This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Romania including arbitration agreements, tribunals, proceedings as well as costs, awards and the hot topics concerning this country at present.
This Q&A is part of the global guide to Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/
What legislation applies to arbitration? Are there any mandatory laws?
The main body of law governing arbitration is included in the new Code of Civil Procedure which came into force on February 15 2013. Book IV of the Code of Civil Procedure (“On Arbitration”) regulates national arbitration and also represents the general set of provisions applicable to international arbitration whenever the parties have not agreed on certain aspects in the arbitration agreement and have not vested the arbitral tribunal with settling those aspects either, while Title IV of Book VII sets out specific legal provisions regarding international arbitration and the effects of foreign arbitral awards.
The arbitration law includes mostly non-mandatory provisions, as a reflection of the principle provided for in the Code of Civil Procedure that parties are free to organise arbitral proceedings as they deem fit. However, parties’ freedom is subject to observing public policy, a couple of mandatory provisions and ethics. For instance, in ad hoc arbitration organised by the parties themselves, they are free to agree rules regarding the constitution of the arbitral tribunal, removal of arbitrators, the timing and seat of the arbitration, the procedural rules to be applied by the arbitral tribunal (including potential preliminary proceedings), the allocation of costs and any other rules that may govern the arbitration, subject to public policy, mandatory provisions of law and ethics. There are a few mandatory rules, for instance certain validity requirements of the arbitration agreement, regarding the written form of the arbitration agreement or the authenticated form of the arbitration agreement in arbitrations regarding the transfer of the ownership right over an immovable asset. The law also imposes certain fundamental principles related to a fair trial from which no derogation is permitted (e.g., the parties shall be ensured equal treatment, the right to defence and a reasonable opportunity to present their case).
Is the country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Romania ratified the New York Convention in 1961 by means of Decree no. 186/1961 which came into force on July 24 1961.
Romania reserved the right to apply the convention only to:
- the recognition and enforcement of awards made in the territory of another contracting state or, for the awards made in non-contracting states, only subject to reciprocity, namely to the extent to which those states grant reciprocal treatment.
- disputes arising from legal relationships – whether contractual or not – that are considered commercial under the national law.
What other arbitration-related treaties and conventions is the country a party to?
Since 1963, Romania is a party to the European Convention on International Commercial Arbitration (Geneva, 1961) and since 1975, Romania became a party to the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States.
As well, Romania has signed multiple bilateral conventions with countries including Albania, Algeria, Belgium, Bulgaria, China, Cuba, Czech Republic, France, Greece, Hungary, Italy, Moldova, Mongolia, Montenegro, Morocco, North Korea, Poland, Russia, Serbia, Slovenia, Slovakia, Syria and Tunisia.
Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
Romania does not have a UNCITRAL Model Law-based legislation; however, the institutions within the newly enacted legislation follow the lines and spirit of UNCITRAL Model Law, but a specific analysis of each provision would have to be performed in order to determine the exact influence of the Model Law.
Are there any impending plans to reform the arbitration laws?
No reforms or significant changes are expected in the near future, as the applicable legislation is relatively recent – the new Code of Civil Procedure was enacted on February 15 2013. Discussions are ongoing around the need to broaden the scope of arbitrability of disputes.
What arbitral institutions (if any) exist? Have there been any amendments to their rules or are there any being considered?
The main arbitration body in Romania is the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania, which also coordinates the activity of the courts of arbitration attached to the regional chambers of commerce and industry, each county in Romania having such a chamber of commerce and industry.
The Court of International Commercial Arbitration (further herein referred to as “CICA”) has its own set of rules of arbitration. However, these rules are to be supplemented with the ordinary provisions of the Code of Civil Procedure insofar as the latter are compatible with the arbitration and the nature of the disputes. The Arbitration Rules of CICA have been substantially modified in June 2014, when new and modern rules entered into force. A new set of rules are currently under debate and public consultation, but no specific date for their finalization and enter into force was provided.
Another arbitral institution established only in 2010 is the Court of Arbitration attached to the German-Romanian Chamber of Commerce and Industry.
What are the validity requirements for an arbitration agreement?
Under Romanian law, a valid arbitration agreement must be concluded in writing, either under the form of an arbitration clause, stipulated in the main contract, or of a separate agreement called compromise. However, the Code of Civil Procedure sets a broadly construed ‘written form’ requirement for arbitration agreements, to the effect that an agreement to arbitrate may be reached following an exchange of correspondence or an exchange of procedural acts (after the commencement of arbitral proceedings).
To the same effect, the rules of arbitration of CICA also provide that the arbitration agreement may also originate in the filing by the claimant of a request for arbitration and the agreement by the respondent that such request be settled by CICA.
The code provides that an arbitration agreement should be authenticated by a notary public if it refers to disputes regarding the transfer of ownership rights/ other rights in rem over an immovable asset. Non-compliance with this formal requirement leads to the absolute nullity of the arbitration agreement. This legal provision has been heavily criticised since the code entered into force and it is expected to be repealed.
Are arbitration clauses considered separable from the main contract?
Both the Code of Civil Procedure and the rules of arbitration of CICA expressly provide for the separability of arbitration agreements, to the effect that the validity of the arbitration clause is independent from the validity of the contract comprising it.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
Although the law does not state to this effect in any provision, claims arising out of or in connection with more than one contract may be brought in one arbitral proceeding as long as the arbitration agreements are compatible with respect to the number of arbitrators adjudicating the case and the constitution of the arbitral tribunal, for example.
The situation is similar with respect to the consolidation of the proceedings, for which the arbitration law in Romania neither comprises specific provisions (such as the ones currently existing under ICC rules), but nor it excludes such possibility. Therefore, theoretically, the consolidation of arbitral proceedings is possible. The traditional view is that the parties’ consent is required for the consolidation of separate arbitral proceedings where the arbitral tribunals are constituted of different arbitration panels. Otherwise, constitution of the arbitral tribunal may be considered to breach the arbitration agreement.
How is the law applicable to the substance determined?
The arbitral tribunal applies the substantive law designated by the parties. If no law has been designated, the arbitral tribunal applies the law that it deems appropriate in light of the elements of the dispute. In all cases, the arbitral tribunal shall take into account the trade usages and professional rules.
An arbitrator can decide ex aequo et bono only if the parties have expressly authorised him or her to do so.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
As a matter of principle, all disputes are arbitrable, unless there is a legal provision which states otherwise.
As far as national arbitration is concerned, the following matters are exempt from arbitration, according to the Civil Procedure Code: civil status litigation, litigation with respect to legal capacity of persons, inheritance litigation, matters arising out of or in connection with family relations, as well as litigation regarding rights that the parties cannot dispose of (eg in labour and employment law matters where the law expressly provides that a party cannot waive the legal rights established in their favour, criminal matters - except for civil aspects arising in connection thereto).
Regarding international arbitration, a dispute can be referred to arbitration provided that:
- it is of a patrimonial nature;
- it deals with rights the parties may freely dispose of (this excludes, among others, disputes over personal civil status and legal capacity, inheritance and family matters and labour law disputes); and
- it falls outside the exclusive jurisdiction of the courts pursuant to the law of the seat of arbitration.
While the procedural rules regulating domestic proceedings may still occasionally raise questions regarding the capacity of public and state-owned bodies to conclude arbitration agreements, no such limitations are imposed in respect of international arbitration. Thus, international arbitration parties may not seek to evade arbitration to which they have previously agreed by invoking internal law provisions that purport to prohibit entering into arbitration agreements. As a matter of fact, in the recent years the jurisprudence has become quite unanimous in rejecting the objections raised by state-owned bodies that had previously agreed to refer a dispute to arbitration.
Are there any restrictions in the appointment of arbitrators?
Under the arbitration law, any natural person with full capacity to exercise his/her rights may act as an arbitrator, without any other criteria needing to be met (eg, citizenship, as the previous rules stipulated or certain qualifications).
If the parties agree to arbitrate under the purview of the Bucharest Court of Arbitration, they must check the specific requirements set out in the regulations of this arbitral institution. It should be mentioned that for a period of two years CICA, the main arbitration institution, had changed its rules by prohibiting the parties from nominating the arbitrators, this role being fulfilled by an appointing authority; in 2014, CICA changed such much contested rule and returned to the traditional approach of party autonomy in selecting arbitrators.
Are there any default requirements as to the selection of a tribunal?
The parties are free to agree whether disputes should be submitted to a sole arbitrator or an arbitral tribunal; however, an arbitral tribunal must comprise an odd number of arbitrators. If the parties fail to agree, there will be three arbitrators: each party can appoint one arbitrator, and those two arbitrators shall appoint a presiding arbitrator. Where there are multiple claimants or respondents and the dispute is referred to three arbitrators, the claimants jointly and the respondents jointly shall each appoint one arbitrator.
The Code of Civil Procedure provides for the nullity of the arbitration clause which allows one of the parties privileged participation in the nomination of the arbitrator or which provides a party’s right over the other party to nominate the arbitrator or to have more arbitrators than the other party.
Can the local courts intervene in the selection of arbitrators? If so, how?
The Code of Civil Procedure provides that local courts, namely the tribunal whose jurisdiction covers the seat of the arbitration, may intervene in the selection of arbitrators by appointing an arbitrator or the presiding arbitrator in cases where the parties do not agree on the appointment of the sole arbitrator or a party fails to nominate an arbitrator or in the case of a three-panel arbitral tribunal, when the two arbitrators do not agree on whom should they appoint as presiding arbitrator. The local courts render a decision regarding the appointment of the arbitrators after hearing the parties.
Can the appointment of an arbitrator be challenged? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
The parties may agree on a procedure for challenging the appointment of an arbitrator and replacing the arbitrator. In the absence of an agreement, the arbitral tribunal might establish such procedure as it deems most appropriate. For example, if the arbitration agreement provides for institutional arbitration, the rules of the arbitral institution will govern the whole procedure and – in the majority of cases – will cover any issues related to the challenge or replacement of arbitrators.
In the absence of the above, the rules detailed below comprised in the Code of Civil Procedure will apply. Pursuant to the Code of Civil Procedure, the arbitrator may be replaced if:
- he or she is successfully challenged or abstains from settling the dispute
- the appointment is revoked (by parties’ agreement on the termination of his or her mandate); or
- he or she has withdrawn from the case waiving his mandate, has died or is otherwise prevented from serving, and the substitute arbitrator (if appointed) also cannot serve in the case.
In such cases, the arbitrator will be replaced according to the provisions for his appointment.
As for the challenge of the appointment of an arbitrator, an arbitrator may be challenged in cases of incompatibility, namely in case he finds himself in one of the situations of incompatibility provided for judges in the Code of Civil Procedure (for example, the arbitrator previously expressed his opinion in relation to the solution in the dispute he was appointed to settle, there are circumstances which justify the doubt that he, his spouse, his ancestors or descendants have a benefit related to the dispute, his spouse or previous spouse is a relative of maximum the fourth degree with one of the parties etc.) or for the following reasons which cast a doubt on the arbitrator’s independence and impartiality:
- he does not meet the qualifications or other requirements regarding arbitrators provided in the arbitration agreement;
- a legal person whose shareholder the arbitrator is or in whose governing bodies the arbitrator is bears an interest in the case;
- the arbitrator has employment relations or direct trade links with one of the parties, with a company controlled by one party or that is placed under common control with the latter
- the arbitrator has provided consultancy to one of the parties, assisted or represented one of the parties or testified in one of the earlier stages of the case.
A party may challenge an arbitrator whom it has appointed only for reasons of challenge occurring after the appointment or if the party becomes aware of such reasons only after the appointment. A person aware of a challenging reason regarding himself/herself shall be bound to inform the parties and the other arbitrators before accepting the office of arbitrator, or, should such reasons occur after his/her acceptance of the office as soon as he/she has knowledge of them. In this case, the arbitrator may not participate in the arbitral proceedings unless the parties, apprised thereupon, notify in writing that they do not intend to challenge the arbitrator. Even in this particular case, the arbitrator has the right to refrain from adjudicating the dispute, an abstention statement to this effect sufficing.
The challenge shall be made, under the sanction of forfeiture, within 10 days since the date the party has acknowledged the appointment of the arbitrator or, as the case may be, since the reason for challenge occurred.
The challenge is to be adjudicated within 10 days by the local courts, namely the tribunal whose jurisdiction covers the seat of the arbitration, after hearing the parties and the concerning arbitrator. The decision of the local courts is not subject of appeal.
The arbitration rules of CICA provide for similar reasons for challenging an arbitrator, only the procedure for such a challenge being slightly different, as follows: The challenging petition shall be solved by the arbitral tribunal, in the absence of the challenged arbitrator, as he/she shall be replaced by the president of the Court of Arbitration or by an arbitrator appointed by the same. In case the challenging petition regards the sole arbitrator, it shall be settled by the president of the Court of Arbitration or by an arbitrator appointed by the same. When all members of an arbitral tribunal are challenged, the challenging petition shall be settled by an arbitral tribunal appointed by the president of the Court of Arbitration. If the challenging petition is accepted, the arbitrator, the presiding arbitrator or the sole arbitrator shall be appointed as provided by the rules of CICA.
In addition, the rules of CICA also provide for the dismissal of an arbitrator or of the presiding arbitrator. In this respect, the arbitrator or the presiding arbitrator shall be dismissed from a certain dispute in case of one of the following actions, in relation to the gravity of such action:
- should the arbitrator, after acceptance, unduly abandon their duty of arbitrator;
- should the arbitrator, without solid reason, repeatedly fail to participate to the hearings or commit other acts that lead to unjustified delays of the settlement of the dispute, or fail to render the award within the time limit provided by the arbitration agreement or rules of CICA
- should the arbitrator fail to observe the confidentiality of the arbitration, by intentionally publishing or disclosing without the parties’ authorisation data of which they took knowledge as arbitrator.
In such cases, CICA rules of arbitration stipulate that the dismissal shall be decided by the Court of Arbitration Board upon the proposal of any of the members of the Board, hearing the arbitrator whose dismissal is required / proposed, the member making the proposal not having the right to vote. When committing one of the above-mentioned actions in bad faith or gross negligence, the arbitrators shall be liable to damages within the fee received.
The number of challenges continues to be relatively small by reference to the amount of the cases.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
The Code of Civil Procedure provides that in any case in which an arbitrator is impeded to fulfil its obligations, another arbitrator must be appointed in accordance with the provisions set forth in this respect. A similar provision can be find in CICA Rules. Therefore, in all cases the number of arbitrators should be restored, the truncated tribunal not being able to continue the proceedings.
Are arbitrators immune from liability?
Arbitrators are generally immune from liability in respect of decision making, considering their power to assess the case according to their “intimate conviction”. The Code of Civil Procedure provides that arbitrators are to be held liable for the damage incurred as a result of their following actions:
- withdrawal from serving (abandoning their duty as arbitrators) in the case with no justified reason;
- failure to participate in the adjudication of the case;
- failure to render the award within the established time limit;
- failure to comply with the duty of confidentiality; and
- breach of their other duties, intentionally or by reckless negligence.
Is the principle of competence-competence recognised? What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
The principle of competence-competence is fully recognised under Romanian arbitration law. Once a dispute has been referred to arbitration, the arbitral tribunal is competent to decide on its own jurisdiction – and will do so even if identical disputes are pending before the courts or other arbitral tribunals, except if the arbitral tribunal finds it appropriate to suspend the proceedings. Further, the arbitral tribunal’s ruling that it has jurisdiction may not be challenged before the courts during the arbitral proceedings. Such decision may be subject to judicial review by state courts only during an action to set aside the final arbitral award. Therefore, the arbitration law provides no procedural grounds allowing a party to ask the local courts, during the arbitral proceedings, to determine whether an arbitral tribunal has jurisdiction.
Nevertheless, a state court court vested with a dispute in respect of which an arbitral agreement has been concluded will check its own competence and decline its jurisdiction if at least one of the parties invokes the existence of the arbitration clause. The court will retain its jurisdiction in settling the dispute only in three exceptional situations, namely, if the respondent has submitted its defence without invoking the existence of the arbitration agreement, if the arbitration clause is null or inoperable, and if the arbitral tribunal cannot be constituted from causes clearly attributable to the defendant in the arbitration.
How are arbitral proceedings commenced? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
In order to commence arbitration a party must submit to the arbitral tribunal its written request for arbitration. If the parties have agreed on ad hoc arbitration, the first step is to establish the composition of the arbitral tribunal. If the composition is not stipulated in the arbitration agreement, the party requesting arbitration shall invite the other party in writing to proceed with the procedure to appoint the arbitrators. Where the arbitration is held under the purview of an arbitral institution, the parties shall follow the procedural rules of that institution. In the majority of cases (including before CICA), the party which wishes to commence arbitration must first file the request for arbitration with the secretariat of the arbitral institution. A fixed filing fee is generally required.
The statute of limitation is subject to the determination of the applicable law by the arbitral tribunal. Under Romanian law, the statute of limitation is a matter of substantive law; therefore, where the arbitral tribunal will assess that the statute of limitations is a substantive matter and that the dispute is governed by substantive Romanian law, it may allow any defence regarding the time bar of the claims submitted to arbitration applying the Romanian law on the statute of limitations. As a rule, claims having a pecuniary object are subject to the statute of limitations. The time limits for bringing civil claims differ, according to the nature of the claim and the subjective right at the basis of the claim. Generally, these limits range from six months to 10 years, the general term being three years.
As a general rule, the time bar term starts to run when the holder of the right to claim knew or was supposed to know, under the circumstances, the coming into being of the right to claim. The doctrine The doctrine has explained that the date when this right (i.e. the right to claim) comes into being is the date: when the right is infringed, denied or contested, or, the date when such right, even not contested or infringed, had to be exercised.
According to a constant case law to this effect, the parties arbitrating under FIDIC rules should be aware that the undergoing of the multi-tier dispute resolution procedure (DAB procedure, 56 days amicable settlement period) is not considered to affect the starting date of the time bar course, but may only lead to a suspension of the limitation period.
Finally, the statute of limitations does not operate ex officio, instead, the objection of limitation can only be invoked within the applicable deadline.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?
Neither the arbitral tribunal nor the local courts can compel the parties to arbitrate or third parties to participate in arbitration proceedings. Once a dispute has been referred to arbitration, it can examine the case and render an award irrespective of whether one or both parties participate in the proceedings. In order to ensure a fair trial, the parties must only be duly notified of the arbitral proceedings, their actual participation in the proceedings being entirely their choice.
Failure of one party, although duly notified, to attend the hearing shall not prevent the progress of the proceedings, unless the absent party submits, at least 3 days before the scheduled date of the hearing, a request to the arbitral tribunal for adjournment of the hearing on solid grounds and notifies the other party and the arbitrators thereof.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
There are no provisions allowing the state to invoke immunity in connection with the arbitration proceedings. Once a valid arbitration agreement was concluded there is no specific regulation allowing the state to evade from arbitration.
In what instances can third parties or non-signatories be bound by an arbitration agreement or award?
Under Romanian law, the arbitration agreement and the award may not impose obligations on third parties. Debate is ongoing over the extension of the arbitration agreement to non-signatories – for example, following their direct involvement in the negotiation, performance or termination of a contract containing an arbitration clause.
Since the entering into force of the Code of Civil Procedure in 2013, a new provision was introduced stating that third parties may take part in arbitral proceedings following the general civil procedure rules on this aspect, but only if such third party and all the parties agree. Only an accessory joinder claim - meaning a third party bearing an interest voluntarily joins an ongoing procedure to support one of the parties’ positions - is admissible even in the absence of the consent of all the other parties.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
During the arbitration proceedings the arbitral tribunal may grant, at the parties’ request, protective measures and interim relief, as well as acknowledge matters of fact. This provision is similar both in the Civil Procedure Code and in the rules of the main arbitration institution, however, neither defines, except for protective measures, what types of relief can be awarded on a provisional basis. However, taking into account the general civil procedure rules, as an interim remedy, the interested party may apply for freezing measures on goods, provisional measures or conservatory measures regarding evidence (acknowledgement of matters of fact, that is).
The local tribunal whose jurisdiction covers the seat of the arbitration may grant protective measures and interim relief, at the parties’ request, before or during the arbitral proceedings. Since a similar order for protective measures or interim relief issued by the arbitral tribunal is not enforceable under Romanian law, the courts play a significant role in obtaining such measures and are preferred by the parties for the reason that the courts issue enforceable decisions.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
As a rule, the party who files a claim has the obligation to prove it. In general, the parties submit the evidence on which they intend to rely on in limine litis (at the start of the procedure).
The most common means of proof are written records, judicial expertise, witness statements and cross-examination. All pieces of evidence are of equal value and subject to the court’s evaluation and conviction. According to the traditional rules of evidence within the Civil Procedure Code and the Rules of the Court of International Commercial Arbitration, evidence such as a witness statement or cross-examination is taken directly before the arbitral tribunal at the hearing and the expertise should be of a judicial nature, i.e. it is carried out under the legality control of the arbitral tribunal. A particular rule in arbitration is that witnesses are not heard under oath, as it would happen before a local court. The arbitral tribunal does not have any powers to compel the witnesses or experts who refuse to appear before the arbitral tribunal or to apply any sanctions. For any such measures, the parties have to file a claim to this effect before the local tribunal whose jurisdiction covers the seat of the arbitration.
The arbitral tribunal can also order a party to produce certain evidence. As well, the arbitral tribunal might request written information to public authorities regarding their documents and actions, but in case the public authority refuses to comply with such a request and submit the information, the parties or the arbitrators have recourse to local courts to request the enforceable court’s order for production of documents. The local courts might also play a role in acknowledging certain matters of fact prior or during the arbitration proceedings such as the state of certain assets, the statement of a certain witness where there is urgency due to the risk the evidence might get lost.
As a matter of principle, the rules on evidence are flexible when it comes to international and domestic arbitration, which makes it possible in procedures such as ad-hoc arbitration or under ICC Rules to submit written witness statements and expert reports drafted by party-appointed experts. Also, the IBA Rules on the Taking of Evidence tend to become a generally accepted standard in practice.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings?
Counsels are subject to the strict ethical obligations under Romanian law regulating lawyers’ practice, the statute of legal profession and by the Charter of Core Principles of the European Legal Profession and Code of Conduct for European Lawyers adopted by The Council of Bars and Law Societies of Europe.
Regarding arbitrators, there is no specific body of law or rules regarding their ethical standard. However, both the Code of Civil Procedure and CICA rules of arbitration provide several obligations of the arbitrators during their office such as confidentiality, impartiality, observance of the applicable deadlines etc. Failure to observe some of these obligations might trigger the arbitrators’ liability, as detailed above. As well, in practice, the parties may agree that the IBA Rules of Ethics for International Arbitrators might apply.
How are the costs of arbitration proceedings estimated and allocated?
Firstly, when filing a request for arbitration a fixed registration fee is generally required. With respect to the arbitrators’ fee, a computation of such fee is made under the CICA rules according to an algorithm stipulated in the schedules of arbitral fees and expenses depending on the value of the claim, there being rules on how to determine the value of the claim when such a claim is not financial.
The arbitral tribunal may provisionally estimate the costs of arbitration at the outset of the proceedings and request both the parties to advance or deposit the amounts in question in an amount split equally between the parties. If the defendant fails to fulfil their obligation, the plaintiff will pay the entire amount, in which case the arbitral award will establish the final amount of the arbitrators’ fees and its division between the parties.
Regarding the final allocation of costs, they are covered by the parties according to their agreement. In the absence of such an agreement, in case of a national arbitration proceeding, costs are incumbent on the party who lost the case, proportionally to the admission/rejection of the claim/defence whereas in case of an international arbitration proceeding each party shall bear the fees and expenses of its appointed arbitrator or, if the dispute is referred to a single arbitrator, they shall split the cost equally. Of course, if the parties agree to arbitrate under the purview of an arbitral institution, it will apply its own set of rules regarding the estimation and allocation of costs.
Can pre- and post-award interest be included on the principal claim and costs incurred?
The parties are entitled to recover interest (pre and post-award interest) on the principal claim upon such request, but not also interest to the costs incurred.
What legal requirements are there for the recognition of an award?
Domestic arbitral awards are treated and enforced in the same way as court decisions whereas foreign arbitral awards are subject to recognition and enforcement proceedings before the Romanian courts. In order to be granted the recognition and enforcement of an arbitral award, the parties must comply with certain formal requirements – they must file a request to this effect before a competent court and attach legalised or apostille certified copies of the translated award and arbitration agreement. The court vested with hearing a request for the recognition and enforcement of a foreign arbitral award is prohibited from reviewing the merits of the dispute, its examination being limited to the grounds for refusal of recognition and enforcement, as set out in the Code of Civil Procedure. The grounds for refusal of recognition and enforcement of the foreign award provided in the code follow those established in the New York Convention.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
There is no specific provision in the arbitration law as to the type of remedies available to the parties. Therefore, there is no limitation on the type of remedies that an arbitral tribunal may award, other than the limitation imposed by the parties’ claims in the sense that the arbitral tribunal can only grant what was requested, regardless of the nature of the claim.
However, to a large extent the admissibility of the remedies depends on the substantive and procedural law applicable to the dispute. For example, if the arbitral tribunal applies Romanian procedural law, it may consider a request for a declaratory judgment to be inadmissible to the extent that the claimant has the option to bring a claim to enforce its rights.
As for the enforceability of the remedies, again the arbitration law does not impose any limitations, the only remedies not enforceable being therefore the ones not enforceable by their nature (for example declaratory judgements).
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
The parties may file a request to set aside the arbitral award on the following grounds:
- the dispute was non-arbitrable
- the arbitration agreement did not exist or was invalid or ineffective
- the constitution of the arbitral tribunal was not in accordance with the arbitration agreement
- the party requesting the setting aside of the award was not duly notified of the hearing when the main arguments were heard and was absent when the hearing took place
- the arbitral award was rendered after expiry of the time limit, even though at least one party submitted its intention to object to the late issuance of the award and the parties opposed the continuation of the proceedings after expiry of the time limit
- the award granted something which was not requested (ultra petita) or more than was requested (plus petita).
- the award failed to mention the tribunal’s decision on the relief sought and did not include the reasoning behind the decision, the date and place of the decision or the signatures of the arbitrators.
- the award violated public policy, mandatory legal provisions or morality.
- subsequent to issuance of the final award, the Constitutional Court has declared unconstitutional the legal provisions challenged by a party during the arbitral proceedings or other legal provisions included in the challenged piece of legislation that are closely related to and inseparable from those challenged.
The request to set aside the arbitral award may be filed within one month of service of the award on the parties, unless the request is grounded on the subsequent issuance of the Constitutional Court, where the time limit is three months after publication of that court’s decision. Certain reasons for setting aside an arbitral award may be deemed waived if they are not raised before the arbitral tribunal at the start of the process (particularly those relating to the jurisdiction and constitution of the arbitral tribunal). A request to set aside is subject to a fixed court fee under the law.
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
The parties cannot waive the right of appeal or challenge to an award by agreement before the dispute arises. The Code of Civil Procedure provides that any agreement to the contrary is null and void. The parties may waive the right to appeal only after the award is rendered.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
With respect to arbitral awards rendered in international arbitration proceedings, a state or state entity cannot raise such a defence.
However, there might be certain delays when enforcing the award due to the provisions of Government Ordinance No. 22/2002. In case the state entity is unable to pay the amounts due, such entity is obliged to initiate the proceedings to fulfil its obligation within 6 months. The creditor and the state entity are free to agree on another deadline for the fulfillment of the obligation. In the absence of such an agreement and in case the state entity fails to pay its debt within the 6 months, the creditor might request the enforcement of the writ of execution. Under this ordinance, any Romanian state entity may ask the court to order the suspension and/or the rescheduling of the obligation to pay the amounts the state entity was ordered to by means of any writ of execution, including arbitral awards. Such a claim needs to be grounded on the practical inability of the state entity to pay the amount due. The reasoning behind such a legal provision is that state entities have annual pre-approved budgets, and any debt that has not been included therein requires additional funds and additional approvals.
To what extent might a third party challenge the recognition of an award?
The request filed in order to obtain the recognition and enforcement of an arbitral award is settled by the court following the subpoena of the parties that participated in the arbitral proceedings. Therefore, usually, third parties cannot challenge the recognition of an award.
Have there been any significant developments with regard to third party funding recently?
Third-party funding is not frequently used in Romania. In fact, litigation funding by a third party is not officially provided for within the Civil Procedure Code. Therefore, third-party funding of the proceedings is permitted, being no provision interdicting such procedure. The third-party funding will be governed by the agreement concluded between the funder and the beneficiary.
Is emergency arbitrator relief available? Is this frequently used?
A procedure similar to the emergency arbitrator relief under the ICC rules is not provided for in the arbitration law of Romania.
Are there arbitral laws or arbitration institutional rules providing for simplified or expedited procedures for claims under a certain value? Are they often used?
There are no arbitral laws or rules of the arbitration institutions providing for simplified procedures for claims under a certain value, such specific provisions existing only before local courts. A set of rules for an emergency procedure was launched by CICA in May 2017, for public consultations, but they were not adopted yet.
Have measures been taken by arbitral institutions to promote transparency in arbitration?
Increasing transparency of the arbitral proceedings is a constant priority of the arbitral institutions in Romania.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted? If so, how?
Usually both the counsel and arbitrators are selected based on their professional expertise rather than on other criteria.
Have there been any developments regarding mediation?
There has been no recent development regarding mediation. Although the Mediation Law was enacted in 2006, the usage of mediation remains quite reduced.
Have there been any recent court decisions considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
As far as we are aware, there is no recent case in Romania regarding the setting aside of an award that has been enforced in another jurisdiction or vice versa. Moreover, it should be noted under the Romanian Code of Civil Procedure an award that has been set aside by the courts at the place of arbitration may not be enforced in Romania.