Legal Disputes Over Share Option Agreements

The law firm has successfully represented the client at the Klaipėda Regional Court on a €50,000 damage case related with the annulment of an Option Agreement.

An option agreement is a contract that gives one party the right (but not the obligation) to buy or sell an asset at an agreed-upon price within a specified period. A dispute may arise if one party believes the other has not fulfilled their obligations under the agreement.

The Option Agreement concluded by our client and his former business partner stated the option of our client to acquire shares of a Lithuanian company for a particular amount. The dispute over the enforcement of this agreement led to a unique and widely discussed case law being developed by the Supreme Court of Lithuania. The Supreme Court of Lithuania has recently ruled on the distinction between a Preliminary Agreement and an Option Agreement under the laws of Lithuania and upheld the position of our law firm that unlike a Preliminary Agreement, the Option Agreement is a main agreement that can be enforced in kind, meaning that the client is entitled to claim the shares to be adjudged in his favour in case the other party refuses to comply with the agreement and transfer the shares*. 

The current case is also a unique spin-off of the aforementioned case. Even though the Lithuanian court later found the Option Agreement to be null and void under the laws of Lithuania due to it being concluded without the consent of a spouse of the client’s former business partner (the co-owner of shares), our law firm managed to prove that the client has the right to claim damages caused by the former business partner’s illegal actions which led to the formerly legal and enforceable Option Agreement being contested by his spouse and ultimately being found null and void by the court. The success of the case was conditioned by the aforementioned ruling of the Supreme Court of Lithuania stating that the Option Agreement is a main and enforceable agreement under the laws of Lithuania, which has no formal defects. The court agreed with the arguments of our law firm that the amount of damage in this case should be determined by the value of shares which the client did not receive under the no longer enforceable Option Agreement.

* This case led by Šulija Partners Law Firm Vilnius sparked intense discussions in Lithuanian legal circles. For more, see:

• www.lat.lt/naujienos/isnagrineta-byla-del-opciono-ir-opciono-sutarties-sampratos/1350
• www.infolex.lt/portal/start.asp?act=news&Tema=54&str=110230
• ellex.legal/lt/opcionu-reguliavimas-igauna-daugiau-aiskumo/
• www.glimstedt.lt/naujienos/opcionai-kas-tai-ir-kaip-jie-kvalifikuojami-lietuvos-teiseje/ 
• www.teise.pro/index.php/2023/03/26/lietuvos-auksciausiojo-teismo-nutartis-del-opcionu-ne-panaceja/

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