the Option Agreement itself as being entered into without her consent.
Nevertheless, the trial court upheld the arguments of our attorneys and held that an option contract is a risk contract because the parties agree in advance on a fixed share price where the value of the shares is constantly changing. The parties have entered into an agreement on the possibility for the claimant to have a right of claim, and the right of claim does not mean the possibility of concluding a future sales contract, but the right to oblige the seller to sell the shares at the agreed price. i.e., to require performance of the contract in kind. An option is a transaction that gives its buyer the right, but not the obligation, to buy or sell a particular asset at an agreed date in the future. The court ruled that the agreement entered into by the parties has elements of consideration and, moreover, that an option agreement does not automatically become null and void if no additional consideration has been paid for its conclusion. Finally, the court also found the defendant to be unfair in not disclosing to the plaintiff at the time of concluding the Option Agreement the possible joint ownership of the shares by both defendants and using that circumstance in court to avoid the share transfer to the plaintiff. Accordingly, the court upheld the plaintiff's claim and awarded 90% of the company's shares to the plaintiff under the Option Agreement.
The dispute is unique to the Lithuanian case law, as Lithuanian law does not regulate the legal relations of parties to an option agreement (Call Option) and the practice of enforcement of such agreements has not yet been developed in Lithuania.
After the defendants filed an appeal, our attorneys will continue to represent the clients in the dispute before the appellate court.
Šulija Partners Law Firm Vilnius, registered office Jogailos street 11, Vilnius, LT-01116, Lithuania, fax +370 52051926, e-mail: info@SulijaPartners.com
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