The aim of the thesis – to theoretically analyze and scientifically explain civil liability of the financial intermediary as investor protection instrument, to provide reasoned assessment of the regulation of civil liability of the financial intermediary and its application practice in the USA and the EU, to identify relevant problems and suggest theoretically grounded solutions and recommendations for these problems which would also put an emphasis on practical efficiency of civil liability; thus supplementing the doctrine of the EU and national law in this field. This thesis consists of two related yet relatively independent parts. The first part covers the most common issues of civil liability of the financial intermediary against the investor and extensively analyzes the conditions of civil liability of the financial intermediary, i.e. fault, damages, causation and unlawfulness, last one being of particular importance because due to the massive regulation of the activities of financial intermediaries it covers the widest range of legal issues. The second part of the thesis analyzes the relevant questions of the application of civil liability, which is possible only when the required conditions for the rise of civil liability have been established. Therefore, it analyzes the cases under the law or the contract, where the financial intermediary is relieved of liability even if the conditions of civil liability are met. The main focus of the second part is placed on the most relevant question of this doctoral thesis – the award of compensatory and restitutionary damages.
The aim of the thesis – to theoretically analyze and scientifically explain civil liability of the financial intermediary as investor protection instrument, to provide reasoned assessment of the regulation of civil liability of the financial intermediary and its application practice in the USA and the EU, to identify relevant problems and suggest theoretically grounded solutions and recommendations for these problems which would also put an emphasis on practical efficiency of civil liability; thus supplementing the doctrine of the EU and national law in this field. This thesis consists of two related yet relatively independent parts. The first part covers the most common issues of civil liability of the financial intermediary against the investor and extensively analyzes the conditions of civil liability of the financial intermediary, i.e. fault, damages, causation and unlawfulness, last one being of particular importance because due to the massive regulation of the activities of financial intermediaries it covers the widest range of legal issues. The second part of the thesis analyzes the relevant questions of the application of civil liability, which is possible only when the required conditions for the rise of civil liability have been established. Therefore, it analyzes the cases under the law or the contract, where the financial intermediary is relieved of liability even if the conditions of civil liability are met. The main focus of the second part is placed on the most relevant question of this doctoral thesis – the award of compensatory and restitutionary damages.
The paper seeks to explain the differences as to how successfully the three Baltic countries managed the economic crisis between 2008 and the first half of 2010. More specifically, it analyzes investors' confidence, Estonia being the most successful country in this regard, Latvia the least (the only country that applied for aid from the International Monetary Fund), while Lithuania staying in between. The paper aims to take into account the differences (and similarities) between the Baltic countries as well as emphasize the importance of political-institutional factors in explaining investors' confidence. The importance of investors' confidence as is discussed and different ways of measuring it are reviewed. Moreover, the relevance of political-institutional factors in explaining investors' confidence is established from the theoretical point of view. Based on existing literature, a number of explanatory factors are distinguished, namely electoral processes, non-electoral pressures on government, government stability as well as the quality of informal institutions. The paper argues that Latvia was indeed in a significantly worse situation in terms of economic pre-crisis vulnerabilities than Lithuania and Estonia, both of which had certain, albeit different, economic advantages. The main difference between Lithuania and Estonia emerges comparing political-institutional, rather than purely economic, factors: Estonia was better placed in terms of electoral cycles, the extent of non-electoral pressures, and – most importantly – better institutions (governance quality, corruption level, trust in political institutions). Both Latvia and Lithuania found themselves in a significantly worse situation regarding political-institutional factors.
The paper seeks to explain the differences as to how successfully the three Baltic countries managed the economic crisis between 2008 and the first half of 2010. More specifically, it analyzes investors' confidence, Estonia being the most successful country in this regard, Latvia the least (the only country that applied for aid from the International Monetary Fund), while Lithuania staying in between. The paper aims to take into account the differences (and similarities) between the Baltic countries as well as emphasize the importance of political-institutional factors in explaining investors' confidence. The importance of investors' confidence as is discussed and different ways of measuring it are reviewed. Moreover, the relevance of political-institutional factors in explaining investors' confidence is established from the theoretical point of view. Based on existing literature, a number of explanatory factors are distinguished, namely electoral processes, non-electoral pressures on government, government stability as well as the quality of informal institutions. The paper argues that Latvia was indeed in a significantly worse situation in terms of economic pre-crisis vulnerabilities than Lithuania and Estonia, both of which had certain, albeit different, economic advantages. The main difference between Lithuania and Estonia emerges comparing political-institutional, rather than purely economic, factors: Estonia was better placed in terms of electoral cycles, the extent of non-electoral pressures, and – most importantly – better institutions (governance quality, corruption level, trust in political institutions). Both Latvia and Lithuania found themselves in a significantly worse situation regarding political-institutional factors.
The paper seeks to explain the differences as to how successfully the three Baltic countries managed the economic crisis between 2008 and the first half of 2010. More specifically, it analyzes investors' confidence, Estonia being the most successful country in this regard, Latvia the least (the only country that applied for aid from the International Monetary Fund), while Lithuania staying in between. The paper aims to take into account the differences (and similarities) between the Baltic countries as well as emphasize the importance of political-institutional factors in explaining investors' confidence. The importance of investors' confidence as is discussed and different ways of measuring it are reviewed. Moreover, the relevance of political-institutional factors in explaining investors' confidence is established from the theoretical point of view. Based on existing literature, a number of explanatory factors are distinguished, namely electoral processes, non-electoral pressures on government, government stability as well as the quality of informal institutions. The paper argues that Latvia was indeed in a significantly worse situation in terms of economic pre-crisis vulnerabilities than Lithuania and Estonia, both of which had certain, albeit different, economic advantages. The main difference between Lithuania and Estonia emerges comparing political-institutional, rather than purely economic, factors: Estonia was better placed in terms of electoral cycles, the extent of non-electoral pressures, and – most importantly – better institutions (governance quality, corruption level, trust in political institutions). Both Latvia and Lithuania found themselves in a significantly worse situation regarding political-institutional factors.
The paper seeks to explain the differences as to how successfully the three Baltic countries managed the economic crisis between 2008 and the first half of 2010. More specifically, it analyzes investors' confidence, Estonia being the most successful country in this regard, Latvia the least (the only country that applied for aid from the International Monetary Fund), while Lithuania staying in between. The paper aims to take into account the differences (and similarities) between the Baltic countries as well as emphasize the importance of political-institutional factors in explaining investors' confidence. The importance of investors' confidence as is discussed and different ways of measuring it are reviewed. Moreover, the relevance of political-institutional factors in explaining investors' confidence is established from the theoretical point of view. Based on existing literature, a number of explanatory factors are distinguished, namely electoral processes, non-electoral pressures on government, government stability as well as the quality of informal institutions. The paper argues that Latvia was indeed in a significantly worse situation in terms of economic pre-crisis vulnerabilities than Lithuania and Estonia, both of which had certain, albeit different, economic advantages. The main difference between Lithuania and Estonia emerges comparing political-institutional, rather than purely economic, factors: Estonia was better placed in terms of electoral cycles, the extent of non-electoral pressures, and – most importantly – better institutions (governance quality, corruption level, trust in political institutions). Both Latvia and Lithuania found themselves in a significantly worse situation regarding political-institutional factors.
The object of the master's study are international legal relations in the field of protection of foreign investment, when the subject of the study is the international legal mechanism for the protection of the rights of a foreign investor in Ukraine. The main purpose of the master's study is to analyze the general characteristics of foreign investments, foreign investors and the issues of their protection; designation of international mechanisms for the protection of foreign investors and investments in Ukraine; studies of international investment agreements on the protection of foreign investors and investments; the study of international commercial arbitration, in particular the activities of such arbitration in Ukraine; formulation of their development trends. These goals will be achieved when performing the following tasks: - research on the concepts of foreign investment and foreign investor, determining its status; - analyzing international legal agreements in the field of protection of foreign investments and foreign investors; - definition of international commercial arbitration and its types. Characteristics of international commercial arbitration in Ukraine; - designation of trends and prospects for the development of mechanisms for the protection of foreign investments. When using the logical method of analysis, the method of system analysis, the method of synthesis and the method of interpretation of law, the following conclusions were made. The main characteristic of the modern world is the strengthening of the integrity of the world economy, which is due to the increasing number of economic ties between countries, creating better conditions for the lives of citizens and peoples. This creates a positive environment for attracting foreign investment into the country, and the development of investment relations, in principle. Today, the issue of attracting foreign investment in Ukraine's economy remains relevant, respectively, the issue of protecting the rights of a foreign investor as such is posting. The relevance of these issues is indicated by the presence of a significant number of agreements that govern them. As well as institutions that are the main mechanisms for the protection of the rights and interests of foreign investors, both at the national and international levels. Master's work can be useful to students, lawyers interested in international investment legislation and national legislation of Ukraine, experts in the field of protection of foreign investment.
The object of the master's study are international legal relations in the field of protection of foreign investment, when the subject of the study is the international legal mechanism for the protection of the rights of a foreign investor in Ukraine. The main purpose of the master's study is to analyze the general characteristics of foreign investments, foreign investors and the issues of their protection; designation of international mechanisms for the protection of foreign investors and investments in Ukraine; studies of international investment agreements on the protection of foreign investors and investments; the study of international commercial arbitration, in particular the activities of such arbitration in Ukraine; formulation of their development trends. These goals will be achieved when performing the following tasks: - research on the concepts of foreign investment and foreign investor, determining its status; - analyzing international legal agreements in the field of protection of foreign investments and foreign investors; - definition of international commercial arbitration and its types. Characteristics of international commercial arbitration in Ukraine; - designation of trends and prospects for the development of mechanisms for the protection of foreign investments. When using the logical method of analysis, the method of system analysis, the method of synthesis and the method of interpretation of law, the following conclusions were made. The main characteristic of the modern world is the strengthening of the integrity of the world economy, which is due to the increasing number of economic ties between countries, creating better conditions for the lives of citizens and peoples. This creates a positive environment for attracting foreign investment into the country, and the development of investment relations, in principle. Today, the issue of attracting foreign investment in Ukraine's economy remains relevant, respectively, the issue of protecting the rights of a foreign investor as such is posting. The relevance of these issues is indicated by the presence of a significant number of agreements that govern them. As well as institutions that are the main mechanisms for the protection of the rights and interests of foreign investors, both at the national and international levels. Master's work can be useful to students, lawyers interested in international investment legislation and national legislation of Ukraine, experts in the field of protection of foreign investment.
The scope and procedures governing the screening of foreign investors and related transactions in Lithuania are established by the Law on Protection of Objects Important to Ensuring National Security of the Republic of Lithuania. Considering the existing legislative framework, the year of 2020 is important because Regulation (EU) of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union became fully operational on 11 October 2020. For many years, the European Union, unlike many of the world's other major economies, did not have a single centralized investor screening mechanism to assess security and public order interests. However, such regulations were in force at the national level in more than half of the EU Member States, including Germany, France, the UK, Italy, Poland, Lithuania and Latvia. Based on the provisions of the EU Regulation, national FDI screening mechanisms in the EU Member States must meet minimum standards starting from 11 October 2020. The EU Regulation does not oblige Member States to adopt FDI screening mechanisms. Moreover, the final decision on whether or not to screen a particular investor or transaction remains with the Member States. However, where the Member States have such mechanisms in place, the EU Regulation lays down several minimum requirements, including transparent and non-discriminatory rules and procedures, clear deadlines and the possibility to appeal against an FDI screening decision. One of the fundamental elements of the EU Regulation is the establishment of an EU cooperation mechanism, which allows the European Commission and the Member States to share information and views on ongoing FDI screenings on a national level. There is no doubt that this Regulation is the first attempt to regulate FDI regime at the EU level. The new Regulation has become an important factor to be taken into account when considering transactions involving foreign investors in the EU. It has to be seen how closer coordination between EU governments and strengthened investment controls to be developed further in the coming year.
The scope and procedures governing the screening of foreign investors and related transactions in Lithuania are established by the Law on Protection of Objects Important to Ensuring National Security of the Republic of Lithuania. Considering the existing legislative framework, the year of 2020 is important because Regulation (EU) of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union became fully operational on 11 October 2020. For many years, the European Union, unlike many of the world's other major economies, did not have a single centralized investor screening mechanism to assess security and public order interests. However, such regulations were in force at the national level in more than half of the EU Member States, including Germany, France, the UK, Italy, Poland, Lithuania and Latvia. Based on the provisions of the EU Regulation, national FDI screening mechanisms in the EU Member States must meet minimum standards starting from 11 October 2020. The EU Regulation does not oblige Member States to adopt FDI screening mechanisms. Moreover, the final decision on whether or not to screen a particular investor or transaction remains with the Member States. However, where the Member States have such mechanisms in place, the EU Regulation lays down several minimum requirements, including transparent and non-discriminatory rules and procedures, clear deadlines and the possibility to appeal against an FDI screening decision. One of the fundamental elements of the EU Regulation is the establishment of an EU cooperation mechanism, which allows the European Commission and the Member States to share information and views on ongoing FDI screenings on a national level. There is no doubt that this Regulation is the first attempt to regulate FDI regime at the EU level. The new Regulation has become an important factor to be taken into account when considering transactions involving foreign investors in the EU. It has to be seen how closer coordination between EU governments and strengthened investment controls to be developed further in the coming year.
REPO transaction is an agreement by which one party (the seller) undertakes to sell financial instruments or cash to the other party (the buyer), and the latter shall pay the purchase price, and thus it is agreed that the seller undertakes to repurchase from the buyer the same or equivalent financial instruments or the same amount of money for the repurchase price at the scheduled future date. This transaction determines relatively complex legal relations, and the investor 's risk to suffer monetary losses depends not only on the instability of the market price of the financial instruments, but also on genuine fulfillment of contractual obligations by the parties of the transaction. As in all contractual relations, in case of REPO transaction, there are situations where the parties violate the terms of the transaction and the disputes have to be solved in court. Although the Lithuanian case law is rather unified when solving disputes between the parties of the transaction where the investor does not comply with the obligation of the transaction to pay margin, sometimes non-compliance with this obligation is not the only reason for the resulting losses. The law, in cases where the investor violates the obligation to pay margin, grants the right to the financial intermediary to dispose of financial instruments, however giving the right, but not the obligation the law does not impose strict imperatives for the deadline of realization of financial instruments, for this reason in practice there are cases where the latter are in no hurry to implement their rights to realize the financial instruments, what increases the losses even more. In such cases the biggest problem is the legal qualification of the delay of financial intermediary to realize the financial instruments and the connection with the obligations applicable to the latter and influence of failure to comply with these obligations to the size of the loss. In such cases the question is whether if there is proof that the financial intermediary delayed realization of financial instruments, the losses of the REFO transactions still have to be covered by the investor who failed to fulfill their obligation to pay margin? Whether the losses shall be distributed in proportion to the two parties and whether such distribution of the losses for both parties is legally possible and reasonable in general? The aim of this thesis is to establish any contractual or statutory provisions that forbid the financial intermediary to delay realization of financial instruments, when the latter acquires such a right. The aim of the thesis is to assess whether the financial intermediary is responsible for the losses resulting from the delay in the realization of the financial instruments transferred to the intermediary during the REPO transaction where the investor does not pay margin (i.e. or one party, a financial intermediary, is responsible for the losses incurred because of his fault, as a result of the delay in realization of financial instruments transferred based on REPO transaction when such right incurred due to the fact that another party, investor, breaches his obligations (did not pay margin), and to determine the recovery mechanism of damages caused because of the fault of both parties that concluded transaction. In order to achieve these objectives, the paper has analyzed both the Lithuanian and the European Union law acts regulating investment services and protection of investors' rights, the thesis has also examined the Lithuanian case law and the various scientific sources. The hypothesis of the paper that a financial intermediary is responsible for the losses resulting from a delay in the realization of financial instruments transferred to him based on the REPO transaction where the investor does not pay the margin has been proven. The paper has found out that in cases where the investor does not pay the margin, the conditions under REPO transaction allow the financial intermediaries to realize the transferred financial instruments. In some cases REPO contracts shall provide the deadline of such right from the moment when the investor does not pay the margin, but this condition is not mandatory and is not always included in repurchase agreements. Actually, even in cases where such a term is provided for in the contract it does not require a financial intermediary to fulfill this right as soon as it occurs, the financial intermediary is free to determine how soon after the emergence of the right to realize the financial instruments he shall implement the latter. In cases where in the REPO transaction there is a dispute on realization of financial instruments in terms of timeliness of the financial intermediary in respect of realization of financial instruments, the provisions provided for in the Act of Markets of Financial Instruments in the Republic of Lithuania and in the Civil Code are applicable, such provisions establish the principles of care, diligence and fairness, and oblige the financial intermediary to operate for the best conditions and interests of the customer. Given the fact that this work has established that the obligations to the parties arising based on REPO transaction end only when both parties have fulfilled their obligations, the obligations arising based on the mentioned transaction, including the care, diligence and integrity requirements are to be applied even when the investor breaches his obligations, as in such case the obligations of the parties still can not be considered to be expired. Therefore, in cases where it is determined that the financial intermediary with the right to realize financial instruments, even in cases where this obligations occurred due to the fact that the investor has failed to fulfill his obligation according to REPO transaction to pay margin, delayed to implement it, such behavior is to be regarded as the breach of duty of care, diligence and fairness and the obligation to act for the best conditions for the customer. This thesis has also showed that during the settlement of disputes between an investor and a financial intermediary in court, in addition to special legal norms regulating the investment services, the contractual civil liability provisions are also applicable, which, in cases where both REPO counterparties violate the contractual obligations according to this transaction, allow the use of mixed fault institute, based on which when analyzing the causality of resulting losses and actions of each party two types of solutions are accepted: the debtor's liability is reduced in proportion to the creditor's fault, i.e. the court in determining the fault of each party for the occurred losses and reducing the borrower's responsibility by eliminating the creditor's liability or with the full exemption of the debtor's liability, having established that the damage was caused mainly due to the creditor's action. Thus, in cases where the investor violates the contractual obligation to pay margin and the financial intermediary delays to realize financial instruments, the influence of failure to comply with each of the obligations is assessed in respect of the losses, and when the influence is determined the losses are respectively distributed to both parties involved.
REPO transaction is an agreement by which one party (the seller) undertakes to sell financial instruments or cash to the other party (the buyer), and the latter shall pay the purchase price, and thus it is agreed that the seller undertakes to repurchase from the buyer the same or equivalent financial instruments or the same amount of money for the repurchase price at the scheduled future date. This transaction determines relatively complex legal relations, and the investor 's risk to suffer monetary losses depends not only on the instability of the market price of the financial instruments, but also on genuine fulfillment of contractual obligations by the parties of the transaction. As in all contractual relations, in case of REPO transaction, there are situations where the parties violate the terms of the transaction and the disputes have to be solved in court. Although the Lithuanian case law is rather unified when solving disputes between the parties of the transaction where the investor does not comply with the obligation of the transaction to pay margin, sometimes non-compliance with this obligation is not the only reason for the resulting losses. The law, in cases where the investor violates the obligation to pay margin, grants the right to the financial intermediary to dispose of financial instruments, however giving the right, but not the obligation the law does not impose strict imperatives for the deadline of realization of financial instruments, for this reason in practice there are cases where the latter are in no hurry to implement their rights to realize the financial instruments, what increases the losses even more. In such cases the biggest problem is the legal qualification of the delay of financial intermediary to realize the financial instruments and the connection with the obligations applicable to the latter and influence of failure to comply with these obligations to the size of the loss. In such cases the question is whether if there is proof that the financial intermediary delayed realization of financial instruments, the losses of the REFO transactions still have to be covered by the investor who failed to fulfill their obligation to pay margin? Whether the losses shall be distributed in proportion to the two parties and whether such distribution of the losses for both parties is legally possible and reasonable in general? The aim of this thesis is to establish any contractual or statutory provisions that forbid the financial intermediary to delay realization of financial instruments, when the latter acquires such a right. The aim of the thesis is to assess whether the financial intermediary is responsible for the losses resulting from the delay in the realization of the financial instruments transferred to the intermediary during the REPO transaction where the investor does not pay margin (i.e. or one party, a financial intermediary, is responsible for the losses incurred because of his fault, as a result of the delay in realization of financial instruments transferred based on REPO transaction when such right incurred due to the fact that another party, investor, breaches his obligations (did not pay margin), and to determine the recovery mechanism of damages caused because of the fault of both parties that concluded transaction. In order to achieve these objectives, the paper has analyzed both the Lithuanian and the European Union law acts regulating investment services and protection of investors' rights, the thesis has also examined the Lithuanian case law and the various scientific sources. The hypothesis of the paper that a financial intermediary is responsible for the losses resulting from a delay in the realization of financial instruments transferred to him based on the REPO transaction where the investor does not pay the margin has been proven. The paper has found out that in cases where the investor does not pay the margin, the conditions under REPO transaction allow the financial intermediaries to realize the transferred financial instruments. In some cases REPO contracts shall provide the deadline of such right from the moment when the investor does not pay the margin, but this condition is not mandatory and is not always included in repurchase agreements. Actually, even in cases where such a term is provided for in the contract it does not require a financial intermediary to fulfill this right as soon as it occurs, the financial intermediary is free to determine how soon after the emergence of the right to realize the financial instruments he shall implement the latter. In cases where in the REPO transaction there is a dispute on realization of financial instruments in terms of timeliness of the financial intermediary in respect of realization of financial instruments, the provisions provided for in the Act of Markets of Financial Instruments in the Republic of Lithuania and in the Civil Code are applicable, such provisions establish the principles of care, diligence and fairness, and oblige the financial intermediary to operate for the best conditions and interests of the customer. Given the fact that this work has established that the obligations to the parties arising based on REPO transaction end only when both parties have fulfilled their obligations, the obligations arising based on the mentioned transaction, including the care, diligence and integrity requirements are to be applied even when the investor breaches his obligations, as in such case the obligations of the parties still can not be considered to be expired. Therefore, in cases where it is determined that the financial intermediary with the right to realize financial instruments, even in cases where this obligations occurred due to the fact that the investor has failed to fulfill his obligation according to REPO transaction to pay margin, delayed to implement it, such behavior is to be regarded as the breach of duty of care, diligence and fairness and the obligation to act for the best conditions for the customer. This thesis has also showed that during the settlement of disputes between an investor and a financial intermediary in court, in addition to special legal norms regulating the investment services, the contractual civil liability provisions are also applicable, which, in cases where both REPO counterparties violate the contractual obligations according to this transaction, allow the use of mixed fault institute, based on which when analyzing the causality of resulting losses and actions of each party two types of solutions are accepted: the debtor's liability is reduced in proportion to the creditor's fault, i.e. the court in determining the fault of each party for the occurred losses and reducing the borrower's responsibility by eliminating the creditor's liability or with the full exemption of the debtor's liability, having established that the damage was caused mainly due to the creditor's action. Thus, in cases where the investor violates the contractual obligation to pay margin and the financial intermediary delays to realize financial instruments, the influence of failure to comply with each of the obligations is assessed in respect of the losses, and when the influence is determined the losses are respectively distributed to both parties involved.
REPO transaction is an agreement by which one party (the seller) undertakes to sell financial instruments or cash to the other party (the buyer), and the latter shall pay the purchase price, and thus it is agreed that the seller undertakes to repurchase from the buyer the same or equivalent financial instruments or the same amount of money for the repurchase price at the scheduled future date. This transaction determines relatively complex legal relations, and the investor 's risk to suffer monetary losses depends not only on the instability of the market price of the financial instruments, but also on genuine fulfillment of contractual obligations by the parties of the transaction. As in all contractual relations, in case of REPO transaction, there are situations where the parties violate the terms of the transaction and the disputes have to be solved in court. Although the Lithuanian case law is rather unified when solving disputes between the parties of the transaction where the investor does not comply with the obligation of the transaction to pay margin, sometimes non-compliance with this obligation is not the only reason for the resulting losses. The law, in cases where the investor violates the obligation to pay margin, grants the right to the financial intermediary to dispose of financial instruments, however giving the right, but not the obligation the law does not impose strict imperatives for the deadline of realization of financial instruments, for this reason in practice there are cases where the latter are in no hurry to implement their rights to realize the financial instruments, what increases the losses even more. In such cases the biggest problem is the legal qualification of the delay of financial intermediary to realize the financial instruments and the connection with the obligations applicable to the latter and influence of failure to comply with these obligations to the size of the loss. In such cases the question is whether if there is proof that the financial intermediary delayed realization of financial instruments, the losses of the REFO transactions still have to be covered by the investor who failed to fulfill their obligation to pay margin? Whether the losses shall be distributed in proportion to the two parties and whether such distribution of the losses for both parties is legally possible and reasonable in general? The aim of this thesis is to establish any contractual or statutory provisions that forbid the financial intermediary to delay realization of financial instruments, when the latter acquires such a right. The aim of the thesis is to assess whether the financial intermediary is responsible for the losses resulting from the delay in the realization of the financial instruments transferred to the intermediary during the REPO transaction where the investor does not pay margin (i.e. or one party, a financial intermediary, is responsible for the losses incurred because of his fault, as a result of the delay in realization of financial instruments transferred based on REPO transaction when such right incurred due to the fact that another party, investor, breaches his obligations (did not pay margin), and to determine the recovery mechanism of damages caused because of the fault of both parties that concluded transaction. In order to achieve these objectives, the paper has analyzed both the Lithuanian and the European Union law acts regulating investment services and protection of investors' rights, the thesis has also examined the Lithuanian case law and the various scientific sources. The hypothesis of the paper that a financial intermediary is responsible for the losses resulting from a delay in the realization of financial instruments transferred to him based on the REPO transaction where the investor does not pay the margin has been proven. The paper has found out that in cases where the investor does not pay the margin, the conditions under REPO transaction allow the financial intermediaries to realize the transferred financial instruments. In some cases REPO contracts shall provide the deadline of such right from the moment when the investor does not pay the margin, but this condition is not mandatory and is not always included in repurchase agreements. Actually, even in cases where such a term is provided for in the contract it does not require a financial intermediary to fulfill this right as soon as it occurs, the financial intermediary is free to determine how soon after the emergence of the right to realize the financial instruments he shall implement the latter. In cases where in the REPO transaction there is a dispute on realization of financial instruments in terms of timeliness of the financial intermediary in respect of realization of financial instruments, the provisions provided for in the Act of Markets of Financial Instruments in the Republic of Lithuania and in the Civil Code are applicable, such provisions establish the principles of care, diligence and fairness, and oblige the financial intermediary to operate for the best conditions and interests of the customer. Given the fact that this work has established that the obligations to the parties arising based on REPO transaction end only when both parties have fulfilled their obligations, the obligations arising based on the mentioned transaction, including the care, diligence and integrity requirements are to be applied even when the investor breaches his obligations, as in such case the obligations of the parties still can not be considered to be expired. Therefore, in cases where it is determined that the financial intermediary with the right to realize financial instruments, even in cases where this obligations occurred due to the fact that the investor has failed to fulfill his obligation according to REPO transaction to pay margin, delayed to implement it, such behavior is to be regarded as the breach of duty of care, diligence and fairness and the obligation to act for the best conditions for the customer. This thesis has also showed that during the settlement of disputes between an investor and a financial intermediary in court, in addition to special legal norms regulating the investment services, the contractual civil liability provisions are also applicable, which, in cases where both REPO counterparties violate the contractual obligations according to this transaction, allow the use of mixed fault institute, based on which when analyzing the causality of resulting losses and actions of each party two types of solutions are accepted: the debtor's liability is reduced in proportion to the creditor's fault, i.e. the court in determining the fault of each party for the occurred losses and reducing the borrower's responsibility by eliminating the creditor's liability or with the full exemption of the debtor's liability, having established that the damage was caused mainly due to the creditor's action. Thus, in cases where the investor violates the contractual obligation to pay margin and the financial intermediary delays to realize financial instruments, the influence of failure to comply with each of the obligations is assessed in respect of the losses, and when the influence is determined the losses are respectively distributed to both parties involved.
This Master's thesis is dedicated to the analysis of investor protection mechanisms in case of state insolvency. The classic notion of state immunity provides that a state is the sovereign that is immune from judicial proceedings. However, Lithuania as well as other states waive the sovereign immunity and participate in financial markets as equal entities. Contractual relationship forms between a state and an investor who has purchased debt securities issued by the state. An investor who invests into the state securities and participates in the financial market shall be entitled to special protection, as he remains the weaker party to the relations in any case. The thesis has analysed interpretation of the notion of sovereign insolvency in international law; however, no such notion has been found. The research has shown that this notion is construed as a state's incapacity to comply with its financial liabilities. Thus, according to the world's practice, if a state has become insolvent, it is incapable of complying with the assumed financial liabilities to its creditors, i.e. high profile foreign and local banks and investors holding bonds or other debt securities of the state. Key factors determining a state's resolution to proclaim own insolvency are excessive indebtedness of the state, slow economic growth. State's insolvency and incapacity to comply with the assumed liabilities as well as debt restructuring have negative effects on financial markets, given that the state's, i.e. issuer's, debt securities have spread all over the world. In such a situation, the state launches a debt restructuring offer to its investors with the intention to amend terms and conditions of the bonds or postpone their repurchase. The Master's thesis provides comprehensive analysis of investor rights in case of a state's intention to restructure the debt. Hence, if a state is incapable of paying the nominal value of bonds to the respective bondholders, it launches an offer to exchange the bonds held to new restructured bonds and compensation of other sorts. Lithuania and other EU member states are subject to a Collective Action Clause (CAC) that establishes state securities restructuring conditions for the cases where a state is incapable of paying the primary nominal value of the securities. The European Parliament has established that all new more than one year maturity securities issued by Governments of the Eurozone, i.e. state-issued bonds, shall be subject to the CAC. These clauses are aimed at creating more favourable conditions for agreement between the state and its private sector creditors, considering that the private sector is involved. However, the concern is whether or not inclusion of such clauses into bond subscription agreements might create an obstacle for the investors to dispute such offer and reject debt restructuring. As a result, state debt restructuring would satisfy state's interests by compromising the investors' interests. Absence of the CAC from bond agreements might pose difficulties for the investors to protect the violated rights and reject debt restructuring on pari passu basis. Many scientists acknowledge that there is currently no universal system that would govern state debt restructuring and protection of investor interests. Witnessing the state bankruptcy and incapacity to pay the debt to the bondholders in Greece as well as the effect of it on other member states of the Eurozone, the European Union has adopted a resolution to establish the European Stability Mechanism (ESM) to tighten budget discipline and enforce coordination of economic and financial policies of the member states. The thesis also discusses the implications of legislative acts and institutions for investors protecting their violated rights. Analysis of investor protection mechanisms is unreasonable unless the possibility for investors to seek protection of the violated rights is discussed. Hence, the Master's thesis has also involved review of two options for the investors to protect the violated rights. The first option is to address the International Centre for Settlement of Investment Disputes, where investors initiate judicial disputes on the basis of the Bilateral International Agreement, or to apply to foreign national courts according to the governing law specified in the respective bond subscription agreement. Investors address the International Centre for Settlement of Investment Disputes primarily due to failure of national courts in a number of countries to directly ensure enforcement of investment agreements. This investor protection mechanism has proven its value as the specialized place for resolution of investment disputes, and is the most favourable rights protection mechanism that can be used by investors at present. There is little chance for the investors' claim to be satisfied if submitted to the respective country's courts. However, if the issued bond subscription agreement specifies the governing law of a country other than the issuing country's law (e.g. English law), investors have more chances when submitting the claim to the other country's courts.
Investing is the conversion of available savings to a specific asset, usually shares, bonds, real estate or investment fund units, with a simple purpose of increasing the amount of money invested in the future. Investments have several types, which are divided according to certain features: according to the investor's influence on the entity, according to the investor's permanent residence, according to the investor status, according to the investment object. Investment policy is often defined institutional investors including, where everything is more or less regulated. State investment policy is formulated in the program of activities of the Government of the Republic of Lithuania, taking into account economic and social-economic development forecasts of the Republic of Lithuania Investor's rights and protection, cooperation between the investor and the investment firms determine the Markets in Financial Instruments Directive.
