Recodification of civil law in The Republic of Lithuania during 1990–1994
1. ”The Historical Background”
As a traditional European state Lithuania has a dated history of civil law codification stretching as far back as the early sixteenth century. Lithuania’s first civil law codification encompassed legal norms in private law, inheritance law, law of obligations and family law.
In the early eighteenth century, when Lithuania was absorbed into the Russian empire which covered much of the Baltic region, the governing Lithuanian statutes were replaced by civil laws imposed on the state by the new ruling bodies which included Russia, Germany, and France.
After gaining independence from Russian rule in 1918 the existing laws from the various ruling bodies, combined with newly enacted amendments and supplements, continued to function in Lithuania. This was practical at the time as the same economic system remained in tact throughout the region.
During the years between independence in 1918 and Soviet occupation in 1940, a large portion of the Lithuania state retained the First Part of Volume Ten of the Restatement of Laws of Russia of 1840. Other Lithuanian areas such as Klaipeda Land and Uznemune continued adherence to the Civil Code of Germany of 1900 (BGB) and the Code of France of 1804, respectively. In Palanga Rural District and part of Zarasai District, the Collection of Civil Laws for the Baltic Provinces, created during the Russian rule, was applied. While operating under the remaining laws of the Russian regime, Lithuania also adopted several new civil laws such as the Law on co-operative Companies of 1919, the Law on Joint Stock Corporations of 1925 , and the Law on Mortgage of 1936.
In 1940 when Lithuania was forcibly incorporated into the Soviet Union, the civil Code of the Russian Federation of 1922 and accompanying Soviet Statutes were enforced and all previous laws enacted in Lithuania were abolished. Once the Fundamentals of Civil Laws of the USSR and the Union Republics was established, drafting of the Civil Code of the Republic of Lithuania occurred. This new code which came into force on January 1, 1965 was very similar to the codes created in other Soviet Republics which set forth the elements of the Civil Code of the Russian Federation and established principles regulating relations between the Soviet Republics.
2. Period after March 11, 1990
When Lithuania regained independence in March of 1990, the Provisional Basic Law was immediately enacted. This law recognised the validity of the former Code of 1964 to the extent that it did not conflict with any of the provisions enumerated in the Provisional Basic Law.
Recognising that for political and economic reasons adherence to the laws of the Soviet Republic was socially intolerable and clearly incompa-
tible with a transition from a planned economy to a market driven one, a proposal of the Law Faculty of Vilnius University by the Decree of the Presidium of the Supreme Council of Lithuania in July of 1990 officiated several ”Working Groups” to prepare drafts of the codes which the Supreme Council deemed necessary.
The first formal group, assigned in July of 1990 to the significant task of drafting a Lithuanian Civil Code, failed to commence with its duties and was subsequently replaced by a new working group in November of 1991.
This new group, headed by V. Mikelenas, organised the task into two stages. The first stage involved preparing a compilation of amendments and supplements of the existing Civil Code of 1964, weeding out various articles that would hamper economic transition to a market economy, and fixing new principles of property regulations. The second stage consisted of the actual drafting of a new civil code.
Results from the first stage of the working group were presented to the Supreme Council of Lithuania for review on March 18, 1992. The product demonstrated the need to either amend or replace nearly all sub chapters of the Civil Code of 1964. The general prescription of the Code was extended from a one to a three year period (Article 84) and its application was limited to cases where a debtor declares the demands to the court (Article 85). Important changes in the right of property law were made including the addition of legal distinctions and recognition between public and private property.
Significant alterations were also made in the law on obligations. For instance, the right to modify or cancel a contract under the unfavourable conditions on demand of one of the contract parties was added (Article 177) and the establishing of contractual interest (Article 185). Provisions regulating suretyships and pledges were modified and degrees of non-pecuniary damages was widened (Article 486). The Code’s rules on copyrights were adapted to the standard of international covenants dealing with intellectual property.
Perimeters regulating the right of inheritance were extended from two lines to five lines of legatees (Article 573). Moreover, adaptations in the area of conflicts of laws were made. For example, the right of contracting parties to choose which laws are to be applied to the contract was recognised (Article 616).
Although the changes and amendments found in this draft were a significant step toward the second stage of the Working Group’s important national goal, namely the drafting of a Lithuanian Civil Code, its application was not free from complications and errors. Furthermore, there was an unfortunate two year delay in the Code’s review by the Parliament that contributed greatly to the confusion and difficulties that later ensued.
Contradictions between laws enumerated in the Code’s draft emerged more frequently as during the detrimental two year interim laws regulating activities of enterprises, land leasing and property law were enacted by various institutions within the existing governmental structure. For example, the Ministry of Economy organised and formulated legal acts
relating to economic questions which sometimes constituted issues also addressed by the Ministry of Transport such as delivery and transport of goods. There was a severe lack of co-ordination among the institutions that created new laws and unfortunately the Centre which ensured such co-ordination had not yet been established. Consequently, much confusion and disarray resulted from these legal inconsistencies in both the Lithuanian legislature and courts. Furthermore, during these years the fundamental aim of a unified codification of Lithuanian laws was forgotten.
3. Concept of the unified Lithuanian Civil Code
After the Working Group revised and amended the Code of 1964, completing stage one of its plan, preparation for the draft of the new Lithuanian Civil Code was begun. The first step taken was the analysis of civil codes of various foreign countries with special attention given to codes produced in this century such as the Civil Codes of Italy, Holland and the Quebec Province of Canada.
While drafting the new Civil Code, the working group remained cognisant of the importance that the Code’s codification be systematic and comprehensive. Rather than developing two separate codes, the intention was to draft one uniform code encompassing both civil and commercial law as was successfully done in Holland and Italy.
The following is the structure of the Lithuanian Civil Code as proposed by the Working Group: The First Book, ”General Provisions,” sets forth the sources of civil law and the supremacy of the Civil Code in relation to other existing laws. Principles of good faith, reasonableness and equity are established in this section of the Code. In a separate sub-chapter entitled ” International Private Law,” provisions of the Rome Convention ”On the Laws Applicable to the Contractual Obligations” of 1980 was incorporated in full. There is also a sub-chapter dealing with legal acts and grounds for their invalidity. Provisions regulating prescription terms are set out in conformity with the Convention of Council of Europe of 1972 ”On Calculation of Time Limits”.
The Second Book, ”Persons”, consists of two parts. The first part regulates civil status of natural persons and the second deals with the status of legal persons. In addition to defining natural persons, their capacity and traditional norms, special rights such as the right to privacy, a name, and protection of honour and dignity are enumerated in a separate subchapter of this Book.
In the second part of the Second Book general norms applied to all legal persons are set forth. In a separate sub-chapter provisions regarding commercial legal persons and non-profit organisation are found. The third sub-chapter of this Book addresses the institute of representation.
It is helpful to note here that unlike many other law codifications in Europe the Lithuanian Civil Code does not incorporate into its structure a section on family law. Instead, a special Working Group for a separate Family Law Code was formed in 1991. Undoubtedly this unnecessary
separation of statutes regarding family law matters will provoke confusion and difficulties in the Lithuanian legal system and operates against the goal of a unified Civil Code.
The Third Book, ”Inheritance,” is a development of the supplements made to the Civil Code of 1964. The right of inheritance upon law of the survived spouse is changed, taking into consideration the novelty- the possibility and the right to conclude a marriage agreement on the ground of which property relations among the spouses are established. The peculiarities of inheritance of specifically defined property — of enterprise, economy, land, etc. — are established. Also the manner and form for testate documents is simplified and made more comprehensive including stipulations for inheritance of real property. Heirs inherit not only property and assets of the deceased, but also the deceased’s obligations and debts. The Fourth Book, ”Real Rights,” classifies types of property such as real and personal property. Included are sub-chapters addressing possession of property, ownership rights and protection of ownership rights, and servitudes. Mortgages and other liens are also regulated in this Book.
The Fifth Book, ”Law on Obligations, ” consists of two parts. The first deals with ”General Questions of Law on Obligations ” involving monetary obligations, obligations with multiple creditors and debtors, termination of obligations, assurance of obligation fulfilment such as pledges and suretyships. The norms found here are in conformity with the European Conventions of 1967 and 1972 which regulate currency and monetary obligations. Also covered in this section are the general norms and special rules for contractual liability and torts which are based on the Resolution of the European Council of Ministers ”On Penalty Clauses in Civil Law” of January 1978 (No. 3 (78)) and with the EEC Directive on products Liability of July 1985.
The second part of the Fifth Book regulates special types of contracts such as leases, construction, insurance and gifts. It is noteworthy that the Code of 1964 did not address general questions of Contract Law such as the elements of a contract, the principle of freedom of contract, and the grounds for invalidity of a contract. Thus, the Fifth Book of the newly drafted Lithuanian Code was a significant development in contract law.
The Sixth Book, ”Intellectual Property,” includes much of the 1964 Code’s amendments and supplements brought up to date with international conventions and acts on intellectual property, patents, and trademarks. To date there is no decision regarding the contents of the Seventh Book, ”Transport Law.” Codes for the various transport branches such as air, railway, and commercial navigation are being drafted. Thus, it is possible that in the future laws regulating the various branches of transport will be condensed into this Seventh Book.
The above draft of the new Lithuanian Civil Code was presented to Lithuania’s Ministry of Justice in 1994. Regrettably however, the Ministry rejected the proposal of an inclusive Code that incorporates both laws
regulating Commercial and Civil Law matters. Instead the Ministry officiated yet another Working Group to draft a separate Commercial Code.
The results of the Ministry’s decision are detrimental not only to the long term goal of a comprehensive Civil Code but also to the operations in law for the near future. Confusion and inconsistencies regarding private and commercial dealings in Lithuania will increase as questions of bankruptcy, contract regulations and other economic matters remain unresolved. And as the Code’s content will be challenged by developments of other Working Groups, the relatively comprehensive draft of the new Civil Code will disappointingly wither to a mere resource on property law.
The continuation of an unstable and indefinite legal base in Lithuania is far from conducive to a nation that is desperately attempting to strengthen both its economic and political structure. Creation of Civil Code for Lithuania is vital to the nation’s growth and future in both the internal and international spheres. Hopefully the institutions in Lithuania’s government will recognise the necessity for a uniform Civil Code and return its draft presented above.