Success in the dispute against Lithuanian Road Administration

Our team successfully represented the interests of one of the largest road building companies in Lithuania in a civil case against Lithuanian Road Administration for unlawful application of contractual penalty and set off, and award of debt.

The case concerned a contract for road building works in 12 different sites. In summer and autumn of 2017 heavy rain disrupted the performance of works and such event was declared as force majeure. However, the Administration ignored force majeure circumstances and applied contractual penalty for the delay. As a result, the Administration set off claims thus reducing payable amount to the contractor. Another key issue was regarding the interpretation of contract. The Administration calculated penalty based on full value of the contract while only 3 out 12 roads were delayed.

Litigation team were successful in proving that the Administration acted wrongly and unlawfully. The courts accepted the claim, eliminated the penalty and awarded the full amount of debt.

During the proceedings the Administration amended the standard terms of new contracts. Now the penalty is calculated based only on value of works of delayed road, instead of full value of the contract. Moreover, according to new terms, the Administrator will not calculate the penalty if the monthly precipitation rate exceeds standard precipitation rate by 200 percent.