As it is known, the Government of the Republic of Lithuania in 2020 March 14 by resolution No. 1226 “On the announcement of quarantine in the territory of the Republic of Lithuania” taking into account the situation regarding the spread of coronavirus, declared quarantine in the whole territory of the Republic of Lithuania from 2020 March 16 00:00 until 2020 June 16 24:00. Meanwhile, the Government of the Republic of Lithuania on 2020 November 4 by resolution No. 1226 declared second quarantine that has been in effect since 2020 November 7 00:00 until 2021 June 30 24:00. The established quarantine regime prohibited or restricted the activities of private natural and legal persons in practically all spheres of activity, which often prevented those people from carrying out economic and commercial activities or providing services on leased premises and receiving income. As a result, many tenants refused to pay rent due to the existence of “Force Majeure” circumstances because they were unable to use the leased property for the purpose for which the property was leased due to restrictions and prohibitions.

For these reasons, disputes have arisen between the landlords and tenants in the courts, which have led to the development of case law whether the restrictions imposed on Covid-19 are considered as “Force Majeure” exemption from the obligation to pay rent, which we will try to review.

Šiauliai Regional Court Civil Cases Division 2021 March 8 in the order in civil case no. e2A-199-440 / 2021 was considered a dispute in which the plaintiff A. B. requested that the defendant L. firm “Egzotika” be ordered to pay 1080 EUR debt, 1200 EUR fine, 5 % of procedural interest and legal costs, because the parties on 2019 September 30 and 2019 October 1 signed the rent agreements under which plaintiff leased the premises to the defendant and under the 4.1 point, the defendant was obliged to pay 600 EUR rent per month under each contract, in all – 1200 EUR per month, but the defendant didn’t do so. In the present case, the appellant, L. firm “Egzotika”, stated that it had a legitimate expectation of the applicant’s goodwill, which meant that the rent would be reduced by at least 30% during the quarantine period. However, the court of appeal clarified that the defendant had the right and opportunity to apply to the plaintiff for a change in the terms of the contract, the layout of payments or, as the defendant indicated, the deduction of the deposit, but not in its own discretion, referring to circumstances which may have led to a disadvantage, loss of income, loss of income, refuse to perform the contract between the parties under the conditions laid down. Finally, the court of appeal explained that the defendant had not provided any evidence that the quarantine, according to the defendant’s activities (trade in tires, rims and other goods, services), had completely restricted and prevented it from doing so to pay the rent specified in the rent contracts. It is agreed that the defendant’s business, trade and services turnover may have been reduced as a result of the quarantine of COVID-19 and that the reduction in turnover may have affected the defendant’s business and the fulfillment of its obligations to the applicant, however, after considering the defendant’s activities and other circumstances, the court ruled that the mere decrease in turnover in the present case did not constitute “Force Majeure” circumstance and that there were no grounds for unilaterally suspending the payment of rent to the plaintiff.

In other case in which the “Force Majeure” circumstance is assessed, the appellate instance of the Kaunas Regional Court in 2020 November 17 in the order in civil case No. e2A-1613-601/2020 was stated that cannot be accepted the appellant ‘s argument that it should be relieved of its civil liability for non – performance of the contract, since that was due to the quarantine in the country, which led to the appellant’ s activities in physical shops being banned. In the present case, the Kaunas Regional Court clarified that the defendant is a for-profit legal entity which enters into commercial transactions in its activities which involve a certain risk, therefore it must bear the risk of adverse consequences and when the proper performance of contractual obligations becomes restricted for reasons beyond its control (Order of the Supreme Court of Lithuania of 6 May 2020 in civil case No. e3K-3-147-421 / 2020). According to the court, in the present case, the appellant’s situation (inability to repay the debt for the goods) does not comply with the provisions of either Clause 4.1 of the contract or Article 6.212 of the Civil Code. The court noted that the appellant had purchased the goods before the quarantine was issued and that the appellant had to pay for some of the goods also before the quarantine was issued, in addition, the appellant sells not only in shops which were closed during the quarantine but also on the internet (online), so those circumstances lead to the conclusion that the appellant ‘s failure to pay for the goods was not the result of “Force majeure”.

Meanwhile, Vilnius Regional Court in the civil case No. e2A-1497-565/2021 in 2021-06-01 decision considered the issue of a fine of 3 months’ rent for the unilateral termination of the contract without the fault of the other party.

In the present case, the Court of Appeal held that because of Covid-19 epidemic situation there was a suspension of education and childcare in all educational establishments, is the basis for a finding of force majeure in relation to the defendant’s contractual obligations, because the defendant was unable to use the property for the purpose for which the property (childcare and education) was rented, as a result of “Force Majeure”. At the same time, however, the Vilnius Regional Court recalled the court of cassation’s interpretation that the conditions (features) of “Force Majeure” established in Article 6.212 of the Civil Code must be applicable individually in each case, and the party relying on “Force Majeure” must prove that “Force Majeure” conditions (Order of the Supreme Court of Lithuania of 6 June 2012 in civil case No. 3K-3-268/2012).

Thus, the current rulings of the courts of the Republic of Lithuania lead to the conclusion that the restrictions imposed on Covid-19 are not generally considered to be a “Force Majeure” circumstances that exempt tenants from the obligation to pay rent, but at the same time court interpretations do not preclude a party relying on “Force Majeure” from proving that such circumstances of “Force Majeure” exist in its particular situation and, on that basis, seeking the dismissal of the landlords’ claims.

It is obvious, that in this situation the Supreme Court of Lithuania which has accepted the cassation appeal of the party, must also have its say, because the main function is to form uniform case law of general jurisdiction in the interpretation and application of laws and also to develop the law. However, in our view, the quarantine and its restrictions should not be used as a basis to exempt tenants from the obligation to pay rent, as the state has made significant efforts and resources to avoid such disputes, namely that the state provided subsidies to the affected ones of the Covid-19 pandemic and the restrictions imposed, including rent compensation. For example, on 15 April 2021, the Government of the Republic of Lithuania Resolution No. 230 approved a subsidy for the companies most affected by COVID-19, according to which if the company’s average monthly income fell by at least 50%, the company could apply for 70%. a subsidy to cover the fixed costs of its operation, comprising the costs of renting the premises, utilities, operating, security, equipment integral to the premises, parking spaces, indexation under the lease.

Thus, tenants were able to apply for a state subsidy to cover 70% of the value of the invoices received for renting the premises, which means that the State also provided compensation mechanisms for the negative consequences of the restrictions, and tenants should focus their claims to the state on limited access for the subsidy for leased premises, but not to the owners of the premises, who could not in any way influence or predict the onset of the pandemic or the application of state action due to the restrictions.


Černiauskas and Partners Law Firm Advocate’s assistant Vytautas Breimelis.