SOME LEGAL INITIATIVES AS A RESPONSE TO THE COVID-19 CRISIS The Lithuanian government, like authorities in other countries worldwide, was looking for

urgent measures to save jobs and local economies by helping the most vulnerable business sectors deal with quarantine issues. In this regard, legislative initiatives were introduced that stipulated that in special circumstances, such as Covid-19, limitations for the protection of consumer rights (such as vouchers for cancelled travel, prolonged terms of compensation, etc.) would be initiated. Thus, due to Covid-19 and seeking to preserve the tourism sector, the Seimas of the Republic of Lithuania changed Article 171 of the Law on Tourism, allowing travellers to be compensated for a cancelled trip with a voucher (provided the traveller agrees), and Article 6.751 of the Civil Code was changed, allowing compensation for a cancelled trip due to Covid-19 within 90 days from the date on which the applicable restriction no longer applies (if a tourist and a travel operator do not agree to other compensation options). It should be noted that in such a case, it would be very difficult to foresee when applicable restrictions will cease; in other words, the timing of refunding a customer for a cancelled trip would be unpredictable and might last forever.

However, this new legal regulation has received the attention of the European Commission, as its provisions may violate the rights of passengers established in EU legislation, namely EU Directive 2015/2302 of the European Parliament and the Council of 25 November 2015 on package travel and linked travel arrangements. Article 12 of this directive stipulates that

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travellers shall be refunded or reimbursed without undue delay and in any case no later than 14 days after the termination of the travel contract. Also, the European Commission launched infringement proceedings against 10 Member States, including Lithuania. It discovered that during the Covid-19 pandemic in Lithuania (as well as in nine other EU Member States, including the Czech Republic, Greece, Italy, Poland, France, etc.), new legal initiatives had possibly infringed EU consumer laws. As a response, seeking to avoid this procedure, Lithuania rescinded this regulation.

In September of 2021, significant changes to the Law on Consumer Rights Protection were also introduced.[8] Initiating these changes was determined in keeping with the goal of establishing a more effective pretrial settlement of consumer disputes, encouraging sellers and service providers to settle disputes with consumers amicably as soon as possible, and promoting more effective consumer protection against the use of unfair terms in consumer contracts.

A new regulation established the duty of the entrepreneur to reimburse the costs incurred by the institution handling consumer disputes – in other words, the national consumer agency – when the decision is taken in favour of the consumer. The average cost of processing one consumer dispute at the agency is about 270 euros. Of course, this rule will not be applied to the consumer, who will not be obliged to reimburse the costs of the dispute resolution. This measure can significantly contribute to the incentive of sellers or service providers to settle the dispute with the consumer peacefully, especially since trends in handling consumer disputes in recent years show that approximately half of all decisions were made in favour of consumers (55% in 2018, 47% in 2019, and 45% in 2020).

Another important legal measure to protect consumers introduced by the new regulation is the right of the consumer rights agency to carry out a preliminary (ex ante) assessment of draft consumer contracts in terms of unfair clauses of consumer contracts. To prevent an entrepreneur from continuing to use conditions recognized as unfair, the law stipulates a fine imposed by the agency, amounting to 3% of annual income but not exceeding one hundred thousand euros, and if the violation is committed repeatedly within one year, the fine can amount to 6% of annual income (not exceeding two hundred thousand euros). This measure was already used in the cited case of the electricity suppliers “Perlas Energija,” which unilaterally changed the agreement with electricity consumers. As the national consumer agency recognized that the terms of the contract unilaterally offered by the supplier to the customers were unfair, the company was instructed not to apply them.Otherwise, the company would have incurred a fine.[9] However, the supplier altogether stopped its activity under threat of bankruptcy.[10] Now the problem appears to have become a state problem, which eventually means the problem of all taxpayers.

Unfortunately, this seems to be only the first signs of a new crisis.Whether a balanced way out of this crisis of unprecedented inflation can be found remains unclear.

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IV. CHALLENGES INVOLVING SHIFTING CONTRACTS AND SERVICES ONLINE During the quarantine period, contracts, sales, and services have largely shifted online. In this regard, data from customer rights related cases shows that customers often complain about the unfair terms of such online contracts because they have no possibility to negotiate or otherwise influence their clauses. Consumers are frequently not properly informed about their rights and obligations, and thus online contracts usually exacerbate the imbalance between a customer’s rights and obligations and the provider’s product and service. When concluding contracts with consumers, standard contracts are usually used, the terms of which are not individually negotiated. So when concluding these contracts, the consumer can only choose either to sign or to refuse the contract offered. In Lithuanian court practice, it is emphasized that due to lack of information, experience, special knowledge, and so on, the consumer has limited opportunities to influence the content of the terms of such a contract for the proper protection of his interests. In other words, as mentioned, in most cases the customer can only choose to sign the contract or refuse to do so. Accordingly, the seller or service provider gains an unjustified advantage over the consumer, and thus the principle of fairness is particularly relevant in online consumer contracts. A consumer whose rights have been violated due to the unfair terms in a consumer contract has the opportunity to defend his violated rights in court or by pretrial procedures at the state consumer agency.

One could mention as examples in this regard the cases involving contracts with insurance companies. In a few cases,[11] Lithuanian courts found that the standard insurance contract terms shall be considered unfair because the result is a significant imbalance among the rights and obligations of the parties. For example, if an insurance company has the exclusive right to interpret the contract[12] and the absolute and unconditional right to choose the method of compensation and this choice has a major impact on the amount of the insurance benefit[13]

or clause of a standard insurance contract which has not been individually discussed with consumer, this can result in a significant imbalance between the rights and obligations of the parties.[14]

According to Shoshana Zuboff, author of The Age of Surveillance Capitalism (2019), one of the most influential books in recent years, these contracts in most cases are among the most pernicious and are called “contracts of adhesion” by legal experts because they impose take-it-or-leave-it conditions on customers. She notes that online “contracts” are also referred to as

“click-wrap,” because most people get wrapped up in these oppressive contract terms by simply clicking on the box that says “I agree” but without ever reading the agreement.[15]

Furthermore, as in most cases, as online contracts are excessively long and complex, customers are discouraged from actually reading their terms. Paper documents require a physical item and a signature, which naturally restrains the contracting process simply by virtue of paper, printing, archiving, and other costs. Digital terms, in contrast, are “weightless” and can be expanded, reproduced, distributed, and archived at no additional cost.[16] This raises the question of lack of meaningful consent, at least on the part of the consumer of such a contract.

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Indeed, since Roman times the sacred notions of “agreement” and “promise” have been critical to the evolution of contracts. According to Zuboff, such expressions of solidarity and human agency as promises, dialogue, shared meaning, problem solving, dispute resolution, and trust over the course of millennia were gradually institutionalised in the notion of “contract.”[17]

When there is a lack of understanding or consent in the customer, some experts call such a situation as “a unilateral seizure of rights without consent” and consider such “contracts'' as a moral and democratic “degradation” of the rule of law and the institution of contract, a perversion that restructures the rights of users granted through democratic processes. Zuboff concludes that for now it appears that the institution of the uncontract is celebrated, given the asymmetries of knowledge and power[18] between the two parties involved: the corporation and the customer.