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The Lithuanian citizenship law was recently adopted to be in accord with a Lithuanian Constitutional Court decision which is ever more clearly completely unfounded. Among its effects, some of which are covert – that is, they are apparently intentionally hidden from view and only materialize if one grasps how the statute is meant to work  (which is rather typical of Lithuanian statutes) – is the loss of citizenship effected upon a Lithuanian citizen’s acquiring of another (second) citizenship.

There is a tension between the lamentable Lithuanian law, EU citizenship, and the EU bedrock policy “freedom of movement,” which means the right to move to another EU state. In order to encourage such mobility, the policy is that member states such as Lithuania must allow a citizen of another member state to become its citizen after some reasonable period of residency (such as three to five years). This was famously expressed in the The Tampere European Council of 1999.

Thus, one can go to another state, and as a matter of EU policy, receive the citizenship of that state. Obviously, if by doing so the person in question loses the citizenship of his original EU member state, tension is generated between this fact and the EU principles outlined above.

Can the member state take away the citizenship of a natural born (not naturalized) citizen in this way without violating EU law?

It appears that the answer well may be no. “The European Court of Justice has recently pointed out in its judgment in the Rottmann case on 2
March 2010 that in exercising their powers to withdraw nationality, Member States must apply a principle of proportionality and have due regard to European Union law.” (The quote is from a handy bulletin:

The Rottmann case may be read in its entirety (it is short) here.

The ECJ case in question involves a person who may be rendered stateless … The Lithuanian citizenship law regarding a second citizenship does not really render them stateless, obviously.
One unfortunately cannot with complete assurance state that the ECJ caselaw holds that citizenship cannot be withdrawn wholesale because of the acquisition of a second Member State’s citizenship. The argument here would be that EU citizenship is not lost in such a case. Yet an argument of equality can be made; why is long-term residence in the second state ok, even if coupled with election to a local municipal council … A better argument would be that the lost original citizenship was stronger: naturalized citizens are usually at greater risk to lose their citizenship for various reasons.
The moral argument is, nevertheless, the strongest: why should any sanction be had against a person who did what was lawful and, indeed, encouraged? Why must he deny his father and all those he left behind?
But an even stronger argument could be made that deprivation of EU citizenship for a person who acquires U.S. citizenship violates EU law. U.S. citizenship can be acquired BY BIRTH in a foreign country (if one parent is an American citizen). If one deprives this person of their LT citizenship because of this, he loses the right to reside ANYWHERE in the EU. That is to say, he loses his EU citizenship – without ever having resided anywhere other than in Europe; indeed, without ever having resided anywhere other than, perhaps, in Lithuania.
Note that in certain EU countries this person would not lose the citizenship of the EU country concerned. The Lithuanian law would therefore be a type of discrimination against certain EU citizens.

The debate and indeed ruckus over the Chief Justice’s ruling in the Obamacare case may be quite confusing for non-Americans.

In order to understand it, one must focus on the federal nature of the USA. The question posed in the Supreme Court is not whether it is good to have the type of plan proposed. The question is whether the federal government has any power to pass such a law.

This may seem quite strange. But that is because most of what is considered government in Europe is handled in the United States by the governments of the states, such as the State of New York or Texas. Indeed, no one debates whether a state government has the power to pass a law like that in question. INDEED, one has: it was done in Massachusetts, as strange as it may seem, during the time that the Republican contender for the presidency, Mitt Romney, was governor there.

What, you may be asking, is the problem on the federal level? The problem on the federal level is that the federal government is generally thought of as being one of enumerated powers – only. Either the Constitution gives the federal (U.S.) government the power, or it just doesn’t have it. (The states retain it.)

The law was passed by under a certain theory: that the commerce clause of the Constitution is wide enough to give power to pass the law to the federal government. The main problem here was that there was a penalty attached to failure of an individual (citizen, human being) to purchase insurance. Thus, he had to purchase insurance or pay a fine: that was what the law called for. This puts the federal government in a position of telling a citizen he has to buy something – which is quite a radical proposition.

In the Supreme Court decision, a majority of the justices ruled that the federal government just does not have the power to do this under the commerce clause.

One justice, the Chief Justice, ruled that it would have had the power to do so if the penalty were a tax. He joined four other justices (a minority) who were of the opinion that the commerce clause is wide enough on its own. Thus, the law as it stands, and it was permitted to stand, treats the penalty and indeed the insurance payment as a tax. The claim is that the Federal Government can tax in this manner.

The matter is further complicated in that the argument was not really raised in any meaningful manner. (Arguments are usually raised in the procedure; they are talked out, as it were; both sides are heard.)  Roberts just kind of made it up. He may believe it, or it may have been a maneuver to keep the Court from being too criticized for over-activity. (Increasingly, it is being viewed as a giving-in to outside pressure.)

It is all very strange indeed. One would imagine that the matter would be left to the state governments. But some must feel strongly otherwise.

My own opinion? I have more respect for the four justices who thought the commerce clause wide enough to justify the law. At least they were intellectually completely and clearly honest. The Roberts tax ruling is too weird for me. I don’t like it as a lawyer, and as a leader, if it is a ploy of some type, it is highly unlikely to succeed; it therefore exhibits poor leadership.
I also think it dangerous. If a tax, it is a direct tax, which is prohibited by the Constitution without an amendment. Apart from anything else, it is unwise to drive such divisive measures, measures of such consequence, by brute force, as it were.

The reason why we think that the store clerk who defended himself against robbers and was fired for it got a raw deal (see the link here) is because the privilege of self-defense is derived from our (Western, Christian) conviction that we are worth something.

We are convinced we are worth something because Jesus Christ became man, and thus in a sense we were raised to the level of the divine. Around the eleventh century this gave rise to the creation of the doctrine of self-defense. Of course, many of us are now no longer Christians, but the idea lingers on.

Therefore, we think, that is, most of us think, that if a person exercises this privilege it is not right that he should be punished for it. It is a privilege, and it is has a centrality about it: it cannot be impinged upon without challenging that which we most deeply, indeed now even instinctively, feel.

Lithuania, in the person of the former EU commissioner who is now president of the country, went along with the pack in the ongoing Euro crisis. On television one could see Lithuania’s president enjoying the attention of France’s president Sarkozy and looking delighted with herself.

But there is no constitutional or even parliamentary authorization for her making the commitment. And some nations, such as Hungary, are already backing out.

The “Euro-Pact” was an agreement of sorts by 26 of 27 EU member-states to give up a great deal of control over their own nations to the unelected bureaucrats in Brussels in order to support (and, for those states which have not yet adopted the euro) to eventually adopt the euro as their official currency.

What is immensely interesting, and scary as can be, is that there is no up-side to adopting the euro. The crisis in the Eurozone, particularly in Greece and Italy, amply demonstrates the euro’s dangers.  (The danger is that some countries follow an inflationary path, whereas others do not; yet all eurozone countries have the same currency, meaning that it is quite possible for one country to cause grave fiscal difficulties in another.)

But the amazing part is that there is no economic upside. The euro has not increased trade.

There are political ‘benefits,’ however. The euro is an amazing device, operating on the theory of sunk-costs, which strongly militates toward increasing the power of the EU’s bureaucracy. Some, mostly the bureaucrats of various countries, have a nearly-religious belief that this is a good. Apparently the president of Lithuania does, too.

Now, however, would be the time for Lithuania to take a stand and to determine not to enter the eurozone (that is, to decide not to adopt the euro as its currency, displacing the litas). Indeed, it is high time that the Lithuanian litas be de-coupled from the euro.

What does that mean? At present, the litas is, by Lithuanian law, pegged to a certain price in euro currency. Thus it is not a floating currency, and events in the EU, including Greece, faraway Portugal, and exotic Cyprus, all have a distorting effect upon the Litas. Why would Lithuania need this?

Poland’s currency, by way of contrast, is a free-floating currency (the zloty). One would imagine that if the Poles can do it, the Lithuanians could.

But furthermore, Lithuania is surrounded by countries which are not in the Euro zone. Poland (zloty), Sweden (which owns all the large Lithuanian banks) (the Swedish krona), not to mention Russia and Latvia.

If the Lithuanian litas has to be linked to foreign currencies, Lithuania would be better served, one would think, to unhook it from that doubtful euro and set its price in regard to a ‘bundle’ of foreign currencies, such as the krona, the Danish krone, the Polish zloty, the U.S. dollar, the British pound sterling. This would give the Litas stability (in regard to speculation, if that is a legitimate fear) and it would tend to be less inflationary, or at least no more so than with its current status of being tied to the problematic euro.

Will this happen? No. It would take more guts than have been demonstrated. Let us remember that Lithuania was the first to vote in favor of the eventually-defeated EU Constitution – although based upon some rather decent insider information, no one had any real idea what they were voting for (the ‘constitution’ was a series of changes to various treaties, and it was immensely difficult to get a handle on what it all was to mean).

So it goes.

You heard it here first!

“The train has left the station.” These were the words of Viviane Reding, Vice-President and Commissioner for Justice, Fundamental Rights and Citizenship, spoken at the ECR European Contract Law Hearing held at the European Parliament in Brussels on May 3rd, 2011 (which I attended). This is how the question of whether there will or will not be a pan-EU Contracts Code was answered. The “Commisar” was trying to convey the idea that a political decision has been made and that there indeed will be an EU Contracts Code.

Commissioner Reding did not speak with forked-train. It’s been a slow train coming, but the official proposals have now been made. In words more understandable by American standards, the bill has now (just about a month ago – October 11) been proposed and is in committee.

The proposals, including the draft legislation (code) itself, can be downloaded here:

Here is an alternate link to the EU Sales Law

Among the highlights of the new trans-European code are these:

  1. It is an opt-in code. This is the reverse of the CISG, which is opt-out.
  2. It is both Business To Business and Business to Consumer.
  3. It affects all cross-border trading, including online sales.
  4. It is applicable to cross-border trading and is not applicable to internal (within-country, national) sales. Thus the regime it imposes is one in which consumers purchasing from a seller within the country the consumer resides in will find their contracts governed as per usual by the national law. But consumers from another EU country, if the contract so states, will find the contract (and their consumer-protection laws) governed by this new opt-in EU UCC (Art. 2) (EU Common Sales Law).
  5. Supposedly this regime will lower information-costs and enhance, encourage, and expand cross-border trading.
  1. And my favorite: it contains a facilitative section enabling the new code’s adoption by EU Member States for national (within-border) sales.

The rationale for the code is more or less the standard iteration in defense of such legal regimes (such as the CISG). Here are a few juicy excerpts:

[Regarding B 2 B] In cross-border transactions between traders, parties are not subject to the same restrictions on the applicable law. However, the economic impact of negotiating and applying a foreign law is also high. The costs resulting from dealings with various national laws are burdensome particularly for SME. In their relations with larger companies, SME generally have to agree to apply the law of their business partner and bear the costs of finding out about the content of the foreign law applicable to the contract and of complying with it. In contracts between SME, the need to negotiate the applicable law is a significant obstacle to cross-border trade. For both types of contracts (business-to-business and business-to-consumer) for SME, these additional transaction costs may even be disproportionate to the value of the transaction.

These additional transaction costs grow proportionately to the number of Member States into which a trader exports.



[Regarding B to C] While cross-border shopping could bring substantial economic advantages of more and better offers, the majority of European consumers shop only domestically. One of the important reasons for this situation is that, because of the differences of national laws consumers are often uncertain about their rights in cross-border situations. For example, one of their main concerns is what remedies they have when a product purchased from another Member State is not in conformity with the contract. Many consumers are therefore discouraged to purchase outside their domestic market.

Regarding the quoted justification in the B 2 B context, the Commisioner at the May 3 hearing stated that according to her statistics, the price for a company wanting to sell products through all 27 EU Member States reaches 150,000 euro just for legal fees to ascertain the applicable law.

Me, I doubt it. I am not the only doubting Thomas (or Tadas). Commissioner Reding’s figures were called into question by several members in the audience. Happily, I have a copy of the minutes of the hearing: ECRContractLawminutesFINAL Some of the speakers, all of whom appeared to be either from international law firms or were representatives of various groups and associations, stated that the small businesses in question simply do not view a forced choice of foreign law as an issue. Others questioned the figures given by the Commissioner.

Recent research has suggested that in fact choice of law is not an issue which is dealt with by the majority of businesses engaged in cross-border transactions. The author of one study suggests this is because of lack of sophistication and a view of the law as one in which it is useful only in the case of dispute (as opposed to knowing the dimension of one’s obligations and hence optimizing performance). (See, for example:  Gilles Cuniberti, Is the CISG Benefitting Anybody? 39 Vand. J. Transnat’l L. 1511, (Nov.) 2006) (available at SSRN:  ). Interestingly, Cuniberti is a prof at the U of Luxembourg, the same country the Commissioner is from …  I can say from my own practical experience that there is a lot of truth to the idea that these transnational sales regimes don’t achieve what is claimed. If true, this means that SME (Small to Medium Enterprises) will NOT find the new EU Sales Law useful, precisely because it is an opt-in statute. They will not be sufficiently sophisticated or motivated to do so. And yet these are the folks and enterprises which most need the regime (at least arguably, according to its own arguments).

I cannot pass by without mentioning another curiosity. I had not read much about the code being proposed (well, outside of a several-hundred page White Paper on the subject written several years ago). During the May 3 hearing, however, the code was always referred to as such – a contracts code. I assumed, rather naturally, that it was meant to be applied to cross-border service contracts as well. It is not: it is confined solely to the sale of goods. And here I can note the official reason why the CISG is not thought of as being sufficient: four EU countries are not its signatories (England, Portugal, Malta, and Ireland), and it is not ‘sufficiently’ comprehensive.) And as the hearing minutes confirm, ‘all’ of the UK ‘stakeholders’ have come out against the proposed sales law.

For the non-EU reader, it should be explained that the EU is a strange political being. While it is for the most part the Council which passes a law, laws (which the call legal acts) are supposed to be originated in and written by bureaucrats. The bureaucrats are unelected, of course, and are not supposed to be bribed. Supposedly, however, they are to fnd out both what the people want and what is needed. They then write the proposals. The Commissioner is the highest of the high in this process: it is her or his job to ride herd on the matter. Yet it is a kind of runaway state: judging, for instance, from the statements made from the assembled public in the hearing, one would think that the proposal would have been nixed. But the ‘train had left the station.’ Let us hope that this is for the best.

Nevertheless, I cannot refrain from stating my own thoughts as to how the same matter might have been addressed in a more efficient way. Inasmuch as the regime is opt-in, as far as business to business transactions are concerned, it probably would have been at least as efficient for an EU legal act to have the effect that the Unidroit principles of international contracts and other similar soft-law non-statutes (such as the PECL) could be a legitimate choice of law to be applied by national courts (not just arbitration). In regard of the CISG, if necessary, that Convention might have been supplemented by additional provisions, applicable only in B 2 B contracts between EU Member States who were also CISG signatories.

In regard to B 2 C, well, why not, in a spirit of … comity, change the default rule. At present the rule is that the consumer law of the place of residence of the consumer will be applied to the transaction. Why not flip it? I mean, really, if a Lithuanian consumer is placing an order online from a firm in Malta, why should Lithuanian law apply?

But the train has left the station … and so it goes. Let us hope for less than the usual blood on the tracks.

It is not surprising to me that the PhD thesis of a German minister (the minister of defence, Karl-Theodor zu Guttenberg, was riddled with plagiarism. (The doctorate has been revoked by the issuing German university.)

Simply, many European universities – and especially their PhD programs – are susceptible to this sort of thing. They don’t catch it. There really are no institutional processes in place to catch plagiarism. which would catch it. PhD committees are left to their own selves, but whistleblowers are neither protected nor rewarded. The best book on the subject remains DeCoo’s Crisis on Campus. The second-best is my own, in Lithuanian …

But what is amazing and even cosmic is that (only) (!!) a concerted volunteer effort (allegedly) discovered the extent of the plagiarism.

A comment by one ‘Dr. Strangelove” to an article in the Globe & Mail (German minister in plagiarism row stripped of PhD) claims:

“There was a large-scale volunteer effort that uncovered improper use of material on almost 75% of all pages of his “thesis”. In several instances, the appropriated material runs over pages on end. His defence of “inadvertent” use of such materials is a joke.”

Yup, I’d agree. 75 percent is a concerted effort to cut and paste one’s way to a PhD.  No way around it, no way to explain it.

But again: what this demonstrates, yet again, is that there are insufficient institutional safeguards in European PhD programs. The minister’s thesis should have been exposed for what it was way before even its defense. (PhD theses, also known as dissertations, are ‘defended’ before a committee, which in general is all-powerful, but in practice has few resources and restricted time to do what should be done.)

The Lithuanian Ministry of Justice has come up with a proposal to do away with the requirement that all legal entities (corporations and other companies) in Lithuania have a seal, as stated in the ministry’s press release (in Lithuanian) dated January 12, 2011.

There never was a requirement for the use of the seal in forming contracts, but many regulations require that companies affix a seal when dealing with the government.

As the press release states, the requirement of a seal has no utility. It also states that the requirement to have a seal as a precondition to incorporation or company registration costs newly formed companies half a million litas a year.

All of this is obvious. No normal countries require a seal. Seals have no utility or nearly none. And I repeat, no normal countries require a seal. Normal being Western ones.

But there is no mention of the practice in any Western country in the press release. I guess they don’t exist. No reason to gauge oneself by their standards. Fine.

So, anyway, one could commend this development. I suppose one should.

But that would be akin to complimenting someone on his ceasing to beat his wife. I mean, well and good, I am glad if any man stops beating his wife. One wonders, though, whether he really should have been beating her at all. Just to make sure readers understand, I am speaking sarcastically. It is difficult to justify any wife-beating. So if one stops, well, good, but …

Something having so little utility, something so clearly ridiculous and costly, should have been gotten rid of twenty years ago. It is telling (which means that it indicates) something else: the tenacity of Soviet legal thinking and indeed the Soviet mentality. I think it also indicates strongly that there is and was little impetus to reform.

Now, that is a shame.

To be completely fair, I suppose I should state that somewhere about five years ago or so the powers that be did away with some other costly requirements as to seals. Previously, when one started a company, one had to … get a permit from the police okaying the seal’s creation. I kid you not.

While on the topic, larger companies created numerous seals. (!!) One that I saw was particularly hilarious. It bore the company name and then in big letters, “For Contracts.”

Now, all of this was great stuff in the way of amusement, if one likes a live-in theater of the absurd. But it did nothing for the improvement of living and legal conditions. The more absurdity, the more lack of clarity. The more lack of clarity, the diminution of rights. Everything affects everything else, you know.

Some know. Some care. Others don’t.

In Lithuania, if you are poor you can’t liquidate (close) your sole proprietorship, and they won’t let you get unemployment
benefits, either.

It works, or rather doesn’t, like this. Your business is not doing well and so you want to close it. So you go file the
appropriate papers and it is in liquidation status.

Now, that in principle is not a bad thing — for a large firm. For a measly one-person operation, it’s overkill to the max. In
order to get the thing liquidated, one has to show that one has paid all the taxes and all of one’s creditors, and has no employees and so forth. A lot of so
forth. Eventually one gets a piece of paper saying the thing is liquidated.

But –

the social security people (called SODRA) insist
that a sole proprietor is … operating a business, even if it’s being
liquidated, and therefore he or she has to cough up social insurance payments
(kind of like social security) plus also health insurance. In other words, it’s
not hooked onto income, not even gross income, but onto the concept of

So every month, these people are being hit for social security payments, even though they are not making a cent. Even though
they are bankrupt (and of course NO PERSONAL BANKRUPTCY either).

This includes those who have upped and left the country. Many have no idea that one can’t get off the hook for social insurance
payments once your company is being liquidated. This seemed to startle a member of the Parliament
who is on the appropriate Social Insurance/Security committee. Arturas Melianas was described as having stated, that if the company has no income,
there can be no question of having to pay social insurance. Seems the fellow doesn’t quite know what the reality is.

A Lithuanian citizen wrote me a few days ago. This poor soul  submitted papers for his company’s liquidation – and now he
finds he is being assessed hundreds of litas a month for social and health insurance. But this is not his greatest worry.

You see, he can’t liquidate the company if there is any debt, which there is – to the social insurance. Which keeps growing.

And until it is liquidated, he cannot … get unemployment benefits. They won’t let him.

A writeup of the general problem, in Lithuanian, is here.

Now, just to be fair and more or less complete: there are ways to avert the imposition of social insurance upon your sole
proprietorship. It is arcane, convoluted, and in-human, but it can be done. But it has to be done before filing for liquidation. Even afterward, things can be
done – for instance, your sole proprietorship can be converted to a corporation.

But normal people can’t do this on their own. And why should they have to?

In the USA, assuming there are no specific problems with the IRS, if one is the sole shareholder of a corporation, one simply walks away. If the state fees are not paid on a yearly basis, the thing is ‘liquidated’ for you. It no longer exists.

In regard to a sole proprietorship, things are even easier. It is not a company per se, so who cares. One has one, or twelve, and again, who cares. The creditors can sue you if they need to. And if one has no income, one pays no social insurance taxes, either.

Lithuania, and other Eastern countries, likes to do things the old Soviet way: control ab initio and not post hoc. That’s the key
to the solution.

But they don’t care.

Some things continue to amaze.

Hungary adopted a citizenship law which took effect Jan 1, 2011. It allows ethnic Hungarians to obtain Hungarian citizenship — and of course to retain their other citizenship. The idea, as correctly stated by government officials, is a recognition of community. This is, by the way, the normal course for EU countries.


The Slovakians hate this. In retaliation, they passed a law which … cancels the Slovakian citizenship of anyone who takes advantage of the Hungarian law.

A decent writeup is here.

What the Slovakians don’t get is this: unless a Slovakian tells their government that they obtained Hungarian citizenship, it is very unlikely that the Slovaks would find out. Secondly, it is VERY DIFFICULT to imagine how this sort of thing, the automatic, bureaucratic, removal of citizenship for native-born citizens could be accomplished WITHOUT BENEFIT of COURT HEARINGS.

In short, it is easier in some countries for a native born citizen to lose their citizenship than to lose their … drivers license.

In a report entitled „When Employers Disappear“ published Monday, Nov. 22, 2010, in the Lithuanian weekly Apskaitos aktualijos, we are told that company presidents and sole proprietors often disappear, leaving their employees on their own. „These, not being able to terminate their contracts of employment (!!) continue to work without pay (!!!) or do not work, but are unable to register with the Labor department and cannot obtain unemployment compensation.“ This is because they are … still employed and they can‘t get unemployed, because there is no one to unemploy them. According to the report by Algirdas Bartkevicius, the Lithuanian Labor inspection says that hundreds of such „hanging“ employees contact them each year.

How can this be described? Supreme lunacy? Are these people aficionados of the theatre of the absurd?

Not really. It is the Soviet legal mentality (and legal theory) in action. Note that there is not a single, not one, law or other legal act compelling this outcome. Under the very same Labor Code referenced in the article, a person can certainly quit his job, and it is clearly a unilateral juridical (legal) act by which it is done. That means that it is done entirely at the will of the employee. Of course this is so: it can‘t be any other way, because forced servitude is slavery. Which all normal constitutions prohibit.

But not in practice. And notably, this time, it‘s not the courts who are the guilty ones. This particular ‚case‘ illustrates that the problem goes well beyond the courts. The government is suffused with this mentality. It is the clerks who are treating these people in this horrid way. They are depriving them of their unemployment benefits, to be sure, but what is worse, I think, is that they are treating them just like the Soviets used to. Like ‚people‘ with no rights. Children, deformed, of a lesser god, to be offered up upon the alter of unholy anti-law.

And this is going on in independent Lithuania twenty years after the restoration of independence!