Governing Law, Place and Form of a Power of Attorney

  • 2010-01-27
  • Andrius Gabnys, Assistant to the Attorney at Law

According to the Civil Code of the Republic of Lithuania, transactions shall be made in writing (in the ordinary or notarial form), or their formation may be implied from the actions. A transaction, in respect of which there is no specific form established by laws, shall be deemed to have been formed if the person demonstrates by his behavior the will to form a transaction (a contract formed by actions). Where the written form is not required by laws or by an agreement of the parties as a necessary condition for the forming of a transaction, the transaction may be formed verbally. Transactions which are permitted by law to be formed verbally may also be made in written or notarial form, and transactions, the ordinary written form for which is mandatory, may also be formed in the notarial form.

Notably, the power of attorney is a unilateral transaction. It means that it is formed only according to the will of the person who issues the power of attorney. The Civil Code of Lithuania indicates that a unilateral transaction shall be deemed to have been formed in the place where the will of a party to the transaction is expressed (the place where an authorization is given or a will, a testament, is made, etc.). The form of a power of attorney shall be governed by the law of the state in the territory of which it is issued. The time-limit of validity of a power of attorney, where it is not indicated in the document itself, the powers (rights and obligations) of the agent, the bilateral liability of the principal and the agent, and their liability in respect to third persons shall be governed by the law of the state in which the agent acts. This leads to the conclusion that if the party, natural person - citizen of Lithuania, or legal person registered in the Republic of Lithuania, represented by the citizen of Lithuania, issues the power of attorney while being abroad, that means it expresses his will to the transaction, this power of attorney ends up as being formed abroad.

According the Civil Code of Lithuania, as mentioned above, the form of this power of attorney is governed by the law of that particular state in the territory of which it is issued. Legal disputes arise when the state institutions require the notarial form of the power of attorney issued in Lithuania. It has to be said that despite the reasonably clear legal regulations, practical issues still arise because of the lack of proper implementation of the imperative rules.