Court system - Doing Business in Estonia
Estonia is renowned for its business-friendly environment with a simple tax system and digital-first approach to government services.
Whether you wish to launch a startup, expand your corporation through a local branch, or work here as a freelancer, Estonia offers excellent opportunities and an efficient digital ecosystem.
Here are a few reasons why Estonia is an ideal place to do business:
- A company can be established in a day through a fast and straightforward registration process.
- The minimum share capital of a private limited liability company is 0.01 euros.
- Almost all reports and applications can be easily submitted online.
- Estonia's tax system is simple, with a 0% corporate income tax on undistributed profits.
- There are very few restrictions to foreign ownership or management and foreign entrepreneurs are treated equally to Estonian citizens.
- As an EU member state, Estonia provides access to the European single market and operates under the EU legal framework.
Estonia is also an excellent base for your business, even if you don't plan to live here. With the e-Residency program, you can easily manage your company remotely from anywhere in the world. For more detailed steps on establishing a company in Estonia, please see here.
The following guide will answer common questions that may arise when conducting business in Estonia. We hope to provide an overview of the most important things to expect or keep in mind. For any specific inquiries, please contact our team of expert lawyers who are ready to assist you with any issues you may have.
Court system
An overview of Estonia’s court system and other dispute resolution mechanisms available to businesses.
Civil and criminal proceedings begin at the county court level. There are four county courts with courthouses in 16 cities and towns. These are followed by the appellate level in the circuit courts located in Tallinn and Tartu. The cassation level is the Supreme Court, located in Tartu. Estonia does not have a jury system.
Administrative proceedings are typically handled at the first instance by administrative courts in Tallinn and Tartu. The appellate and cassation instances are the same. In specific administrative matters, pre-trial procedures may be mandatory before approaching the courts.
Estonia does not have any specialized courts. For most labor disputes, the employer or the employee can turn to the Labor Dispute Committee in Tallinn, Tartu, Jõhvi or Pärnu. This instance is commonly used in employment relationships because the proceedings are much faster than in a traditional court. There are also no state fees and all the legal costs are borne by the parties themselves. The Committee’s final decision has the same force as a court judgment, but the parties may contest it in a county court in 30 days.
In disputes involving up to 3200 euros related to the rental premises in Tallinn, parties can seek resolution from the Tallinn Rental Dispute Committee. Decisions made by these bodies have the same legal effect as court judgments.
Additionally, the Arbitration Court of the Estonian Chamber of Commerce and Industry, located in Tallinn, issues decisions enforceable in all countries that have ratified the 1958 New York Convention.
Judicial proceedings and clerical business at the court are conducted in Estonian. Most disputes require the payment of a state fee, the amount of which is specified in the State Fee Act, which also provides for exceptions to said obligation.
Proceedings in an action-by-claim case start when the court receives the claim. The court then decides whether to accept or reject and return the claim or set a time limit for correcting defects. Once the claim is accepted, the pre-trial proceeding begins. The court sends the claim to the defendant, setting a deadline for the defendant to respond. The court may hold a preliminary hearing if it believes this will facilitate trial preparation or improve the chances of settling the matter by compromise. If the court’s judgment is not appealed during the prescribed deadline, it will become final and enforceable.
Individuals may represent themselves in court or be represented by a legal representative with the required legal education. A company employee may represent the organization if the court deems them sufficiently knowledgeable and experienced. In the Supreme Court, only attorneys may file documents. Similarly, in criminal proceedings, only attorneys can serve as defence counsel.
The speed of court proceedings depends on many factors and can vary greatly. As of 2023, the average time to resolve civil cases involving substantive disputes was approximately 344 days in county courts and 240 days in circuit courts. For administrative matters, the respective times were 162 days and 296 days.
- Written Proceedings: With the consent of the principal parties, the court may resolve a case without a trial or hearing. The court may also decide this on its own discretion in cases where the value of the claim does not exceed 4500 euros for the principal claim and 8000 euros when any ancillary claims are included. The court sets deadlines for filing motions, applications, and documents, and announces when the judgment will be made public.
Written procedure saves time and money and is therefore recommended when there are no complex circumstances that require oral explanation, or witnesses who need to be heard, etc. - Streamlined Proceedings: For pecuniary claims where the principal claim is up to 3500 euros and any ancillary claim does not exceed 7000 euros, the court exercises discretion to follow simplified rules while adhering to the general principles outlined in the Estonian Code of Civil Procedure. As the choice of this procedural form is up to the court, the parties cannot demand nor challenge its application.
- Expedited Proceedings for Orders for Payment: Claims for monetary amounts arising from private-law contractual obligations of up to 8,000 euros (includes both the principal and ancillary claims) can be resolved through a simplified procedure called the expedited order-for-payment process.
The payment order petition must include a brief description of the facts and available evidence. If the court grants the petition, it will issue a proposal for payment to the debtor. The debtor may file an objection to the proposal, which does not need to be justified. If the debtor does not file an objection on time, the court will issue an order for payment, which is immediately enforceable. If the debtor files an objection, the procedure will continue as per normal action-by-claim procedure. In such a case, the claimant must submit their claim and justify it in the form required for a statement of claim. The claimant must also pay any additional state fees, which are higher in action-by-claim procedure.
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